A4-0400/98

Resolution on the Commission Green Paper 'Supplementary Pensions in the Single Market' (COM(97)0283 - C4-0392/97)

The European Parliament,

- having regard to the Commission Green Paper (COM(97)0283 - C4-0392/97),

- having regard to Articles 49, 51, 57(2), 66, 73a ff., and 119 of the Treaty,

- having regard to Council Directive 98/49/EC on safeguarding the supplementary pension rights of employed and self-employed persons moving within the European Union, ((OJ L 209, 25.7.1998, p. 46.))

- having regard to its opinion of 30 April 1998 on the proposal for a Council Directive on safeguarding the supplementary pension rights of employed and self-employed persons moving within the European Union ((OJ C 152, 18.5.1998, p. 65.)),

- having regard to the report of the Committee on Legal Affairs and Citizens' Rights and the opinions of the Committee on Employment and Social Affairs, the Committee on Economic and Monetary Affairs and Industrial Policy, and the Committee on Women's Rights (A4-0400/98),

A. whereas state social security has made it possible to guarantee a decent standard of living and limit poverty in most Member States; whereas it is the channel through which social solidarity between generations is brought to bear on the different peoples who make up the European Union; and whereas this model must remain the corner-stone of the Union's welfare system,

B. whereas the Member States are having to contend with severe problems as regards social security funding because the population is ageing, a phenomenon that could lead to a clash of generations between the elderly population who have acquired pension rights and a younger population who have still to secure such entitlements and must do so under much less generous arrangements,

C. whereas the Member States must maintain existing social security schemes at a financially sustainable level and whereas public finances established through sustainable development are the best means of guaranteeing that the necessary level of social security provisions will not be undermined,

D. whereas it must be stressed that it is important to maintain the European social model, which has provided for not only security in old age, but also health, education, welfare and other related social benefits,

E. whereas there are pension schemes in some Member States which are grouped in sectoral-related industries with employer, employee, government and consumer representation,

F. whereas the structure of social security systems falls entirely under the responsibility of the Member States,

G. whereas, because world markets are being liberalised and the economy globalised, Member States are concerned that the cost of financing social security expenditure places an oncost on the production of goods and services; and whereas, against this concern, it should be stressed that, under the Commission¨s proposals, labour costs will also be incurred in the second and third pillars and passed on through the cost of the product or service,

H. whereas the assets of pension funds are already equivalent to 20 % of Union GNP; whereas pension funds rank with the largest European financial institutions in terms of the volume of their assets; and whereas capital market growth will be influenced by the spread of supplementary pensions,

I. whereas capital market growth will enable companies to obtain long-term resources more easily, as well as reducing the dependence of industry on the banking system and making for greater transparency in business management,

J. whereas SMEs will be able to finance their development more easily from other sources, for example a special stock exchange,

K. whereas the diversity and complexity of the tax arrangements applied to supplementary pensions in the Union constitute one of the biggest obstacles to free movement of workers and the supply of bridging pension schemes, since contributions paid in one Member State are generally not deductible in another and employers' contributions paid in other Member States are in some cases liable to tax,

L. whereas the possibility of benefiting from tax concessions has a decisive bearing on the structure of individual pension schemes and whereas every Member State has laid down rules to prevent abuses,

M. whereas unfair tax competition combined with increased international capital mobility has had the effect of reducing the volume of taxable capital and, de facto, transferring tax sovereignty from the Member States to the market,

N. whereas the impact of exchange risks will be eliminated between those countries using the euro but will still prevail throughout the rest of the world; and whereas in this regard there will be a reluctance, where resources are already established in Member States, to transfer them to other countries,

O. whereas once the euro has begun to be used in most Member States, the impact of exchange risks will be eliminated, being limited to relations with separate currencies, particularly of third countries, and there will no longer be any fundamental obligation to pay dividends and other sums in domestic currency or keep the bulk of resources in the country of domicile,

P. whereas there have recently been wild fluctuations in the stock exchanges of the world, exacerbated by speculative forces, and whereas it would be instructive and advantageous to economic stability to clearly identify the financial institutions and agents controlling those speculative funds, and the sources of such funding,

Q. whereas the GATT agreements and the related implementing measures will gradually open up the European financial services market to world competition, a process which can only be restricted for generally prudential reasons,

R. whereas pension funds are major financial services without a European passport, preventing them from developing cross-border activities,

S. whereas legislative regulation should consequently be put in place to enable pension funds to exploit the single market to the full, but Community regulations must also be framed in such a way that the many existing forms of supplementary pension scheme in the internal market are made available throughout the Community and are discriminated against neither by taxation nor supervisory law, so that a range of choice is created for those entitled to pension provision,

T. whereas workers should be allowed to move throughout Union territory, not least because occupational mobility can help to offset a crisis or serious economic difficulties in a given part of the EU,

