Discriminatory dividend taxation

The EU Commission has sent letters of formal notice to Italy and Finland about their rules under which dividends paid to foreign pension funds may be taxed more heavily than dividends paid to domestic pension funds. Italy and Finland are asked to reply within two months. These letters constitute the first step of the infringement procedure of Article 226 of the EC Treaty. Similar letters have been sent to the Czech Republic, Denmark, Spain, Lithuania, the Netherlands, Poland, Portugal, Slovenia and Sweden on 7 May.

Mitigating cost of ageing

McKinsey has an interesting Chart Focus displaying the mitigating effect of direct & indirect policy measures on the opportunity cost to growth of ageing societies. By far the largest effect could be had in Germany by raising the average rates of return on savings, which would not appear to be outlandish, given the notoriously conservative nature in which German savings tend to be invested. Immigration and higher fertility pale in comparison.

A Commissioner's philippic

Here is the text of Commissioner McCreevy's speech at today's IPE Awards. He expresses his disappointment in some member states' defective implementation of the Pensions Directive, especially with regards to national investment limits. He describes the Directive as a "harmonising framework" "to allow the best pension fund managers to administer pension schemes across the single market and pension providers to compete fairly on a pan-European basis". He also announced that court cases have been initiated against three member states today - these are probably Slovenia, the UK and Italy. Interestingly, he singles out Liability Driven Investment as a market innovation to better manage risks. Clearly, deficient implementation will not be cut a lot of slack.

The core focus of the speech was dedicated to the third pillar and forthcoming changes in the regulatory environment as well as existing challenges in the marketplace, such as insufficient availability of annuity products. (More from IPE)

EU Commission sues Italy [IT] [CZ] [HU] [PL]

Following action against the UK and Slovenia, the Commission has decided to refer Italy to the European Court of Justice for non-transposition of the Pensions Directive. Apparently Italy has also not responded to the Commission's reasoned opinion - why it has taken the Commission four months longer than in the case of the UK and Slovenia to discover that they had not received a response is not quite clear.

IPE adds, although it is unclear on what source this information is based, that the Commission has sent letters of formal notice to the Czech Republic, Hungary and Poland. At any rate, the latter two countries have not been involved in infringement proceedings regarding the Pensions Directive to date, even though Poland definitely deserves attention as we noted earlier.

Italian pensions [IT]

epn has an interesting article about the occupational pensions situation in Italy, another laggard country. Fortunately, there is an Association for the development of the market in pension funds!

Commission takes action

The EU Commission has issued a reasoned opinion against Belgium, Cyprus, Czech Republic, Finland, France, Italy, Lithuania, Slovakia, Slovenia, Spain and the United Kingdom for non- or partial transposition of the Pensions Directive into their national law, thereby capturing all the member states that it has identified earlier for lagging. The next step in the infringement proceedings according to Art. 226 EU Treaty would be court action in front of the ECJ after two months time (via IPE).