The European Commission is to prepare plans that would allow European Union workers to take their pensions with them throughout member states, according to the conclusions of the Stockholm summit.
The plans, part of the EU’s drive to open up the European labour market, will be presented to EU leaders at the first quarter meeting of the European Council in 2002. The action plan will focus on the portability of supplementary pensions, without prejudice to the coherence of member states' tax systems.
Before the summit, EU finance ministers approved draft legislation setting out rules for fund managers wishing to do business throughout the 15 states. The law will provide a service provider passport for fund managers, meaning they would be able to sell their products throughout the EU, using slimmed down prospectuses.
However managers would have to meet tough new rules on authorisation and capital requirements, in addition to observing new prudential and conduct rules.
Also, just prior to Stockholm, Austrian MEP Othmar Karas presented his draft report on the supplementary pensions directive to the European Parliament’s Economic and Monetary Affairs Committee. In it he called for greater flexibility and movement within the European Union for workers and their pensions, as well as easing restrictions on cross-border activity by institutions.
According to Karas, this would mean that investors will be offered a comprehensive range of services and workers will be able to enjoy the benefits of mobility, with no risk of forfeiting part of their pension entitlements. Additionally, institutions would be free to seek the services of a more efficient asset manager or custodian established in another Member State.
Karas also called for the introduction of the prudent person investment rule to govern asset management in European pension funds. In his report, he argued that institutions would be able to invest pension assets efficiently, with the introduction of the prudent person rule. On the prudent person rule, Karas claimed: This is advantageous for recipients, since they can expect a higher yield and thus also a higher pension.
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