Hacia Un Nuevo Sistema de Pensiones Para Europa

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Resumen para el ciudadano

Propuesta de la UE: consulta pública sobre las pensiones

¿DE QUÉ SE TRATA?

Ante el envejecimiento de la población de la UE, muchos países reforman sus regímenes depensiones. Por otra parte, la reciente crisis financiera y económica ha puesto de manifiesto una seriede problemas que las aquejan. De ahí que la UE deba replantearse su labor en este campo.

¿A QUIÉN BENEFICIARÍA Y CÓMO?

• A todos los ciudadanos de la UE a la hora de planificar y percibir su pensión

• A las partes interesadas, que podrán dar su opinión sobre cómo la UE puede ayudar mejor a lospaíses miembros a elaborar su política de pensiones

• A los gobiernos nacionales que colaboran con la Comisión Europea en temas de pensiones,pues la política de la UE en este campo se someterá a revisión exhaustiva.

¿POR QUÉ MEDIDAS EUROPEAS?

La UE coordina una serie de políticas y regula determinados aspectos que inciden en laspensiones. Tomar medidas europeas permitirá a los ciudadanos de la UE sacar pleno provecho delmercado interior (al aumentar las opciones de pensión a costes más bajos en todo el territorio) yaumentará la estabilidad de las finanzas públicas y la economía de la UE.

¿QUÉ CAMBIARÁ EXACTAMENTE?

En la consulta se recabarán los comentarios de todas las partes interesadas sobre lo que la UEpuede hacer para contribuir a unas pensiones adecuadas y seguras en el futuro. En una faseposterior podrían proponerse cambios en la legislación de la UE.

¿CUÁNDO ENTRARÍA EN VIGOR LA PROPUESTA?

• La consulta se inicia el 7 de julio de 2010 y finaliza el 15 de noviembre de 2010. Para enviar suscomentarios, utilice el cuestionario en líneahttp://ec.europa.eu/yourvoice/ipm/forms/dispatch?form=pensions o remítalos a las direccionespostales indicadas en el documento oficial de la consulta pública.

• En su caso, la Comisión presentará las propuestas oportunas en una fase posterior.

http://ec.europa.eu/yourvoice/ipm/forms/dispatch?form=pensions


http://ec.europa.eu/social/main.jsp?langId=en&catId=89&newsId=839&furtherNews=yes









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EUROPEAN COMMISSION

Brussels, 7.7.2010

COM(2010)365 final

GREEN PAPER

towards adequate, sustainable and safe European pension systems

SEC(2010)830



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GREEN PAPER


1. INTRODUCTION

An adequate and sustainable retirement income for EU citizens now and in the future is a

priority for the European Union. Achieving these objectives in an ageing Europe is a major

challenge. Most Member States have sought to prepare for this through pension reforms.

The recent financial and economic crisis has aggravated and amplified the impact of the

severe trend in demographic ageing. Setbacks in economic growth, public budgets, financial

stability and employment have made it more urgent to adjust retirement practices and the way

people build up entitlements to pensions. The crisis has revealed that more must be done to

improve the efficiency and safety of pension schemes1 which not only provide a means for a

decent life in old age but also represent the reward for a lifetime of work.

In his political guidelines for this Commission, President José Manuel Barroso highlighted the

importance of adequate and sustainable pensions for strengthening social cohesion:

"Millions of Europeans are wholly dependent on pensions. The crisis has shown the

importance of the European approach to pension systems. It has demonstrated the

interdependence of the various pension pillars within each Member State and the importance

of common EU approaches on solvency and social adequacy. It has also underlined that

pension funds are an important part of the financial system. We need to ensure that pensions

do the job intended of providing the maximum support to current and future pensioners,

including for vulnerable groups."

Member States are responsible for pension provision: this Green Paper does not question

Member States' prerogatives in pensions or the role of social partners and it does not suggest

that there is one 'ideal' one-size-fits-all pension system design. The principles of solidarity

between generations and national solidarity are key in this regard. At EU level, national

retirement systems are underpinned by a framework of activities spanning from policy

coordination to regulation. Some common themes need to be addressed in a coordinated way

such as the functioning of the internal market, the requirements of the Stability and Growth

Pact, or ensuring that pension reforms are consistent with the Europe 2020 strategy. Sound

and adequate pension systems, enabling individuals to maintain, to a reasonable degree, their

living standard after retirement, are crucial for citizens and for social cohesion. The impact of

public pension expenditure on public finances in one Member State may have serious

repercussions in others. EU policy coordination on pensions has proven useful and necessary

to make progress at Member State level. Pension funds are an integral part of financial

markets and their design can promote or inhibit the free movement of labour or capital.

1 The European Parliament is also engaging in a policy discussion on the lessons learnt from the crisisunder the auspices of the Special Committee on the Financial, Economic and Social Crisis.



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Following a decade of reforms that have altered pension systems in most Member States,

there is now a need to thoroughly review the EU framework. Demographic ageing has been

faster than previously expected and the recent financial and economic crisis had a dramatic

impact on budgets, capital markets and companies. There have also been deep structural

changes such as new intergenerational balances, shifts from Pay-As-You-Go (PAYG) to

funded pensions and the shift of more risks to individuals. This Green Paper launches a

European debate through extensive and early consultation on the key challenges facingpension systems and how the EU can support Member State efforts to deliver adequate and

sustainable pensions.

This Green Paper takes an integrated approach across economic, social and financial market

policies and recognises the links and synergies between pensions and the overall Europe 2020

strategy for smart, sustainable and inclusive growth. It takes into account work by the

Economic Policy Committee and the Social Protection Committee on pensions. The Interim

Joint Report was noted by the 7-8 June 2010 Council (ECOFIN and EPSCO)2. The goal of

generating adequate and sustainable retirement incomes through pension reforms and the

goals of Europe 2020 are mutually reinforcing. Europe 2020 emphasises higher and better

quality employment and positive transitions: both are decisive for workers (women and men)to accrue pension rights. Its 75% employment target requires employment rates significantly

higher than the present levels in the age group 55 to 65. Addressing gaps in pension adequacy,

which can be a significant cause of poverty among the elderly, can also contribute to

achieving the Europe 2020 poverty reduction target. Policies in many areas can help to reduce

poverty in older ages and this will in turn contribute to enhancing adequacy, thus

complementing pension reforms. Other goals include tackling bottlenecks in the completion

of the single market, for example making the internal market in financial products safer and

more integrated and facilitating the mobility of all workers3

and citizens across the EU4. In

turn, pension reforms will contribute towards reaching the Europe 2020 goals for employment

and long-term sustainability of public finances. Moreover, completing the internal market for

pension products has a direct impact on the EU's growth potential and therefore directly

contributes towards meeting the Europe 2020 objectives.

2. KEY CHALLENGES

2.1. Demographic ageing

Whilst it is well known that Europe is facing a major demographic challenge5, we are

reaching a critical stage as the first cohorts of baby boomers are now approaching retirement

and Europe's working-age population is set to start shrinking from 2012 onwards.

2 Report available at http://europa.eu/epc/publications/index_en.htm, see Council Conclusions

http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/114988.pdf. 3 Including highly mobile workers such as researchers, see Council Conclusions 2 March 2010:

http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/en/intm/113121.pdf. 4 The Commission will issue a Report on Citizenship in 2010 on the entire life cycle of EU citizens,

covering i) obstacles in the effective exercise of citizens' rights, including free movement rights, and ii)

the solutions envisaged to remove these obstacles, along with a Roadmap for their adoption.5 Commission communication on Ageing of 29th April 2009 "Dealing with the impact of an ageing

population in the EU (2009 Ageing Report)" and Commission staff working document Demography Report 2008 – Meeting social needs in an ageing society (SEC (2008) 2911).

http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/114988.pdf


http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/en/intm/113121.pdf




http://europa.eu/epc/publications/index_en.htm



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Living longer than ever before is of course an enormous achievement: over the last 50 years,

life expectancy has risen by about five years in the EU. The latest demographic projections6

reveal that a further rise of about seven years could materialise by 2060. Combined with low

fertility rates this will lead to a dramatic change in the age composition of the population (see

figure 1). As a result, the old-age dependency ratio will double: where at present there are

four people of working age for every person over 65, by 2060 there will be just two people of

working-age for every person over 65 (see figure 2).

There are also other longstanding trends in labour markets: starting full-time working lives

later because of the increased need for education and retiring earlier due to labour market age

management and prevailing policies. Although the trend of early retirement has started to

reverse, most people, and women in particular, still leave the labour market significantly

before the typical pensionable age of 65 (see figure 6 and 7), highlighting the gender aspect.

On present trends the situation is untenable. Unless people, as they live longer, also stay

longer in employment, either pension adequacy is likely to suffer or an unsustainable rise in

pension expenditure may occur. The impact of the demographic challenge as aggravated by

the crisis will tend to reduce economic growth and put pressure on public finances. The 2009Ageing Report7 showed that, on account of the shrinking labour force, the only source of

growth by 2020 will be labour productivity. While reforms have already significantly reduced

the impact of ageing on future pension costs, age-related public expenditure is still set to

increase overall by almost 5 percentage points of GDP by 2060, half of which is due to

spending on pensions (see figure 3 for public pension expenditure projections for Member

States).

Another longstanding trend is societal change – such as single households, couples without

children and different generations of a family living far apart from each other – which is

fuelling more formal provision of care services otherwise provided within the family. This

poses further challenges to the financing of the cost of health care and long-term care.

Funded pensions could also be affected by demographic ageing. Ageing societies would

reduce the potential growth rate of the economy, implying lower real rates of return and this

could also affect financial asset prices. Such potentially lower returns on pension fund

investments may lead to higher contributions, lower retirement benefits, increased capital

outflows to emerging markets or greater risk taking.

Against the background of demographic ageing, the 2001 Stockholm European Council

agreed a three-pronged strategy for dealing with the impact on public budgets consisting of:

– reducing debt rapidly;

– raising employment rates and productivity; and

– reforming pension, health care and long-term care systems.

6 European Commission and Economic Policy Committee (2009) "2009 Ageing Report: Economic and

budgetary projections for the EU-27 Member States (2008-2060)", European Economy, No 2.7 Ibid.



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Moreover, the 2001 Laeken European Council agreed a set of common objectives for

pensions emphasising the need to make them adequate, sustainable and adaptable8.

2.2. Changes in pension systems

While Member State systems differ markedly, a majority have been adapted so as to put them

on a more sustainable footing over the past decades. At the same time, Member States haveattempted to protect adequacy and to respond better to changes in labour markets and gender

roles. Key trends have been9:

(1) Encouraging more people to work more and longer so as to obtain similar entitlements

as before: increases in pensionable ages; rewarding later and penalising earlier

retirement (see figure 8); moves from benefits based on earnings in best years towards

entitlement based on working career average earnings; closing or restricting early exit

pathways; labour market measures to encourage and enable older workers to stay in

the labour market and encouraging greater gender equality in the labour market.

(2) The move from largely single to multi-tiered systems. This is a result of the trend inmost, but not all, Member States to lower the share of public PAYG pensions in total

provision while giving an enhanced role to supplementary, prefunded private schemes,

which are often of a Defined Contribution (DC) nature (see figure 10).

(3) Measures to address adequacy gaps, e.g. through efforts to broaden coverage, support

building up rights, ease access to pensions for vulnerable groups and increase in

financial support for poorer pensioners.

(4) Gender dimension: women tend to predominate among those with atypical contracts,

they tend to earn less than men and tend to take career breaks for caring

responsibilities more often than men. As a consequence, their pensions tend to belower and the risk of poverty tends to be higher among older women, also because

they live longer. While periods of care are recognised in some PAYG systems, this is

less straightforward in funded pension schemes, with the question of how to finance

such solidarity.

Reforms have underpinned recent increases in effective retirement ages and opened new

avenues to delivering adequate pensions in a sustainable manner. At the same time, reforms

have given and will continue to give rise to greater individual responsibility for outcomes.

While people have more choice, they are also exposed to more risk. For reforms to be

successful, all pension schemes must deliver their part and risks must be well understood and

managed. Future pension adequacy will rest on a combination of returns in financial marketsand labour markets delivering opportunities for longer and less broken contributory careers.

To strengthen social cohesion, a number of Member States may want to address outstanding

issues such as minimum pensions, coverage of atypical workers and crediting of some

involuntary employment breaks, for example when caring for frail dependents.

8 "Quality and viability of pensions – Joint report on objectives and working methods in the area of

pensions" [10672/01 ECOFIN 198 SOC 272].

9 The Interim Joint Report on pensions of the Economic Policy Committee and the Social ProtectionCommittee contains a more detailed assessment, see footnote 2.



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The reformed pension systems increase adequacy risks for a considerable number of workers.

Net replacement rates will decline in many Member States, though the starting position and

the degree of reduction vary significantly, and some countries, especially those with very low

initial levels, have increased them (see figure 5). Delaying labour market exit can reduce the

decline.

In many Member States additional reforms may be needed given the scale of demographicchanges ahead and to ensure the lasting success of implemented reforms. For Member States

where the reform process is not sufficiently advanced, there is an urgent need to review the

pension promise in view of what the rest of the economy – and public budgets - can be

expected to provide.

2.3. Impact of the financial and economic crisis

The financial and economic crisis has seriously aggravated the underlying ageing challenge.

By demonstrating the interdependence of the various schemes and revealing weaknesses in

some scheme designs it has acted as a wake-up call for all pensions, whether PAYG or

funded: higher unemployment, lower growth, higher national debt levels and financial marketvolatility have made it harder for all systems to deliver on pension promises. Private schemes

can relieve some of the pressure on public pension provision. However, increasing reliance on

private schemes has fiscal costs, given the widespread practice of providing tax incentives

during the accumulation phase. The costs of tax relief can be considerable and its

effectiveness and redistributive impacts questionable10

. With public budgets under heavy

pressure, some Member States are now reconsidering the efficiency of this spending. Better

sharing of information on its costs and effectiveness may help policy makers across the EU11

.

Furthermore, if private schemes cannot deliver their promises, there will inevitably be

pressures on the public purse to pick up part of the tab.

With secure incomes from public pensions, which generally have been allowed to performtheir role as automatic stabilisers, current pensioners have so far been among those least

affected by the crisis. Exceptions apart, benefits from funded schemes still play a marginal

role and just a few Member States with very acute public budget problems or well-anchored

automatic adjustment mechanisms were compelled to reduce public pensions in payment. But

the crisis and lower growth prospects will affect all types of pension schemes.

The scale of fiscal deterioration following the crisis is equivalent to offsetting 20 years of

fiscal consolidation, implying that fiscal constraints will be very strong in the next decade.

Estimates suggest that the crisis will put further pressure on public pension spending over the

long-term because economic growth is set to be considerably lower and there is great

uncertainty as to the timing of the full recovery.12 In a number of Member States some socialsecurity contributions were diverted to newly established mandatory funded pensions. The

crisis has underscored this double payment problem and has caused a few governments to halt

or lower contributions to private pensions to improve public pension finances.

10 Section 4.2 p. 26 of SPC Report "Privately managed funded pension provision and their contribution to

adequate and sustainable pensions" (2008) http://ec.europa.eu/social/main.jsp?catId=752&langId=en. 11 This could include sharing experience on approaches such as 'communicating vessels' whereby the

amount of tax relief available for voluntary individual savings is inversely related to the amount of

statutory and occupational pensions an individual already has. See the "Proposal for a pension model

with a compensating layer" by G.J.B. Dietvorst, EC Tax Review 2007 nr.3 p.142-145.12 See footnote 6.

http://ec.europa.eu/social/main.jsp?catId=752&langId=en





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In the short term, the return rates and solvency of funded schemes have been affected through

falls in interest rates and asset values: private pension funds lost over 20% of their value

during 200813

. Moreover several sponsors of occupational pension funds were hindered in

their ability to honour their obligations. However, as few schemes had to lock in losses to

meet their current liabilities, supervisors were able to ease valuation and solvency regulations

to allow time for markets to recover. Pension funds were able to recoup some of their losses

in 200914 but many still remain far off the required solvency levels.

Variations in the ability of funded schemes to weather the crisis have demonstrated that

differences in design, regulation and investment strategy clearly matter. Losses vary with

investment practices and the ability to absorb the shock depends also on how well the burden

is shared among providers, contributors and recipients. Unfortunately, schemes in countries

where solvency requirements were lower and asset value losses particularly large also tend to

have poorer protection of accrued entitlements and the least flexible mechanisms for burden

sharing. As a result, entitlements can be lost and providers inclined to discontinue schemes,

since they cannot afford to bring schemes back to solvency.

