Commission Opinion pursuant to point (c) of the third subparagraph of Article 251(2) of the EC Treaty on the amendments made by the European Parliament to the common position of the Council on the proposal for a Directive of the European Parliament and of the Council on the activities and supervision of institutions for occupational retirement provision (presented by the Commission pursuant to Article 250 (2) of the EC Treaty)
Date: 2003-05-07
Institutions: European Commission
Subjects: competition law, consumer protection, cross-border cooperation, drafting of EU law, financial institution, pension scheme, regulation of investments, right of establishment, supplementary pension

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 07.05.2003
COM(2003) 254 final

2000/0260 (COD)

COMMISSION OPINION

pursuant to point (c) of the third subparagraph of Article 251(2) of the EC Treaty
on the amendments made by the European Parliament
to the common position of the Council on the proposal for a

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

on the activities and supervision of institutions for occupational retirement provision

(presented by the Commission pursuant to Article 250 (2) of the EC Treaty)

2000/0260 (COD)

COMMISSION OPINION

pursuant to point (c) of the third subparagraph of Article 251(2) of the EC Treaty
on the amendments made by the European Parliament
to the common position of the Council on the proposal for a

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

on the activities and supervision of institutions for occupational retirement provision

1.

INTRODUCTION

Point  (c)  of  the  third  subparagraph  of  Article  251(2)  of  the  EC  Treaty  stipulates  that  the
Commission  must  deliver  an  opinion  on  amendments  proposed  by  Parliament  on  second
reading.  Below  is  the  Commission's  opinion  on  the  thirteen  amendments  proposed  by
Parliament.

2.

BACKGROUND

Commission proposal transmitted to Parliament and the Council on
(document COM(2000)507 final – 2000/0260 (COD))

13 November 2000 (OJ
C 96/E, 27.3.2001)

Economic and Social Committee opinion delivered on

Parliament opinion (first reading) delivered on

Common position adopted on

Commission  communication  on  the  Council's  common  position
presented on

28 March 2001 (OJ C
155, 29.5.2001)

4 July 2001 (OJ C 65
E, 14.3.2002)

5 November 2002

14 November 2002

Parliament opinion (second reading) delivered on

12 March 2003

3.

PURPOSE OF THE PROPOSAL

The Lisbon European Council issued a forceful reminder of the need to complete integration
of financial markets in the Union. This includes full implementation of the Financial Services
Action  Plan1  by  2005.  Coordination  of  the  rules  applicable  to  institutions  for  occupational
retirement provision (IORPs), which currently lack an appropriate Community framework, is
a central plank of the Action Plan. These institutions must be able to carry out their activities

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COM (1999) 232.

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securely  within  the  internal  market,  for  the  benefit  of  firms  and  workers  who  require  their
services to manage their retirement savings.

In  drawing  up  the  proposal  for  a  Directive,  the  Commission  paid  careful  attention  to  two
issues: security and efficiency. It is vital to ensure a very high standard of protection for the
income  of  future  pensioners.  But  IORPs  must  also  be  efficient,  particularly  as  regards
investments  and  cross-border  transactions.  Insufficient  protection  is  a  threat  to  retirement
benefits. Inefficiency increases the cost of saving, to the detriment of the competitiveness of
firms  and  the  financial  balance  of  pension  schemes.  Consequently,  the  proposal  for  a
Directive contains:

– 

– 

– 

Strict  prudential  rules  to  protect  beneficiaries.  IORPs  must  be  subject  to  detailed
rules of operation. Members and beneficiaries must be properly informed of the terms
of  the  scheme,  the  financial  situation  of  the  institution  and  their  rights.  Benefits
promised must be calculated prudently and be covered by sufficient assets. If an IORP
offers  any  financial  guarantees,  it  must  hold  own  funds.  Lastly,  the  supervisory
authorities must have the necessary powers to monitor adequately the IORPs for which
they are responsible.

Investment  rules  tailored  to  the  characteristics  of  IORPs  and  geared  towards
effective  savings  management.  IORPs  invest  on  a  very-long  term  basis  and  can
predict  with  relative  ease  the  amount  of  benefits  they  will  have  to  pay  out.  They
should,  therefore,  be  allowed  a  certain  amount  of  freedom  in  determining  the
investment  policy  which  best  suits  their  commitments.  They  should,  in  any  event,
ensure that their assets are fairly widely spread. Member States may, if necessary, lay
down  more  detailed  rules  for  supervision  of  the  institutions  within  their  territory.
However,  such  rules  should  not  interfere  excessively  with  the  international
diversification  of  investment  portfolios  and  investments  in  shares,  which  generally
offer high long-term returns and satisfactory security.

