Proposal for a Directive of the European Parliament and of the Council on the activities of institutions for occupational retirement provision (COM(2000) 507 final — 2000/0260(COD)) (Text with EEA relevance)
Date: 2001-03-27
Institutions: European Commission
Subjects: free movement of workers, pension scheme, single market, supplementary pension

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Official Journal of the European Communities

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Proposal for a Directive of the European Parliament and of the Council on the activities of
institutions for occupational retirement provision

(2001/C 96 E/06)

(Text with EEA relevance)

COM(2000) 507 final (cid:151) 2000/0260(COD)

(Submitted by the Commission on 13 November 2000)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

subject only

investment
to coordinated prudential
requirements, regardless of whether these institutions are
considered as legal entities.

Having regard to the Treaty establishing the European
Community, and in particular Articles 47(2), 55 and 95(1)
thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of
Committee,

the Economic and Social

Acting in accordance with the procedure laid down in Article
251 of the Treaty,

Whereas:

(1) A genuine internal market for financial services is crucial
for economic growth and job creation in the Community.

(2) Major achievements have already been made in the estab-
lishment of this internal market, allowing financial insti-
tutions to operate in other Member States and ensuring a
high level of protection for the consumers of financial
services.

(3) The communication from the Commission implementing
financial markets: action plan (1)
the framework for
identifies a series of actions that are needed in order to
complete the internal market for Financial Services and
the European Council at its meeting in Lisbon on 23
and 24 March 2000, called for the implementation of
this Action Plan by 2005.

(4) The Action Plan for Financial Services stresses as an
urgent priority the need to draw up a Directive on the
institutions for occupational
prudential supervision of
these institutions are major
retirement provision, as
financial
coherent
to
Community legislative framework allowing them to fully
benefit from the advantages of the internal market.

institutions

subject

not

a

(6) Member States should retain full responsibility for the

organisation of their social protection systems.

(7) Institutions managing social security schemes, which are
should be
already coordinated at Community level,
excluded from the scope of
this Directive. Account
should nevertheless be taken of the specificity of insti-
tutions which,
in a single Member State, manage both
social security schemes and occupational schemes.

(8) Financial

that

benefit

already

institutions

from a
Community legislative framework should in general be
excluded from the scope of this Directive. However, as
these institutions may also in some cases offer occupa-
tional pension services, it is important to ensure that this
Directive does not lead to distortions of competition. Such
distortions may be avoided by applying the prudential
requirements of
to the occupational
pension business of life-assurance companies.

this Directive

(9) Giving Member States the possibility to exclude from the
scope of national
implementing legislation institutions
managing schemes with less than 100 members or bene-
ficiaries can facilitate supervision in some Member States
without undermining the proper
the
internal market in this field.

functioning of

(10) Institutions such as Unterst(cid:252)tzungskassen in Germany,
where the members have no legal rights to benefits of a
certain amount and where their interests are protected by
a compulsory statutory insolvency insurance, should be
excluded from the scope of the Directive.

(5) Institutions that are completely separated from any spon-
soring undertaking and that operate on a funded basis for
the sole purpose of providing retirement benefits should
services and freedom of
have

freedom to provide

(1) COM(1999) 232 final.

(11) In order to protect members and beneficiaries, institutions
for occupational retirement provision should limit their
activities
arising
therefrom, referred to in this Directive.

and operations

activities,

to the

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(12) In case of bankruptcy of an undertaking which pays
contributions into an institution, a sponsoring under-
taking, the member faces the risk of losing both his job
and his acquired pension rights. This makes it necessary
to ensure that there is a clear separation between that
undertaking and the institution.

In some Member States,

(13) Institutions for occupational retirement provision operate
and are supervised with significant differences in Member
States.
supervision can be
exercised not only on the institution itself but also on
the companies that are authorised to manage these insti-
tutions. Member States should be able to take such speci-
ficity into account as long as all the requirements laid
down in this Directive are effectively met.

made available on request also to members and bene-
ficiaries of the scheme.

(19) To fulfil their statutory function, competent authorities
should be provided with adequate rights to information
and powers of intervention with respect to the institution
In
and the persons who effectively run the institution.
case the institution for occupational retirement provision
has transferred functions of material importance such as
investment management,
informatics or accounting to
other companies (outsourcing), it should be possible for
the rights to information and powers of intervention to be
enlarged to these outsourced functions
to check if
activities are carried out in accordance with the super-
visory rules.

