Latest updates from our European experts - Eversheds Sutherland

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Jun 30, 2014 - 1 EU – European Commission publishes proposed new IORP Directive –. Under the Commission's proposals,
European Pensions Agenda

Latest updates from our European experts Date: June 2014

Advisers: Eversheds LLP

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EU – European Commission publishes proposed new IORP Directive – Under the Commission’s proposals, IORPs will be required to: • put in place effective risk management, internal audit and actuarial functions • be run by persons with adequate professional qualifications, knowledge and experience • provide detailed pension benefit statements to members, and appoint a depository to safeguard plan assets, where members and beneficiaries fully bear the investment risk.

Action: Lobby MEPs and national ministers if you want changes made to the Directive before it is approved by the Council of the EU and the European Parliament. Read more

2 France –Employers with DC plans must comply with new Social Security rules

by 30 June 2014 – Employers have until 30 June 2014 to benefit from social security exemptions on their contributions to DC plans. DC plans have to be aligned with these new requirements before this date.

Action: Where necessary, employers in France need to amend their DC plans to meet the new conditions by 30 June 2014 and communicate any changes to plan members.

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Germany - Preventing employee who was 45 when she joined her employer from joining the company pension plan is unlawful age discrimination – The German Federal Labour Court recently ruled that an eligibility rule in a company pension plan that required an employee to have completed a ten year waiting period to join the plan by age 55 is unlawful age discrimination. Action: German employers should review the eligibility rules for their company

pension plan and amend any discriminatory provisions of this nature.

4 Ireland – High Court sets standards for trustee decision making – In Greene and

Others v Coady and Others the Irish High Court has set out what factors pension plan trustees should take into account when deciding whether to make a contribution demand against a sponsoring employer. It also clarified Irish law on conflicts of interest and wilful default and highlighted the importance of trustees following a proper process and obtaining relevant expert advice before making decisions.

Action: Trustees should review their decision-making process in light of this judgment, including procedures for dealing with conflicts and for documenting the factors considered and advice sought when making a decision. Read more

5 Belgium - Blue and white collar employees’ pension benefits must be harmonised

– The Constitutional Court in Belgium has ruled that it is unlawful to provide different pension benefits to blue collar and white collar workers. A proposed new law will place an obligation on employers in Belgium to harmonise pension benefits by 1 January 2015.

Action: Belgium employers with blue and white collar employees need to put in place an action plan for harmonising pension benefits by 2015.

European Pensions Agenda June 2014

6 UK – Government sets out plans to give greater freedom to pension savers and allow

employers to establish collective DC plans – The UK Government has confirmed its plans to introduce legislation to change the tax rules to give individuals with DC pension funds freedom over how they use their retirement savings from April 2015. The Government has also signalled its intention to allow Dutch style collective DC pension plans to be established in the UK.

Action: UK pension plans that offer DC benefits need to decide whether to allow their members to take advantage of the new flexibility under their plan Read more. Employers should monitor the legislation on collective DC to ensure it works for them.

7 Ireland – Pensions in payment can be reduced – The Irish Government has amended The

Pensions Act 1990 to enable section 50 benefit reductions to be applied to pensions in payment worth €12,000 per year or more and not just future increases in pensioner benefits.

Action: Factor in the possibility of reducing pensions in payment above 12,000 to any negotiations relating to a section 50 restructuring of an Irish DB plan.

8 Belgium – Employee consent required to payment of premium into pension plan upon

termination of employment – The Labour Court in Belgium has ruled that a payment made into a pension plan in place of integrating these contributions in the calculation basis for the indemnity in lieu of notice is only valid if it is effected with the employee’s agreement. In the absence of this, the employee would be entitled to claim the value of those contributions again in the indemnity in lieu of notice.

Action: Update HR practices and, in future, reach explicit agreement with employees upon termination of their employment about the payment of a premium in lieu of contributions due during the employee’s notice period.

9 France – Employees exposed to “hardship” to build up points towards early retirement

– From 1 January 2015, employees in France who are exposed to particular hardship such as extreme temperatures, mechanical vibrations, repetitive or night-shift work will earn points that can be used toward training for less arduous work and full-time pay while transitioning to parttime work at the end of their working lives. Workers may also convert these points to enable them to retire early, beginning at age 58. This will be financed by the payment of two new contributions from employers.

Action: French employers need to assess the financial implications of this, which will depend on their employees’ working conditions.

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Austria – Increased demand for company and private pension plans – The new Personal Retirement Account was introduced in January this year for all men and women born after 1 January 1955 who have retirement insurance coverage. It is designed to help savers understand what their future retirement benefits from their mandatory pension contributions are likely to be and how this compares to their current salary. As savers become aware of the considerable difference between their current salary and their expected future benefits it is driving greater demand for company and private pensions.

Action: Austrian employers and insurers need to decide how they will respond to the increase in demand for company and private pension plans created by the new information being provided to savers about their future retirement benefits. For more details on these or any other issues speak to your usual Eversheds adviser or email Francois Barker, Head of Pensions, [email protected] or Liz Fallon, Pensions Partner, [email protected].