The crisis will also have a serious impact on future pensions as many workers will have losttheir jobs and have been unemployed for a certain period and others might have had to accept

lower earnings or shorter working hours15

. One of the challenges will be to ensure that

adequate levels of pensions can be maintained also in these situations (see figure 9).

The crisis has, therefore, added the following dimensions to the pre-existing reform agenda:

– a more pressing need to address adequacy gaps;

– a more pressing need for reforms that improve the sustainability of public finances;

– an increased emphasis on raising effective retirement ages;

– a need to revisit the regulation of funded pension schemes to ensure that they are efficient

and remain safe in the wake of major financial crises whilst ensuring regulation is

proportionate and does not push employers into insolvency or into abandoning pension

schemes;

– a need to ensure that financial market regulation is effective and intelligent given the

growing role of pension funds. The G20 Pittsburgh and Toronto summits emphasised that

all financial institutions should be regulated and that there is a greater need for common

rules.

3. PRIORITIES FOR MODERNISING PENSION POLICY IN THE EU

The overarching objectives of pension reforms are to ensure that pension systems are

adequate and sustainable. There has been a tendency to treat the three-pronged Stockholm

strategy as a list from which to pick and choose. But if pension systems are to deliver and if

13 OECD, "Pensions and the crisis – How should retirement income systems respond to financial and

economic pressures" 2009.

14 OECD "Pension Markets in Focus", October 2009, Issue 6.15 Chapters 3.3 – 3.5 of the Interim Joint Report on pensions, see footnote 2.



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the Europe 2020 strategy is to succeed, it will now be necessary to address all three issues in a

coordinated way.

3.1. Overarching objectives: adequacy and sustainability

Adequacy and sustainability are two sides of the same coin. If pensions are at risk of being

inadequate, there may be pressure for ad hoc increases in pensions or higher demand for otherbenefits, jeopardising sustainability. Equally if a pension system is unsustainable it will prove

to be inadequate in the long run when sudden corrections are needed. The issues of pension

adequacy and sustainability need to be considered jointly.

Addressing pension adequacy

Ensuring adequate retirement income is the purpose of pension systems and is a matter of

fundamental inter- and intra-generational solidarity. Most reforms of pension systems so far

have been aimed at improving sustainability. Further modernisation of pension systems will

be needed to address adequacy gaps. As public pension replacement rates in most cases will

decline (see figure 4), it is important to provide sufficient opportunities for complementary

entitlements: e.g. enabling longer working lives and increasing access to supplementarypension schemes. The lack of compensatory crediting for periods of unemployment, sickness

or caring duties can also lead to gaps, as can lack of coverage of vulnerable groups, such as

short-term contract and atypical workers, or insufficient minimum pension guarantees or

income provision for older people, but these raise questions about financing. In funded

schemes, reducing investment risk, notably close to and in the pay-out phase, and improving

risk sharing between pension savers and pension providers, building on the advantages of

collective insurance, can boost the adequacy of retirement income. Broadening the sources of

retirement income beyond pensions may also need to be considered.

Securing sustainability

Many pension reforms have contributed to limiting the increase in future public pensionspending, but additional steps are urgently needed to put systems on a more sustainable

footing, thereby contributing to the long term sustainability of public finances, notably in

countries where future public pension spending is projected to be high. Failing to take resolute

policy action to enhance sustainability will push the burden of adjustment forward either to

future workers or to future pensioners who might not have prepared for lower than expected

pensions, as underlined by the European Council16

. Given the dire state of public finances and

the projected unsustainable increase in public debt levels with unchanged policies, fiscal

consolidation will be a binding constraint on all policies, including pensions. The Stability

and Growth Pact (SGP) provides the framework for monitoring the sustainability of public

finances, including pension systems17

. Moreover, there could be further pressure for spending

on care for the elderly should formal care increasingly replace informal care in the future.

Reforms that enhance the EU's economic growth potential, e.g. by stimulating labour supply,

are therefore particularly important. Higher labour productivity growth benefits all citizens, as

it enables higher living standards. As regards fiscal sustainability, achieving higher

employment rates in particular for older workers is even more important.

16 Presidency conclusions of the 23 March 2005 COUNCIL OF THE EUROPEAN UNION 7619/1/05,

REV 1, stressed the need "to safeguard the sustainability of public finances in the long run, to promote

growth, and to avoid imposing excessive burdens on future generations."

17 In relation to the SGP the Commission has proposed to also take account of implicit liabilities, notablyrelated to ageing, amongst other factors to reflect future risks (COM(2010) 367/2).



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(1) How can the EU support Member States' efforts to strengthen the adequacy of pension

systems? Should the EU seek to define better what an adequate retirement income

might entail?

(2) Is the existing pension framework at the EU level sufficient to ensure sustainable

public finances?

3.2. Achieving a sustainable balance between time spent in work and in retirement

Time spent in retirement has increased considerably over the past century and there are large

variations between Member States. Currently, typically about one third of adult life is spent in

retirement and this share will increase substantially with future gains in life expectancy18

unless the length of working life increases and people retire later. Less than 50% of people are

still in employment by the age of 60. This goes against Member State commitments at the

Barcelona European Council to postpone the age at which people stop working by five

years19

. It is also inconsistent with the objective of reaching the Europe 2020 75%

employment rate target and impacts negatively on growth potential. The steep rise in old-age

dependency ratios could be largely avoided if people would work longer (see figure 2).Without this a painful combination of lower benefits and higher contributions would be

inevitable.

Ensuring that the time spent in retirement does not continue to increase compared to time

spent working would support adequacy and sustainability. This means increasing the age at

which one stops working and draws a pension. Many Member States have already decided to

raise the eligibility age for a full pension in their public pension schemes (see figure 6). There

is a growing awareness that this represents an important signal to workers and employers,

which motivates them to aim for higher effective retirement ages. A number of Member

States have demonstrated that a promising policy option for strengthening the sustainability of

pension systems is an automatic adjustment that increases the pensionable age in line with

future gains in life expectancy. While this approach of contingent adjustments could be

contemplated for other risks as well, committing to periodic reviews of the adequacy and

sustainability of pensions could be an alternative or complementary way to facilitate a timely

and smooth response to changing conditions many of which are hard to predict.

The feasibility of universal pensionable ages has always been debated due to occupational

differences in labour market entry ages and the health status of workers in different

occupations. Most Member States address this challenge through resolute policies to improve

health and safety at work while providing access to pathways for those in real need before the

pensionable age. National efforts are underpinned by the European Health and Safety

Strategy. A few Member States have acknowledged differences in entry ages by combining

measures to increase pensionable ages with those increasing the number of contributory years

required for a full pension. Furthermore, whilst taking measures to extend working lives, it

will also be important to address issues such as gender gaps in both pay and the labour

market.

As labour market exit ages are still low, the question is whether common EU principles and

pathways to adequate and sustainable pensions, applied in a differentiated manner, to cater for

18 Chapter 3.2.1 of the Interim Joint Report on pensions, see footnote 2.19 Presidency conclusions of the 15-16 March 2002 EUROPEAN COUNCIL SN 100/1/02 REV 1.



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differences in pension systems, would be helpful? Such pathways would aim to enable people

to build adequate entitlements whilst also making EU economies more sustainable. This

requires pension system reforms to be supplemented with substantial efforts to allow workers

to maintain their employability throughout their working lives, offering appropriate retraining

opportunities. New technologies and services to provide flexible work arrangements through

telework and upgrading of skills can help to accommodate older workers in the workplace for

longer.

Key measures enabling older workers, both women and men, to remain longer in the labour

market would include access for all, irrespective of age, gender and ethnicity, to labour

markets, to training and disability adjustments20

. The European Social Fund supports

measures to improve the employability and raise the employment rates of women and men of

all working ages. The Commission is preparing a European Year on Active Ageing 2012

which should encourage Member States, social partners and other stakeholders to create better

opportunities and working conditions for the participation of older workers in the labour

market.

This could involve adapting social and financial incentives to work, including Member Statesexamining the role of their tax rules. Other measures could include adjusting age

management, working arrangements and attitudes in labour markets and work-places, and

considering conditions for older self-employed workers. Prolonging working lives to reflect

continuous gains in life expectancy over time would bring a double dividend: higher living

standards and more sustainable pensions. In order to achieve more sustainable and adequate

pensions, it is important that workers, and very often younger ones, spend more time in jobs

with wages and working hours entitling them to future pension rights.

Member States are already taking measures to support longer working lives21

. Health policies

aimed at helping citizens age in better health can contribute to extending working lives,

reduce pressure on pension systems and can improve sustainability22. Poor health is one of thedrivers of early retirement.

(3) How can higher effective retirement ages best be achieved and how could increases in

pensionable ages contribute? Should automatic adjustment mechanisms related to

demographic changes be introduced in pension systems in order to balance the time

spent in work and in retirement? What role could the EU level play in this regard?

(4) How can the implementation of the Europe 2020 strategy be used to promote longer

employment, its benefits to business and to address age discrimination in the labour

market?

3.3. Removing obstacles to mobility in the EU

Policies and regulation need to facilitate the free movement of production factors, notably

labour and capital, so as to use resources efficiently and create favourable conditions to

maximise incomes. Greater flexibility in job mobility supports the adjustment capacity of the

20 A better transposition and application of the Employment Equality Directive (2000/78/EC) and the

realisation of the added value of older staff is needed. Age is the most common perceived disadvantage

when seeking a job, see http://ec.europa.eu/public_opinion/archives/ebs/ebs_317_en.pdf.

21 Chapter 2.1 of the Interim Joint Report on pensions, see footnote 2.22 See Commission Staff Working Document SEC(2010)830.

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economy and strengthens the European social model. Unleashing the full potential of the

single market could bring significant benefits for all citizens23

.

3.3.1. Strengthening the internal market for pensions

The adoption of the Directive on Institutions for Occupational Retirement Provision (IORP)

in 2003 was a major achievement. But this Directive only covers those funded pensions thatare occupational in nature and not even all occupational schemes fall under its scope (e.g.

book reserve schemes are excluded). It is not a framework directive, which makes it difficult

to adapt regulation to market changes. First experience has shown that there are still

considerable barriers to cross-border activity. They prevent the full realisation of efficiency

gains arising from scale economies and competition, thereby raising the cost of pensions and

restricting consumer choice. Barriers are in many cases the result of regulatory differences

and legal uncertainties, such as an unclear definition of cross-border activity, a lack of

harmonisation of prudential regulation and complex interaction between EU regulation and

national law. Removing these obstacles may require a review of the IORP Directive, further

supervisory convergence and more transparency about national differences. Moreover, aspects

concerning custodianship24 and pension fund governance need to be addressed, including anadequate understanding and supervision of investment decisions, remuneration, incentive

structures for service providers and socially responsible investment (SRI).

Appropriate and comparable accounting standards are important to enhancing transparency

about pension liabilities. The International Accounting Standards Board (IASB) has

undertaken a project to review its pension accounting standard IAS 1925. The European

Commission jointly with its technical advisor, the European Financial Reporting Advisory

Group (EFRAG), closely monitors the IASB project to improve pension accounting, possibly

also for pension funds themselves, in accordance with the endorsement process established

under the IAS Regulation26

.

The free movement of capital is facilitated by Member States giving the same tax treatment to

dividends and interest received by IORPs investing in their territory but established elsewhere

in the European Economic Area (EEA). Following the Commission's decision to launch

infringement action against several Member States because of discriminatory features of their

tax rules in this area, some Member States have already aligned their pension's tax legislation

with the requirements of EU law.

Although the Internal Market for insurance products has been in place for a longer time,

cross-border activity for life assurance products has also remained limited, representing well

below 10% of total life assurance premiums written in most Member States. The Internal

Market could also be helpful in extending access to additional sources of retirement incomebeyond pensions, such as reverse mortgages. There have also been calls to create a regulatory

23 See footnote 22 for more information on the current EU framework on pensions.24 See Commission report on some key aspects concerning Directive 2003/41/EC on the activities and

supervision of institutions for occupational retirement provision (IORP Directive) of 30.4.2009,

COM(2009) 203, available at

http://ec.europa.eu/internal_market/pensions/docs/legislation/iorp_report_en.pdf.

25 IAS 19 Employee Benefits applies to the sponsoring undertakings.26 IAS Regulation 1606/2002.

http://ec.europa.eu/internal_market/pensions/docs/legislation/iorp_report_en.pdf





EN 12 EN

framework for an EU-wide private pension regime alongside the existing pension regimes in

Europe27

.

(5) In which way should the IORP Directive be amended to improve the conditions for

cross-border activity?

3.3.2. Mobility of pensions

EU Regulations on the coordination of social security systems have been protecting pension

rights of mobile EU citizens and their family members for the past five decades. The new

Regulations 883/2004 and 987/2009 expand this protection and ensure that for the accrual of

pension rights, insurance periods acquired in another Member State will be taken into

account. These Regulations are limited to statutory and occupational pension schemes where

rights are based on legislation: recent national reforms as outlined above may thus require an

extension of the coordination regulations and minimum standards to improve mobile workers'

access to supplementary pension rights within and between Member States.

The Commission proposed a Directive in 2005 to set minimum standards for the acquisition,preservation and transferability of supplementary pension rights. Internal mobility was

included because a separation of internal and external mobility was impractical.

The proposal was revised by the Commission in 2007 to drop the transferability element

which had been opposed by some as technically difficult and potentially burdensome or open

to abuse. This left the emphasis on the timely acquisition of pension rights and their

subsequent preservation. However, it has still not been possible to achieve the unanimity

needed in the Council to pass the Directive.

Fresh impetus is needed to reach a solution for all mobile workers28

. In today's labour market,

with the added challenges from the financial and economic crisis, people need to be able tochange jobs easily throughout their working life and employers should be able to recruit the

right person with the right skills. Further need for action comes from the rise in the

importance of funded pensions in diverse forms. This raises the issue of scope: e.g. should

statutory mandatory funded schemes be included in EU measures?

Some Member States operate pension tracing services which help people keep track of their

pension rights from different sources within that Member State. Given the growing degree of

labour mobility and reliance on a broader set of public and private sources of retirement

income, an EU level tracking system could help mobile individuals keep track of their pension

rights.

Discriminatory tax rules can be an obstacle to the mobility of pensions. The Court of Justice

has ruled that it is contrary to EU law to tax transfers of pension capital from domestic

pension funds to funds established elsewhere in the EEA if transfers of pension capital

27 The Monti Report also suggests an option to explore the 28th regime for supplementary pension rights,

see A NEW STRATEGY FOR THE SINGLE MARKET AT THE SERVICE OF EUROPE'S

ECONOMY AND SOCIETY, Report to the President of the European Commission José Manuel

Barroso by Mario Monti, 9 May 2010, p.58.28 For example, setting up a cross-border EU pension fund for highly mobile workers (e.g. researchers)

could be an option. See "Feasibility Study of a Pan-European pension fund for EU researchers", HewittAssociates on behalf of the European Commission (DG RTD), May 2010.



EN 13 EN

between domestic pension funds are tax free29

. The Commission intends to examine whether

there are any other Member States with similar rules.

(6) What should be the scope of schemes covered by EU level action on removing

obstacles for mobility?

(7) Should the EU look again at the issue of transfers or would minimum standards onacquisition and preservation plus a tracking service for all types of pension rights be a

better solution?

3.4. Safer, more transparent pensions with better awareness and information

Safety in pensions is important to support adequacy. Moreover, the macroeconomic benefits

can be felt quickly as pensioners are a growing source of stable and regular consumption. The

disparate developments in Member States' pension systems and the trend towards DC

schemes, however, raise new policy questions.

3.4.1. Closing gaps in EU regulation

As pension provision moves from single to multi-tiered systems and from simple to complex

pension packages, the fragmented and incomplete character of the present European

framework may no longer be sufficient.

(1) Reforms have led to some funded pension schemes, both public and private, being

covered by EU regulation in some Member States but not in others. This is not

consistent with the relevant G20 Pittsburgh declaration (“13. […] All firms whose

failure could pose a risk to financial stability must be subject to consistent,

consolidated supervision and regulation with high standards. […]”), as reinforced at

the G20 Toronto summit, nor does it reflect the fact that pension funds have becomemajor players in financial markets.

