COMMISSION OF THE EUROPEAN COMMUNITIES 
COM( 93) 237 fma\ - SYN 363 
Brussels, 26 May 1993 
Amended proposal for a 
COUNCIL DIRECTIVE 
relating to the freedom of management and investment of funds 
held by institutions for retirement provision 
(presented by the Commission pursuant to Article 149(3) 
of the EEC-Treaty) 
- 2 -
EXPLANATORY MEMORANDUM 
On the 12th of November 1991 the Commission sent to the Council the 
Proposal for a Council Directive relating to the freedom of management 
and investment of funds held by institutions for retirement provision. 
The aim of the proposal is to provide for the application of the 
fundamental treaty principles of freedom of capital movements and 
freedom of services to institutions for retirement provision. 
The Economic and Social Committee gave its opinion on the 29th of April 
1992. The European Parliament gave its opinion on the 18th of November 
1992 on the basis of a report from its Legal Committee, thus completing 
the first reading of this proposal. Both the European Parliament and 
the Social and Economic Committee approved the general approach of the 
initial proposal. 
The Commission has accepted two amendments proposed by the European 
Parliament in their intention, if not their exact wording. In 
accordance with Article 149, paragraph 3 of the Treaty, the Commission 
has decided to amend its initial proposal. 
In line with the purpose of Amendment No 17, Article 2(a) has been 
changed to more clearly define the scope of the Directive. While the 
Annex largely corresponds to the lists included in Council Regulation 
1408/71 the purposes of that Regulation and the current Directive are 
sufficiently diverse to require a separate list to be produced. This 
avoids any automatic change to the scope of this Directive whenever the 
lists annexed to regulation 1408/71 are adapted for the purpose of that 
Regulation. However, the indicative nature of the list has been 
maintained. An indicative list is appended to the revised proposal as 
an Annex. 
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Taking up the spirit of the first part of Amendment 27, Article 4.1(c) 
has been changed to extend the restriction on investment in the 
sponsoring undertaking to "associated undertakings". This has required 
a definition of "associated undertakings" which is based upon the 
definitions in the Seventh Council Directive of 13th June 1983 
(83/349/EEC). 
On the other hand the Commission has not considered it appropriate to 
take up certain other amendments, particularly in the following areas: 
1. Amendments outside the scope of the proposal. 
Amendments 6 and 14 on pensions surpluses and contribution holidays 
Amendment 7 on the economic position of women 
Amendments 4 and 9 on members' participation in the decision making 
processes of institutions and the training of their representatives. 
Amendment 15 on insolvency insurance 
Amendments 16. 19. 20. 24 and 25 on annual accounts, actuarial 
valuations, detailed investment rules and the disclosure of 
investments. 
The first part of amendment 26 which would oblige Member States to 
define the duties and obligations of board members, managers and 
custodians. 
4 -
While all these amendments raise issues of concern they go beyond the 
scope of the proposal which is restricted to the freedom of investment 
and of provision of services. As the proposal does not envisage any 
detailed harmonisation of prudential regulations for pension funds 
these issues cannot be addressed in the context of this proposal. The 
spirit of amendment 15 is already addressed by Article 8 of Directive 
80/987/EEC1 which deals with the protection of the rights of employees 
in the event of the employer becoming insolvent. 
2. Amendments which the Commission rejects because they make the 
proposal less clear. 
Amendments 8 and 10 are already encapsulated within the present 
proposal. Amendments 3. 12 and the second part of 26. which require 
that investments should be made in the long term or in the best 
interests of the beneficiaries are already, and we believe better, 
covered by the proposal's present reference to the prudent man rule. 
Amendment 1 refers to "professional pension schemes". The Commission's 
proposal, however, does not deal with "schemes" but with 
"institutions". It is also unclear what is meant by a "professional" 
pension scheme. Amendment 27 seeks to introduce the term "first pillar 
statutory social security bodies". This is legally imprecise and could 
cause confusion. Both amendments have been addressed in spirit by the 
changes made to Article 2(a) 
1 0J No L 283, 20.10.1980, p. 23 
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3. Amendments which the Commission opposes in principle. 
