This proposal, by harmonising prudential requirements, is a first step in this regard. A second step will consist in giving the right to companies and employees to obtain tax relief on contributions paid to institutions situated in other Member State. The Commission will come forward with appropriate initiatives on this next year. Under this proposal, the fund would be subject to the investment and prudential rules of the Member State where it was established. As regards taxation, the Commission will be seeking to find ways to move towards tax neutrality between domestic funds and funds established in other Member States.
Security comes first.
That is why the Commission has proposed a global prudential framework, with rules on such issues as assets, liabilities and information for beneficiaries. The whole proposal is designed to prevent another Maxwell scandal notably by requiring a clear distinction between the sponsoring company and the fund, by imposing on-going prudential control and by requiring that the funds always holds sufficient assets to cover its commitments. Ongoing financial supervision would have to be on the basis of annual accounts and the annual report, which would have to be made available on request to members and beneficiaries of the pension scheme. The supervisory authority would then have to be able to compare whether actual investments were being made according to the principles laid out. This is one way of obliging managers to take a strategic and long-term view on how to manage assets and liabilities.