EUROPE - The European Commission has launched a public consultation to help encourage supplementary pension provision and cross-border job mobility.
The consultation addresses the issue of pension rules that discourage scheme members from transferring to another EU Member State or from changing jobs within the same Member State.
Mercer Human Resource Consulting said it welcomed this latest initiative but highlighted the lack of tax harmonisation as a “fundamental obstacle to mobility”:
Many European countries are facing a crisis of future pension provision through their pay-as-you-go social security systems,” said Mercer worldwide partner Paul Kelly.
“Clearly, harmonisation of pension rules will help encourage the development of supplementary pensions as well as cross-border pension provision.”
Kelly argued that EU states are unlikely to volunteer tax concessions under the new initiative as many just cannot afford to do so. He added that multinationals are already shelling out millions in compensation for employees’ loss of retirement benefits when they transfer within Europe because tax reliefs vary so much between Member States.
He added: One of the simplest ways to have true pan-European pension mobility would be to have a single pan-European pension scheme for each multinational employer, and the Commission recognises this.
“However, national tax legislation means that this is currently not possible, and the position will not change even with the Commissions latest initiatives.” This week Mercer launched a pan-European pension test case that it hopes will force the issue in law. International business and information technology consultants AMS Management Systems has applied to the UK Inland Revenue for approval to place one of their UK employees in their company pension plan in the Netherlands.
The case is part of the Pan-European Pensions Group which is jointly managed by Mercer and Geoffrey Furlonger, an independent European lawyer and consultant.
By Madhu Kalia
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