(2) Similar pension schemes are covered by different EU rules thus raising issues of

consistency.

(3) There are unclear boundaries between: social security schemes and private schemes;

occupational and individual schemes; and voluntary and mandatory schemes.

(4) It is not always clear what differentiates general saving from pensions. This raises the

question whether the label 'pension' should not be restricted to a product that has

certain features such as security and rules restricting access including a payout designwhich incorporates a regular stream of payments in retirement.

Moreover, the trend towards DC schemes, away from defined benefit (DB) schemes, is

continuing. The aim of tying employees to the company through occupational pension

promises is losing ground: employers are less reliant on firm-specific skills due to

technological advances and employees are increasingly preferring flexibility and mobility.

Furthermore, while occupational DB schemes provide greater certainty about future

retirement income and reduce costs because of their size and risk sharing, they can be an

untenable burden on employers.

29 Commission vs. Belgium, Case C-522/04.



EN 14 EN

Today, nearly 60 million Europeans are enrolled in DC schemes30

. Such schemes are much

more prevalent today than they were a decade ago and will continue to grow in importance.

The sponsor does not bear the financial risk and DC schemes are more likely to promote

longer working lives. But a key implication is that they shift the investment, inflation and

longevity risks to scheme members, who are less well placed to bear these risks individually.

There are, however, ways to reduce these risks. Minimum return guarantees and life-styling

portfolio compositions come at a cost but good practice across Member States has shown thatthey can reduce short-term volatility. Market performance can be enhanced by good economic

and public finance policies and better regulation. Better investment practice and scheme

design can substantially mitigate risk and increase capacity for shock absorption thus

achieving a better balance between risks, security and affordability for both savers and

providers.

Collective risk sharing through hybrid schemes, such as a DC scheme with a minimum return

guarantee or a part-DB and part-DC scheme, could change the current trend to individualised

DC schemes. Moreover, high quality schemes are being promoted by industry initiatives.

Some occupational DB schemes have also adapted to demographic and structural changes by

increasing risk sharing between sponsors, workers and pensioners. Existing collectivegovernance structures in DB schemes facilitate this. Examples include moving from final

salary to career average schemes, establishing cash balance schemes, allowing for longevity

adjustments, changing accrual rates, adjusting the normal pension age, and applying

conditional indexation.

International policy discussions raise the question whether current EU regulation is able to

cope with the shift towards DC schemes31

. A reassessment of the IORP Directive may be

required in areas such as governance, risk management, safekeeping of assets, investment

rules and disclosure. In addition, the current EU framework does not address the accumulation

phase. This includes (i) plan design to mitigate short-term volatility in returns and (ii)

investment choice and default investment options. Moreover, given that the size of the

pension in DC schemes can depend on the year in which the pensioner retires, market

regulation needs to address the payout phase such as rules on purchasing an annuity (e.g.

whether it is mandatory or voluntary, and the timing).

(8) Does current EU legislation need reviewing to ensure a consistent regulation and

supervision of funded (i.e. backed by a fund of assets) pension schemes and products?

If so, which elements?

(9) How could European regulation or a code of good practice help Member States

achieve a better balance for pension savers and pension providers between risks,

security and affordability?

3.4.2. Improving the solvency regime for pension funds

The IORP Directive's minimum prudential requirements include solvency rules for DB

schemes. These solvency rules are currently the same as those that apply to life assurance

undertakings. With the entry into force of the Solvency II Directive in 2012, insurance

undertakings will be able to benefit from a three-pillar, risk-based solvency regime and the

30 EFRP survey on DC pensions 2010.31 OECD Pension Market in Focus Oct. 2009.



EN 15 EN

question is whether this new regime should also apply to IORPs. There is little agreement

among stakeholders, partly reflecting the difference in the ways occupational pensions are

delivered: book reserve, pension fund or insurance contract.

As regards pension funds, Member States have also taken different approaches to protecting

acquired pension rights32

. The Commission conducted a consultation on this subject in 2008

and organised a public hearing in May 2009. During this process, stakeholders signalled thatthere needs to be a sui generis solvency regime for pension funds and that it is important to

avoid pro-cyclical solvency rules. The Solvency II approach could be a good starting point,

subject to adjustments to take account of the nature and duration of the pension promise,

where appropriate. The suitability of Solvency II for pension funds needs to be considered in

a rigorous impact assessment, examining notably the influence on price and availability of

pension products.

A related question is whether, reflecting developments in banking, insurance and investment,

there is a need for promoting pension benefit guarantee systems in the Member States,

possibly coordinated or facilitated at EU level. Such systems can not only address failures in

sponsor-backed DB schemes or book reserve schemes, but could also compensate forexcessive losses in DC schemes. There are, however, important aspects to address such as

moral hazard and potential implicit public support in very turbulent times.

(10) What should an equivalent solvency regime for pension funds look like?

3.4.3. Addressing the risk of employer insolvency

Given the important role of sponsoring undertakings in the provision of benefits and the

funding of IORPs, their insolvency presents a particular risk. The Insolvency Directive33

provides for the protection of employees’ rights to supplementary occupational pensions in

the event of the insolvency of their employer. However, there is no obligation on the MemberState to fund the rights nor do full guarantees need to be provided, thus leaving considerable

latitude on the level and modalities of protection. Moreover, the IORP Directive does not

apply to companies using book reserve schemes for the payment of retirement benefits to their

employees. The need to ensure the protection of supplementary occupational pensions in

those instances becomes more acute in the present situation, since the financial and economic

crisis will increase the number of company insolvencies.

The Commission presented a Staff Working Document34

on the implementation of the

provision concerning supplementary occupational pensions contained in the Insolvency

Directive. As a follow-up to this document, the Commission has launched a study in 200935

covering DB and book reserve schemes and is currently gathering information on the

protection of unpaid contributions to DC schemes in case of employer insolvency.

(11) Should the protection provided by EU legislation in the case of the insolvency of

pension sponsoring employers be enhanced and if so how?

32 Security mechanisms used today rely on a realistic valuation of technical provisions, own funds,

sponsor covenants, pension protection funds or a combination of those elements (CEIOPS SSC report).33 2008/94/EC

34 SEC(2008) 475, 11.4.2008.35 OJ 2009/ S 230-329482.



EN 16 EN

3.4.4. Facilitating informed decisions

The trend towards DC schemes underlines the need for transparent and clear communication.

The IORP and the Life Directives contain information disclosure requirements. But these

provisions are based on minimum harmonisation and national approaches differ markedly.

Moreover they were designed for DB schemes and may therefore need to be adjusted. In

going forward, it would seem important to review the key information specifically for pensionschemes and products (e.g. risk, nature of promise, cost/fees, payout method, etc.). This

should take into account what is being developed for other financial products, seeking to

ensure comparable information. Consumer testing combined with economic research could be

used to improve the quality of information in terms of clarity and comparability.

Shifting choice and responsibility to the individual requires that people understand the

information in order to make informed choices, especially as pensions have become more

complex. Financial education can help as demonstrated by the work of the OECD and the EU

already works with Member States on this. Financial education complements regulation of the

industry, both prudential (e.g. the IORP Directive) and market conduct rules, and product

disclosure rules. It is important that individuals are properly equipped with economic literacyand planning skills to adequately assess their need for financial and social protection and to

avoid behavioural biases. For example, with the growing importance of DC schemes people

need to make informed decisions about investments. It is also important that people have a

competent body to turn to that can answer their questions relating to pensions, especially in a

cross-border mobility context.

At the same time, national experiences suggest that the engagement rate that can be obtained

through disclosure and financial education has an upper limit. It is therefore important to

envisage an in-depth examination of the merits of auto-enrolment with opt-out clauses.

Informed decisions go hand in hand with adequate pension provision. When making savingdecisions it is important that individuals be offered appropriate options. There could therefore

be a case for defining what exactly the desirable features of pensions are: if they lack certain

key characteristics, not only could this lead to confusion, but it could also lead to under

provision in retirement, for example if early withdrawals lead to a depletion of savings or if

no steady income is generated from the accumulated assets. Member States may consider

putting in place a reliable pensions advice service to facilitate consumer choices.

(12) Is there a case for modernising the current minimum information disclosure

requirements for pension products (e.g. in terms of comparability, standardisation and

clarity)?

(13) Should the EU develop a common approach for default options about participation

and investment choice?

4. IMPROVING EU STATISTICS ON PENSIONS

Data about pension systems available from the different national and EU-level sources could

be streamlined to increase their comparability and make substantial cost savings. Building on

existing international work (e.g. the OECD) and various EU initiatives, the development of an

EU methodology for pension statistics could facilitate the assessment of the common policy

and regulatory challenges. Pension funds are important institutional investors and their



EN 17 EN

investment behaviour can affect financial stability. Citizens would benefit from the collection

of accurate statistics about their retirement income from the different sources. Pensioners are

set to grow as a group of consumers and firms would benefit from reliable and timely

information about total disposable income.

Furthermore, the monitoring of implicit liabilities could be strengthened to allow for a better

assessment of the impact on the sustainability of public finances of pension schemes run byboth public and private entities.

5. ENHANCING GOVERNANCE OF PENSION POLICY AT EU LEVEL

Europe must help address citizens' concerns about future pensions and revisit how a strategy

can be defined to deliver adequate, sustainable and safe pensions, including through better use

of EU instruments.

Whilst Member States generally are responsible for the design and organisation of their

pension systems, some specific areas relating to pensions fall directly within the EU'scompetencies. Member States have also recognised that acting together can be more effective

and efficient and that the EU level can add value, not least since the challenges are similar

across the EU and reform polices need to be consistent with existing frameworks such as the

Stability and Growth Pact and Europe 2020.

As part of this strategy, the EU contributes with measures such as surveillance, coordination

and mutual learning. Examples include best practice sharing, peer reviews, agreeing

objectives and indicators, and gathering comparable statistics. EU regulation covers social

security coordination of public pensions, rules for occupational pension funds, portability and

the protection of supplementary pension rights in the event of the insolvency of the employer,

as well as rules for life assurance undertakings.

If the EU is to offer appropriate support to national reform efforts, the framework of policy

coordination must take an integrated approach to reflect the increasing complexity of pension

systems. Moreover, given increasing economic and financial integration, the EU-level

regulatory framework, as well as good coordination across the EU level policies and Member

States' policies, is becoming ever more important.

Pension policy is a common concern for public authorities, social partners, industry and civil

society at national and at EU level. A common platform for monitoring all aspects of pension

policy and regulation in an integrated manner and bringing together all stakeholders could

contribute to achieving and maintaining adequate, sustainable and safe pensions. TheCommission is therefore keen to explore how this can best be achieved in support of the EU's

wider economic and social objectives.

(14) Should the policy coordination framework at EU level be strengthened? If so, which

elements need strengthening in order to improve the design and implementation of

pension policy through an integrated approach? Would the creation of a platform for

monitoring all aspects of pension policy in an integrated manner be part of the way

forward?



EN 18 EN

6. HOW TO RESPOND TO THE CONSULTATION

The Commission invites all interested parties to respond to the questions set out in this Green

Paper, together with any additional comments, by 15 November 2010 by means of the online

questionnaire available at:

http://ec.europa.eu/yourvoice/ipm/forms/dispatch?form=pensions.

Alternatively, for those without web access, responses can be sent by post to:

European Commission

Directorate-General for Employment, Social Affairs & Equal Opportunities

Green Paper on Pensions consultation

Unit E4

rue Joseph II

Office J-27 1/216

B - 1040 Brussels

Please note, received contributions, together with the identity of the contributor, will be

published on the Internet, unless the contributor objects to publication of the personal data on

the grounds that such publication would harm his or her legitimate interests. In this case the

contribution may be published in anonymous form. Otherwise the contribution will not be

published nor will, in principle, its content be taken into account.







EN 19 EN

GLOSSARY AND STATISTICAL ANNEX

1. GLOSSARY

Accumulation phase – Period during which contributions are made and invested in a defined

contribution scheme. (See also: Defined contribution (DC) schemes).

Accrual rate – Rate at which future pension benefits are built up. It is used in defined benefit

schemes and based on the formula linked to the scheme. For example, a pension accrual rate

could be 1.5% of final pensionable salary for each year of pensionable service (See also:

Defined benefit (DB) schemes).

Annuity – A financial contract, sold by a life insurance company for example, that guarantees

a fixed or variable payment of income benefit (monthly, quarterly, half-yearly, or yearly) for

the life of a person(s) (the annuitant) or for a specified period of time. It differs from a life

insurance contract which provides an income to the beneficiary after the death of the insured.

An annuity may be bought on instalments or by paying a single lump sum. Benefits may startimmediately or at a pre-defined time in the future or at a specific age. An annuity is one way

of securing a regular retirement income for individuals who have saved in a defined

contribution scheme. (See also: Defined contribution (DC) schemes).

Automatic (or auto-) enrolment – Generally refers to employees being members of their

employer's pension scheme as a default choice, with the possibility of opting out on request.

Automatic adjustment mechanisms – Generally refers means of adjusting benefits, rights

and/or contribution levels to changing circumstances, e.g. economic conditions, financial

market returns or longevity assumptions.

Book reserve pension scheme – A method of accounting used by some sponsoring

employers to finance pension promises. Sums are entered in the balance sheet of the scheme

sponsor as reserves or provisions for scheme benefits. Some assets may be held in separate

accounts for the purpose of financing benefits, but they are not legally or contractually

pension plan assets. (See also: Defined benefit (DB) schemes).

Career average scheme – A defined benefit scheme where the future pension benefit earned

for a specific year depends on the level of the member's earnings for the given year. (See also:

Defined benefit (DB) schemes).

Cash balance schemes – A scheme where the employer guarantees a pension pot to schememembers, payable at the normal pension age, with which they can purchase an annuity. (See

also: Normal pension age; Annuity).

Conditional indexation – Refers to defined benefit schemes where the provision of indexed

benefits (generally revalued to inflation or wages) is conditional on the financial performance

of the scheme's investments. (See also: Defined benefit (DB) schemes).

Defined benefit (DB) schemes – Pension schemes where the benefits accrued are linked to

earnings and the employment career (the future pension benefit is pre-defined and promised to

the member). It is normally the scheme sponsor who bears the investment risk and often also

the longevity risk: if assumptions about rates of return or life expectancy are not met, the



EN 20 EN

sponsor must increase its contributions to pay the promised pension. These tend to be

occupational schemes. (See also: Defined contribution (DC) schemes).

Defined contribution (DC) schemes – Pension schemes where the level of contributions, and

not the final benefit, is pre-defined: no final pension promise is made. DC schemes can be

public, occupational or personal: contributions can be made by the individual, the employer

and/or the state, depending on scheme rules. The pension level will depend on theperformance of the chosen investment strategy and the level of contributions. The individual

member therefore bears the investment risk and often makes decisions about how to mitigate

this risk. (See also: Defined benefit (DB) schemes).

Effective retirement age – Age at which an individual actually retires. Not necessarily the

same as the labour market exit age or normal retirement age. (See also: Labour market exit

age, and Normal pension age).

Equity Release Scheme – Term used to describe both the process and the products that allow

homeowners to secure substantial lump sums or regular income payments by realising part of

the value of their homes, while being able to continue to live in it.

Final salary scheme – A defined benefit scheme where the pension benefit is typically based

on the last or the last few years' of earnings before retirement. (See also: Defined benefit (DB)

schemes).

Funded scheme – A pension scheme whose benefit promises are backed by a fund of assets

set aside and invested for the purpose of meeting the scheme's liability for benefit payments

as they arise. Funded schemes can be either collective or individual. (See also: Pay-As-You-

Go schemes).

Governance (of pension funds) - The operation and oversight of a pension fund. Thegoverning body is responsible for administration, but may employ other specialists, such as

actuaries, custodians, consultants, asset managers and advisers to carry out specific

operational tasks or to advise the scheme administration or governing body.

Hybrid pension scheme – In a hybrid scheme, elements of both defined contribution and

defined benefits are present or, more generally, the risk is shared by the scheme's operator and

beneficiaries.

Individual pension scheme - Access to these schemes does not depend on an employment

relationship. The schemes are set up and administered directly by a pension fund or a

financial institution acting as pension provider without the involvement of employers.Individuals independently purchase and select material aspects of the arrangements. The

employer may nonetheless make contributions to individual pension schemes. Some schemes

may have restricted membership.