(14) Institutions

for occupational

retirement provision are
financial service providers and therefore should meet
to
certain minimum prudential standards with respect
their activities and conditions of operation.

(15) The huge number of institutions in certain Member States
means a pragmatic solution is necessary as regards prior
authorisation of
if an institution
institutions. However,
wants to manage a scheme in another Member State, a
prior authorisation granted by the competent authority of
the home Member State should be required.

the institution’s assets,

(16) The annual accounts and annual report, reflecting a true
and fair view of
liabilities and
financial position duly approved by an authorised
person responsible for auditing the annual accounts, are
an essential source of information for members and bene-
ficiaries of the scheme and the competent authorities. In
particular,
to
monitor the financial soundness of an institution and
assess whether the institution is able to meet all
its
contractual obligations.

they enable the competent authorities

information

(17) Proper information of members and beneficiaries of the
pension scheme is crucial. This is of particular relevance
for
financial
concerning
the institution, the contractual rules, the
soundness of
benefits and the actual
financing of accrued pension
entitlements, the investment policy and the management
of risks and costs.

requests

the

(18) The investment policy of an institution is a decisive factor
for both security and affordability of occupational
pensions. The institutions should therefore draw up, at
least every three years, a statement of investment prin-
ciples. It should be sent to the competent authority and

(20) A prudent calculation of

technical provisions

is an
essential condition to ensure that obligations to pay
retirement benefits can be met. Technical provisions
should be calculated on the basis of recognised actuarial
methods and certified by qualified persons. The interest
rate should be chosen prudently according to national
rules. The amount of technical provisions should both
reflect an actuarial value of accrued pension rights of
members
already in
sufficient
payment to beneficiaries to continued to be paid.

for benefits

and be

(21) Risks covered by institutions vary significantly from one
Member State to another. Member States should therefore
have the possibility to make the calculation of technical
provisions subject to additional and more detailed rules
than those laid down in this Directive.

(22) Sufficient and appropriate assets to cover the technical
provisions protect the interests of members and bene-
ficiaries of the pension scheme if the sponsoring under-
taking becomes insolvent. In particular in cases of cross-
the mutual recognition of supervisory
border activity,
principles applied in Member States requires that
the
technical provisions be fully funded at all times.

(23) If the institution does not work on a cross-border basis,
Member States should be able to permit underfunding
provided that a proper plan is established to restore full
funding and without prejudice to the requirements of
Council Directive 80/987/EEC of 20 October 1980 on
the approximation of
the Member States
relating to the protection of employees in the event of
the insolvency of their employer (1).

the laws of

(1) OJ L 283, 28.10.1980, p. 23; Directive as last amended by Directive

87/164/EEC (OJ L 66, 11.3.1987, p. 11).

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(24) In many cases, it is the sponsoring undertaking and not
the institution itself that either covers any biometric risk
or guarantees certain benefits or investment performance.
However, in some cases, it is the institution itself which
provides such cover or guarantees and the sponsor’s obli-
gations are generally exhausted by paying the necessary
contributions. In these circumstances, the products offered
are similar to those of life-insurance companies and the
institutions concerned should hold the same additional
own funds as life-assurance companies.

(31) In accordance with the principles of subsidiarity and
proportionality as set out in Article 5 of the Treaty, the
the proposed action, namely to create a
objectives of
Community legal
for
framework covering institutions
occupational retirement provisions, cannot be sufficiently
achieved by the Member States and can therefore, by
reason of the scale and effects of the action, be better
achieved by the Community. This Directive confines
itself to the minimum required in order to achieve those
objectives and does not go beyond what is necessary for
that purpose,

(25) Institutions are very long-term investors. Redemption of
the assets held by these institutions cannot, in general, be
made for another purpose than providing retirement
benefits. Furthermore, in order to adequately protect the
rights of members and beneficiaries, institutions should be
able to opt for an asset allocation that suits the precise
nature and duration of their liabilities. These aspects call
for a qualitative approach towards
rules,
obliging institutions to act prudently but also allowing
them sufficient flexibility to decide on the most secure
and efficient investment policy.

investment

(26) Supervisory methods and practises vary among Member
States. Therefore, Member States should be given some
discretion on the precise investment rules that they wish
to require from the institutions established in their terri-
these rules must not restrict the free
tories. However,
movement of
justified on prudential
grounds.

capital, unless

(27) As very long-term investors with low-liquidity risks, insti-
tutions for occupational retirement provision are in a
position to invest in non-liquid assets such as shares as
well as in risk capital markets. They can also benefit from
the advantages of international diversification. Investments
in shares, risk capital markets and currencies other than
the liabilities should therefore not be unduly
those of
restricted.