U. whereas workers should not forfeit their pension rights, including those accruing under a supplementary fund; whereas the proposal for a Directive on retention of acquired rights, cross-border payment of benefits, and workers temporarily on secondment in another Member State is only the first stage in the gradual removal of the constraints imposed on supplementary pensions, especially as regards the time required to acquire rights,

V. whereas, as far as supplementary pensions are concerned, the fundamental freedoms enshrined in the Treaty relate to:

a) freedom of establishment,

b) freedom to make cross-border investment,

c) freedom of persons in one Member State to belong to pension schemes in other Member States open to them under national law,

d) freedom to provide administrative and financial management services on a cross-border basis;

and whereas national measures which might obstruct or discourage the exercise of those freedoms must satisfy four conditions, namely: they must be enforced without discrimination; they must be justified for reasons of public interest; they must be suitable to fulfil the aim being sought; and they must not go beyond what is necessary to achieve that aim,

W. whereas in its judgment on the Sanz de Lera case the Court of Justice of the European Communities ruled that Articles 73b(1), 73c and 73d(1)(b) of the Treaty have direct effect and that national laws conflicting with them are accordingly inapplicable,

X. whereas there is a need to ensure the economic future of European pensioners,

1. Believes that supplementary pension provision based on a system of capital cover is an important way of supporting statutory pension insurance and could contribute largely to the maintenance or improvement of the income of pensioners, provided that the national government bears the responsibility for the due payments within the framework of social security in the first pillar;

2. Calls on the Commission to adopt a proposal for a Directive to enable pension funds to enjoy freedom of investment, lay down the spheres and limits of operations as regards investment in and outside the Community, the amounts drawn by employers and employees established in the individual Member States, and the operating procedures for pension funds to raise capital on Community markets; to allow advisers to exercise the freedom to provide management services, if they are licensed to do so in any one Member State; and to lay down principles governing prudential supervision in accordance with the European social market model of co-decision and co-determination; believes that such a proposal should allow for the legal characteristics of the rules applying to pension funds in the individual Member States;

3. Believes that if pension fund managers were free to invest as they chose, investment yields could be improved; recognises, however, that a high degree of security needs to be guaranteed; considers that yields could be improved first and foremost by increasing investment in equities which are capable of outperforming fixed-interest securities in the medium to long term, while recognising that investment in equities also involves risks of its own;

4. Believes that, given freedom of investment, a system must be established to ensure that pensions will be paid in the event of insolvency; in connection with a proposal for a Directive creating a Community action framework for pension funds, the Commission should offer such funds the option, as an alternative to stringent investment rules under supervisory law, of complying with insolvency security requirements by joining a mutual insolvency security scheme organised by the funds themselves;

5. Maintains that, because investment in equities is gradually increasing, companies in certain Member States lack equity capital, some industrial and financial sectors are due to be privatised, and the supply of corporate debt securities is expanding constantly, the funds' equity investment will find the necessary uptake and also help stabilise share and financial markets on a new footing;

6. Calls on the Commission to produce a report on why certain Member States have restrictions on the mobility of capital; and draws attention to the requirement on pension schemes to safeguard not only the highest possible profits but also the security of capital investment over several generations;

7. Notes that observance of quantitative limits is sometimes linked to the supervision methods employed in some Member States where external quantitative checks are carried out instead of internal quality control implemented within funds, as practised in other Member States; believes, therefore, that any attempt at harmonisation will have to take account of these different approaches;

8. Maintains that the 'prudent man' principle, as embodied in the European social market model, including co-decision and co-determination combined with modern joint asset and liability management techniques, can serve to maximise yields without undermining the proper security, provided that such a management principle encompasses the option to introduce explicit investment criteria when prudential provisions so recommend;

9. Is convinced that the 'prudent man' principle must be brought to bear to encompass the following prudential components:

a) balance of assets and liabilities,

b) diversification of investment,

c) maintenance of sufficient liquidity,

d) restriction of investment in service providers, including associated companies and subsidiaries;

e) involvement of the contributors and sectoral interests;

f) clear separation of the employer¨s assets and the pension fund,

g) provision for commitments,

h) the implementation of stringent and effective control;

10. Calls for the introduction of a European passport for pension schemes, in so far as uniform supervisory law provisions safeguard the opportunities for control and equal co-decision by the pension recipients, and guarantee insolvency insurance; notes in particular that adequate precautions must be established for the transparency of pension fund activities:

a) through the fund management¨s reports, and

b) by setting up an independent pensions ombudsman and advisory service in the Member States;

11. Believes that Community legislation to regulate pension funds should bring about basic harmonisation of:

a) national provisions relating to actuarial principles and

b) accounting rules;

12. Takes the view that the participation of representatives of the participants and beneficiaries of pension schemes in the pension funds¨ management and supervisory bodies would be likely to improve the transparency and responsibility of decisions;

