Implementing the EU Pensions Directive: Practical Implications

1. 4th Annual UK and Irish Pensions and Investing Summit EU PENSIONS DIRECTIVE: Practical Implications in the Countdown to Full Implementation ANNE MAHER Chief Executive The Pensions Board 18/19 October 2004 Ireland Dublin

2. AGENDA Implementation progress Issues to be decided Impact on existing funds Possible changes for pension industry Member state competition Pan-European pension funds?

3. IMPLEMENTATION PROGRESS EU Pensions Directive came into force on 23 September 2003 with 2 years to implement EU member states must implement by 23 September 2005 Ireland aims to legislate in April 2005 through Social Welfare Act, 2005 UK aims to legislate with effect from 6 April 2005 Other member states at various stages of implementation Difficulties with interpretation of some Directive Articles Conference of Insurance and Pension Supervisors (CEIOPS) and its Working Group on Occupational Pensions (WGOP) supervising implementation

4. IMPLEMENTATION PROGRESS Areas where member states may decide approach Application to pension business of insurance companies covered by Life Directives Exclusion of pension scheme with less than 100 members (de minimis rule) Whether certain contracts (e.g. Irish PRSAs) fall inside or outside scope of Directive Designation of competent authorities for different provisions Any requirement for additional national investment provisions to be required for national employees in an IORPs located in another member state Whether to introduce quantitative investment rules

5. IMPACT ON EXISTING FUNDS • Changes (and possible increases) in compliance requirements • Single employer/single country plan might consider re-location • Multinational employer might consider • Pooling investments • Pooling services • Merging plans

6. POSSIBLE CHANGES FOR PENSION INDUSTRY • Consolidation of investment services • Asset Management • Funds Administration • Custody • Consolidation of pension services • Actuarial • Legal • Benefit consulting • Benefit administration • Accounting • Compliance • Increased EU wide competition and pressure on charges

7. POSSIBLE MEMBER STATE COMPETITION • Benefits to being location of choice • Influences may include • Tax arrangements • Pension tradition/services available/skills/resources • Supervisory regime • Irish activities • Common Contractual Fund (CCF) • Tax transparent equity pooling vehicle • Pan-European Pensions Task Force • Established under Department of Taoiseach • To examine opportunities for Ireland in international pensions areas with particular regard to EU developments • Will report in next few months

8. PAN-EUROPEAN PENSION FUNDS EFRP model – EIORP 2005 Tax issues still major factor Seems impractical for Defined Benefit Potential for Pan-European Defined Contribution Funds Some multinationals interested But needs a first player to try…

9. IN CONCLUSION • Pensions Directive • Is a first step • Likely to be catalyst for major change • Pan-European Pension Funds • Will take time • But WILL come about