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Brussels, 28 October 2010

Financial Services: European Commission calls on Czech Republic to respect Court ruling on pension funds

The European Commission has today acted to ensure that common rules on pension funds are respected by formally requesting the Czech Republic to comply with an EU Court judgment from January 2010 (C-343/08). The Court ruled that the Czech Republic had failed to fulfil its obligations under the Pension Funds Directive by not fully transposing the Directive into national law before the transposition deadline. The Czech Republic now has two months to respond to the Commission's request. In the absence of compliance, the Commission may refer the case for the second time to the Court and ask it to impose a lump sum or penalty payment on the Czech Republic.

What do the rules in question say?

The Pension Funds Directive (2003/41/EC) allows pension funds to manage occupational pension schemes for companies which are also established in another Member State and allow a pan-European company to have only one pension fund for all its subsidiaries all over Europe. Before the Directive entered into force, occupational pension providers operated for the most part only in the Member State in which they were established. This meant for example that a firm with a presence in ten Member States had to call on the services of ten different pension providers. The Pension Funds Directive would make this no longer necessary, allowing for the creation of economies of scale and bringing a high level of protection and cost savings to both employers and employees at a firm.

How is the Czech Republic not respecting these rules and how are citizens and businesses suffering as a result?

The Court's judgement set out that the Czech Republic had failed in its obligations under the Pension Funds Directive of 13 May 2003 by not fully transposing the Directive into national law before the deadline of 23 September 2005. As a result, common rules on pension funds are not upheld at the same level across the EU, meaning that eventual Czech members and beneficiaries of occupational pensions would not have the same level of protection, legal certainty and guarantees as elsewhere in the EU.

Under Article 260 of the Treaty on the Functioning of the European Union, Member States are obliged to take the necessary measures to comply with the judgments of the Court.

More information

Occupational pensions:

Latest information on infringement proceedings concerning all Member States:

For more information on EU infringement procedures, see MEMO/10/530.

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