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OSE-FINAL REPORT-Scope of the Coordination in the Pension Field 15 September 201 1 Scope of the coordination system in the pension field Tender VT/2010/104 Dalila Ghailani Igor Guardiancich David Natali Maurizio Ferrera Matteo Jessoula Scope of coordination system in the pension field – Final Report 2 Table of contents Introduction ........................................................................................................................ 6 Part I: Review of the EU legislation on the coordination of pensions ....................... 8 Dalila Ghailani Section 1: Regulations 883/2004 and 987/2009 on the coordination of social security schemes ........................................................................................................... 11 1.1 Objective, material scope and definitions .......................................................................... 11 1.2 Application of the general coordination principles to pensions ............................................. 14 1.3 Special coordination rules for old-age pensions ................................................................. 17 1.4 Special provisions for funded schemes ............................................................................. 19 Section 2: Directive 98/49/EC on safeguarding the supplementary pension rights of employed and self-employed persons moving within the Community ......... 21 2.1 Objective, material scope and definitions .......................................................................... 21 2.2 Measures for safeguarding the supplementary pension rights of workers moving within the Community .................................................................................................................... 22 Section 3: Draft proposal on the portability of supplementary pension rights COM(2005)507 ................................................................................................ 23 3.1 Objective, material scope and definitions .......................................................................... 23 3.2 Measures for safeguarding the supplementary pension rights of workers moving within the European Union ............................................................................................................. 24 Part II: Pension systems in the EU: reform trends and outcomes ............................ 26 Igor Guardiancich and David Natali Section 1: Basic Glossary for the Analysis of Pension Institutions ............................ 29 1.1 Supplementary pension schemes: key concepts ................................................................. 31 Section 2: Pension Models in Europe: the status quo ante ............................................. 34 Section 3: Pension Reform Trends in the EU .................................................................... 35 3.1 Two Decades of Institutional Trends, Pension Models in Europe (1990-2007)....................... 35 3.2 Aftershocks and Pension Policy (2008-2010) ..................................................................... 38 Section 4: Changing Public/Private Mix, a state of flux .................................................. 41 Section 5: First review of EU legal framework on pensions ............................................ 44 5.1 First Pillar Schemes ......................................................................................................... 44 5.2 Second Pillar Schemes..................................................................................................... 45 5.3 Third Pillar Schemes........................................................................................................ 45 Scope of coordination system in the pension field – Final Report 3 Part III: Gaps of EU legislation on the coordination of pensions: key issues ............ 46 Dalila Ghailani Section 1: Lacunas and weaknesses in the relevant existing legislation ....................... 47 1.1 Exclusion of non-statutory schemes from the material scope of Regulation 883/2004 ........ 47 1.2 Lack of transferability of supplementary pension rights in Directive 98/49/EC ...................... 48 1.3 Waiting and vesting periods: a lack of harmonisation ......................................................... 49 1.4 Lack of fiscal coordination and the consequent limits to transferring pension rights ............. 50 1.4.1 Different taxation regimes ....................................................................... 51 1.4.2 Tax neutrality with respect to premia........................................................ 52 1.4.3 Dividends and interest paid to foreign pension funds ................................. 53 1.4.4 VAT on outsourced services ..................................................................... 54 1.4.5 Transferability of capital .......................................................................... 54 1.5 Other persisting gaps: indexation, limitations to choice and information asymmetries ........... 54 1.6 Failure of the draft directive on portability: from an ambitious “portability directive” to a directive on minimum requirements for enhancing worker mobility by improving the acquisition and preservation of supplementary pension rights ............................................ 56 1.7 Consequences: a lack of protection for migrant workers’ pension rights and a barrier to mobility within the Union……………………………………………………………………………………………...57 Part IV: Mapping Pension Systems in the EU: Technical Problems in the application of EU legislation to Different Pension programmes ...................................... 61 Igor Guardiancich and David Natali Section 1: A critical assessment of different classifications of pension systems .......... 62 1.1 The World Bank's Proposal.............................................................................................. 62 1.2 The OECD and the EU .................................................................................................... 63 1.3 Ebbinghaus and Wiß’s typology ....................................................................................... 64 Section 2: Most critical aspects of OECD/EU typology .................................................... 66 2.1 Blurred boundaries of application .................................................................................... 66 2.2 The case against one-size-fit-all coordination.................................................................... 67 Section 3: Does the EU need a more coherent taxonomy? ............................................. 70 3.1 New categorization......................................................................................................... 70 3.2 Adaptation of current rules ............................................................................................. 71 3.3 An EU-27 matrix of pension schemes ............................................................................... 72 Part V: Proposals for a better coordination of Pension Schemes in the EU: A Synoptic Table ................................................................................................. 74 Igor Guardiancich and David Natali Section 1: Persisting gaps in portability .......................................................................... 76 Section 2: More Technical Problems and Issues of coverage .......................................... 77 Scope of coordination system in the pension field – Final Report 4 Section 3: Future Scenarios for the Coordination of Pension Schemes in the EU ...... 80 3.1 Recalibration of Regulation 883/2004 .............................................................................. 82 3.2 A New Portability Directive .............................................................................................. 84 3.3 IORP Directive and the Extension of its Scope .................................................................. 85 3.4 EU-27 Matrix of Pension Provision (the necessity to mapping the terrain) ........................... 89 3.5 A Principle-based Approach ............................................................................................. 91 References ........................................................................................................................ 93 List of Cases ...................................................................................................................... 98 ANNEX 1 SURVEY ON “SCOPE OF THE COORDINATION SYSTEM IN THE PENSION FIELD” ....... 100 Introduction ..................................................................................................................... 100 Coordination of Pension Schemes in the EU ................................................................... 103 Replies and Intreviews to National Experts ................................................................... 109 ANNEX 2 MAP OF PENSION SCHEMES IN EU COUNTRIES ............................................................. 139 (Updated version, based on CEIOPS 2010 Annex to the Green Paper 2010) Scope of coordination system in the pension field – Final Report 5 Introduction The present report summarises the main steps of the project carried out by the European Social Observatory (OSE) in response to the tender ‘Scope of the coordination system in the pension field’ (VT/2010/104) issued by the European Commission (DG Employment, Social Affairs and Equal Opportunities, EMPL/E.3). The reference is to the key research products delivered before and after the kick-off meeting held in Brussels on 31 January 2011 (Deliverable 1). In line
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