1 EU New European requirements pending - The text for the new IORP Directive is currently being finalised in Trilogue negotiations between the Council of the EU, the European Parliament and the European Commission. EIOPA has also recommended to the EU institutions that DB plans across Europe be required to produce and disclose, on a regular basis, a marketconsistent balance sheet and a standardised risk assessment using EIOPA's common funding methodology.
Action: Lobby European Commission and MEPs to ensure any new requirements are appropriate and fit for purpose. Read more.
2 Austria Retrospective amendment to Social Insurance Act - Following the transfer of more than 3,000 employees of UniCredit Bank Austria AG to the public pension system, an amendment to the Social Insurance Act has been passed with retrospective effect back to 1 February 2016. This obliges all employers to pay a contribution of 22.8% of the last salary instead of 7% as before and irrespective of whether the employment contract is terminated or not. This amendment is likely to be challenged as the constitution generally prohibits retrospective laws.
Action: Monitor if the amendment is challenged so necessary actions can be taken.
3 Belgium Elimination of beneficial exit arrangements - Since 1 January 2016, provisions in pension plans that improve an individual's accrued benefits on exit or early retirement (including so-called "old bridge pensions") are invalid. Transitional measures apply to certain types of employees.
Action: Consider the impact of these changes and the transitional measures on your pension plan and the benefits payable to your staff on exit or early retirement.
4 France - New style pension plans may be introduced ("Fonds de Retraite Professionnelle Supplmentaire") - A draft Bill referred to as "loi Sapin 2" published on 30 March 2016 contains provisions to authorise the Government to implement a new type of pension plan before the end of 2016. These new plans would be subject to the IORP Directive and monitored by the French regulatory authority ("Autorit de Contrle Prudentiel et de Rsolution"). However, quantitative rules would be relaxed slightly in an attempt to deliver higher investment returns.
Action: Insurers should analyse this opportunity and the conditions to implement such plans. Employers should consider whether and, if so, how to amend their existing supplementary pension plans and/or whether to implement a new plan.
5 Germany Extended information requirements - From 1 January 2018, new significantly enhanced pension information requirements will come into force. As a result, employers will be required, amongst other things, to provide employees (upon request) with information about how rights to a company pension may be acquired and how termination of their employment contract affects existing pension rights. It is unclear whether the new legislation will allow information to be provided online.
Action: Review new information requirements and prepare to comply.
6 Ireland Negative rate of revaluation prescribed - The Minister for Social Protection in Ireland has for the first time prescribed a negative rate of annual revaluation (i.e. inflation protection) for preserved benefits under Irish defined benefit pension plans. Irish preserved benefits may be reduced by 0.3% as a result, to reflect deflation in the Irish Consumer Price Index for the 2015 calendar year. The legislation is overriding, but its impact will be controversial and may vary depending upon plan rules.
Action: Trustees should seek legal advice on their individual plan rules, which may provide for a higher rate of revaluation than the statutory framework. Read more.
7 The Netherlands Greater flexibility for DC members - Pay-outs from lifelong annuities have been negatively impacted by ultralow interest rates. To reduce the impact of this the Government is proposing to allow members of defined contribution plans to choose a variable pension benefit after reaching retirement age instead. Under the new system, annual payments could vary depending on investment return, changes in life expectancy and the projected interest rate.
Action: Monitor developments as this could become law in July or August 2016. Read more.
8 Norway Window closing for compulsory retirement age of 67 - From 1 July 2016, the minimum compulsory retirement age that employers can operate is rising from age 67 to age 70. To be valid and enforceable, a compulsory retirement age has to be communicated to employees, be supported by an occupational pension plan and be consistently applied to all employees. Without this, termination due to age will not be allowed before age 72.
Action: Plan for rise in retirement age from 1 July 2016 and establish a new policy if required.
9 UK - Brexit planning - With the referendum on the UK's continued membership of the EU fast approaching, trustees should consider the potential impact of Brexit on their plan and their sponsor and make appropriate contingency plans. Employers should also consider the potential impact on their business
Action: Assess potential impact of Brexit and identify what action to take in the event of a vote for the UK to leave the EU on 23 June. Read more.
10 UK - New DC Code and `how to' guides - A new Code of Practice for plans that provide any money purchase benefits (including AVCs) is due to come into force in July 2016 together with six new `how to' guides. The Code and guides cover issues such as assessing value for members, designing and monitoring DC investment strategies and the need for diversity on trustee boards.
Action: Review draft Code and guides to ensure you are ready to comply with the new requirements. Read more