There are seven amendments which the Commission cannot accept because 
they run counter to the policy objectives of this proposed Directive: 
Amendments falling into this category are: 
Amendments 2 and 5 and 22 would require pension funds to invest in the 
wider interests of the Community to, for example, stimulate growth. 
These amendments contradict the principle, accepted by Parliament, that 
pension funds should be invested in the sole interests of the 
beneficiaries and participants. 
Amendment 11. requiring custodians to be entirely independent of 
sponsoring undertakings would, for instance, forbid a bank to act as 
custodian of the pension fund for its own employees, requiring it to 
engage a competitor to provide this service, and this amendment must 
therefore, in the view of the Commission, be rejected. 
The second part of Amendment 13 proposes a maximum percentage for self 
investment which in most circumstances would be regarded as too high, 
but which can be too low in certain situations where self investment is 
Justifiable. Furthermore, such a specific maximum runs counter to the 
general principle of this proposal which is to establish prudential 
principles and to leave Member States to translate the principles into 
detailed requirements appropriate to their own markets and conditions. 
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Amendment 28. taken together with Amendment 18. would prevent Member 
States from laying down prudential rules to ensure proper 
diversification and currency matching while Amendment 18 taken in 
isolation would enable Member States to require 100% currency matching. 
These are contrary to the principle of free movement of capital and 
also to modern investment practice and theory which suggests that 
proper diversification can improve the yield obtained over the long 
term. 
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Amended Proposal for a 
COUNCIL DIRECTIVE 
relating to the freedom of management and Investment of funds 
held by Institutions for retirement provision 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic 
Community, and in particular Articles 57(2) and 66 thereof, 
Having regard to the proposal from the Commission, 
In cooperation with the European Parliament, 
Having regard to the opinion of the Economic and Social Committee, 
Whereas institutions for retirement provision are institutions 'sui 
generis' which are amongst the largest and most important financial 
institutions within the Community and often represent an 
alternative means of providing the same benefits as are provided by 
other competing financial institutions; 
Whereas the provision of supplementary retirement benefits through 
institutions for retirement provision is a matter of considerable 
importance for social policy within the Community and forms one 
part of the overall structure of retirement provision, the 
components of which vary considerably between Member States, 
particularly as regards the level and the form of statutory social 
security retirement benefits; whereas there is no intention to 
alter at Community level the balance which has been arrived at in 
individual Member States in this respect; whereas the provision of 
supplementary retirement benefits can facilitate the effective 
provision of a satisfactory level of overall retirement income; 
whereas the protection of rights to retirement benefits is 
therefore a matter of proper concern and great importance for the 
Member States; 
Whereas the provisions of the Directive apply equally to many 
different types of institution for retirement provision including 
institutions which operate on a fully funded basis, but also some 
institutions operating essentially on a pay-as-you-go basis with 
compulsory membership and limited reserves on the basis of 
generational transfers; whereas such institutions are different in 
many other respects; whereas the characteristics which are 
necessary for their stability must be taken into account; 
Whereas freedom of services extends to the provision of investment 
management services and custody services to institutions for 
retirement provision; whereas a situation where such institutions 
are restricted to the use of investment managers or custodians 
established in a particular Member State is incompatible with the 
principle of freedom of services; whereas the requirements for 
authorisation and mutual recognition of the providers of such 
services are set out under the legislation applicable to these 
providers; 
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Whereas institutions for retirement provision represent major 
accumulations of capital within the Community; whereas the 
provisions of Council Directive (88/361/EEC)1 (capital movements) 
have a clear impact on such institutions but are without prejudice 
to the right of Member States to take all requisite measures to 
prevent infringements of their laws and regulations, inter alia in 
the field of prudential supervision of financial institutions; 
whereas it is therefore necessary to define in more detail the 
prudential investment rules which are consistent with the free 
movement of capital and the freedom of services; whereas the 
adoption of common prudential investment principles will facilitate 
the exercise of the freedom of establishment for institutions for 
retirement provision; 