(28) Restrictions regarding the free choice of approved asset
managers and custodians limit competition in the internal
market and should therefore be eliminated.

HAVE ADOPTED THIS DIRECTIVE:

Article 1

Subject-matter

This Directive lays down rules for taking up and pursuit of
activities carried out by institutions for occupational retirement
provision.

Article 2

Scope

This Directive shall apply to institutions for occupational
retirement provision.

It shall not apply to:

(a) institutions managing social

that are
covered by Council Regulation (EEC) No 1408/71 (1), or
are listed in Annex II
thereto, and Council Regulation
(EEC) No 574/72 (2);

security schemes

(b) institutions

are

that

by Council Directive
covered
79/267/EEC (3), Council Directive 85/611/EEC (4), Council
Directive 93/22/EEC (5) and Directive 2000/12/EC of the
European Parliament and of the Council (6);

(c) institutions that operate on a pay-as-you-go basis;

(29) Institutions should have the possibility to provide their
services in other Member States. This would potentially
lead to significant economies of scale for these insti-
tutions, improve the competitiveness of the Community
industry and facilitate labour mobility. This
requires
mutual recognition of prudential standards.

(d) German (cid:145)Unterst(cid:252)tzungskassen(cid:146) and other institutions rating

in a similar way;

(e) companies using book-reserve schemes with a view to

paying-out pension benefits to their employees.

(30) The right

for an institution in one Member State to
manage an occupational pension scheme concluded in
another Member State should be exercised while fully
respecting the provisions of the local social and labour
law in force in the host Member State.

(1) OJ L 149, 5.7.1971, p. 2.
(2) OJ L 74, 27.3.1972, p. 1.
(3) OJ L 63, 13.3.1979, p. 1.
(4) OJ L 375, 31.12.1985, p. 3.
(5) OJ L 141, 11.6.1993, p. 27.
(6) OJ L 126, 26.5.2000, p. 1.

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Article 3

Application to institutions operating social

security

schemes

Institutions for occupational retirement provision that also
operate compulsory employment
related pension schemes
which are considered to be social security schemes covered
by Regulations (EEC) No 1408/71 and (EEC) No 574/72 shall
be covered by this Directive in respect of their non-compulsory
occupational retirement provision activities.

Article 4

Optional application to institutions covered by Directive
79/267/EEC

Member States may choose to apply Articles 11 to 16, 18 to 19
this Directive to the occupational retirement provision
of
business of activities of
that are covered by
institutions
Directive 79/267/EEC, provided that the relevant assets and
liabilities are managed in a separate legal entity. In this case,
such separate legal entity shall not be made subject to Articles
17 and 21 of Directive 79/267/EEC and to Articles 19 to 24
and 31 of Council Directive 92/96/EEC (1).

Article 5

Small pension schemes and statutory schemes

1. Member States may choose not to apply this Directive, in
whole or in part, to institutions running pension schemes of
which less than 100 persons are members and beneficiaries.
Article 20 may only be applied if a Member State chooses to
apply all the provisions of this Directive to such institutions.

2. Member States may choose not to apply Articles 9 to 17
to institutions where occupational retirement provision is made
under statute and which is guaranteed by a public authority.