Rules  enabling  cross-border  (and,  consequently,  more  efficient)  management  of
occupational pension schemes. At present, it is impossible for an IORP to manage a
pension  scheme  for  a  company  located  in  another  Member  State.  A  firm  which  has
offices in the fifteen Member States must set up fifteen different schemes. Substantial
economies  of  scale  could  be  achieved  if  one  institution  managed  all  the  schemes,
while  respecting  local  social  and  labour  law  requirements.  This  would  necessitate
mutual recognition of supervisory regimes, which is one of the key objectives of the
proposal. The proposal also provides for a cooperation procedure between supervisory
authorities where occupational schemes are managed on a cross-border basis.

4.

COMMISSION OPINION ON PARLIAMENT'S AMENDMENTS

4.1.

Amendments taken up by the Commission

(cid:1)  Parliament adopted on second reading thirteen amendments to the common position. They
clarify  certain  provisions  but  do  not  jeopardise  the  scope  of  the  common  position  or
misinterpret the objectives pursued by it.

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(cid:1)  The amendments are as follows:

Amendment No
25

26

27

28

29

30

31

32

33

34

35

36

37

Provision of the common position
New  recital  4a. Addition  of  a  recital  underscoring  the  role  that
institutions  for  occupational  retirement  provision  can  play  in  the
organisation of retirement schemes.
Recital 11. It proposes that the Commission monitor the situation  in
the  occupational  pensions  market  and  assess  the  possibility  of
extending  the  optional  application  of  the  Directive  to  institutions
other than life-assurance companies.
New recital 11a. It stresses that, where their common objective  is to
ensure financial protection, retirement benefits should be in the form
of a lifelong pension, without prejudice to other forms of payment.
New  recital  11b. It  underscores  the  importance  of  appropriate  cover
for  biometrical  risks  in  the  fight  against  poverty  and  stresses  that
consideration  should  be  given  to  providing  such  cover  when  a
pension scheme is being set up.
Recital  17. It  emphasises  that  the  institutions  not  only  provide  a
financial service but also bear a heavy responsibility for the provision
of occupational retirement benefits.
Recital  37. It  stresses  the  importance  of  sound  cooperation  between
competent  authorities  and  announces  the  Commission's  intention  to
set up a committee of supervisors.
Article  6(d). It  stresses  that,  where  their  purpose  is  to  provide
financial protection, retirement benefits generally should be paid out
in  the  form  of  a  lifetime  payment.  However,  it  also  retains  the
possibility for the payment to be made for a temporary period or as a
lump sum.
Article  9(1)(a). It  proposes  the  establishment  of  a  register  listing  all
the
registered 
Member States in which they operate.
New Article 9(1a). It stipulates that Member States have the right to
ensure  that,  in  the  case  of  agreement  between  employers  and
employees, cover for biometrical risks is offered to members.
Article 11(4). It adds to the list of information the right  of members
to  receive  on  request  the  arrangements  relating  to  the  transfer  of
pension rights in the event of termination of employment.
It  requires  the  institutions  to  send  to  their  members  each  year  brief
particulars  on  the  (financial)  situation  of  the  institution  and  on  the
current level of individual entitlements.
Article  21. It  deletes  from  Article 21  the  reference  to  the  Insurance
and Pension Committee, which does not yet exist.
It shortens to four years the period within which the reports are to be
produced.
Article  15(6). It  deletes  the  reference  to  the  Insurance  and  Pensions
Committee in this Article.
Article  16(2)(c). It  requires  institutions,  in  the  event  of  a  transfer  of
assets  following  termination  of  a  scheme,  to  inform  the  competent
authorities  accordingly  and  to  provide  members  with  a  general
outline of the transfer procedure.

indicating,  where  appropriate, 

institutions  and 

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5.

CONCLUSION

Pursuant  to  Article 250(2)  of  the  EC  Treaty,  the  Commission  amends  its  proposal  in  the
manner indicated above.

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