Position Paper on Possible Legal Inconsistency With EU Provisions on Cross Border Transfers of Pension Schemes With Regards to the Establishment of Excessive and Unjustified Majorities of Members and Beneficiaries Left to National Legislations (Art. 12, Paragraph 3 of the IORP II Directive)

Abstract

The Cross Border Benefits Alliance-Europe (www.CBBA-Europe.eu) believes that the manner in which the Dutch government transposed article 12 paragraph 3 of the Directive (EU) 2016/2341, better known as the “IORP 2” Directive, to be inconsistent with EU law. Article 12(3) IORP 2, refers to cross border transfers of pension schemes, provides for prior approval of a majority of members and beneficiaries, and allows member states to define such a majority “in accordance with national law”.

The Dutch Ministry of Social Affairs, however, is currently requiring a majority of 2/3 of both the members and beneficiaries for such approval. Such a “super-majority” requirement not only creates a significant obstacle to cross-border transfers of Dutch based pension schemes, which is the apparent purpose of new IORP 2; but it also violates the EU principle of non-discrimination based on nationality of the pension scheme1 , which is a pillar of EU law, because it would generate an unequal treatment between domestic transfers of pension schemes in the Netherlands, and cross border transfers to pension schemes in other parts of the European Economic Area.

CBBA-Europe believes that the most reasonable interpretation of the sentence “in accordance with national law” should be in the sense that the same majorities of members and beneficiaries requested to approve transfers of domestic transfers provided by national laws, should be equally applicable to cross border transfers. Unequal treatments between national and European situations might be legally acceptable only if justified. One possible argument would be the aim of protecting members and beneficiaries in case of cross border transfers due to unclarity and/or shortcomings of the Directive. However, in the view of CBBA-Europe, the provisions of the IORP 2 Directive sufficiently protect members and beneficiaries in these situations. Therefore, majority requirements unreasonably strict, or in any way higher than the national rules on transfers are not justified.

Keywords: IORP, Pensions, EU