Article 6

Definitions

For the purposes of this Directive:

(a) (cid:145)institution for occupational retirement provision(cid:146), or (cid:145)insti-
tution(cid:146), means an institution operating on a funded basis,
established separately from any sponsoring undertaking or
trade for the sole purpose of providing retirement benefits
in the context of an occupational activity on the basis of an
agreement or a contract agreed individually or collectively
their
between the employer(s) and the employee(s) or
respective representatives or between the institution and
the individual, both self-employed and employed;

(b) (cid:145)pension scheme(cid:146) means a contract, an agreement, a trust
deed or rules stipulating which retirement benefits are
granted and under which conditions;

(c) (cid:145)sponsoring undertaking(cid:146) means any undertaking or other

body which pays contributions into an institution;

in the

(d) (cid:145)retirement benefits(cid:146) means benefits

form of
payments, whether for life time, a temporary period or as
a lump sum, paid on death, disability, cessation of
reached, or
employment or when a defined age is
support payments or
sickness,
services
indigence or death when they are supplementary to those
benefits;

in case of

(e) (cid:145)members(cid:146) means the persons entitled, or who will be

entitled, to receive retirement benefits;

(f)

(cid:145)beneficiaries(cid:146) means
benefits;

the persons

receiving retirement

(g) (cid:145)competent authorities(cid:146) means

designated to carry out
Directive;

the national authorities
the duties provided for in this

(h) (cid:145)biometrical risks(cid:146) means risks linked to human life. This

includes death, disability and longevity risks;

(i)

(cid:145)risk capital markets(cid:146) means markets providing equity
financing to a company during its early growth stages;

(j)

(cid:145)home Member State(cid:146) means the Member State in which the
institution is located;

(k) (cid:145)host Member State(cid:146) means the Member State where the
sponsoring undertaking or the individual member(s) are
located;

(l)

(cid:145)location(cid:146):

(cid:151) where an institution is concerned, the Member State
where it has its registered office or its main adminis-
tration;

(cid:151) where a sponsoring undertaking is concerned,

the
Member State in which it has its registered office or
its main administration if that sponsoring undertaking
is a legal person, a branch or an agency or the Member
State in which its head office is situated if that spon-
soring undertaking is a natural person;

(1) OJ L 360, 9.12.1992, p. 1.

(cid:151) where an individual is concerned, the Member State in

which he or she has his or her residence.

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Article 7

Activities of the institution

Member States shall require institutions located within their
to retirement benefits
territories
related operations and activities directly arising therefrom,
including activities arising from their investment policy.

their activities

to limit

Article 8

Legal separation between the sponsoring undertaking and
the institution for occupational retirement provision

Member States shall ensure that there is a legal separation
between the sponsoring undertaking and the institution for
occupational retirement provision in order that the assets of
the institution are safeguarded in the interest of the members
and beneficiaries, in the event of bankruptcy of the sponsoring
undertaking.

Article 9

Conditions of operation

1. Member States shall ensure that:

(a) the institution is registered;

(b) the institution is effectively run by persons of good repute
who must themselves have appropriate professional qualifi-
cations and experience or employ advisers with appropriate
professional qualifications and experience;

(c) proper constituted rules regarding the functioning of the
pension scheme have been implemented and members have
been adequately informed of these rules;

2. Member States may make the conditions of operation of
an institution subject to other requirements, with a view to
ensuring that the interests of members and beneficiaries are
adequately protected.

In case of cross-border activity as referred to in Article
3.
20,
the institution shall be
the conditions of operation of
subject to a prior authorisation by the competent authority
of the home Member State.

Article 10

Annual accounts and annual report

Member States shall require that institutions located in their
territories draw up annual accounts and an annual report. The
annual accounts and the annual report shall give a true and fair
view of the institution’s assets, liabilities and financial position.
They shall be consistent and duly approved by an authorised
person responsible for auditing the annual accounts.

Article 11

Information to be given to the members and beneficiaries
of the scheme

1.
Depending on the nature of the pension scheme estab-
lished, Member States shall ensure that the information set out
in paragraphs 2, 3 and 4 is provided.

2. Members and beneficiaries shall receive:

(a) on request, the annual accounts and the annual report;

(d) all technical provisions are computed and certified by an
actuary or other specialist in this field on the basis of
recognised actuarial methods;

(b) within a

reasonable

time,

any

relevant

information

regarding changes to the pension scheme rules.

(e) if the sponsoring undertaking guarantees the payment of
the retirement benefits it must be committed to regular
financing;

(f)

the members are sufficiently informed of the conditions of
the pension scheme, in particular concerning:

(i) the contractual rights and obligations of the parties

involved in the pension scheme;

(ii) the financial, technical and other risks embedded in the

pension contract;

(iii) the distribution of the risks embedded in the pension

contract to the contractual parties.

