Brussels, 13/05/2003 (Agence Europe) - The Ecofin Council has adopted the "pension funds" directive, which will allow professional pension institutions to offer their services throughout the European Union. Proposed by the Commission three years ago, the directive lays down rules of caution, obliging the funds to diversify their assets (no more than 30% in currency and 70% in shares and bonds), and stopping chain reactions (funds can only invest up to 5% of their assets in the shares of an affiliated company). Member States retain the option to set stricter rules.
The directive refers only to pension "products" and not savings ones: acquired rights cannot be sold before retirement age. However, under an amendment adopted by Parliament, the directive allows Member States to ask the institutions to supply pensions "for life" rather than a lump sum payment. The directive provides for rules on information for members on the products on offer.
Pension institutions cover some 25% of the active population of the European Union, mostly in the Netherlands, the United Kingdom and Ireland. They manage a total of 2.5 billion Euros, which the Commission hopes will rise to 3.5 billion in 2005.
Belgium abstained, because it feels that pension security could be jeopardised by the fact that when the principle of mutual recognition applies, the rules of caution to be applied will be those of the State where the pension company is based. As countries with experience of pension funds encountered problems during the recent turbulence on the financial markets, what will happen in countries with no such experience, asked Belgium's permanent representative during a "public debate". He pointed out that Belgium had wanted the directive to allow Member States to set a minimum reserve threshold. It also regretted the fact that the directive does not apply to professional pensions which work by allocation (as in France), or by consolidation of the employer's equity (as in Germany).
Estonia, which, along with the other accession countries, was taking part in the meeting as an observer, presented a statement. It welcomed the adoption of the directive, but notes, among other things, that the definition of
"professional pensions institutions" in the directive "does not apply to Estonian pension companies". It asked the Commission to look into this point in the context of co-operation procedures between Member States and Commission, as provided for in the directive.