Perspectives of EU Pension Law to Facilitate Worker Mobility and Sustainability of Pensions

Chapter 1: Introduction 1
1 Introduction 1
2 The European Landscape of Occupational Pensions 3
2.1 Beveridge and Bismarck 4
2.2 Three Pillars 5
2.3 The Three Pillars in the EU 8
3 Context 13
3.1 Introduction 13
3.2 A Problem of Demographics 14
3.3 An Increasingly Mobile Continent 16
3.4 Economic Challenges 17
4 European Pension Policy 17
4.1 Introduction 17
4.2 Worker Mobility 18
4.3 Using the Internal Market to Achieve Safe, Adequate and Sustainable Pensions 22
5 The IORP II Directive and IORPs: an Introduction 24
5.1 Introduction 24
5.2 What is an IORP? 24
5.3 Why Cross-Border IORPs? 26
5.4 What is the IORP II Directive? 28
5.5 How Do Cross-Border IORPs Operate? 29
6 Taking EU-Level Action: The Political Context 31
7 Research Focus 34
8 The Main Research Question 34

Chapter 2: The EU and the Member States’ Pension Systems: Legitimising EU Involvement with National Pension Systems 37
1 Introduction 37
2 The EU and Occupational Pensions 38
3 EU Powers in the Field of Occupational Pensions 39
4 Positive Integration 40
4.1 Introduction 40
4.2 Legal Bases for Positive Integration 41
4.3 Alternatives to Legislation: Soft Governance and the Open Method of Coordination 45
5 Negative Integration 46
5.1 Judgments of the European Court of Justice 47
5.2 Negative Integration: The Fundamental Freedoms 48
5.3 Fundamental Principles and Occupational Pensions 55
6 Conclusion 57

Chapter 3: The History and Goals of the EU’s involvement in Occupational Pensions 59
1 Introduction 59
2 History of the EU’s involvement in Occupational Pensions 60
2.1 1991: Communication on Occupational Pensions and First Proposal for a Directive 61
2.2 1997: The Green Paper on Supplementary Pensions in the Single Market 69
2.3 1999: A New Communication from the Commission: “Towards a Single Market for Supplementary Pensions” 72
2.4 Negotiations on the Proposed IORP I Directive: A Struggle for a More Social Directive 75
2.5 The IORP Directive: Analysis of Its Objectives and Adoption 81
3 Since the Safeguard Directive and IORP I 84
4 Summary and Analysis 88
5 Conclusion 92

Chapter 4: Cross-Border IORPs and the Pension Scheme Member 93
1 Introduction 93
Part 1: Pension Scheme Types: Defined Benefit to Defined Contribution and everything in between 95
Section A: Retirement Income Security 95
1 Pension Scheme Types: Defined Benefit to Defined Contribution and Everything In Between 97
1.1 Defined Contribution (DC) Plans 97
1.2 Defined Benefit (DB) Plans 100
1.3 Taking Stock of the Scheme Types 101
2 Securing the ‘Promise’: Security Mechanisms and IORP II 102
2.1 Introduction 102
2.2 Security Mechanisms 103
3 Security Mechanisms and Cross-Border IORPs 106
3.1 Introduction 106
3.2 The Classification of Security Mechanisms in the Case of Cross-Border IORPs 109
3.3 Towards a Solution 112
4 Conclusion to Section a 117
Section B: Prudential Supervision of Cross-Border IORPs 119
1 Introduction 119
1.1 An Illustration 120
2 Safeguards in the IORP II Directive 122
2.1 New Requirements in the IORP II Directive 123
2.2 Quantitative Requirements 123
2.3 Governance and Risk Management 124
2.4 Information Requirements 125
2.5 Powers of Intervention for Supervisory Authorities 126
2.6 Conditions Applicable to Cross-Border Transfers 128
3 Conclusion to Section b 130
Section C: The Social Function of Occupational Pensions 132
1 Introduction 132
1.1 Context – An Increasing Social Role for Occupational Pensions 133
2 The Full Funding Requirement: Does the IORP Directive Encourage Cross-Border Provision of DC over DB Schemes? 136
2.1 Funding a Cross-Border Scheme 136
2.2 No Removal of the Requirement, but a Compromise? 137
2.3 Does the Requirement Make It More Difficult to Operate DB Schemes Across Borders? 138
3 Conclusion to Section c: The Social Function of Occupational Pensions 139
Conclusion to Part 1 141
Part 2: Worker Mobility 143
1 Introduction: The Obstacles to Worker Mobility and Terminology 144
2 Portability in Current EU Occupational Pension Law 146
3 Acquisition and Preservation of Pension Rights: The Supplementary Pension Rights Directive 150
4 Transferability of Pension Rights 153
5 Role of the European Court of Justice 156
6 Conclusion to Part 2 159
Conclusion to Chapter 4 162