3.
Each member shall
substantial information on:

receive on request, detailed and

(a) if applicable, the target level of the benefits;

(b) the actual financing of accrued pension entitlements;

(c) the level of benefits in case of termination of employment;

(d) where the member bears the investment risk, the range of
investment possibilities and the actual investment portfolio
as well as information on risk exposure and costs related to
the investments.

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Information on issues set out in the first subparagraph shall be
provided together with the annual accounts and the annual
report as mentioned in paragraph 2(a).

(v) evidence that contributions have been paid in as

planned;

Each beneficiary shall be provided with the appropriate
4.
information on the retirement benefits that are due and the
corresponding payment options.

Article 12

Disclosure of investment policy principles

1. Member States shall ensure that every three years, as well
as without delay after any significant change in the investment
policy, all institutions located in their territories disclose their
investment policies to the competent authority of the home
Member State. This shall be done by sending a statement of
investment policy principles containing the risk measurement
methods and risk management processes implemented and the
strategic asset allocation with respect
to the nature and
duration of pension liabilities.

2.
The statement of investment policy principles shall also
be made available to members and beneficiaries of the scheme
on request.

Article 13

(vi) report of the statutory auditor;

(d) to carry out on-site inspections at the institution’s premises
and, where appropriate, on outsourced functions to check if
activities are carried out in accordance with the supervisory
rules.

Article 14

Powers of intervention of the competent authority

1.
The competent authority shall require every institution to
have sound administrative and accounting procedures and
adequate internal control mechanisms.

2.
The competent authority may take any measures, with
regard to the institution or the persons running the institution,
that are appropriate and necessary to prevent or remedy any
irregularities prejudicial to the interests of the members and
beneficiaries.

It may also restrict or prohibit the free disposal of the insti-
tution’s assets when:

Information to be provided to the competent authority

Every Member State shall ensure that the competent authority
has the necessary powers and means:

(a) the institution has failed to establish sufficient technical
provisions in respect of the entire business or insufficient
assets to cover the technical provisions;

(a) to require the institution, the members of their boards of
directors and other managers or directors or persons
controlling the institution to supply information about all
business matters or forward all business documents;

(b) to supervise contracts regulating relationships between the
institution and other companies, transferring functions to
influencing the financial
other companies (outsourcing),
situation of
the institution or being in a material way
relevant for effective supervision;

(b) the institution has failed to hold the regulatory own funds.

3.
In order to safeguard the interests of scheme members
and beneficiaries, the competent authority may transfer the
powers which the persons running the institution hold in
accordance with the law or its statutes wholly or partly to a
special representative who is fit to execute these powers.

The competent authority may prohibit or restrict

4.
activities of the institution in particular if:

the

(c) to obtain regularly, in addition to the annual accounts and
the documents necessary for the

the annual report, all
purposes of supervision in particular:

(a) the institution fails to adequately protect the interests of

scheme members and beneficiaries;

(i) internal interim reports:

(b) the institution no longer fulfils the conditions of operations;

(ii) actuarial valuations;

(iii) asset-liability studies;

(iv) evidence of coherence with the investment policy prin-

ciples;

(c) the institution fails seriously in its obligations under the

rules to which it is subject;

(d) in case of cross-border activity the institution does not
respect
the
host Member State relevant in the field of occupational
pensions.

labour and social

the provisions of

law of

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Any decision to prohibit activities of the institution shall be
supported by precise reasons and notified to the institution in
question.

5.
In case of cross-border activity as referred to in Article
20, the institution shall be subject to ongoing supervision by
the competent authority of the host Member State as to the
compliance of
law
requirements of the host Member State referred to in Article
20(5).

its activities with the labour and social

6. Member States shall ensure that decisions taken in respect
of an institution under laws, regulations and administrative
provisions adopted in accordance with this Directive are
subject to the right to apply to the courts.

Article 15

Technical provisions

1. Member States shall ensure that
occupational pension schemes establish at all
adequate
liabilities
amount of
commitments that arise out of
pension contracts.

institutions operating
the
to reflect
financial
their portfolio of existing

times

the

2. Member States shall ensure that
institutions operating
that provide cover against
occupational pension schemes
biometric risks and/or where the benefits include a guarantee
of either investment performance or level of benefits establish
sufficient technical provisions in respect of the total range of
these schemes.

