As Konrad Adenauer, one of the founding ‘fathers’ of the EU construction said: “We live all under the same sky, but we don’t all have the same horizon.” Even today this reveals the essence of the whole EU project. Can Europe get the plans for the retirement house in place and build it? In other words, can Europe get pensions regulation right? Under which conditions?
We need to assume that there is agreement on the plans and on what a ‘right’ regulation should be. In the EU context, as often for condominiums in Europe, this takes the form of a two step process. Step one consists of the general plan designing the framework of the pan-European pension architecture, including the structure of the main “supporting walls”. This has been in place since September 2003 and coincides with the adoption of the so called EU pension fund directive. We should assume that this is the right law, in the sense that it is the only one having been agreed jointly by the European Parliament and the EU member states, after three years of cross-country and cross-party discussions.
Step two implies the implementation of the EU pension fund directive into the national legislation of the enlarged EU members states. Continuing the analogy with a building, each owner-country is due to further develop the specific lay-out of its apartment by accommodating its needs and habits into the given space while respecting the agreed quality and security standards. This second step is under construction, and is due to be finalised for delivery by the next 22 September. According to the Commission, on 10 July 2005, only seven out of 25 member states had notified their implementing rules. It is worth noticing the encouraging diligence of several new member states. The implementing measures notified by Austria, Estonia, Poland, Slovenia and Slovakia are already under examination by the Commission, which has the authority and duty to verify the correct implementation of the EU directive into national law. Denmark and Spain have also notified their measures, but still partially. Although several other countries such as Ireland, UK, the Netherlands and Luxembourg are well advanced in their law making process, it is very likely that all the national measures will not be in place before 2006 and that the deadline will be missed.
Missing deadlines is not news, as there are at least 1,000 infringement procedures already pending for non implementation of directives and rules. Can we - the business community, employees and future retirees, the EU institutions - accept such a bad habit with complacency? What are the powers that each stakeholder can use to reverse this trend? A basic ‘to do’ and ‘who should do’ list, combining right behaviours and actions, should be implemented.
Firstly, stick to the agreed principles and rules laid out in the EU pension fund directive and stop arguing why and how it should be different. There will be time and scope for a further revision following the Commission’s review in September 2009. If national governments and their administrations do not accept that the game-plan is over, it will be impossible to start the construction process at all. The transition period allowed to member states for the implementation of the directive is not, like in football, ‘extra time’. This period should be used fairly and in good faith to adapt the national system in a way that would permit the member states to reach the EU objectives set out in the directive, rather than just protect a national acquis.
Secondly, develop a common understanding of the directive and clear its grey areas in the context of the Committee of European Insurance and Occupational Pension Supervisors (CEIOPS) and of the European Insurance and Occupational Pension Committee (EIOPC). CEIOPS, involving the 25 member states supervisory authorities, has a key role to ensure an effective functioning of the pension fund directive and for guaranteeing a smooth co-operation in the exchange of information for cross-border operations. It is empowered to advise the Commission on the technical implementing measures and can provide guidelines and draft standards which, although not compulsory, can enhance the convergence of national supervisory practices. The occupational pension protocol of co-operation due to be adopted by CEIOPS next October can be an important contribution for securing a consistent implementation of the directive.
CEIOPS needs to resist the temptation of extending its powers towards a hidden re-negotiation of the areas of the directive considered unclear. This would have the unlawful effect of over-ruling the Council decision. The EIOPC, involving high level representatives from the member states with responsibility in the pension and insurance area, has taken office only recently. It has an advisory role vis-à-vis the Commission on any policy issues arising from the application of EU law on occupational pensions and on any forthcoming proposal for new legislation in this field. This committee has a strategic role in the effective implementation of the whole directive on pensions. As with CEIOPS, an adequate level of transparency for the EIOPC’s work is also necessary.
This is not only a question of principle, but also because an informal external control will enhance market pressure and accountability of national decision makers. In the context of better law-making and market review, the re-establishment of the Inter-Institutional Monitoring Group for financial services, agreed in July by Parliament, the Council and the Commission should also play a role. Its mandate, which is to assess the proper functioning of such committees and anticipate any bottlenecks emerging from their operations, should be explicitly extended to cover occupational pensions issues.
Thirdly, pursue the countries who do no notify the implementing measures or comply with the directive requirements both in terms of timing and substance. This is the duty of the Commission and one of its funding missions. Commissioner Charlie McCreevy, in a recent hearing on the 2005-2010 financial service priorities, has confirmed the policy shift towards better implementation and law-making in the broader sense. We hope that the pension fund directive will be high on the list of EU laws under scrutiny, and that the grace period left to member states after they have passed the deadline for compliance will not be too long.
To be effective, t he Commission should manage the ‘stick’, represented by the infringement procedures process, and the ‘carrot’ represented in this case by its invaluable cross-country and cross-culture expertise to be brought in support of the national administrations, and of the business community that has the legitimate right to benefit from it. There is scope for improving the quantity and quality of informal meetings where stakeholders can exchange their views and experience with the Commission.
Lastly, make people and business rights known in plain language. This is a formal task for the European Commission and other institutions. But this is a task also for the various interests groups, business organisations and associations which already intervene in the EU law making process. Their search for enhanced institutional legitimacy should be combined with better work on information and communication with their members and with a broader ‘constituency’, including the media.
The future of the pan-European regulatory framework is more interlinked to European politics than one could imagine. The conditions to fully exploit the opportunities opened by an initiative at the EU level, as opposed to a national specific status quo, largely rely on two factors: effective leadership and mutual trust. Without leadership, the effective translation of the common general interest became impossible. Without trust, the national supervisors will continue to oppose any excuse to impede the operation of a foreign based fund into its country.

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