Information disclosure regulations – The rules prescribing the periodicity, procedure, type

and extent of information to be provided to members of pension plans and/or the supervisory

authority.

Institutional investor - Generally refers to a group of investors such as pension funds,

insurance companies, investment funds and, in some cases, banks.



EN 21 EN

Labour market exit age - Age at which an individual actually leaves the labour market. For

data availability reasons labour market exit age is often used as a proxy for the effective

retirement age. Differences between the two may exist, as some people leave the labour

market before they actually retire while others continue working after retirement. (See also:

Effective retirement age).

Lifestyling or life-cycling strategies – Investment strategies used in defined contributionpension schemes to reduce investment risk and volatility by gradually and automatically

reducing the investment risk taken by the scheme member as they approach retirement. (See

also: Defined contribution (DC) schemes).

Minimum return guarantees – Minimum level of pension benefit paid out regardless of

investment performance in a defined contribution scheme.

Normal pension age – Age at which a member of the pension scheme is eligible to receive

full pension benefits.

Occupational schemes – A pension plan where access is linked to an employment orprofessional relationship between the plan member and the entity that sets up the plan (the

plan sponsor). Occupational pension schemes may be established by employers or groups of

employers (e.g. industry associations) or labour or professional associations, jointly or

separately, or by self-employed persons. The scheme may be administered directly by the

sponsor or by an independent entity (a pension fund or a financial institution acting as pension

provider). In the latter case, the sponsor may still have responsibility for overseeing the

operation of the scheme.

Old-age dependency ratio – Population aged over 65 as a percentage of the working age

population (usually defined as persons aged between 15 and 64).

Operational risk - The risk of loss arising from inadequate or failed internal processes,

personnel or systems, or from external events.

Own funds (regulatory) – Refers to the additional assets of a pension funds above its

technical provisions serving as a buffer. Regulation usually requires that these assets are free

of all foreseeable liabilities and serve as a safety capital to absorb discrepancies between

anticipated and actual expenditure and profits. Also referred to as regulatory capital. (See

also: Technical provisions).

Pay-As-You-Go (PAYG) schemes – Pension schemes where current contributions finance

current pension expenditure (See also: funded schemes).

Payout phase or decumulation phase – Period during which assets accrued in the

accumulation phase are paid out to the pension scheme member in a funded scheme. An

example of a payout phase is a period in which regular retirement income is received through

the purchase of an annuity. (See also: Annuity).

Pension benefit guarantee system – An arrangement to pay compensation to members or

beneficiaries of pension schemes in the event of insolvency of to the pension fund and/or

sponsoring employer. Examples of a pension benefit guarantee systems include the Pensions-

Sicherungs-Verein Versicherungsverein auf Gegenseitigkeit (PSVaG) in Germany and the

Pension Protection Fund in the UK.



EN 22 EN

Pension pillar – Different types of pension schemes are usually grouped into two, three, four

or more pillars of the pension system. There is however no universally agreed classification.

Many pension systems distinguish between statutory, occupational and individual pension

schemes, or between mandatory and voluntary pension schemes. Participation in occupational

and individual pension schemes, usually private pension arrangements, can be mandatory or

voluntary.

Replacement rate – Generally refers to an indicator showing the level of pension income

after retirement as a percentage of individual earnings at the moment of take-up of pensions or

of average earnings. Replacement rates measure the extent to which pension systems enable

typical workers to preserve their previous living standard when moving from employment to

retirement.

Solvency – The ability of a pension scheme's assets to meet the scheme's liabilities. The

scheme's liabilities cover all future pension payments and must therefore be discounted well

into the future, thus making substantial assumptions about longevity. The value of a scheme's

assets is dependent on the type of accounting standard used. If a scheme is not deemed to

have a sufficiently high solvency level, it needs to consider whether to increase contributionlevels or reduce entitlements, where scheme rules permit.

Sponsor covenant - Refers to a sponsoring employer’s ability to support pension fund

volatility by providing additional funding if required. The 'covenant' in this context is a very

similar concept to 'creditworthiness' for borrowers. At a simple level, if a pension fund has a

deficit then it is in many respects similar to a bond holder in financial market terms. It

depends on the ability of the company to pay additional contributions in the future if

investment returns are not sufficient to make up the shortfall.

Statutory pension scheme - Social security and similar statutory programmes administered

by the general government (that is central, state, and local governments, plus other publicsector bodies such as social security institutions). Public pension plans have traditionally been

of the PAYG type.

Supplementary pension schemes –Mandatory or voluntary pension schemes which generally

provide additional retirement income to the statutory pension scheme.

Technical provisions – The amount of liabilities corresponding to the financial commitments

of a pension fund which arise out of its portfolio of existing pension contracts. See also

Article 15 of Directive 2003/41/EC.

Transferability – The right to transfer accrued benefits or accumulated capital from onepension scheme to another, for example to the pension scheme of the new employer.



EN 23 EN

2. STATISTICAL ANNEX

Figure 1: Demographic structure of the population in 2008 and 2060

Figure 2: Old-age dependency ratios under different average exit age scenarios

Figure 3: Change in public pension expenditure as a share of GDP over 2007-60 (in

percentage points)

Figure 4: Benefit ratios in EU Member States in 2007 and 2060

Figure 5: Change in theoretical replacement rates for an average wage earner retiring at

65 after 40 years career between 2006 and 2046 in percentage points

Figure 6: Standard pension eligibility age and average labour market exit age in EU-27

Figure 7: Overall, female and older workers employment rates in EU-27, 2000-2008, inpercent

Figure 8: Pension benefit impact of shorter and longer working lives

Figure 9: Pension benefit impact of career breaks due to unemployment

Figure 10: Increasing significance of funded pensions



EN 24 EN

Figure 1: Demographic structure of the population in 2008 and 2060

2008

2060

Source: Commission services, graph published in the 2010 Interim Joint Report on pensions of the Economic

Policy Committee and Social Protection Committee, noted by the 7-8 June 2010 EPSCO and ECOFIN Councils,

p. 9, available at: http://europa.eu/epc/publications/index_en.htm.

Note: the red (dark) bar indicates the most numerous cohort.








EN 25 EN

Figure 2: Old-age dependency ratios under different average exit age scenarios

In 2010, when it is assumed that people leave the labour market on average at age 60, the

dependency ratio, i.e. the number of people of working age relative to the number of people

above age 60, amounts to 5 to 2. If by 2040 people were to remain until 67 the corresponding

ratio would stay constant and the increase by 2060 would far less dramatic than at lower exit

ages. There would be no increase if the exit age would increase another 3 years between 2040

and 2060.

EU-27 old-age dependency ratios, 2010-2060, under four exit

assumptions (working ages from 20 to 59 through 69)

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

2010 2020 2030 2040 2050 2060

20 to 59 / 60+ 20 to 63 / 64+ 20 to 66 / 67+ 20 to 69 / 70+

Source: Eurostat, Population Projections, 2008 data.



EN 26 EN

Figure 3: Change in public pension expenditure as a share of GDP over 2007-60 (in

percentage points)

PL

EE

ITHU

LV

SE

DK

AT

FR

PT

DE

EU27

UK

EA16

BGCZ

FI

SK

NL

LT

IE

NO

BE

MT

ES

SI

RO

CY

EL

LU

-8 -6 -4 -2 0 2 4 6 8 10 12 14 16

Social Security Pension /GDP

Source: Ageing report 2009, available at:

http://ec.europa.eu/economy_finance/publications/publication13782_en.pdf , data as updated at the Ageing

Working Group in 2010.

Note: Hungary reformed its pension system in 2009. Following the reform, its impact was assessed through a

peer review by the AWG, and endorsed by the EPC at their 22 February 2010 meeting. According to the revisedpension projections, public pension expenditure is projected to decrease from 10.9% of GDP in 2007 to 10.5% of

GDP in 2060, i.e. by 0.4 p.p. of GDP, compared with the projection in the 2009 Ageing Report, where anincrease of 3 p.p. of GDP between 2007 and 2060 was projected.

http://ec.europa.eu/economy_finance/publications/publication13782_en.pdf






EN 27 EN

Figure 4: Benefit ratios in EU Member States in 2007 and 2060

2007 2060 % change 2007 2060 % change

BE 45 43 -4

BG 44 36 -20 44 41 -8CZ 45 38 -17

DK 39 38 -4 64 75 17

DE 51 42 -17

EE 26 16 -40 26 22 -18

IE 27 32 16

EL 73 80 10

ES 58 52 -10 62 57 -8

FR 63 48 -25

IT 68 47 -31

CY 54 57 5

LV 24 13 -47 24 25 4

LT 33 28 -16 33 32 -2LU 46 44 -4 46 44 -4

HU 39 36 -8 39 38 -3

MT 42 40 -6

NL 44 41 -7 74 81 10

AT 55 39 -30

PL 56 26 -54 56 31 -44

PT 46 33 -29 47 33 -31

RO 29 37 26 29 41 41

SI 41 39 -6 41 40 -2

SK 45 33 -27 45 40 -11

FI 49 47 -5

SE 49 30 -39 64 46 -27UK 35 37 7

NO 51 47 -8

Benefit Ratio (%)

Public pensions Public and private pensions

Source: Ageing report 2009, available at:

http://ec.europa.eu/economy_finance/publications/publication13782_en.pdf .

Note: The 'Benefit ratio' is the average benefit of public pension and public and private pensions, respectively, as

a share of the economy-wide average wage (gross wages and salaries in relation to employees), as calculated by

the Commission. Public pensions used to calculate the Benefit Ratio includes old-age and early pensions and

other pensions. Private pensions are not included for all Member States. Hence, the comparability of the figures

is limited. The value of indicators might change as some Member States consider reforms of their pension

systems (e.g. Ireland).







EN 28 EN

Figure 5: Change in theoretical replacement rates for an average wage earner retiring at

65 after 40 years career between 2006 and 2046 in percentage points

Change in TRR in pp, 2006-2046

-25

-15

-5

5

15

25

35

45

55

C Z

P T

P L

F R

S E

L V

E S I E F

I

M T

E L

U K L

T L U

D E S

I

S K I T

B E

A T

H U

N L

D K

E E

C Y

B G

R O

Net RR Gross RR

Source: INDICATORS' SUBGROUP OF THE SOCIAL PROTECTION COMMITTEE (ISG) 2009 report on

Theoretical Replacement Rates, "UPDATES OF CURRENT AND PROSPECTIVE THEORETICAL PENSION

REPLACEMENT RATES 2006-2046", p.17, available at:

http://ec.europa.eu/social/main.jsp?catId=752&langId=en&moreDocuments=yes.

Note: Replacement rates are defined as the level of pension income during the first year of retirement as a

percentage of individual earnings immediately before retirement. For countries with a projected drop in

replacement rates it should be noted that the decrease can usually be counterbalanced by working longer.

It should be noted that EE, like other countries with a more positive evolutions in replacement rates (RO, BG and

CY), start off from rather low initial levels of the rates.

http://ec.europa.eu/social/main.jsp?catId=752&langId=en&moreDocuments=yes






EN 29 EN

Figure 6: Standard pension eligibility age and average labour market exit age in EU-27

There has been a more or less pronounced increase in the average exit age from the labour

force of nearly all Member States between 2001 and 2008, with an EU27 average exit age of

61.4 years in 2008. For those countries with increasing pensionable ages until 2020 and

beyond, the average exit age is expected to continue to increase. It appears that most countries

are gradually moving to a universal pensionable age of at least 65, but countries such as DK,

DE and UK have already legislated further increases in order to respond to continued

advances in longevity.



EN 30 EN

Member State

Average exit age

from the labour force

in 2001

Average exit age from

the labour force in

2008

Statutory retirement

age for M/W in 2009

Statutory retirement

age

for M/W in 2020

Further increases

in the statutory retirement age

for M/W after 2020

Belgium 56.8 61.6* 65/65 65/65

Bulgaria 58.4 61.5 63/60 63/60

Czech Republic 58.9 60.6 62/60y8m 63y8m/63y4m 65/65

Denmark 61.6 61.3 65/65 65/65 67+/67+***

Germany 60.6 61.7 65/65 65y9m/65y9m 67/67

Estonia 61.1 62.1 63/61 63/63

Ireland 63.2 64.1** 65/65 65/65 (66/66) (68/68)

Greece 61.3° 61.4 65/60 65/60 65/65

Spain 60.3 62.6 65/65 65/65

France 58.1 59.3 60-65 60/60

Italy 59.8 60.8 65/60 65/60**** ***

Cyprus 62.3 63.5* 65/65 65/65

Latvia 62.4 62.7 62/62 62/62

Lithuania 58.9 59.9** 62y6m/60 64/63 65/65

Luxembourg 56.8 : 65/65 65/65

Hungary 57.6 : 62/62 64/64 65/65

Malta 57.6 59.8 61/60 63/63 65/65

Netherlands 60.9 63.2 65/65 65/65 (66/66) (67/67)

Austria 59.2 60.9* 65/60 65/60 65/65

Poland 56.6 59.3* 65/60 65/60

Portugal 61.9 62.6* 65/65 65/65

Romania 59.8 55.5 63y8m/58y8m 65/60 (65/61y11m) (65/65)

Slovenia 56.6° 59.8** 63/61 63/61 (65/65)

Slovakia 57.5 58.7* 62/59 62/62

Finland 61.4 61.6* 65/65, 63-68 65/65, 63-68

Sweden 62.1 63.8 61-67 61-67

United

Kingdom62.0 63.1 65/60 65/65 68/68

EU 27 average 59.9 61.4



EN 31 EN

Source: Eurostat, MISSOC, Ageing Report, 2010 Interim Joint Report on pensions of the Economic Policy

Committee and Social Protection Committee, noted by the 7-8 June 2010 EPSCO and ECOFIN Councils,

available at: http://europa.eu/epc/publications/index_en.htm.

Note: ° - 2002, * - 2007, ** - 2006, in brackets – proposed, not yet legislated, *** retirement age evolves in line with life

expectancy gains over time, introducing flexibility in the retirement provision. **** For Italy 65/65 for civil servants, startingfrom 2018.

Sweden: guarantee pension is available from the age of 65.

Romania: the National House of Pensions and other Social Insurance Rights.








EN 32 EN

Figure 7: Overall, female and older workers employment rates in EU-27, 2000-2008, in

percent

Overall, female and older workers employment rates

in EU-27 2000-2008 in %

30

35

40

45

50

55

60

65

70

2000 2001 2002 2003 2004 2005 2006 2007 2008

% o

f r e s p e c t i v e a g e p o p u l a t i o n

Total 15-64 Females 15-64 Total 55-64

Source: Eurostat, LFS annual data, graph published in the 2010 Interim Joint Report on pensions of the

Economic Policy Committee and Social Protection Committee, noted by the 7-8 June 2010 EPSCO and ECOFIN

Councils, p.10, available at: http://europa.eu/epc/publications/index_en.htm.








EN 33 EN

Figure 8: Pension benefit impact of shorter and longer working lives

Difference in Net TRR percentage points for an average earner working until the

age of 63 or 67 (ie 38 or 42 contributory years) compared with working until 65 (ie40 years career - basecase). Prospective Calculations, 2046

-14,0

-12,0

-10,0

-8,0

-6,0-4,0

-2,0

0,0

2,0

4,06,0

8,0

10,0

12,0

14,0

16,0

L U

D K I E

U K

E S

B E S

I

F R

L T I T

R O F

I

S E

D E

N L

E L

L V

B G

P L

H U

E E

A T

C Z

S K

P T

C Y

M T

Difference in Net TRR after a 38 year career compared with a 40 year career

Difference in Net TRR after a 42 year career compared with a 40 year career


Theoretical Replacement Rates (TRR), "UPDATES OF CURRENT AND PROSPECTIVE THEORETICAL

PENSION REPLACEMENT RATES 2006-2046", p.22, available at:








EN 34 EN

Figure 9: Pension benefit impact of career breaks due to unemployment

Accumulated difference in net theoretical replacement rates for an average earner entering the

labour market at 25 and retiring at the statutory retirement age with a 1, 2 or 3 year career

break due to unemployment compared with no break*

-7

-6

-5

-4

-3

-2

-1

0

1

2

M T

P T

F R

C Z

E S

H U

B G

E L

D K I E

N L

A T

L T

E E

S I

U K

B E

S E

L U

C Y

D E

P L

L V I T F

I S K

R O

1 year 2 years 3 years

Source: SOCIAL PROTECTION COMMITTEE/INDICATORS' SUBGROUP OF THE SOCIAL

PROTECTION COMMITTEE (ISG). Graph published in the 2010 Interim Joint Report on pensions of the

Economic Policy Committee and Social Protection Committee, noted by the 7-8 June 2010 EPSCO and ECOFINCouncils, p.50, available at: http://europa.eu/epc/publications/index_en.htm

*The unemployment break is assumed to take place in the years just prior to old age retirement which is assumed

here to be the statutory retirement age for men

Note: the values for MT and PT are equal to 0 and should not be interpreted as missing. The values are validated

by Member States. Conditions of crediting unemployment breaks might have a positive impact on the

replacement rate of a hypothetical worker in the base-case scenario, for whom values in the Figure are provided.