Chapter 5: Cross-Border IORPs in the Single Market – The Perspective of Pension Providers 165
1 Introduction 165
2 The Obstacles Faced by Cross-Border IORPs 168
2.1 Non-Legal Obstacles to the Cross-Border Activity of IORPs 168
2.2 Legal Obstacles to the Cross-Border Activity of IORPs 169
3 Social and Labour law 172
3.1 Introduction 172
3.2 What is the Origin of the Directive’s Deference to National Social and Labour Law? 173
3.3 The Scope of Social and Labour Law and Prudential Law 176
3.4 Conclusion 179
4 The IORP II Directive and the Freedom to Provide Services 180
4.1 The Freedom to Provide Services 180
4.2 Restrictions of the Freedom to Provide Services: General 181
5 Obstacle No. 1 to the Freedom to Provide Services: Compulsory Membership 183
5.1 Introduction 183
5.2 The Design of Occupational Pension Systems: A Member State Prerogative within the Limits of EU Law 184
6 Obstacle No. 2 to the Freedom to Provide Services: Non-Recognition of the IORP by Host State Legislation 188
7 Obstacle No. 3 to the Freedom to Provide Services: Non-Recognition of the Pension Scheme 190
8 Obstacle No. 4 to the Freedom to Provide Services: Conditions Applicable to the Transfer of Pension Rights to an IORP from Another Member State 191
9 Justifying Restrictions on the Freedom to Provide Services: General 193
9.1 Introduction 193
9.2 Justifying Discriminatory Measures 194
9.3 Justifying Indirectly Discriminatory and Non-Discriminatory Measures 196
9.4 Justifying Obstacle No. 1: Compulsory Membership 197
9.5 Justifying Obstacle No. 2: Non-Recognition of the IORP 202
10 Justifying Obstacle No. 3: Non-Recognition of the Pension Scheme 204
11 Justifying Obstacle No. 4: Conditions Applicable to the Transfer of Pension Rights to an IORP from Another Member State 204
Conclusion to Chapter 5 206
Conclusion on Cross-Border IORPs (Chapters 4 And 5) 207

Chapter 6: PEPP – A Third-Pillar Complement to Second-Pillar EU Pension Law? 209
1 Introduction 209
2 What Is a PEPP? 210
3 The PEPP Regulation 212
Part 1: The PEPP on the Single Market 215
4 PEPP Features 215
4.1 PEPP Product Features & Governance 215
4.2 PEPP Security Mechanisms 215
4.3 PEPP Funding 216
4.4 Guarantees and Biometric Risks 217
4.5 Costs and Charges 218
4.6 Increasing Premiums 219
4.7 Benefit Adjustment Mechanisms 220
4.8 PEPP Governance 220
4.9 Analysis and Conclusion 223
Part 2: Worker Mobility 228
5 Portability 230
6 Transferability: The Switching Service 231
7 Could the PEPP be an Alternative to Second Pillar Schemes for Mobile EU Citizens? 232
8 Conclusion to Part 2 232
9 Analysis and Conclusion to Chapter 6 241

Chapter 7: Conclusion 245

Bibliography 253
Table of Contents