Whereas the protection of members' rights requires that the assets 
of institutions for retirement provision be invested in a prudent 
manner; whereas capital movements within the Community must not 
lead to a situation where an increased level of risk could endanger 
those rights; whereas the assets of institutions for retirement 
provision must therefore be invested with the care, skill, prudence 
and diligence under the circumstances then prevailing that a 
prudent man acting in a like capacity and familiar with such 
matters would use in the conduct of an enterprise of a like 
character and with like aims; whereas those responsible for the 
investment of the assets of an institution for retirement 
provision, such as the directors or trustees of such an 
institution, and their delegates, such as external or internal 
managers and advisors, must act together in the sole interest of 
1 OJ No L 178, 8.7.1988, p. 5. 
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HAS ADOPTED THIS DIRECTIVE: 
Article 1 
1. This Directive shall apply to institutions for retirement provision 
in order to ensure certain freedoms concerning the management and 
investment of their assets. 
2. This Directive shall not apply to financial institutions which are 
covered by 
Council Directive 89/646/EEC1 
Council Directive 92/96/EEC2 
Council Directive 92/49/EEC3 
Council Directive 85/611/EEC4 
Directive (Investment Services Directive) 
1 OJ No L 386, 30.12.1989, p. 1 
2 OJ No L 360, 9.12.1992, p. 1 
3 OJ No L 228, 11.8.1992, p. 1 
4 OJ No L 375, 31.12.1985, p. 3 
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Article Z 
For the purpose of this Directive 
(a) "Institution for retirement provision" means an institution or a 
fund, other than a statutory social security body, established 
separately from any sponsoring undertaking or body for the purpose 
of financing supplementary retirement benefits, including those 
prescribed by. or provided for, in social security legislation and 
which constitute reserves which are capable of being invested In 
assets. 
A non exhaustive list as at the date of adoption of this Directive 
of the statutory social security bodies, referred to in the above 
sub paragraph, is contained in the Annex. 
Member States shall Inform the Commission of any changes to this 
list which shall be published in the Official Journal. 
(b) "retirement benefits" means benefits in the form of pensions, 
whether for life-time or a temporary period, or in the form of lump 
sums paid on death, disability, cessation of employment or when a 
defined retirement age is reached, or support payments in case of 
sickness or indigence when they are supplementary to the above-
mentioned benefits. Benefits which replace statutory social 
security benefits are regarded as retirement benefits within this 
définit ion. 
13 -
(c) "Sponsoring Undertaking" means any prIvate or pub Iic undertaking 
which pays contributions, or the employees or members of which pay 
contributions, into an institution for retirement provision. 
(d) "Sponsoring Body" means any private or public body which pays 
contributions, or the employees or members of which pay 
contributions, into an institution for retirement provision. 
Article 3 
1. Member States which permit the external management of the 
Investments of certain forms of institution for retirement 
provision shall not restrict the freedom of such institutions to 
choose an investment manager, for parts or the whole of their 
assets, who is established in another Member State and duly 
authorised for this activity, according to Council Directive 
92/96/EEC, Directive (Investments Services Directive) or 
Council Directive 89/646/EEC. 
2. Member States shall allow institutions for retirement provision of 
which the sponsoring undertakings or bodies belong to a group of 
undertakings or bodies to organise the management of their 
investments on a group basis, through one of these institutions. 
This shall not affect the right of Member States to provide that 
institutions for retirement provision shall be managed by a 
separate legal entity. 
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3. Member States which permit or require that the assets of an 
institution for retirement provision are held by a custodian shall 
not restrict the freedom of such institutions to choose a custodian 
to hold parts or the whole of their assets who is established in 
another Member State and duly authorised according to Directive 
89/646/EEC or Directive (Investment Services Directive), or 
is accepted as a depositary for the purposes of Directive 
85/611/EEC. 
Article 4 
1. Member States shall require institutions for retirement provision 
established within their territory to invest all assets held to 
cover expected future retirement benefit payments in accordance 
with the foMowing principles: 
(a) The assets shall be invested in a manner appropriate to the 
nature and the duration of the corresponding liabilities and 
the level of their funding, taking account of the requirements 
of security, quality, liquidity and profitability of the 
institution's portfolio as a whole. 
(b) The assets shall be sufficiently diversified in such a way as 
to avoid major accumulations of risk in the portfolio as a 
who Ie. 