EN 35 EN

Figure 10: Increasing significance of funded pensions

This figure shows that for most of those countries represented, funded pensions will provide

for a larger share of retirement income in 2046 than in 2006 as a result of pension reforms

(measured by gross theoretical replacement rates).

Share of occupational and statutory funded pensions in total gross theoretical

replacement rates in 2006 and 2046 in selected Member States

0%

10%

20%

30%

40%

50%

60%

70%

IT RO BG BE DE HU SE EE LT UK PL SK IE LV DK NL

2046 2006


Theoretical Replacement Rates, "UPDATES OF CURRENT AND PROSPECTIVE THEORETICAL PENSION

REPLACEMENT RATES 2006-2046", Annex – country fiches, available at:


Note: Data available only for a number of Member States







EN EN

EN



EN EN

EUROPEAN COMMISSION

Brussels, 7.7.2010

SEC(2010) 830 final

COMMISSION STAFF WORKING DOCUMENT

EU LEGISLATION, COVERAGE AND RELATED INITIATIVES

Accompanying document to the

GREEN PAPER


{COM(2010) 365 final}



EN 2 EN

TABLE OF CONTENTS

1. Description of EU legislation covering the pension pillars ......................................... 3

1.1. Social Security Regulation........................................................................................... 3

1.2. The IORP Directive...................................................................................................... 4

1.3. The Insolvency Directive ............................................................................................. 4

1.4. The existing Directive on safeguarding supplementary pension rights of a person

moving within the EU and the draft proposal on portability of supplementary pension

rights............................................................................................................................. 4

1.5. The Life Assurance Directive ...................................................................................... 5

2. Related EU legislation and initiatives .......................................................................... 5

2.1. UCITS IV Directive ..................................................................................................... 5

2.2. Pre-contractual information disclosure ........................................................................ 6

2.3. Financial education ...................................................................................................... 6

2.4. Corporate Governance and remuneration policies....................................................... 7

2.5. Non-life Insurance Directive (health) .......................................................................... 7

2.6. Health policy ................................................................................................................ 7

2.7. The Gender Equality Directives................................................................................... 8

2.8. Taxation........................................................................................................................ 8

2.9. Statistics ....................................................................................................................... 9

2.10. EU-wide reviews.......................................................................................................... 9

3. CEIOPS mapping of EU prudential regulation.......................................................... 10

3.1. Statutory funded pension schemes/institutions .......................................................... 11

3.2. Occupational pension schemes/institutions................................................................ 11

3.3. Individual pension schemes/institutions .................................................................... 12



EN 3 EN

This document describes EU legislation covering the pension pillars (section 1) and related

EU legislation and initiatives (section 2). A mapping of the EU legislation applicable to

pension schemes/institutions in the different EU Member States is provided in section 3. This

mapping focuses in particular on prudential regulation and was carried out by the Committee

of European Insurance and Occupational Pensions Supervisors (CEIOPS).

1. DESCRIPTION OF EU LEGISLATION COVERING THE PENSION PILLARS

1.1. Social Security Regulation

EU law in the field of social security provides for the co-ordination but not the harmonisation

of social security schemes. This means that each Member State is free to determine the details

of its own social security system, including which benefits are to be provided, the conditions

of eligibility, how these benefits are calculated and what level of contributions should be paid.

EU law provisions, in particular Regulations No 883/20041

and No 987/20092

(replacing

Regulations No 1408/713

and No 574/724

since 1 May 2010), establish common rules and

principles which must be observed by all national authorities when applying national law.These rules ensure that the application of the different national legislations respects the basic

principles of equality of treatment and non-discrimination and persons exercising their right to

free movement within the EU are not adversely affected by the application of different

national legislations.

With regard to pensions, the EU Coordination Regulations cover old-age pensions, survivors'

pensions and invalidity pensions. In general, only statutory schemes are coordinated. The EU

Coordination rules lay down for the following principles:

– Aggregation: periods of insurance or residence completed under the legislation of another

Member State are taken into account if necessary for entitlement to a benefit;

– Waiving of residence clauses: entitlement to a pension does not depend on residence in the

Member State granting the pension;

– Each Member State where a person was insured for at least one year pays a pension; there

is no 'transfer' of pension rights to the pension system of another Member State.

1 Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the

coordination of social security systems (Text with relevance for the EEA and for Switzerland), OJ L

166, 30.4.2004, p. 1–1232 Regulation (EC) No 987/2009 of the European Parliament and of the Council of 16 September 2009

laying down the procedure for implementing Regulation (EC) No 883/2004 on the coordination of

social security systems.3 Regulation (EEC) No 1408/71 of the Council of 14 June 1971 on the application of social security

schemes to employed persons and their families moving within the Community4 Council Regulation (EEC) No 574/72 of 21 March 1972 fixing the procedure for implementing

Regulation (EEC) No 1408/71 on the application of social security schemes to employed persons andtheir families moving within the Community



EN 4 EN

1.2. The IORP Directive

A major milestone was reached in 2003 with the adoption of Directive 2003/41/EC5

on the

activities and supervision of institutions for occupational retirement provision (IORP

Directive). It enables pension funds to benefit from the Internal Market principles of free

movement of capital and freedom to provide services. The Directive allows pension funds to

manage occupational pension schemes for companies that are established in another MemberState and allows European-wide companies to have only one pension fund for all subsidiaries

in Europe. The Directive establishes prudential standards to ensure that members and

beneficiaries are properly protected, as well as requirements concerning the disclosure of

information. The Directive is, however, based on minimum harmonisation and mutual

recognition and it does not cover all forms of occupational pension provision.

1.3. The Insolvency Directive

Directive 2008/94/EC6 provides for the protection of employees’ rights in the event of the

insolvency of their employer, in particular in order to guarantee payment of their outstanding

claims. As far as supplementary occupational pensions are concerned, Article 8 requiresMember States to adopt the necessary measures to protect these pensions. The European

Court of Justice has ruled7

that the Directive places no obligation on the Member States

themselves to fund the rights to old-age benefits. Furthermore the Court took the view that the

Directive cannot be interpreted as demanding a full guarantee of the rights in question. The

Directive does no more than call, in general terms, for adoption of the measures necessary to

“protect the interests” of the persons concerned, while leaving the Member States

considerable latitude as regards the level of protection and ruling out any obligation to

provide a full guarantee. At the same time, the Court considered that a system which may, in

certain cases, lead to a guarantee of benefits of less than half of that entitlement, cannot be

deemed to fall within the definition of “protect” as applied in the Directive.

1.4. The existing Directive on safeguarding supplementary pension rights of a

person moving within the EU and the draft proposal on portability of

supplementary pension rights

Unlike with social security pensions which are aggregated under EU rules, people who have

supplementary pension rights may lose out when they change jobs within or between

countries. A first step to tackle this issue was Council Directive 98/49/EC8, which effectively

ensured that people moving across borders were treated no worse than those moving within a

Member State. The Directive does not cover, however, what is often called the "portability" of

supplementary pensions even though this may have a serious effect on worker mobility.

The Commission has recognised that insufficient portability of supplementary pension rights

can create important obstacles to workers' mobility, and therefore to the free movement of

5 Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003 on the activities

and supervision of institutions for occupational retirement provision, OJ L 235 , 23/09/2003 P. 0010 –

0021.6 Directive 2008/94/EC of the European Parliament and of the Council of 22 October 2008 on the

protection of employees in the event of the insolvency of their employer OJ L 283, 28.10.2008, p. 367 Judgment of the Court of 25 January 2007 (Carol Marilyn Robins and others v Secretary of State for

Work and Pensions). C-278/05. ECR 2007 Page I-01053

8 Council Directive 98/49/EC of 29 June 1998 on safeguarding the supplementary pension rights of employed and self-employed persons moving within the Community, OJ L 209, 25.7.1998, p. 46–49.



EN 6 EN

supervisory cooperation and mutual confidence. To ensure this confidence, the Commission is

due to adopt Level 2 implementing measures by the end of June 2010 that will harmonise

certain attributes of management companies business (in particular organisational

arrangements including rules of conduct, conflicts of interest but also risk management and

measurement). As a result, once the management company is approved in one Member State

it will be subject to a harmonised set of standards across the EU.

2.2. Pre-contractual information disclosure

There are several examples of testing of pre-contractual information for financial services,

both at EU and national level. At the EU level, the Commission asked OPTEM and its

partners in the 27 Member States to carry out a qualitative study among consumers on the

subject of pre-contractual information for diverse types of financial products, including

consumer credit, mortgage loans and investment services. A summary report was made

available in January 2008.13

The UCITS IV Directive requires UCITS to provide a Key Investor Information (KII) sheet in

a harmonised and standardised form to the investor. On the basis of a consumer testing thatfed into advice from the Committee of European Securities Regulators (CESR), the

Commission will adopt Level 2 implementing measures by the end of June 2010. The results

of the testing underlined the difficulty faced by retail investors in effectively engaging with

and using information about investment products. It showed that key information on risks,

costs and performance was calculated and presented inconsistently or in such a way that it

was difficult to use, and detailed content or presentation of information was not standardised.

The Level 2 implementing measures are to ensure that the communication and presentation of

Key Investor Information to individuals is visual, simple, and facilitates comparisons across

funds.

The Commission announced in its Communication of 30 April 2009 on Packaged RetailInvestment Products (PRIPs)

14its commitment to introduce a new horizontal approach to the

regulation of sales and pre-contractual disclosures for these products, so as to ensure a level

playing field between different types of investment products offered in the retail market. The

aim is to ensure that consumer protection measures are effective and appropriate. Following

the Communication, the Commission will focus on developing specific legislative proposals

for this new horizontal approach, possibly in Spring 2011. The PRIPs proposals will be

subject to their own impact assessment, which will consider their incremental impact for all

stakeholders.

2.3. Financial education

The best way to increase the financial capability of consumers in the Internal Market is by

developing coordinated strategies in individual Member States. The role of the Commission is

to encourage the Member States to tackle financial education issues and to facilitate an

exchange of best practices. The Commission has taken initiatives to organise expert meetings,

maintain a European database, develop on-line tools for teachers and support events through

patronage.

13 Pre-contractual information for financial services, January 2008, available at

http://ec.europa.eu/consumers/rights/docs/PCI_final_report_22Feb2008_en.pdf

14 Communication from the Commission on Packaged Retail Investment Products, 30.4.2009,COM(2009) 204 final



EN 7 EN

2.4. Corporate Governance and remuneration policies

Following an announcement in the Commission Communication "Driving European

Recovery" of March 2009, the Commission adopted a Green Paper on 2 June 201015

in order

to launch a consultation process on possible (legislative and non-legislative) EU measures in

the area of Corporate Governance in financial institutions. The Green Paper addresses, among

others, the role of boards, shareholders, supervisors and external auditors in ensuring goodcorporate governance, governance of the risk management process and remuneration policies.

The Green Paper states that corporate governance should take account of the interests of other

stakeholders (depositors, savers, life insurance policy holders, etc), as well as the stability of

the financial system, due to the systemic nature of many players. A fortiori, these

considerations are relevant for pension funds, considering their economic importance and

their growing role in the society.

Furthermore, the Commission intends to consult, in a second stage, on possible measures in

Corporate Governance for all listed companies early in 2011.

2.5. Non-life Insurance Directive (health)

The First Non-life Insurance Directive (Directive 73/239/EEC16

) specifies that health

insurance constitutes insurance business. Accordingly, supplementary private health insurance

(insurance which provides for health cover which is already covered by the statutory social

security system), complementary private health insurance (insurance which provides for

additional health cover which is outside the scope of the statutory social security) and

substitutive health insurance (insurance serving as a partial or total alternative to health cover

provided by the statutory social security system) are subject to the Non-life Insurance

Directives. The first Non-life Insurance Directive excludes from the scope of the application

of the non-life insurance directives "insurance forming part of a statutory system of socialsecurity." The same applies to long-term care insurance.

2.6. Health policy

The state of people's health makes a significant difference between being able to work or not

and therefore impacts on retirement age and expenditure on pensions. National healthcare

reforms aimed at helping citizens to age in good health as well as EU action to promote

healthy ageing (as foreseen in the EU Health Strategy White Paper) can therefore contribute

to achieving the Europe 2020 objectives of retaining citizens longer on the labour market.

A population ageing in bad health means a smaller workforce with many people unable to

work because of health problems, lower retirement age and therefore greater spending on

pensions. A population ageing in good health can continue working as it grows older thus

15 Green Paper on Corporate governance in financial institutions and remuneration policies, COM(2010)

284, available at:

http://ec.europa.eu/internal_market/company/modern/corporate_governance_in_financial_institutions_e

n.htm 16 First Council Directive 73/239/EEC of 24 July 1973 on the coordination of laws, regulations and

administrative provisions relating to the taking-up and pursuit of the business of direct insurance otherthan life assurance, OJ L 228 , 16/08/1973 P. 0003 – 0019.

http://ec.europa.eu/internal_market/company/modern/corporate_governance_in_financial_institutions_en.htm








EN 8 EN

contributing to rising retirement age and lowering spending on pensions. Citizens in good

health retire about two years later than workers in poor health.17

2.7. The Gender Equality Directives

Three Gender Equality Directives have an impact on pension schemes.

Directive 79/7/EEC18 implements the principle of equal treatment between men and women in

matters of social security and notably covers statutory pensions. It however contains a number

of exceptions to the principle of equal treatment. Member States are, for example, allowed to

maintain different retirement ages for men and women. At the same time, even if there is no

obligation flowing from EU gender equality law to equalise pensionable ages for men and

women in the field of social security, gender equalisation is often a first step in reforms aimed

at increasing the retirement age in general to preserve the adequacy and sustainability of

pensions.

Directive 2006/54/EC19 on employment and occupation covers occupational pension schemes.

In accordance with the case law of the European Court of Justice, this framework also appliesto pension schemes for a particular category of worker such as that of public servants if the

benefits are paid by reason of the employment relationship with the public employer. In this

case, these benefits are considered as pay.

Finally, Directive 2004/113/EC20 prohibits discrimination between women and men in the

access to and supply of goods and services and therefore covers private/individual pension

products. It contains an exception enabling Member States to permit proportionate differences

in individuals' premiums and benefits where the use of sex is a determining factor in the

assessment of risk based on relevant and accurate actuarial and statistical data (Article 5 (2)).

2.8.

Taxation

In parallel to its proposal of the IORP Directive, the Commission presented a Pension

Taxation Communication21

in April 2001. At the time, many Member States did not grant tax

relief for the payment of pension contributions to foreign pension funds, whereas they did so

for payments to domestic funds. This would hinder the functioning of the proposed IORP

Directive. The Pension Taxation Communication concluded that the Member States cannot

discriminate against pension contributions paid to foreign IORPs. After attempts to find

common solutions with the Member States in Council discussions, the Commission launched

infringement procedures where necessary. Most Member States adapted their legislation. In

two cases the Court of Justice of the EU ruled that if domestic pension contributions were tax

17 Survey of Health, Ageing and Retirement in Europe, Mannheim Research Institute for the Economics

of Aging (MEA), 200818 Council Directive 79/7/EEC of 19 December 1978 on the progressive implementation of the principle

of equal treatment for men and women in matters of social security (OJ L 6, 10.01.1979). 19 Directive 2006/54/EC of the European Parliament and of the Council of 5 July 2006 on the

implementation of the principle of equal opportunities and equal treatment of men and women in

matters of employment and occupation (recast - OJ L 204 of 26.07.2006). It notably repeals Directive

86/378/EC (amended by Directive 96/97/EC) on occupational social security schemes (OJ L 225,

12.08.1986). 20 Council Directive 2004/113/EC of 13 December 2004 implementing the principle of equal treatment

between men and women in the access to and supply of goods and services (OJ L 373 of 21.12.2004).

