Perspectives of EU Pension Law to facilitate worker mobility and sustainability of pensions

Abstract

This dissertation studies European (second-pillar/occupational) pension law from the perspective of a pension scheme member. It discusses the prerogatives of the EU in the field of occupational pensions as well as the history of its involvement in occupational pensions, the weaknesses of EU pension law and presents possible solutions to problems found.

Developments such as population ageing and increasing mobility of the EU workforce affect pension systems in EU Member States in similar ways. In response to these developments, and also to facilitate the role of European pension funds as institutional investors, the EU began presenting measures in the late 1980s. One of these measures was the so-called Directive on the activities and supervision of institutions for occupational retirement provision (IORP), or simply IORP Directive. The goal of this directive was to implement a European market for occupational pensions, and allowed pension providers to operate across borders within the EU. Its underpinning theory was that the internal market could yield scale economies, resulting in lower costs and better pension results. In turn, such cross-border IORPs could boost the sustainability and adequacy of European pension systems. These institutions take a central role in this work. The original IORP Directive has now been succeeded by the IORP II Directive.

Apart from the IORP (II) Directive, the EU has adopted other legislation in the field of occupational pensions. These measures were aimed primarily at alleviating occupational pension-related constraints experienced by workers moving to another EU Member State. All these legislative measures have in common that they were watered down during the legislative process, causing them to miss some of their intended objectives. This legislation is being assessed in this research from the perspective of a pension scheme member with the following research question: How does EU pension legislation secure the mobility of workers and the use of the advantages of the Single Market to the benefit of pension scheme members to achieve safe, adequate and sustainable pensions; and which alternatives are possible to remedy any weaknesses?

Despite limited direct powers to regulate occupational pensions, the EU has left a significant mark on national pension systems. Nevertheless, problems remain. For instance, mobile European workers still face obstacles: there is no process regulated at EU-level for the transferability of accrued pension rights and the option for cross-border membership is open only to posted workers for a limited period. In addition, imprecise definitions in the IORP II Directive may lead to conflicts that could negatively influence the position of pension scheme members. Finally, cross-border IORPs face legal and non-legal hurdles when seeking to offer their services in other Member States.

The Pan-European Personal Pension Product (PEPP) seems to offer some important advantages over traditional occupational schemes. This dissertation explores to what extent the PEPP could be used to complement EU second-pillar pension law.