- 15 
(c) Investment In the sponsoring undertaking or undertakings or Lu 
affiliated or associated undertakings shall be restricted to a 
prudent level. "Affiliated undertakings" are those between 
which a relationship exists as described in Article 1 of 
Council Directive 83/349/EEC1 of 13th June 1983. "Associated 
undertakings" are those over which the sponsoring undertaking 
or_under-taJc-lncis or an affiliated undertaking exercises a 
significant Influence as described in Article 33(1) of Council 
Directive 83/349/EEC of 13th June 1983. 
In the application of these principles the extent of any insolvency 
insurance or State guarantees may be taken into account. 
2. Member States shall not require institutions for retirement 
provision to invest in particular categories of assets or to 
localize their assets in a particular Member State. 
3. Member States shall in no case require institutions for retirement 
provision to hold more than 80% of their assets in matching 
currencies, after taking account of the effect of any currency 
hedging instruments held by the institution. In the case of those 
institutions for retirement provision whose liabilities are not 
fixed in monetary terms, but are for instance linked to future 
salary levels, this percentage shall be reduced to 60%. 
Assets denominated in ECU shall be regarded as matching any 
particular currency in the Community. 
1 OJ No L 193, 19.7.1983, p. 2 
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4. Member States shall not subject the investment decisions of an 
institution for retirement provision or its investment manager to 
any kind of prior approval or systematic notification requirements. 
5. Member States may lay down more detailed rules consistent with 
paragraphs 1 to 4. 
Article 5 
1. Member States shall bring into force the laws, regulations and 
administrative provisions necessary to comply with this Directive 
not later than They shall forthwith inform the 
Commission thereof. 
When Member States adopt these provisions, these shall contain a 
reference to this Directive or shall be accompanied by such 
reference at the time of their official publication. The procedure 
for such reference shall be adopted by Member States. 
2. Member States shall communicate to the Commission the texts of the 
main laws, regulations or administrative provisions which they 
adopt in the field covered by this Directive. 
Article 6 
This Directive is addressed to Member States. 
Done at Brussels For the Council 
The President 
ANLLEÂ 
List of Social Security Bodies referred to In Article 2(a) 
s 
BELG1QUE/BELG1E 
Office national des pensions, Bruxelles - Rijksdienst voor 
verknemerspensioenen, Brussel 
Institut national d'assurances sociales pour travailleurs indépendants, 
Bruxelles - Rijksinstitùut voor de sociale verzekeringen der 
zelfstandigen, Brussel 
PANMARK 
Arbejdsmarkedets TiIlaegspension 
DEUTSCHLAND 
Bundesversicherungsanstalt fur Angestellte (BfA) 
Landesversicherungsanstalten (LVAen) 
Bundesknappschaft 
Altershilfe fur Landwirte 
Seekasse 
BundesbahnversicherungsanstaIt 
Berufsstandische Versorgungswerke 
(doctors, architects, pharmacists, notaries, lawyers, veterinarians, 
dent ists) 
Zusatzversorgung des offentlichen Dienstes 
HELLAS 
IKA 
Tctueio Zuvia^euv AUTOKIVHTIOTWV 
Taueio EuvxâSewv Kai ETTIK. AocpâAionç flpoowniKoù 
recopyiKwv ZuveraipiOTiKÛv Opyavûoeuv 
Taueîo EuvTàÇewv npooomiKoû HEAfl 
TaMeio EuvTâÇewv npooamiKOÛ 
0epaireuTn.ptou "0 EYArrEAIEMOE" 
-AS-
Taueio Ao<paX. npooamiKOÛ Ao<p. Exaipiaç 
"H E0NIKH" 
Taueio EuvxàÇewv npooamiKOÛ E8vu<nç TpaitéÇnç Tnç EXXâôoç 
Taueîo EuvxâÇewv npooum»KOÛ TpanéÇnç EXXâôoç KOI 
KTIUJOTIKI^Ç 
Taueio Euvxâ^ewv npooum IKoù AypoxiKfiç TpanéÇnç Tnç EXXâôoç 
Taueio AotpâXionç npooomiKoû TpanéCnç IOVIKHÇ - AaïKnç 
Taueio AotpâXionç npoowntKoû ETBA 
Taueio Ao(pàXtonç npoowtuKOÛ O.T.E. 