21 The elimination of tax obstacles to the cross-border provision of occupational pensions, COM (2001)214 final.



EN 9 EN

deductible, contributions paid to IORPs elsewhere in the EEA should also be tax deductible22

.

Concrete result of the Commission's work in the area is that mobile workers can now remain

in their home country pension scheme if they take up a job in another Member State and

contributions to IORPs in other Member States can now be paid without tax discrimination.

The Pension Taxation Communication also concluded that discriminatory tax rules can be an

obstacle to the mobility of pensions. In Commission vs. Belgium

23

, the Court of Justice of theEU ruled that it is contrary to EU law to tax transfers of pension capital from domestic

pension funds to funds established elsewhere in the EEA if transfers of pension capital

between domestic pension funds are tax free. The Commission intends to examine whether

there are any other Member States with similar rules.

In April 2003 the Commission published a Dividend Taxation Communication24

. On the basis

of the case law of the Court of Justice of the EU this Communication concluded that

dividends which leave a Member State (outbound dividends) cannot be taxed higher than

dividends which stay in the country (domestic dividends). Further to the Communication the

Commission opened a large number of infringement cases against those Member States that

discriminated against foreign IORPs. Some Member States have already changed their lawand eliminated the discriminations; a few others have been referred to the Court of Justice of

the EU.

2.9. Statistics

Several EU bodies are involved in the statistical work for pensions. The purpose of the

Indicator Sub-Group (ISG) of the Social Protection Committee (SPC) is to collect data on

coverage and contribution rates. Eurostat collects data on social protection benefits

(ESSPROS), disposable income (EU-SILC) and pension funds (Structural Business

Statistics). The European Central Bank (ECB) collects statistics on the volumes (stocks and

flows) of the assets and liabilities of pension funds and insurance corporations. The futureEuropean Systemic Risk Board (ESRB) is likely to step up its data requirements for financial

stability purposes. The European Commission also participates in international work and has

engaged in a joint project with the OECD to collect statistics on the adequacy of benefits from

private pension provision.

In the future, retired people will receive their pensions from at least two, if not more, sources

(and pillars). Thus, the current statistical frameworks - even if improved - will not be able to

provide comprehensive and reliable information on regular pension-type revenues. It is

essential, therefore, to define precisely what sorts of regular receipts can be considered as a

pension, how different revenue streams may be added, and how risks related to some

resources are to be measured.

2.10. EU-wide reviews

A study carried out for the European Commission in 200725

provided an insight into the range

of products in which retail clients invest when they save for the long term: namely term bank

22 Commission vs. Belgium, Case C-522/04, Commission vs. Denmark , Case C-150/04.23 Case C-522/04.24 Dividend taxation of individuals in the Internal Market, COM(2003) 810 final.

25 "The EU Market for Consumer Long-Term Retail Savings Vehicles" (BME Consulting, 15 November2007); available at http://ec.europa.eu/internal_market/finances/docs/cross-sector/study_en.pdf



EN 10 EN

deposits, securities, investment funds, life assurance contracts and funded pension schemes. It

illustrated the degree of integration in this market in the EU. The study also provided a

snapshot of the drivers of consumer behaviour, in terms of both reasons for saving and choice

of vehicle.

A more recent study carried out for European Commission in 200926

indicated that 13

Member States have some form of Equity Release Scheme (Austria, Bulgaria, Finland,France, Germany, Hungary, Ireland, Italy, Netherlands, Romania, Spain, Sweden, UK). The

most significant markets are the UK, Ireland and Spain. ERS account for less than 0.1% of the

EU mortgage market. The market for Loan model schemes is larger than that for Sale model

schemes: the estimated volume of Loan model schemes is EUR 3.3 billion (50 000 contracts),

whereas that for Sale model schemes is EUR 1.4 billion (with just under 20 000 contracts).

3. CEIOPS MAPPING OF EU PRUDENTIAL REGULATION

The statutory pay-as-you-go (PAYG) pension, an unfunded defined-benefit scheme, is the

basis for the overall pension income for most EU citizens. A number of Member States havesupplemented the statutory pension scheme with a funded tier in the form of a defined-

contribution scheme, which is administered in many cases by a private financial institution.

Other Member States have, instead of or in addition to these schemes, set up unallocated

demographic reserve funds to support statutory PAYG pensions.

In many Member States the statutory pension is supplemented by occupational pensions and

individual pensions. In some instances occupational pensions are offered on a PAYG basis or

through book reserves on the employer's balance sheet, although the bulk is provided through

funded schemes operated by pension funds or insurance undertakings (e.g. group insurance

contracts). Individual pensions are arranged by contract directly with a product provider -

generally a life assurance company or a pension fund. An individual’s contributions areaccumulated and invested, and the resulting fund is subsequently used to provide pension

benefits for the individual.

Participation in occupational and individual schemes may be mandatory or voluntary,

although increasingly Member States are allowing the possibility of opting-out from

mandatory pension schemes.

Mirroring the disparate developments in Member States, the distinction between the various

pension pillars has also become less straight-forward in recent years. At the request of the

Commission, CEIOPS has carried out a detailed mapping exercise in 2009 to clarify the EU

prudential regulation that applies to the different pension schemes/institutions. The EUDirectives considered were Directives 2003/41/EC (IORP), 2002/83/EC (Life) and

85/611/EEC (UCITS). Some Member States also referred to Directives 2006/48/EC

(Banking) and Directive 93/22/EEC (Investment Services), repealed by Directive 2004/39/EC

(MiFID). The remainder of this section summarises the main results of the mapping. The

more detailed information is provided in Table 1.

26 "Study on Equity Release Schemes in the EU" (Institut für Finanzdienstleistungen, January 2009);

available at:http://ec.europa.eu/internal_market/finservices-retail/docs/credit/equity_release_part1_en.pdf

http://ec.europa.eu/internal_market/finservices-retail/docs/credit/equity_release_part1_en.pdf






EN 11 EN

Moreover, on the basis of this mapping, the Commission, with the collaboration of CEIOPS,

is conducting a further exercise aiming to review data on private pension products.

Preliminary results of this exercise indicate that occupational products reach a total of roughly

€3.6 trillion, of which €2.6 trillion in IORPs, €0.5 trillion in insurance products and €0.5

trillion in other investment vehicles. Personal pension products account for around €1.7

trillion, of which €0.7 trillion in insurance products, € 0.9 trillion in other investment vehicles

and a further €58 billion in IORPs.

3.1. Statutory funded pension schemes/institutions

Statutory funded pension schemes/institutions, whether mandatory or not, are covered by EU

Regulations 883/2004 and 987/2009 (replacing Regulations 1408/71 and 574/72 since 1 May

2010). According to the mapping, they exist predominantly in the Member States that joined

the EU in the period 2004-2007. Employers can pay contributions into the schemes in the case

of EE.

There are no EU prudential rules for the pension funds that are part of statutory funded

pension schemes/institutions. Most of the Member States concerned therefore do not applyEU prudential regulation. Some Member States have, however, applied the Life or UCITS

Directive to these pension funds. The mapping has highlighted the following situation:

– IORP Directive: n/a

– Life Directive: EE

– UCITS Directive: EE

– Banking Directive: n/a

– Investment Services (MiFID): n/a

– No EU prudential rules: BG, LV, LT, HU, PL, RO, SK

3.2. Occupational pension schemes/institutions

The IORP Directive covers many occupational pension schemes/institutions, but not all. The

Directive has been implemented by almost all the Member States, with only a few exceptions.

Article 4 of the IORP Directive, allowing many of the rules in the IORP Directive to apply to

the occupational retirement provision business of life assurance undertakings, is used in three

Member States. The IORP Directive explicitly excludes book reserve and PAYG schemes

from its scope. In many Member States there are also occupational pension schemes that aresubject to the Life or UCITS Directives. The mapping has highlighted the following situation:

– IORP Directive: - Implemented with a few exceptions.

- Article 4: FR, LT, SE

– Life Directive: BE, DK, DE, EL, LU, NL, AT, PL, PT

– UCITS Directive: PL

– Banking Directive: n/a



EN 13 EN

Table 1 – EU regulation applicable to pension institutions/schemes

Important note: This table was prepared by CEIOPS and the information reflects the situation

prevailing in May 2010. It has however been the decision of each member of CEIOPS as to

what kind of institution, scheme or product is included in the table. The national information

is therefore not necessarily comprehensive. Important country-specific notes are contained at

the end of this table.

Types of the private pension institutions

Domestic

name

Legal form

(domestic)

Legal form

(English)

Art.

3?

Y/N

Types of

pension

schemes

Mandator

y /

voluntary/

voluntary

opt-out

Source

• Statutory

funded

• occupational

• individual

EU

regulation

IRP(Institutionsde Retraite

Professionnelle)/

IBP (InstellingvoorBedrijfspensioenvoorziening)

until01/01/2012:

ASBL/VZW

or

AAM/OVV

As from01/01/2007:

OFP

non-profitorganisation

or

mutualinsuranceassociation

Organisationfor FinancingPensions

DB, DC ormixed

Voluntary(b)

Occupational(c)

IORP

entreprised’assurance/verzekeringsonderneming

société paractions/vennootschapop aandelen

or

sociétécoopérative/

coöperatievevennootschap

or

AAM(Associationd’AssurancesMutuelles)/

OVV(OnderlingeVerenigingsvereniging)

limitedpartnershipwith a sharecapital

cooperativepartnership

mutualinsuranceassociation

same asabovethroughgroupinsurance

+individuallifeinsurance

voluntary Occupationalor individual

Life

BE

fondsd'épargne-pension /pensioenspaarfonds

OPCVM/ICBE:SICAV/BEVEK

(d)

UCITS:open-endinvestmentcompany

individualpensionssavings

voluntary individual UCITS



EN 14 EN


Domesticname

Legal form(domestic)

Legal form(English)

Art.3?

Y/N

Types of pension

schemes

Mandatory /

voluntary

/voluntary

opt-out

Source

• Statutory

funded

• occupational

• individual

EUregulation

Book reserves DB/DC(e)

voluntary occupational Excludedfrom IORPDirectivebased onArt. 2.2.(e)

Пенсионно-осигурително дружество

Акционерно дружество

Joint StockCompany

No DC Voluntary(a)

Occupational(b)

IORPBG



Joint StockCompany

No DC Voluntary(a)

Individual (c) No EUprudentiallegislation



Joint StockCompany

No DC mandatory Statutoryfunded(individual)(d)

Regulation1408/71and 574/72

CZ penzijní fond akciováspolečnost

joint-stockcompany

No DC voluntary Individual,althoughoccupationalelementspossible (a)

No EUprudentialregulation.

Firmapensionskasse

Pensionskasse CompanyPension

Fund

No DC or DB Mandatory occupational IORP

Livsforsikringsselskab

Aktieselskab LifeInsuranceCompany

No DC orunit-linked

Voluntary/Mandatory(a)

Occupational/individual

Life

DK

Tværgåendepensionskasse

Pensionskasse GeneralPensionFunds

No DC orunit-linked

Mandatory Life

DE Pensionskasse Aktiengesellschaft

Versicherungs

verein auf Gegenseitigkeit

KörperschaftdesöffentlichenRechts

Anstalt desöffentlichenRechts

Joint-stockcompany

Mutual

insuranceassociation

Corporationunder publiclaw

Institutionunder publiclaw

No Voluntary(a)

occupational IORP



EN 15 EN


Domesticname


Legal form(English)

Art.3?

Y/N

Types of pension

schemes

Mandatory /

voluntary

/voluntary

opt-out

Source

• Statutory

funded

• occupational

• individual

EUregulation

Pensionsfonds(b)

Aktiengesellschaft

Pensionsfondsverein auf Gegenseitigkeit

Joint-stockcompany

Mutualpension fundassociation

No Voluntary(a)

Occupational IORP

Direktzusage(book-reserveschemes) (b)

No Voluntary(c)

Occupational Excludedfrom IORPDirectivebased onArt.2.2(e)

Unterstützungskasse (b)

GesellschaftmitbeschränkterHaftung

EingetragenerVerein

Stiftung

Limitedliabilitycompany

Registeredassociation

Foundation

No Voluntary(c)

Occupational Excludedfrom IORPDirectivebased onRecital 16and Art.2.2(d)

Lebensversicherungs-unternehmen(Direktversicherung – directinsurance) (d)

Aktiengesellschaft

Versicherungsverein auf Gegenseitigkeit

KörperschaftdesÖffentlichenRechts

Anstalt desöffentlichenRechts

Joint-stockcompany

Mutualinsuranceassociation

Corporationunder publiclaw

Institutionunder publiclaw

No Voluntary(a)

Occupational Life

Altersvorsorgevertrag(contract)

No Personalpensionschemes

Voluntary Individual Life,Banking,UCITS

Basisrentenvertrag(contract)

No Personalpensionschemes

Voluntary Individual Life,Banking,UCITS

EE Vabatahtlikpensionifond

Lepingulinefond

Contactualfund

No DC Voluntary Individual UCITS+extrarequirements



EN 16 EN


Domesticname


Legal form(English)

Art.3?

Y/N

Types of pension

schemes

Mandatory /

voluntary

/voluntary

opt-out

Source

• Statutory

funded

• occupational

• individual

EUregulation

Kohustuslikpensionifond

Lepingulinefond

Contactualfund

No DC Mandatory Statutoryfunded(individual)

UCITS+extrarequirements

Elukindlustusselts

Aktsiaselts Joint StockCompany

No DB or DC(Unit-linked)

Voluntary Individual Life

Elukindlustusselts

Аktsiaselts Joint StockCompany

No DB Mandatory Statutoryfunded(individual)

Life

IE OccupationalPensionScheme (a)

Trust Trust No DB/DC/Hybridschemesand TrustRetirementAnnuityContracts

Voluntary Occupational IORP

Personalpension

Contract Contract No IndividualRetirementAnnuityContracts /Personal

Pensions


PersonalRetirementSavingsAccounts

Contract Contract No Individualretirement savingsaccounts


EL ΤΑΜΕΙΑ ΕΠΑΓΓΕΛΜΑΤΙΚΗΣ ΑΣΦΑΛΙΣΗΣ (Τ.Ε.Α.)

Νοµικά πρόσωπα ιδιωτικού δικαίου (ν.π.ι.δ.) µη κερδοσκοπικού χαρακτήρα.

Non-profitprivateentities withlegalpersonality.

No OccupationalInsuranceFunds(DC) (a)

Voluntary Occupational IORP (b)

ΑΣΦΑΛΙΣΤΙΚΕΣ ΕΠΙΧΕΙΡΗΣΕΙΣ

GroupInsuranceContracts(c)

Life (d)

ES Fondo dePensiones deempleo

Fondo dePensiones deempleo

IORP No DC, DB,or mixed

Voluntary occupational IORP

Fondo dePensionespersonal

Fondo dePensionespersonal

PersonalPensionFund

No Individualandassociated pensionscheme

Voluntary Individual (a) No relevantprudentialEUlegislationapplicable(b)



EN 17 EN


Domesticname


Legal form(English)

Art.3?

Y/N

Types of pension

schemes

Mandatory /

voluntary

/voluntary

opt-out

Source

• Statutory

funded

• occupational

• individual

EUregulation

Seguroscolectivos

Collective LifeInsurance

CollectiveLifeInsuranceContract

No DB Voluntary occupational Life (ingeneral)

PPSE(EmployerSocialPrevisionPlan)

Collective LifeInsurance

CollectiveLifeInsuranceContract

No DB Voluntary occupational Life (ingeneral)

PPA (PrevisionPlan Assured)

Individual LifeInsurance

IndividualLife

InsuranceContract

No DB Voluntary Individual Life (ingeneral)

FR assureur vie Sociétéanonyme

Or

Sociétéd’assurancemutuelle

Stockcompany

Or

Mutualinsurancecompany

DC/DB Occupationalor individual(a)

IORP (Art.4) or Life(b)

Institution deprévoyance

Institution deprévoyance

Paritarianinstitution

ruled by the “socialprotectioncode”

DC/DB Occupationalor individual

(a)

IORP (Art.4) or Life

(b)

« mutuelle » Mutuelle ducode de lamutualité

Mutualcompanyruled by aspecific code

DC/DB Occupationalor individual(a)

IORP (Art.4) or Life(b)

IT Fondipensionenegoziali (a)

Associazione/f ondazione

Association/f oundation

No DCVoluntaryopting-out

Occupational IORP

Fondipensioneaperti (b)

Patrimonio didestinazioneautonomoistituito dauna societàfinanziaria inmodoseparatorispetto alpatrimoniodella stessa

Anautonomouspool of assetsinstituted bya financialcompanyseparatelyfrom its ownassets

No DCVoluntaryopting-out/Voluntary

occupational/Individual IORP



EN 18 EN


Domesticname


Legal form(English)

Art.3?