3.
The calculation of technical provisions shall take place
every year. However, Member States may allow a calculation
once every three years if the institution provides the competent
authority with a certification of adjustments for the intervening
years. The certification shall reflect the adjusted development of
the technical provisions and changes in risks covered.

The calculation of

4.
executed and certified by an actuary or other specialist
this
field on the basis of
according to the following principles:

shall be
in
recognised actuarial methods

the technical provisions

(c) the method and basis of calculation of technical provisions
shall in general remain constant from one financial year to
the other. However, discontinuities may be justified due to a
change of legal or economic circumstances underlying the
assumptions.

technical
5. Member States may make the calculation of
provisions
detailed
and more
requirements, with a view to ensuring that the interests of
members and beneficiaries are adequately protected.

additional

subject

to

Article 16

Funding of technical provisions

1. Member States shall require every institution to have
sufficient and appropriate assets
technical
provisions in respect of the total range of schemes operated
at all times.

to cover

the

2. Member States may permit
period, to derogate from the provisions of paragraph 1.
order to ensure that
met again, derogation shall be subject
conditions:

institutions for a limited
In
the requirements of paragraph 1 are
to the following

(a) the institution shall set up a concrete and realisable plan to
re-establish the required amount of assets to fully cover the
technical provisions in due time. The plan is subject to
approval by the competent authority;

(b) in drawing up the plan, account shall be taken of

the
specific situation of the institution, in particular the asset/
liability structure, risk profile, liquidity plan, the age profile
of
the persons entitled to receive retirement benefits,
start-up schemes and schemes changing from non- or
partial funding to full funding;

(a) the minimum amount of the technical provisions shall be
calculated by a sufficiently prudent actuarial valuation. It
must be sufficient both for pensions and benefits already in
payment to beneficiaries to continue to be paid, and to
provide members with an actuarial value of their accrued
pension rights;

(c) the institution shall establish and disclose to the competent
authority a procedure in order to transfer the assets to
another
institution or a similar body in the
event of the termination of the pension scheme during
the derogation period.

financial

(b) the rate of interest used shall be chosen prudently and
determined in accordance with the rules of the competent
authority of the home Member State;

3.
In the event of cross-border activity as referred to in
Article 20, the technical provisions must be fully funded at
all times.

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Article 17

Regulatory own funds

1. Member States shall ensure that
institutions operating
pension schemes where the institution itself underwrites the
liability to cover a biometric risk and/or where the institution
itself guarantees an investment performance or a given level of
benefits hold, on a permanent basis, additional assets above the
technical provisions in respect of the total range of schemes
operated. These assets shall be free of all foreseeable liabilities
and serve as a safety capital to absorb discrepancies between
the anticipated and the actual expenses and profits.

For

the purposes of calculating the amount of

2.
the
additional assets, the rules laid down in Directive 79/267/EEC
shall apply.

Article 18

Investment rules

(c) investment in the sponsoring undertaking shall be no more
than 5 % of the technical provisions. When the institution
is sponsored by a group of undertakings,
investment in
these sponsoring undertakings shall be made prudently,
taking into account the need for proper diversification.

4. Member States shall not require institutions to invest in
particular categories of assets.

5. Member States shall not subject the investment decisions
of an institution or its investment manager to any kind of prior
approval or systematic notification requirements.

6.
In accordance with the provisions of paragraphs 1 to 5,
Member States may, for the institutions established in their
jurisdiction, lay down more detailed rules to reflect the total
range of schemes operated by these institutions.

1. Member States shall require institutions established within
their jurisdiction to invest in a prudent manner.

However, these institutions shall be given the possibilities to:

2.
Assets held in relation to schemes where the members
bear the investment risks shall be invested in accordance with
the following rules:

(a) the assets shall be invested in a manner to ensure the
security, quality, liquidity and profitability of the portfolio
as a whole;

(b) the assets shall be properly diversified in such a way as to
avoid accumulations of risk in the portfolio as a whole;

(c) investment in the sponsoring undertaking shall be no more
than 5 % of the portfolio as a whole. When the institution
investment in
is sponsored by a group of undertakings,
these sponsoring undertakings shall be made prudently,
taking into account the need for proper diversification.

