Commission acts on laggards [UK] [SLO]

The EU Commission has decided to refer the United Kingdom and Slovenia to the European Court of Justice for partial or non-transposition of the Pensions Directive into their respective statute book. This follows its earlier reasoned opinion and is a swift consequence of those two countries not responding to the Commission's challenge. The other nine countries (Belgium, Cyprus, Czech Republic, Finland, France, Italy, Lithuania, Slovakia, Spain) at least seem to have sent a response, to which the Commission will react in the near future (via IPE).

Usefulness of IFRS in Europe

A new PwC survey of UK fund managers offers a rare & differentiated, therefore highly relevant glimpse of the usefulness to users (i.e. investors) of the first wave of European financial statements that are prepared under mandatory application of IFRS. The survey looks at diverse issues like the usefulness of IFRS vs. UK and US GAAP, support for fair value, the impact of the IFRS angle on investment decision making etc and displays the change of such perceptions over the recent past. I hope this survey will be continued in the future and will be extended to other European countries!

Pan-European Pensions in Z�rich [CH]

The British-Swiss Chamber of Commerce in association with the Association of Foreign Banks in Switzerland will be hosting a lunchtime presentation about Pension Fund 2nd pillar - borderless: A Swiss Perspective in Z�rich on 6 July. I am honoured to have been asked to speak at that event, which is open to non-members also. The invitation is available here.

Ageing hits politics [NL]

Demographic ageing is no longer approaching, but effectively starting. The Dutch Ministry of Finance receives recommendations of a fiscal policy study group charged with assessing the impact of ageing on Dutch government finance. The recommendations are tough: The next Cabinet should reduce expenditures by some EUR 15 bio (3% of GDP) in order to remain sustainable. Nonetheless, addressing the issue head on is exemplary.

Convergence conference materials

Regular readers of this blog will be aware that my contribution to the IASCF's Frankfurt conference was available online. The IASB has now published all conference materials on their own website.

IZS Seminar on Pensions Directive

IZS invites to a full day seminar on the consequences of the Pensions Directive for the Swiss market. The seminar will take place in Basle, Switzerland on 22 November 2006 and will be held in German. An invitation can be downloaded here.

Reproductive technologies to address demographic challenge?

Rand Corporation has looked into utilising Assisted Reproductive Technologies (ART) as a component of population policy to mitigate falling fertility rates and thus unfavourable demographic developments across Europe. To do that, the researchers transposed parameters from Denmark, where ART are more widely available than in the UK. They found ART to be three to four times more cost effective than child benefits for instance (via BBC).

IMF proposes reform to Swiss pensions system [CH]

In an additional Selected Issues paper to its recently published, periodic Article IV consultation, the IMF has analysed the Swiss occupational pensions system, comparing it to the Dutch and the British system.

While the analysis inevitably remains at a high level of abstraction (for instance, there is no mention of the fact that many pension plans that are nominally classified as DC need to be reclassified as DB to stay in line with IAS 19), the international comparison permits important conclusions concerning the fragmented supervisory structure in Switzerland and its outdated regulatory framework with a set of parameters that are defined without much recourse to actual market developments.

It will interesting to follow the IMF's more detailed exploration of these issues, announced for the Financial Sector Assessment Program update scheduled for the end of this year!

Pensions Directive to enter EEA

We hear that it is pretty certain now that the EEA Joint Committee will formally decide to let the Pensions Directive become part of the EEA legal body in its forthcoming meeting of 7 July. The long delay is said to have been caused by Norwegian difficulties in implementing the Directive.

Court action [DK]

IPE reports today - lacking some precision - that the European Court of Justice has made an "initial judgement" in a case pertaining to pan-european pensions.

To be reported in fact is an opinion of the Advocate General in the case C-150/04 EU Commission vs. Denmark. While it is certainly true that the Court usually follows the reasoning of the Advocate General, it is wrong to speak of it as an "initial judgement".

Materially, the opinion confirms the Court's earlier positions concerning the tax deductibility of retirement premium payments as stated most prominently in the Danner case. The "somewhat diffuse" justification of coherence of a country's system of taxation continues to be weakened, putting additional stress on Denmark's and Sweden's taxation which is not in line with the EET Principle. However, the opinion heavily relies on Double Taxation Treaties to extend said coherence to other Member States. This is a further indication of the functional importance of as dense a network of DTTs as possible.

Demographics to hurt banks / insurance? [D]

The German branch of consultancy Booz Allen Hamilton projects a draw of up to 25% on revenues of banks and insurances by 2030, caused a shift in the German age structure which will reduce savings rates and related demand. The German financial services industry is considered to be ill prepared for changing demand (via FTD).

Proposed changes to FRS 17 [UK]

The British Accounting Standards Board has issued for comment proposed changes to its FRS 17 Standard on Retirement Benefit reporting. These modifications would take into account recent changes in the UK regulatory environment and would align FRS 17 more closely with IAS 19, its international counterpart. Both IAS 19 and FRS 17 are subject to an ongoing fundamental review which is expected to result in the removal of valuation corridors. This will lead to a more faithful representation of the economic nature of the relationship between pension scheme and its sponsor.