Occupational pension rules approved by European Parliament

At present, occupational pension providers operate for the most part only in the Member State in which they are established. A firm which has a presence in all 15 Member States must therefore call on the services of 15 different providers. For a multinational, this could cost about €40 million a year. Substantial economies of scale will be achieved if a single institution can manage all the various schemes of a firm operating in several Member States.

The proposed Directive – which now needs approval from the Council of Ministers – covers the activities and supervision of Institutions for Occupational Retirement Provision, or IORPs. These institutions, such as pension funds, superannuation schemes and "pensions-kassen", cover about 25% of the EU's labour force and manage assets worth €2,500 billion (29% of EU GDP).

The new regime allows for mutual recognition of Member States' supervisory regimes. An IORP will be able to manage the schemes of firms located in other Member States while applying the prudential rules of the Member State in which it is established.

The proposed Directive will nevertheless ensure that the social and labour legislation of the host Member States (i.e. those applicable to the relationship between the sponsoring undertaking and the members) will continue to apply.

Following the Parliament's vote, the Commission said it is optimistic that the EU's Council of Ministers will be able to accept the Parliament's amendments and move to final adoption of the Directive over the coming weeks under the "co-decision" procedure.

"This," said the Commission, "will be a major step towards the creation of an Internal Market for occupational pensions, under a prudential framework strong enough to protect the rights of future pensioners."

It concluded, "The Directive will ensure that occupational pensions transactions attain a high level of security and efficiency".