European developments affecting the pensions industry 2005

Claim to ECJ under Insolvency Directive, October 2005

The trade union, Amicus, has submitted written submissions to the European Court of Justice claiming that the Government has not complied with the 1980 Insolvency Directive which required it to take necessary measures to protect the interests of employees, pensioners and deferred pensioners. The Government has stated that it does not believe this to be the case and intends to defend this claim.

Proposed Portability Directive, October 2005

The European Commission has approved a new pensions portability Directive. The proposal is designed to reduce the obstacles to mobility within and between Member States caused by present occupational pension scheme provisions. The perceived obstacles relate to: conditions for acquiring pension rights (i.e. different qualifying periods), rules relating to preservation of deferred benefits (such as pension rights losing value over time) and the transferability of acquired rights. The proposal also seeks to improve the information given to workers on how mobility may affect supplementary pension rights.

Pensions Directive, September 2005

The Pensions Directive came into force on 23 September 2005. Many of the provisions of the Pensions Act 2004 are aimed at complying with this Directive, including provisions in relation to scheme specific funding and investment. Only 9 member states were in compliance with the Directive when it came into force (presumably not including the UK as many of the Pensions Act 2004 provisions had yet to come into force).

Commission Green Paper on demographic change, March 2005

From 2005 to 2030 it is estimated that the number of people over age 65 will rise by 52.3% while numbers in the age group 15-64 will decrease by 6.8%. The ratio of dependent young and old people to people of working age is predicted to increase from 49% in 2005 to 66% in 2030. To offset the loss of working-age people, there would need to be an employment rate of over 70 per cent. The Commission wants to open a debate on how to tackle the problems which these changes represent and what role the European Union should play.

This article first appeared in our Pensions update January 2006. To view this publication please click here to download it as a pdf in a new window.