TEBE 
Taueio AotpâXionç Eunôpov 
Taueio AotpâXionç NOUXIKWV npaKxôpuv KOI YnaXXnXuv 
Taueio EuvxâÇeuv EKxeXuvtoxûv 
Taueio npôvoiaç Hevoôôxuv 
Taueio NOUIKÛV 
TEAY 
TEMEAE 
Taueio Euvxâ£ewv npooum iKOÛ Etpnuepiôwv 
A8nvœv - OeooaXoviKnç 
Taueio AotpâXionç lôiOKxnTwv EUVXOKXÛV Kat 
YiraXXfiXwv TÛIÏOU 
Taueio EuvxâÇeuv EtpnuepiôontoXûv KO» YnaXXhXuv 
npaxxopeiuv GeooaXoviKrjÇ 
Taueio AotpaX i oeuv TCXVIKWV Tûnou A8nvu>v KOI 
GeooaXovÎKnç 
orA 
T.A.n.E.n. Innoôpouiwv 
T.E.A.n.E. Aiîtaouâxwv 
E.T.E. MexâXXou 
T.E.A.E.Y.E.E. Opyavûoeuv 
T.E.A.n.E. Toiuévxœv 
T.E.A.n.O.Z. OivoiT/iaç 
T.E.A.Y.E. Kaxaoxnuâxuv 
T.E.A.A.fl. Aotp/KÛv ETTI xeipnoeuv 
T.E.A. HXeKxpoxexvixwv 
T.E.A.E.A. EuXoupyiKwv Epyaotûv 
T.E.A.Y. <DapuaKeux i KWV Epyaoïwv 
v°>-
T.E.A.n.E. nexpeXaioeiôûv 
T.E.A.Y.E. Tpotpiu«v 
T.E.A.n. AeponopiKb>v Eiuxeipnoewv 
T.E.A.E.I.T. EKnaiôeuonç 
IKA - TEAM 
Taueio Apuyhç npooum iKOÛ OTE 
KXâô. EfflK. Aotp. AiKHYOpCOV 
Tau. EITIK. Aotp. XnMiKÛv 
Tau. EIUK. Aotp. YnaX. Paô. Kai Toupiouoû 
Tau. EniK. AotpâXionç Apxonoiwv 
Tau. ETTIK. Aotp. Kai npôv. npoo. EPT 2 
ESEABA 
Instituto Nacional de la Seguridad Social 
Instituto Nacional de Empleo 
Instituto Social de la Marina 
Mutualidad General de Funcionarios Civiles del Estado 
Mutualidad Nacional de Prevision de la Administraciôn Local 
Mutuas patronales de accidentes de trabajo reguiadas en la Ley General 
de Seguridad Social 
EBANCE 
Agence Centrale des Organismes de Sécurité Sociale (ACOSS) 
Unions pour le Recouvrement des Cotisations de Sécurité Sociale et 
d'Allocations Familiales (URSSAF) 
Caisse Nationale d'Assurance Vieillesse des travailleurs Salariés 
(CNAVTS) 
Caisses Régionales d'Assurance Maladie (CRAM) 
Caisse Régionale d'Assurance Vieillesse de Strasbourg 
Caisses Générales de Sécurité Sociale des Départements d'Outre-Mer 
Caisses des Français de l'Etranger 
Fonds National de Solidarité 
Caisse Centrale de Secours Mutuels Agricoles 
Caisse Nationale d'Assurance Vieillesse Mutuelle Agricole 
Caisses de Mutualité Sociale Agricole 
-i O-
Caisse de Prévoyance Sociale de Saint Pierre et Miquelon 
Caisse Nationale de Retraites des Agents des Collectivités Locales 
(CNRACL) 
Fonds Spécial des ouvriers de l'Etat 
Caisse Autonome Nationale de la Sécurité Sociale dans les Mines 
(CANSSM) 
Etablissement National des Invalides de la Marine (ENIM) 
Caisse de Retraite et de Prévoyance des Clercs et Employés de Notaires 
(CRPCEN) 
Caisses des Organisations autonome d'Assurance Vieillesse des 
Professions Artisanales (CANCAVA, AVA), des Professions industrielles 
et commerciales (ORGANIC) et des Professions Libérales (CNAVPL) visées 
à l'article L 621-3 du code de la sécurité sociale 
Caisse Nationale des Barreaux Français (CNBF) 
Caisse Mutuelle d'Assurance Vieillesse des Cultes (CAMAVIC) 
Union Nationale Interprofessionelle pour l'Emploi dans l'industrie et 
le Commerce (UNEDIC) 
Associations pour l'Emploi dans l'Industrie et le Commerce (ASSEDIC) 
IRELAND. 