3. Member States shall require institutions established within
their jurisdiction to invest assets held to cover the technical
provisions in accordance with the following rules:

(a) the assets shall be invested in a manner appropriate to the
the expected future retirement
liquidity and

nature and duration of
benefits and to ensure the security, quality,
profitability of the portfolio as a whole;

(b) the assets shall be properly diversified in such a way as to
avoid accumulations of risk in the portfolio as a whole;

the whole portfolio for

the assets covering the technical
(a) invest up to 70 % of
provisions or of
in
which the members bear the investment risks in shares,
shares and corporate
treated as
negotiable
bonds and decide on the relative weight of these securities
in their investment portfolio;

securities

schemes

(b) hold assets denominated in non-matching currencies to
technical

least 30 % of

their

cover an amount of at
provisions;

(c) invest in risk capital markets.

7.
The second subparagraph of paragraph 6 does not
preclude the right for Member States to require the application
investment rules on an individual basis
of more stringent
provided they are prudentially justified, in particular in light
of the liabilities entered into by the institution.

Article 19

Management and custody

shall not

1. Member States
from
appointing, for the management of the investment portfolio,
investment managers established in another Member State and
duly authorised for this activity, in accordance with Directives
92/96/EEC, 93/22/EEC and 2000/12/EC.

institutions

restrict

C 96 E/144

EN

Official Journal of the European Communities

27.3.2001

restrict

shall not

from
2. Member States
appointing, for the custody of their assets, custodians estab-
lished in another Member State and duly authorised in
accordance with Directive 93/22/EEC or Directive 2000/12/EC,
or accepted as a depository for the purposes of Directive
85/611/EEC.

institutions

Article 20

Cross-border activities

1. Member States shall allow the undertakings and indi-
viduals located within their territories to sponsor institutions
retirement provision authorised in other
for occupational
Member States. They shall also allow institutions for occupa-
tional retirement provision authorised in their territory to
accept sponsorship by sponsors located within the territories
of other Member States.

2.
If an undertaking or individuals wish to sponsor an insti-
tution authorised in another Member State, this institution shall
notify the competent authorities of the Member State where it
is authorised.

3.
The Member States shall require institutions proposing to
be sponsored by an undertaking or individuals located in the
territory of another Member State to provide the following
information when effecting the notification:

(a) the Member State within the territory of which the spon-

soring undertaking or the individuals are located;

(b) the name of the sponsoring undertaking;

(c) the conditions of the scheme that the institution proposes

to manage in the host Member State.

Unless the competent authorities of the home Member
4.
State have reason to doubt that the administrative structure,
the financial situation of the institution or the good repute and
professional qualifications or experience of the persons running
the institution is not compatible with the operations proposed
in the host Member State, they shall within three months of
receiving all
the information referred to in paragraph 3
communicate that information to the competent authorities
of the host Member State.

Before the institution starts managing a scheme in the
5.
the host
host Member State,
receiving the
Member State shall, within two months of
information
inform the
in paragraph 3,
competent authority of the home Member State, if appropriate,

the competent authorities of

referred

to

of the relevant social and labour law requirements under which
this scheme must be managed in the host Member State. The
competent authorities of
the home Member State shall
communicate this information to the institution.

6.
On receiving the communication referred to in paragraph
5, or if no communication is received from them on expiry of
the period provided for in paragraph 5, the institution may
to manage the scheme in the host Member State in
start
local social
accordance with the provisions of
and labour law.

the relevant

7.
The competent authorities of the host Member State shall
inform the competent authorities of the home Member State of
any change regarding the characteristics of the scheme that is
managed in the host Member State.

Article 21

Implementation

1. Member States shall bring into force the laws, regulations
and administrative provisions necessary to comply with this
Directive by 31 December 2003 at
the latest. They shall
forthwith inform the Commission thereof.

When Member States adopt those provisions, they shall contain
a reference to this Directive or be accompanied by such a
reference on the occasion of
their official publication.
Member States shall determine how such reference is to be
made.

2. Member States shall communicate to the Commission the
text of the main provisions of domestic law which they adopt
in the field governed by this Directive.

Article 22

Entry into force

This Directive shall enter into force on the twentieth day
following that of its publication in the Official Journal of the
European Communities.

Article 23

Addressees

This Directive is addressed to the Member States.