13. Calls on the Commission, with the aid of the parties concerned, to probe carefully into the activities carried out respectively by pension funds and life assurance, notably with regard to the commitments undertaken and the risks borne, with a view to ensuring full compliance with the principle of equal competition between all operators in the case of similar products serving comparable purposes;

14. Regrets that the Green Paper is essentially confined to pension funds and hence does not give due attention to the many other forms of non-government pension provision in the Member States;

15. Points out that the pension fund concept and its implications in the various Member States differ widely, and accordingly calls for the introduction of a pension fund that is clearly defined and applicable throughout Europe, as a further way of promoting the single market for pension funds;

16. Calls on the Commission to bear in mind that the case-law of the Court of Justice prohibits discrimination on grounds of sex where pay is concerned; notes that women are still paid less than men and that, because pensions are earnings-related, they are in danger of being relegated permanently to their weaker position;

17. Points out that supplementary pension schemes should be designed in an employee-friendly way, with particular emphasis on equal treatment of women and measures to tackle discrimination in pension provision against people with atypical or insecure terms of employment;

18. Points out that it is on principle opposed to the use of gender-based actuarial factors in a discussion of men and women¨s pension requirements, particularly if these could result in higher employers¨ contributions for women and thus form an obstacle to women¨s chances of finding a career;

19. Calls on the Commission to investigate whether company supplementary pensions, for example, do in fact constitute adequate additional provision for retirement in increasingly flexible labour markets, and to determine the approaches to reform of supplementary pension schemes in the Member States that have proved to be most effective in practice, examining in particular their fundamental compatibility at domestic and international levels, and to include them as a benchmark study in the joint annual report on employment so that the Member States can learn from each other's good practices and define joint objectives;

20. Calls on the Commission to ensure that occupational pension schemes do not channel surplus profits back into firms, but use them or set them aside for improvements in the pension schemes; in particular, such surpluses should be used to equalise the pension rights of female employees who do not yet enjoy the same rights as their male colleagues;

21. Asks the Commission to submit a revised version of its 1987 proposal for a directive on the equal treatment of men and women, in connection with statutory and occupational social security schemes, so as to lay the legal foundations for the individualisation of pension rights, including a flexible pensionable age for men and women;

22. Believes that if employers' and employees' contributions are treated as tax-free deductible expenses and pensions as taxable income, saving with a view to pension provision will be encouraged, leading to benefits for the net balance of public finances that will increase as the number of pensioners rises;

23. Urges the Commission's Working Party on Fiscal Policy to identify ways of ensuring that the Member States' tax arrangements and the overall Community-wide impact of the tax system constitute the least possible deterrent to freedom to provide services, as called for by the Court of Justice in the Safir ruling ((Judgment handed down by the Court of Justice on 28 April 1998 in Case C-118/96.));

24. Believes that tax systems need to be coordinated more closely, observing the principles of mutual recognition of systems, prevention of double taxation, and exchange of information among authorities;

25. Urges the Member States to press ahead with the harmonisation of fiscal systems for supplementary pension provision by introducing a separate code of conduct governing a number of basic taxation principles in this area, such as the tax-deductibility of pension contributions, pension plans, exemption of pension funds from income and capital taxation on investments and taxation of final benefits;

26. Welcomes the Directive to safeguard supplementary pension rights acquired by people moving within the European Union but considers it essential that the Commission bring forward further legislative proposals governing the entitlement of workers who change employer or Member State to transfer pension rights to other European countries and the collection of pension contributions, and establishing the conditions under which it is possible to continue to build up pension provision with the original pension provider;

27. Stresses the importance of transferring pension entitlements from one employer to another within the same country or from one Member State to another; considers that such transfers are perfectly possible under capitalisation systems, on condition that provision is made for preserving entitlements acquired under other systems; points out that long vesting periods constitute a distinct barrier to freedom of movement within the single market which, despite higher costs for the undertakings concerned can be overcome, within the framework of a dialogue between the social partners, by a long-term reduction to a maximum of five years;

28. Believes that, once the relevant national provisions have been harmonised, corporate pension funds, for employees of a given company or conglomerate with subsidiaries in several Member States, and multinational pension funds could help facilitate free movement of workers and preserve their pension rights; calls on the Commission to conduct an in-depth study on the above options to determine whether legislative moves should be made in that direction;

29. Calls on the Commission to ensure that the directive stresses the economic needs of Europe¨s elderly citizens;

30. Calls on the Commission to investigate the extent to which supplementary pension provision influences the employment situation in Europe and to encourage pension providers, in conjunction with the EASDAQ and the European Investment Bank, to invest in sectors with real growth potential;

31. Supports the proposal in the Green Paper to set up a pension forum and urges the Commission also to consider assigning the forum the task of analysing the obstacles to freedom of movement, following up the results of measures taken and taking initiatives to draw up new proposals for removing obstacles;

32. Instructs its President to forward this resolution to the Council, the Commission, and the parliaments of the Member States.