The Social Insurance Fund established under Section 122 of the Social 
Welfare (Consolidation) Act 1981. 
ITALIA 
Istituto nazionale del la previdenza sociale 
Ente nazionale di previdenza e assistenza per i lavoratori dello 
spettacolo 
Istituto nazionale di previdenza per i dirigenti di aziende 
industr iali, Roma 
Istituto nazionale di previdenza per i giornalisti italiani 'G. 
Amendola' 
Ente nazionale di previdenza ed assistenza medici 
Ente nazionale di previdenza ed assistenza farmacisti 
Ente nazionale di previdenza ed assistenza veterinari 
Cassa nazionale di previdenza per gli ingegneri ed architetti 
-$A-
Cassa nazionale di previdenza ed assistenza a favore dei geometri 
Cassa nazionale di previdenza ed assistenza a favore degli avvocati e 
dei procuratori 
Cassa nazionale di previdenza ed assistenza a favore dei dot tori 
commercialist i 
Cassa nazionale di previdenza ed assistenza a favore dei ragionieri e 
per i ti commerciali 
Ente nazionale di previdenza ed assistenza per 1 consulenti del lavoro 
Cassa nazionale notariato 
Fondo di previdenza a favore degli spedizionieri doganali 
Ente Nazionale Assistenza Rappresentati di Commercio (ENASARCO) 
Instituto Nazionale del la Previdenza Dipendenti Administrazione 
Pubblico (INPDAP) 
Ente Ferrovie dello Stato 
Istituto Postelegraphonico 
LUXEMBOURG 
Etablissement d'assurance contre la vieillesse et l'invalidité, 
Luxembourg 
Caisse de pension des employés privés, Luxembourg 
Caisse de pension des artisans, des commerçants et des industriels, 
Luxembourg 
Caisse de pension agricole, Luxembourg 
Caisse de prévoyance des fonctionnaires et employés communaux 
NEDERLANP 
Fondsen en instellingen als bedoeld in de Organisâtiewet Sociale 
Verzekeringen en de Wet op de Sociale Verzekeringsbank, in de tel kens 
van kracht zijnde versies. 
EOBIUfiAL 
Centro Nacional de Pensôes 
Caixa Nacional de Seguros de Ooenças Profissionais 
Caixa de Previdência do Pessoal da Companhia Portuguesa Radio Marconi 
-21 
Institute de Gestâo Fi nance ira da Segurança Social 
Fundo Especial da Caixa de Previdéncia do Pessoal da Companhia de 
Carris de Ferro de Lisboa 
Fundo Especial de Segurança Social da Banca dos Casinos 
Fundo Especial da Caixa de Previdéncia dos Profissionais de 
Espectâculos 
Caixa de Previdéncia dos Advogados e Solicitadores 
Caixa Gérai de Aposentaçoes 
Montepio dos Servi dores do Estado 
Fundo de Pensoes dos Mi il tares das Forças Armadas 
UNITED KINGDOM 
A. Great Britain National Insurance Fund maintained 
under the control and management of the Secretary of State under 
S.161(1) of the Social security Administration Act 1992 
B. Northern Ireland Northern Ireland National Insurance 
Fund maintained under the direction of the Northern Ireland 
Department of Finance and Personnel under S.141(1) of the Social 
Security Administration (Northern Ireland) Act 1992 
C. Gibraltar Social Insurance (Pensions) Fund, 
maintained under the control and management of the Director of 
Labour and Social Security. 

ISSN 0254-1475 
COM(93) 237 final 
DOCUMENTS 
EN 09 io 
Catalogue number : CB-CO-93-268-EN-C 
ISBN 92-77-56179-3 
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