Luxembourg, 04/06/2002 (Agence Europe) - On Tuesday, the ECOFIN Council reached an agreement in principle on the "Pension Funds" Directive but still harbours reserves about Belgium. The Spanish Presidency cancelled the adoption of the directive, with the hope of gaining a unanimous vote before the Seville Summit. Belgium believes that the safeguard rules are still insufficient.
The directive harmonises financial security rules in the management of "professional pension institutions", with the aim of allowing the development of pension funds in a single market, while ensuring that pensioners' savings are protected. It will also allow companies in several Member States to affiliate to a single pension fund, instead of a pension fund in each country where they are based, stressed Commissioner Bolkestein.
The directive outlines that a pension funds can only put up to 30% of its investments into currency and 70% into shares and bonds on the stock exchange and stresses the importance of responsible family investments. It will not be able to invest more than 5% of its stock in the shares of affiliated companies. According to the directive, pensions funds will also have to have their own funds behind them that match the rates fixed in life insurance. Member States where the pension fund is based will be able to impose restrictive rules if it so wishes.
France, which opposed this document under its last government lifted its reservations at the Council. According to the French authorities, the directive will not have an impact on the choice of pension funds in Member States in the pension systems by apportionment or capitalisation nor on workers or pensioners' rights, which remain protected by national social law.
Belgium confirmed its reservations in a letter to the Presidency of the Council. It believes that the calculation of pension fund provision is particularly unacceptable. It has stressed that the economic and social costs of a possible grey area in the agreement for affiliated pensioners, and considers that the quantitative principle of responsible family investments ought to be replaced by qualitative criteria. It thinks that the level of investment in currency should be fixed at 10% like in the life insurance directive. Belgium also wants interest rates offered by the funds to be limited to a given rate, in order to fight against pension fund speculation. It is opposed to the exclusion from the field of the directive of pensions based on an allocation basis or by consolidation via the balance sheet of the employer (derogation, which particularly concerns Germany).
Pension funds currently account for EUR 2, 300 billion covering 25% of the European population, notably the United Kingdom, the Netherlands and Ireland, where they are well established. The committee believes that this amount should rise to EUR 3,500 billion by 2005.