Y/N

Types of pension

schemes

Mandatory /

voluntary

/voluntary

opt-out

Source

• Statutory

funded

• occupational

• individual

EUregulation

Fondipensionepreesistentiautonomi (c)


Association/f oundation

No DC, DBclosed tonewmembers

Voluntaryopting-out

occupationalIORP

Fondipensionepreesistenti(nonautonomi) (d)

Fondipensioneinterni aibilanci dellesocietàpromotrici

Book reserve No DC, DBclosed tonewmembers

Voluntaryopting-out

occupationalExcludedfrom IORPDirectivebased onArt. 2.2(e)

(d)

Enti privati diprevidenzaobbligatoriadei liberiprofessionisti(e)


Association/Foundation Yes DB/DC

Mandatory Statutoryfunded Regulation

1408/71

Pianipensionisticiindividuali(Pip) (f)

Patrimonio didestinazioneautonomoistituito daunacompagnia diassicurazionein modoseparatorispetto alpatrimoniodella stessa

Anautonomouspool of assetsinstituted byan insurancecompanyseparately

from its ownassets

No Voluntary Individual Life

CY Ταµεία Προνοίας

Νοµικά Πρόσωπα Ιδιωτικού ∆ικαίου

ProvidentFunds -PrivateEntities withLegalPersonality

No DC/DBset up viacollectiveagreements

MandatoryorVoluntary(determined by therules of eachprovidentfund)

Occupational(a)

IORP

Ταµεία

Συντάξεως

Νοµικά

Πρόσωπα Ιδιωτικού ∆ικαίου

Pension

Funds –PrivateEntities withLegalPersonality

No DB set up

viacollectiveagreements

Mandatory Occupational

(b)

IORP

Επενδυτικά Ατοµικά Σχέδια Ζωής

Ασφαλιστικό Συµβόλαιο

InsuranceContract

No UnitLinkedPersonalLifeContracts

VoluntaryOpt Out

Individual Life

Σχέδια Συντάξεως (c)

Pay as yougo pensionschemes

No DB Mandatory occupational Excludedfrom theIORPDirective



EN 19 EN


Domesticname


Legal form(English)

Art.3?

Y/N

Types of pension

schemes

Mandatory /

voluntary

/voluntary

opt-out

Source

• Statutory

funded

• occupational

• individual

EUregulation

Σχέδιο Φιλοδωρήµατος (d)

Book reserve No DB Mandatory occupational Excludedfrom theIORPDirective

LV Privātaispensiju fonds

Akcijusabiedr ība

Stockcompany

No DC/DB voluntary Occupationalandindividual (a)

IORP (b)

N/A State fundedpensionscheme (c)

DC Mandatory, voluntary

Statutoryfunded

Regulation1408/71

LT Pensijų asociacija

Asociacija Association DC, DB(a)

Voluntary Occupational IORP

Gyvybėsdraudimoį monė,vykdantiprofesinių pensijų kaupimoveiklą

Akcinė bendrovė /Uždarojiakcinė bendrovė /EuroposBendrovė

Publiclimitedliabilitycompany/Private limitedliabilitycompany/Europeancompany(SocietasEuropaea)

Lifeassurancecontractunderwhichoccupationalpensionsareaccumulated

Voluntary Occupational IORP (Art.4)

Valdymoį monė

Akcinė bendrovė /Uždaroji akcinė bendrovė

Publiclimitedliabilitycompany/Private limitedliabilitycompany/

No DC Voluntary Statutoryfunded

Excludedfrom IORPDirectivebased onArt. 2.2(a)

Gyvybėsdraudimoį monė

Akcinė bendrovė /Uždarojiakcinė bendrovė /Eur

oposBendrovė

Publiclimitedliabilitycompany/Private limited

liabilitycompany/Europeancompany(SocietasEuropaea)

No DC Voluntary Statutoryfunded

Excludedfrom IORPDirectivebased onArt. 2.2(a)

Valdymoį monė

Akcinė bendrovė /Uždaroji akcinė bendrovė

Publiclimitedliabilitycompany/Private limitedliabilitycompany/

DC Voluntary individual UCITS (b)



EN 20 EN


Domesticname


Legal form(English)

Art.3?

Y/N

Types of pension

schemes

Mandatory /

voluntary

/voluntary

opt-out

Source

• Statutory

funded

• occupational

• individual

EUregulation

Gyvybėsdraudimoį monė

Akcinė bendrovė /Uždarojiakcinė bendrovė /EuroposBendrovė

Publiclimitedliabilitycompany/Private limitedliabilitycompany/Europeancompany(SocietasEuropaea)

Lifeassurancecontract

Voluntary individual Life

LU Fonds de

pension(CSSF) (a)

Sepcav and

assep

Pension

savingscompanieswith variablecapital andpensionsavingsassociations

No voluntary Occupational IORP

Fonds depension (CAA)(b)

Associationd’assurancesmutuelles,sociétécoopérative,sociétécoopérative

organiséecomme unesociétéanonyme ouassociationsans butlucratif

Mutualinsuranceassociations,co-operativecompanies,co-operativecompanies

organized asa publiclimitedcompany,charitableassociations

No voluntary Occupational IORP

Assurances degroupe

Enterprised’assurances /Contratsd’assurancegroupe

Insurancecompany/Groupinsurancecontracts

No voluntary Occupational Life

Régime

interne depension

NA

Provisions aubilan

NA

Book-reserveschemes

No voluntary Occupational No relevant

prudentialEUlegislationapplicable



EN 21 EN


Domesticname


Legal form(English)

Art.3?

Y/N

Types of pension

schemes

Mandatory /

voluntary

/voluntary

opt-out

Source

• Statutory

funded

• occupational

• individual

EUregulation

Contrat deprévoyance-vieillesse

Produits deprévoyance-vieillessereprésentéspar desproduitsd’assuranceainsi que pardes produitsbancairesinvestis dansdesorganismes deplacement

collectif agréés

Pensionproductsrepresentedby insuranceproducts aswell as bybankingproductsinvested inlicensedunits forcollectiveinvestment

No voluntary Individual Life,Banking,UCITS (c)

HU magánnyugdíjpénztár

magánnyugdíjpénztár

Association-like speciallegal form

No DC (a) mandatory Statutoryfunded(individual)

Regulation1408/71

önkéntesnyugdíjpénztár

önkéntesnyugdíjpénztár

Association-like speciallegal form

No DC voluntary Individual (b) No relevantprudentialEUlegislationapplicable

Nyugdíjbiztosí

tás (LifeInsurancecompany)

- életbiztosító

rt.

- biztosítóegyesület

- joint-stock

company

- association

No Pension

insurance

voluntary Individual Life

foglalkoztatóinyugdíjszolgáltatás

Foglalkoztatóinyugdíjszolgáltató rt.

Joint stockcompany

No DB/DC voluntary Occupational IORP

nyugdíjelőtakarékosságiszámla (c)

pensionsavingaccount

No DC voluntary Individual Banking,UCITS (c)

MT Occupational

RetirementScheme

Trust

Contractual

Trust

Contractual(a)

No Trust

Deed

Contractbetweentheemployerand theRetirementSchemeAdministrator

Voluntary

(b)

occupational IORP (c)



EN 22 EN


Domesticname


Legal form(English)

Art.3?

Y/N

Types of pension

schemes

Mandatory /

voluntary

/voluntary

opt-out

Source

• Statutory

funded

• occupational

• individual

EUregulation

PersonalRetirementScheme

Trust

Contractual

Trust

Contractual(a)

No TrustDeed

Contractbetweenmemberand theRetirementSchemeAdministrator

Individual (d) No EUprudentiallegislation

NL Pensioenfonds(´pensionfund´)

Stichting Foundation(a) No Mandatoryforindustry-wideschemes

Voluntaryopt-out forcompanyschemes

Occupational(b) IORP

Verzekeraar(´insurancecompany´ or´insurer´)

Naamlozevennootschap

Publiclimitedcompany

No Voluntary Occupational(b)/individual

Life

AT Pensionskasse Aktiengesellschaften

Joint-stockcompany

No DB andDC

voluntary occupational IORP

BetrieblicheKollektivversicherung

Aktiengesellschaften,Versicherungsverein auf Gegenseitigkeit and SE

Joint-stockcompany,mutualinsuranceassociationand SE

No DB andDC

voluntary occupational Life

Lebensindividual- und

Gruppenrentenersicherung

Aktiengesellschaften,

Versicherungsverein auf Gegenseitigkeit and SE

Joint-stockcompany,

mutualinsuranceassociationand SE

No DB andDC

voluntary Individual Life

DirekteLeistungszusagen (Book-reserveschemes)

No DB/DC voluntary Occupational Excludedfrom IORPDirectivebased onArt 2.2(e)



EN 23 EN


Domesticname


Legal form(English)

Art.3?

Y/N

Types of pension

schemes

Mandatory /

voluntary

/voluntary

opt-out

Source

• Statutory

funded

• occupational

• individual

EUregulation

PL pracowniczyfunduszemerytalny

funduszemerytalny(osobaprawna)

occupationalpension fund(in Polishlegalframework isregistered asseparatelegal entity)

No DC voluntary Occupational(a)

IORP (b)

zakładubezpieczeń na życie

spółkaakcyjna

joint-stockcompany


Life

funduszinwestycyjnyotwarty

funduszinwestycyjny investmentfund (inPolish legalframework isregistered asseparatelegal entity

No DC voluntary Occupational(a) UCITS

zarzą dzają cyzagraniczny

(foreignmanager)

Not specified– all form of IORPsnotified byrelevantauthoritiesfrom other

MemberStates


IORP (c)

Otwartyfunduszemerytalny

funduszemerytalny(osobaprawna)

Openpension fund(in Polishlegalframework isregistered asseparatelegal entity)

No DC mandatory Statutoryfunded

Regulation1408/71



EN 24 EN


Domesticname


Legal form(English)

Art.3?

Y/N

Types of pension

schemes

Mandatory /

voluntary

/voluntary

opt-out

Source

• Statutory

funded

• occupational

• individual

EUregulation

Indywidualnekontaemerytalne

1) Funduszinwestycyjny,

2) Zakładubezpieczeń na życie,

3) Bank,

4) instytucjaprowadzą ca

działalność

maklerską .

1)Investmentfund -inPolish legalframework isregistered asseparatelegal entity,

2) joint-stockcompany,

3) joint-stockcompany,

4) Limitedcompany or joint-stockcompany

No DC voluntary individual 1) UCITS

2) Life

3) Banking

4) ISD

PT Fundos depensõesfechados(closedpensionfunds)

Fundos depensões

Pensionfunds

No DB / DC Voluntary occupational IORP

Adesõescolectivas afundos depensõesabertos(collectivemembershipof openpensionfunds)

Fundos depensões

Pensionfunds

No DB / DC Voluntary occupational IORP

Contratos deseguro degrupo (groupinsurancepolicies)

Contratos deseguro

Insurancepolicies

No DB / DC Voluntary occupational Life

Planos depoupança-reforma(saving-retirementschemes)

1) Fundos depensões

2) Contratosde seguro

3) Fundos deinvestimento

1) Pensionfunds

2) Insurancepolicies

3) Investment funds

No DC Voluntary individual 1) Norelevant EUprudentialregulation(a)

2) Life

3) UCITS



EN 25 EN


Domesticname


Legal form(English)

Art.3?

Y/N

Types of pension

schemes

Mandatory /

voluntary

/voluntary

opt-out

Source

• Statutory

funded

• occupational

• individual

EUregulation

Adesõesindividuais afundos depensõesabertos(individualmembershipof openpensionfunds)

Fundos depensões

Pensionfunds

No DC Voluntary individual No relevantEUprudentialregulation(b)

Contratos deseguroindividuais(individualinsurancepolicies)

Contratos deseguro

Insurancepolicies

No DC Voluntary individual Life

Planos depensõesfinanciados nobalanço daempresa(book-reserveschemes)

No DB/DC(c)

voluntary occupational Excludedfrom IORPDirectivebased onArt. 2.2(e)

RO Administratoral unui fond

de pensiiadministratprivat

Administratorul unui fond

de pensiiadministratprivat -Societate peactiuni

Administrator of a

privatelyadministrated pensionfund- jointstockcompany

No hybrid DC(a)

Mandatory Statutoryfunded

(individual)

Regulation1408/71

Administratorde fonduri depensiifacultative

Administratorul de fonduride pensiifacultative -Societate peactiuni

Administrator of voluntarypensionfunds - jointstockcompany

Yes DC (b) Voluntary individual IORP (c)

SI Pokojninskadružba

Delniškadružba

Joint-stockcompany

No DC Voluntaryopt-out

Occupational(a)

IORP

Zavarovalnica Delniškadružba

Joint-stockcompany

No DC Voluntaryopt-out

Occupational(b)

IORP



EN 26 EN


Domesticname


Legal form(English)

Art.3?

Y/N

Types of pension

schemes

Mandatory /

voluntary

/voluntary

opt-out

Source

• Statutory

funded

• occupational

• individual

EUregulation

Vzajemnipokojninskisklad

Vzajemnipokojninskisklad,upravjavci:banka,zavarovalnica,pokojninskadružba

Mutualpensionfund,managed bybank,insurancecompany,pensioninsurancecompany

No DC Voluntaryopt-out,Mandatoryfor certainoccupations

Occupational(c)

IORP

Skladobrtnikov inpodjetnikov(SOP)

Sklad Found No DC/DB Voluntary Individual No relevantprudentialEUlegislationapplicableto thepensionproduct

SK dôchodkovásprávcovskáspoločnosť

akciováspoločnosť

joint stockcompany

No

DC(personal,protected)

Voluntary

Statutoryfunded(individual)


doplnkovádôchodkováspoločnosť

akciováspoločnosť .

joint stockcompany

No

DC(hybrid,unprotect

ed)

Voluntary,in general

(a)

Individual, ingeneral (b)

IORP

FI ETA-lisäeläkesäätiö

eläkesäätiö companypension fund(independent legalentity)

No DB voluntary occupational IORP

ETA-lisäeläkekassa

eläkekassa industry-wide pensionfund(independent legalentity)

No DB voluntary occupational IORP

SE Livförsäkringsbolag

Aktiebolag Proprietarylifeinsurancecompany

No DC/DB Voluntary(a)

1)Occupational

2) individual(b)

1) IORP(Art. 4)

2) Life

Livförsäkringsbolag

Ömsesidigtbolag

Mutual lifeinsurancecompany


1)Occupational

2) individual(b)

1) IORP(Art. 4)

2) Life

Tjänstepensionskassa

Understödsförening

Occupationalpension fund


Occupationalandindividual

IORP



EN 27 EN


Domesticname


Legal form(English)

Art.3?

Y/N

Types of pension

schemes

Mandatory /

voluntary

/voluntary

opt-out

Source

• Statutory

funded

• occupational

• individual

EUregulation

Pensionsstiftelse (c)

Stiftelse Pensionfoundation

No None,investments only

Voluntary(a)

Occupational IORP

Särskildredovisning avpensionsskuld(Bookreserves) (d)

No DB Voluntary(a)

Occupational Excludedfrom IORPDirectivebased onArt. 2.2(e)

UK OccupationalDB scheme

Trust Trust (a) No DB Voluntary occupational IORP

OccupationalDC scheme

Trust Trust (a) No DC Voluntary occupational IORP

OccupationalHybridscheme

Trust Trust (a) No DB/DC(b)

Voluntary occupational IORP

Personalpensionscheme

Contract Contract No DC Voluntary individual Life

IS Lífeyrissjóður Sjóður Fund No DB/DC Mandatoryandvoluntary

Occupational(a) andindividual

No EUprudentiallegislation

LI Pension Funds(Pensionskasse)

Stiftung Foundation Yes DB or DC

collectivefoundation orcaptivefoundation

Mandatory Occupational(a)


Pensionsfunds

(Pensionsfonds)

Stiftung,

Aktiengesellschaft,

EuropäischeAktiengesellschaft,

Genosenschaf t

EuropäischeGenossenschaft

Foundation,

Limitedcompany,

Societaseuropa,

Cooperativesociety

SocietasCooperativaEuropaea

No DB or DC

biometricrisk ornot

call foradditionalcover ornot

Voluntary Occupational(b)

IORP



EN 28 EN


Domesticname


Legal form(English)

Art.3?

