IORPs up 46%

The number of cross-border IORPs active in the EEA has risen from 48 to 70 over a time period of 18 months, according to CEIOPS' 2008 Report on Market Developments. Cutoff dates were January 2007 and June 2008, respectively. The bulk of those cross-border plans is still focused on the country pair Ireland - UK, representing 50% of all plans, down from 60% on last count. Most of the activity happened in Austria, Belgium and Luxembourg. Removing the basis effect of plans that have been in operation prior to the implementation of the Pensions Directive, the growth in plan numbers increases to 244%.

While it's good to see some activity picking up, it's still too slow to constitute significant momentum, even if rebased.

CEIOPS State of Pensions Report

CEIOPS' Report on financial conditions and financial stability in the European Insurance and Occupational pension fund sectors has a good section (starting p. 22) about recent developments in the European pension funds market, giving insights into last year's changes in a number of countries and a statistical overview, based on Eurostat.

ECJ deals first blow

In an important decision in case C-522/04 Commission vs. Belgium, the Court's second chamber has found, among other things, that Belgian tax provisions effectively taxing retirement capital to be transferred to an IORP resident outside of Belgium to be in breach of several Treaty freedoms (recital 40) and therefore inadmissible (IPE).

This is the first decision dealing with an issue that is critically important to the establishment of cross-border pensions, and its favourable, albeit unsurprising outcome virtually removes yet another area of legal uncertainty. It is interesting to note that the Court evaluates the equivalent applicability of its reasoning to the EEA, which it confirms.

Polar pensions

IPE reveals that Iceland is the latest (and last) EEA country to adopt the Pensions Directive into its national body of law. It will be interesting to observe how Iceland proceeds with the transposition given the Belgian example. The Icelandic Association of Pension Funds will certainly provide more background.

Liechtenstein attracts IORPs

IPE has an interesting story about German insurance LV 1871 bringing its pan-European pension fund to Liechtenstein. Other institutions are also confirmed to be interested in this location, which is entirely in line with our assessment of Liechtenstein as one of the competitive locations for European IORPs.

Infringement proceedings

The EU Commission swings into action with some treaty infringement related proceedings. It has decided to take Sweden to the ECJ about the country's practise not to grant tax deductibility for pensions contributions paid to insurers resident abroad (but within the EEA) in line with the EET principle. Strangely, there seems to be no reference to the Pensions Directive.

In other news, the Commission is satisfied with recent modifications of Spanish legislation which also did not allow for tax deductibility of cross-border pensions contributions. The infringement case against Spain is therefore closed - in this case with reference to the Pensions Directive btw. Notably, the new Spanish tax rules explicitly allow deductibility for IORPs resident in the EEA, and specifically Liechtenstein, which removes an important legal uncertainty with Liechtenstein IORPs, at least with regards to their relation to Spain.

New mandatory pensions in Norway [NO]

epn has a concise summary of recent important developments in the Norwegian pensions market, which is characterised by the introduction of mandatory occupational pensions and the debate about moving to the prudent person rule in asset management. Remember that Norway, together with Iceland and Liechtenstein, is part of the European Economic Area which has committed to implementing the Pensions Directive into their own regulation.

Liechtenstein joins the fray [FL]

On 23 August, the Liechtenstein government has decided to join the competition to become the most favourable location for pan-European pension funds by adopting a bill to transpose the Pensions Directive into national law. The report 78/2006 should become available here shortly. It is expected that the bill will become law on 1 January 2007, together with the attached regulation which is in the final stages of being drafted.

Pensions Directive part of EEA

It is a formality, and it has been expected, but it's nonetheless noteworthy: The EEA Joint Committee has added the Pensions Directive to the EEA body of law, effective 7 July 2006. Therefore it is also formally applicable to Iceland, Norway and the Principality of Liechtenstein now.

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.

Liechtenstein draft

Liechtenstein has now opened a public comment period until 5 July for its draft law transposing the Pensions Directive into its national law.

Norway / EEA

As mentioned earlier, the EEA, or more specifically, the EEA Joint Committee is still labouring with the transposition of the Pensions Directive into EEA law (via IPE). The expectation remains that the Norwegians will have worked out their difficulties until the next meeting of the JC, scheduled for 2 June.