This month's Off The Record asks whether Europe should continue to strive to create pan-European pension plans, or should it accept that different European countries have developed different pension systems, with different plan designs, supervisory systems and tax regimes?

The attraction of a pan-European pension to companies is cost-saving. The EC directive on institutions for occupational retirement provision (IORP) was designed to create conditions that would enable European occupational pension funds to benefit from economies of scale.

Yet this saving has yet to be realised. In spite of EC threats to ‘name and shame' foot-dragging member states, implementation of the directive has been at a laggardly pace.

The EC directive itself has slowed progress with the requirement that member states comply with social and labour laws in each member state. Yet the biggest and probably least surmountable obstacle is tax harmonisation. Member states, notably the UK, are refusing to harmonise taxes or even contemplate harmonisation. Without tax harmonisation, a pan-European pension cannot succeed.

Yet some European countries, within and without the EU, are unworried by national jealousies and selfishness. They believe that there is profit in pan-European and multinational pensions. Belgium has passed legislation enabling pan-European pension funds to operate in and from the country. Ireland and Luxembourg have both introduced vehicles that enable the pooling of pension assets. The Netherlands has now thrown its hat into the ring, promoting itself as a centre of pensions excellence for promoters of pan European pensions

So where does the true direction lie? Towards or away from the idea of pan-European pensions? One year after the European pension directive came into force, Off The Record re-visits the subject of pan-European pensions and gives IPE readers a chance to give their opinions on how much or how little has been achieved in the progress towards a single pension scheme for a single market. First we wanted to know whether IPE readers agree with the view that a single European market for occupational pensions is as far off as ever it was. In other words, nothing much has changed since September 2005.

The response from the pension fund managers, administrators and trustees who replied to our survey suggests this is perhaps too gloomy a view. A slim majority (51%) are prepared to back the IORP directive, while a minority (44%) agree that a single European pension is an also-ran. The remainder (5%) venture no opinion.

There is strong support for the idea that pension funds in EC member states have their own national characteristics. More than four in five of our respondents (83%) agree that there are more differences than similarities between the occupational pension funds of European countries. So what is the argument for cross-border pensions in Europe? One of the champions of the IORP directive, Piia-Noora Kauppi, a member of the European Parliament, has maintained persistently that the directive is crucial for the development pensions security and the market for private pensions.

Kauppi argues that the IORP directive liberalises investment procedures of occupational pension funds and helps companies to establish cross-border funds. This, in turn, will reduce management costs and increase returns. Yet only a third of the pension fund managers who responded to our survey (33%) agree with this view. A majority (61%) disagree while a few (6%) have no view. One of the arguments in favour of pan-European pensions is that it will encourage European companies to establish pension funds in other member states. Here there is a more optimistic view of the impact of the directive. A majority (56%) agree that the European pensions directive is likely to encourage companies to establish pension funds in other member states. A minority disagree (39%) while a few (5%) are undecided.

The move towards the pooling of European pension assets is seen as an important development. A substantial majority (78%) of respondents agree that the opportunities for pooling pension fund assets on a Europe-wide basis are likely to increase over the next five years.

The timescale for the implementation if the IORPS directive comes in for some criticism. A significant majority of respondents (72%) say that two years is not long enough to introduce so many new regulations for the implementation of the pensions directive.

There are some dissenting voices, however. One manager of a UK pension plan observes that the two year period of grace is "far too long". Do pan-European pensions need the propulsion of a pan-European pensions directive? Cannot Europe-based companies construct their own pensions arrangements across Europe? There is a strong argument that not all European pensions arrangements need the involvement of the EU, and that cross -border co-operation can take place through mutual agreements between different countries.

This suggestion gains strong support from our respondents. A clear majority (67%) agree, a minority (29%) disagree and a few (4%) do not have a view. Yet the real stumbling block for the adoption of pan-European pensions is tax discrimination remains one area that is preventing pan-European pensions from being implemented, according to a 2005 report by the European Federation for Retirement Provision (EFRP).

The walls that member state have constructed to protect their tax systems are being taken down brick by brick through EC court judgments. In recent years, the Danner and Skandia cases in the European Court of Justice (ECJ) put the spotlight on European nations that allowed tax discrimination. In both cases, the court concluded that the member states were acting wrongfully, and that contributions were tax deductible when made to pensions schemes based in other member states. Since then the EU has initiated a series of infringement proceedings to force member states to eliminate discriminatory regulation against cross boarder providers of occupational pension schemes. Those states included Belgium, Spain, France, Italy, Portugal, the UK and Ireland. For supporters of pan European pensions, the roll call of defaulters is profoundly disheartening. Yet the hope that is that such proceedings will force EU member states out of their bunkers, and that pan-European pension funds will be a reality sooner than later.

There is also a hope that the succession of European Court of Justice (ECJ) judgments on tax discrimination by EU member states will advance the cause of pan-European pensions. More than half or respondents (55%) agree with this view. More than a third (39%) disagree and a small minority (6%) have no view.

Pension fund mangers are generally pessimistic about whether tax harmonisation in Europe, in respect of pensions, is possible in the foreseeable future. The manager of an Italian pension plan points out that "the core question for pan- European pensions is tax harmonisation, both in respect of personal income and financial products". Only a minority of respondents (28%) believe that harmonisation is possible. A large majority (72%) say it is not.

Directives may not be the main driver for pan-European pensions. The market, particularly the multinational market, may be more influential. Most respondents (83%) agree that the market itself will encourage the development of cross-border pension arrangements in Europe.

So should governments of European countries should do more to encourage their pensions and investment industry to develop pan-European pension plans?

A small majority (55%) think they should. Others think that European governments should put their own house in order first.

The manager of an Italian pension fund puts the case for government intervention to support second pillar pension funds: "European countries should defend occupational funds. Only a strong demand can balance what the investment industry offers - a too asymmetric market between the individual worker and the financial operators."

In other words, European governments should look after their own pensioners before anyone else's. Isn't that where we came in? David White