Y/N

Types of pension

schemes

Mandatory /

voluntary

/voluntary

opt-out

Source

• Statutory

funded

• occupational

• individual

EUregulation

Insurancecompany(Versicherungsunternehmen, direkteLebensversicherung)

Aktiengesellschaft,

Genossenschaft

Limitedcompany,

CooperativeSociety

No DC or DB Voluntary Occupational IORP(Art.4)

NO Foretakspensjons-ordninger

1)Pensjonskasser

2)

Livsforsikrings- selskaper

1) Pensionfunds

3) Lifeinsurance

companies

No DB It ismandatoryto have aDC or aDB

scheme

occupational 1) IORP

2) Life

Innskuddspensjons-ordninger

1)Pensjonskasser

2)Innskuddspensjons-foretak

3)Livsforsikrings-selskaper

4) Banker

5)Forvaltningsselskap forverdipapirfond

1)Pensionfund,

2) Definedcontributionpensionundertakings,

3)Lifeinsurancecompanies

4)Banks

5)Companieswhichmanagesecuritiesfunds

No DC It ismandatoryto have aDC or aDBscheme

Occupational 1) IORP

2) IORP

3) Life

4) Banking

5) UCITS

Individualpensionschemes

1)Livsforsikringsselskaper

2) Banker

3)Forvaltningsselskap forverdipapirfond

4)Pensjonskasser

1) Lifeinsurancecompanies

2)Banks

3)Companieswhichmanagesecuritiesfunds

4) Pensionfund (e)

No DC Voluntary Individual 1) Life

2) Banking

3) UCITS

4) IORP



EN 29 EN


Domesticname


Legal form(English)

Art.3?

Y/N

Types of pension

schemes

Mandatory /

voluntary

/voluntary

opt-out

Source

• Statutory

funded

• occupational

• individual

EUregulation

StatensPensjonskasse

Pension fund StatensPensjonskasse is apension fundadministering pensionschemes forstateemployeesand certainother groupsof employees

DB Mandatory Occupational Excludedfrom IORPdirectivebased onArt. 2.2. (a)and/or (c)

Book reserves(a)

Pensionschemesbased oncontractwhere thebenefits arepaid by theemployer/undertaking

UsuallyDB (b)

voluntary Occupational Excludedfrom IORPdirectivebased onArt. 2.2. (e)

Pensjonsfond(c)

pension fund DB Mandatoryif apensionfund asmentionedisestablished

Occupational Excludedfrom IORPdirectivebased onArt. 2.2 (c)and/or (d)

pension funds pensionschemesfixed by lawfor certainoccupationalgroups (d)

DB Mandatory Occupational Excludedfrom IORPdirectivebased onArt. 2.2(c)

pension fundsponsored byState

Pension fundfor medicalparctitioners

DB Mandatory Occupational Excludedfrom IORPdirective

based onArt. 2.2(c)

pension fundssponsoredpartly by theState

Pensionfundsadministrating earlyretirementschemes

DB Voluntary Occupational Excludedfrom IORPdirectivebased onArt. 2.2(c)

Note: The column "Art. 3? Y/N" indicates whether or not Article 3 of the IORP Directive applies. This article specifies that

institutions for occupational retirement provision which also operate compulsory employment-related pension schemes which

are considered to be social-security schemes covered by Regulations (EEC) No 1408/71 and (EEC) No 574/72 shall be

covered by the IORP Directive in respect of their non-compulsory occupational retirement provision business.

Country-specific notes to the table:



EN 30 EN

Belgium (BE)

a) The legal forms possible until 01/01/2012 are: ASBL (Association Sans But Lucratif)/VZW (Vereniging Zonder

Winstoogmerk), or AAM (Association d’Assurances Mutuelles)/OVV (Onderlinge Verenigingsvereniging). The new legal

form since 01/01/2007 is the OFP (Organisme de Financement de Pensions/Organisme voor de Financiering van

Pensioenen).

b) Voluntary opt-out in some industry-wide schemes under certain conditions.

c) Scope of schemes: employer, industry-sector or self-employed (some are organised by profession but not necessarily); an

IORP may manage several types of schemes with different scopes.

d) Organisme de placement collectif en valeurs mobilières (OPCVM) / instelling voor collectieve belegging (ICBE):

organismes de placement collectif publics à nombre variable de parts (SICAV) / openbare instellingen voor collectieve

belegging met veranderlijk aantal rechten van deelneming (BEVEK).

e) The scope is limited to providing pension benefits to company managers.

Bulgaria (BG)

(a) Each insured person in a voluntary pension fund has an individual account in which his/her personal contributions are

accumulated. In the same personal account contributions can be made by employers or third persons with prior consent from

the insured person.

(b) The occupational pension schemes are managed within pension funds which are legal persons. The pension funds are

established and managed by pension insurance companies, which are joint stock companies. The pension insurance

companies manage separate pension funds for voluntary occupational schemes.

(c) The individual pension schemes are managed within pension funds which are legal persons. The pension funds are


companies manage separate pension funds for voluntary individual schemes.

(d) The mandatory pension schemes are managed within pension funds which are legal persons. The pension funds are


companies manage separate pension funds for mandatory schemes (universal and professional pension funds).

Czech Republic (CZ)

a) This product is based on an individual contract that can be concluded regardless of the client’s occupational status.

However, there can be some occupational element in the sense that an employer can act as a third person contributing to the

client’s account. In 2008, this was the case for approximately 25% of clients.

Denmark (DK)

a) For life insurance companies participation is mandatory and the scheme belongs to the occupational pillar when the

scheme is part of a pension plan in a company.

Germany (DE)

a) In general voluntary. In some areas, there are collective agreements providing for obligatory occupational retirement

provisions or financial incentives for employees for deferred compensation.

b) The insolvency coverage by the PSVaG (Pensions-Sicherungs-Verein Versicherungsverein auf Gegenseitigkeit) applies to

this type of occupational retirement provisions (insolvency of the employer).

c) In general voluntary. In some areas, there are collective agreements providing for obligatory occupational retirement

provisions.

d) Under certain circumstances, the insolvency coverage by the PSVaG (Pensions-Sicherungs-Verein Versicherungsverein

auf Gegenseitigkeit) applies to this type of occupational retirement provisions (insolvency of the employer).

Ireland (IE)



EN 31 EN

a) The pension scheme is the institution for occupational retirement provision. Legal separation of pension fund assets from

all other assets is achieved via the trust mechanism under which all pension schemes are set up.

Greece (EL)

a) Occupational Insurance Funds are independent legal entities. They are established on a voluntary basis in each company or

sector(s) of employment on the initiative either of employees or employers or through an agreement between employees and

employers as well as on the initiative of self-employed or independent professionals or farmers or their associations.

Depending on the type of arrangement, Occupational Insurance Funds can provide benefits in kind or in cash, in the form of annuity or as a lump sum. Occupational Insurance Funds that provide retirement benefits operate on a funded basis (DC

pension schemes).

b) In addition, also Directive 98/49/EC (safeguarding the supplementary pension rights) and Directive 2006/54/EC (equal

opportunities) apply.

c) Group Insurance Contracts concluded between the employer and the insurance company in the sectors VII "management

of group pension funds" or IX "works similar to social security".

d) In addition, Directive 98/49/EC (safeguarding the supplementary pension rights) applies.

Spain (ES)

a) Employers cannot pay contributions on behalf of members into this scheme.

b) The national legislation applicable is the Pension Plan and Fund Act (Texto Refundido de la Ley 8/1987, de regulación de

Planes y Fondos de Pensiones) of 29 November 2002.

France (FR)

a) All these institutions are able to sell: (i) occupational pension schemes, in particular “Article 83” schemes (defined-

contribution), “article 39” schemes (defined-benefit) or “contrats Madelin” schemes (defined-contribution); or (ii) individual

life insurance (individual pension savings).

b) For occupational retirement provision, the institution can decide about the regulatory framework: life directive or IORP

directive, with application of its article 4. The institution has to ask for a specific agreement if it wants to use the IORP

directive. For individual retirement provision, the life directive applies.

Italy (IT)

a) Independent legal entity set up as a result of an agreement between employers and trade unions at industry level (also

company, group, or regional funds are possible and have in fact been instituted).

b) Pension funds instituted by financial intermediaries (banks, insurance companies, etc) as segregated assets. They can host

both occupational and personal schemes.

c) Pension funds instituted before 1993 as an independent legal entity.

d) Non-autonomous pension funds instituted before 1993 as book reserves within the balance sheet of an employer. When the

company that sets up the pension fund is a bank or an insurance, which is the typical case, the banking directive or insurance

directive applies.

e) Independent private entities operating social security schemes for several categories of self-employed, professional

workers (such as lawyer, etc.).

f) Personal retirement plans based on individual life insurance companies.

Cyprus (CY)

a) There are company provident funds and industry-wide provident funds, which provide lump sum benefits.

b) There are employees´ pension funds (private companies, semi public organizations and local authorities) and pension

funds for self employed (advocates and doctors).



EN 32 EN

c) These schemes have no legal personality. They are pay as you go pension schemes that provide a lump sum benefit and a

monthly benefit for life.

d) These schemes have no legal personality. They are book reserve retirement bonus schemes that provide a lump sum

benefit.

Latvia (LV)

a) There are closed pension funds which provide only occupational pensions and open pension funds which are allowed tooperate both occupational and individual pensions.

b) In addition, Directive 98/49/EC (safeguarding the supplementary pension rights) applies.

c) This scheme is part of the state pension and contributions paid to the scheme are part of the social tax. The scheme is

operated by the State social security agency. The assets of the scheme are managed by private asset managers (they are not

IORPs). State funded pension scheme could be treated as part of the funded tier of statutory pensions.

d) Voluntary for those socially insured persons who were at age between 30 and 45 at 01.07.2001.

Lithuania (LT)

a) DB schemes shall be implemented only for individuals who are not subject to the Lithuanian social security and labourlegislation, i.e. in case of cross-border activities.

b) No relevant prudential EU legislation applicable to the pension product. However, Directive 85/611/EEC (UCITS) is

applied for the providers.

Luxembourg (LU)

a) Authorised and supervised by CSSF.

b) Authorised and supervised by Commissariat aux Assurances.

c) No relevant prudential EU legislation applicable to the pension product. To the provider: Directive 2002/83/EC for

underlying insurance contracts, Banking Directive 2006/48/EC and UCITS directive (2001/108/EC).

Hungary (HU)

a) Since 1.1.2010, there is a performance guarantee equal to inflation.

b) Members are obliged to pay contribution. However the employer has the possibility to pay contribution on behalf of the

member.

c) This is a special saving account with tax incentives. There is no relevant prudential EU legislation applicable to the

pension product. To the provider: Banking Directive 2006/48/EC and UCITS directive (2001/108/EC).

Malta (MT)

a) A Retirement Scheme of a contractual nature consists of a separate pool of assets with no legal personality with thepurpose of providing retirement benefits.

b) Currently the pension system in Malta is still based on state pension provisioning.

c) In addition, Directive 98/49/EC (safeguarding the supplementary pension rights) applies.

d) An employer cannot contribute to Personal Retirement Schemes that may be established in terms of the current legislation.

These Personal Retirement Schemes would be funded solely by contributions from the individual.

Netherlands (NL)

a) Various legal forms are permitted, but pension funds almost exclusively prefer a Foundation.

b) As for occupational pension schemes, the social and labour law and the information requirements are the same for insurersand pension funds.



EN 33 EN

Poland (PL)

a) There are four legal forms of occupational pension plans in Poland which could be freely chosen by an employer as the

plan sponsor.

b) “Pracowniczy fundusz emerytalny” is a Polish financial institution (fund) which operates in Poland and under the Polish

law and its only two tasks are to accumulate and to administer contributions (premiums) from sponsoring undertakings for

occupational pension purposes. This institution fulfils criteria for IORPs under Article 6a of the IORP Directive, so it can

also operate cross-border in other Member States.

c) “Zarzadzajacy zagraniczny” is a foreign IORP which operates cross-border in Poland, in the meaning of the Polish law.

Portugal (PT)

a) These institutions are out of the scope of the IORP Directive because they are institutions for personal retirement

provision. They are covered either by the Life or UCITS Directive or by the national pension fund legislation. The national

pension fund legislation (one single Decree-Law), which always covered both occupational and individual schemes, was

updated to reflect the requirements of the IORP Directive.

b) These institutions are out of the scope of the IORP Directive because they are institutions for personal retirement

provision. They are covered by national pension fund legislation. This legislation (one single Decree-Law), which always

covered both occupational and individual schemes, was updated to reflect the requirements of the IORP Directive.

c) Usually covers retirement benefits that are not tax qualified, e.g. early retirement programmes.

Romania (RO)

a) Personal, mandatory, minimum benefit established by Law, funded pension scheme with automatic enrolment.

b) Voluntary, unprotected, funded pension scheme.

c) In the national implementation.

Slovenia (SI)

a) May offer individual pension policies.

b) May offer individual pension policies and life insurance.

c) The mutual pension fund is not a legal entity. It may offer individual policies.

Slovakia (SK)

a) Mandatory for certain categories of employees (e.g. miners).

b) Occupational for certain categories of employees (e.g. miners).

Sweden (SE)

a) Voluntary, though most occupational pension is mandatory through collective agreements.

b) May offer life insurance (separate) as well.

c) Linked to companies who have technical provisions as DB book reserves (outside of IORP directive scope)

d) Companies recently try to set up book reserves even for DC schemes. The Swedish authorities have therefore initiated a

discussion with the companies to begin in the near future. By law it is required that the book reserves must be secured.

Normally this is done through credit insurance.

United Kingdom (UK)

a) The pension scheme is classed as the institution. As such there is no legal separation. Legal separation of pension fund

assets from all other assets is achieved via the trust mechanism under which all pension schemes are set up.



b) Legally classified in UK as DB but has some guarantees and some money purchase elements.

Iceland (IS)

a) Pensions fund are in many cases based on profession, but some professions can choose in which pension fund they pay.

Liechtenstein (LI)

a) Beside the statutory pillar (old age, disability and survivors’ insurance; AHV), Liechtenstein has also a mandatoryoccupational pillar to supplement the statutory pillar. For each employee for whom an employer has the obligation to pay

contributions to the social insurance (statutory pillar), the employer has also the obligation to pay to an occupational DB or

DC scheme (beside some exceptions; minimum contributions are stipulated by law). The relevant law is the “Gesetz vom 20.

Oktober 1987 über die betriebliche Personalvorsorge” (BPVG).

b) For an employee having the obligation to pay contributions to the social insurance (statutory pillar), only voluntary

contributions can be made into a pension plan according to the “Gesetz vom 24. November 2006 betreffend die Aufsicht über

Einrichtungen der betrieblichen Altersversorgung” (Pensionsfondsgesetz; PFG), with which directive 2003/41/EC was

implemented. The mandatory part has to be paid into a pension plan according to the BPVG.

c) Insurance company (Versicherungsunternehmen, direkte Lebensversicherung).

Norway (NO)

a) The use of this kind of schemes is unknown and probable very limited.

b) Usually DB schemes based on contract and usually limited to providing pension benefits to company managers.

c) All pensjonsfond are established according to tax regulation before 1968. Pensjonsfond are without guaranteed benefits.

The benefits are derived according to certain rules laid down in tax law on the basis of the size of the fund. Benefits from

these pension funds are paid primarily in order to compensate employers/pensioners born before 1917 for reduced benefits

from State pension scheme.

d) The pension schemes are fixed by legislation.

e) It is legally possible for pension funds to offer individual pension schemes to members.

Hacia Un Nuevo Sistema de Pensiones Para Europa

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