New leaked version of pension plan confirms it: Commission wants EU pension policy

3 February 2012

New leaked version of pension plan confirms it: Commission wants EU pension policy

Once again leaked pension plans have found their way into the hands of the SP’s European Parliament team. The second version of the leaked White Paper confirms that the European Commission plans to present a large number of proposals relating to pensions and, in the longer term, is determined to see a European pension policy.

Dennis de Jong“The Commission has clearly now launched its attack on the member states,” says SP Euro-MP Dennis de Jong. “On 14th February, when the Commission comes out with its official plans, we can expect proposals to increase the retirement age and even to attract migrant workers in order to have more people in employment, as if there weren’t already enough unemployment in Europe. The Commission is making the mistake in this of thinking that countries which have never saved sufficiently to have good pension provision can in one leap achieve the level of a country such as the Netherlands, which has the best pension system in the world.”

De Jong calls the European Commission’s analysis of the EU member states’ pension systems ‘extremely gloomy’. However, the analysis applies principally to the problems of pay-as-you-go pensions, which are popular outside the Netherlands but which cannot be compared to the Dutch situation, as they never involve saving for pensions. “The Commission is much too pessimistic,” says De Jong, “when it comes to pensions for which a great deal of capital is saved, as is the case in the Netherlands. They simply assume that in the future yields will decline, evidently thinking that the current economic crisis is permanent. Yet under normal circumstances in an improving economy their reserves would strengthen again.”

In the leaked paper pension systems are also seen as a potentially interesting market for financial service suppliers. “In this the Commission is showing its true face,” says De Jong. “This is much less about pension provision as such than about the furtherance of the internal market. The Commission would most like to see people entering into personal pension plans, thus creating a new market in Europe for this sort of product.”

The White Paper also announces a new legislative proposal on the transferability of pensions. What is striking is the much more aggressive tone adopted by the Commission in relation to taxation, which goes so far as to threaten to intervene in the case of any tax regulations that hinder transferability. “In the Netherlands pension premiums are exempt from tax,” De Jong explains, “but pensions themselves aren’t. If you build up a pension in the Netherlands and then collect your pension outside the country, the Dutch tax office stands to lose out. Instead of threatening to intervene, the Commission should, as we have already requested, propose an effective compensation regime so that the Netherlands doesn’t lose these tax moneys.” It is expected that De Jong will again be given the responsibility to draw up the European Parliament Internal Market Committee’s response to the proposals as soon as the Commission has officially published them.

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