Brussels, 11/10/2000 (Agence Europe) - European Commissioner for the Internal Market Frits Bolkestein presented, on Wednesday, the Commission's proposal on the professional retirement institutions (pension funds, retirement funds or investment funds, see yesterday's EUROPE, p.14). "Once adopted by the Council and the European Parliament, the directive will guarantee a high level of protection for those benefiting from such retirement schemes. It will also guarantee that one has one's money's worth and that contributions are as small as possible for the highest payments possible", he told the press. He went on to explain: "If an employee works during forty years in order to obtain a retirement of 35% of his salary, he should pay 5% of his monthly salary in pension contributions if the net rate of profitability of the fund is 6%. If this rate is only 2%, the worker should contribute up to 19% of his salary", explained the Commissioner. Increasing the output of these funds is therefore a priority, says the European Commission. For this, it proposes that the pension funds should place up to 70% of their investment portfolio in shares. In addition, the Member States will no longer be able to force these funds to acquire determined categories of assets. These new rules would have an impact in Germany, Austria and Denmark in particular, where stricter conditions are in force. The French retirement systems (social security or individual schemes, policies with life insurance companies) are not, on the other hand, covered by the directive.
The proposal also aims to facilitate transnational subscribers to these funds. "For a large multinational company, this could mean substantial savings", said Mr Bolkestein. The aim in time is for a Dutch fund, for example, to be able to manage the retirement scheme of a company based in France or in Italy. But, in order to be fully operational, this project "should be completed by a directive on the taxation of contributions and pension fund payments", announced the Commissioner, "as for people who work, the current rules lead to cases of dual taxation or no taxation", he explained. A draft directive dealing with all these issues should be presented at the beginning of next year.
"To avoid any misunderstanding", Mr. Bolkestein confirmed that no provision would oblige Member states to develop pension funds in their pension schemes: "It is up to Member states to chose their schemes, according to their traditions". The situation is, moreover, very varied: Ireland, the United Kingdom and the Netherlands alone represent 89% of the assets held in pension funds in the EU (of a total of 2,300 billion euro, or equivalent to 25% of the GDP).