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Brussels, 14 March 2011

Financial Services: Czech Republic referred back to EU Court over occupational pension funds

The European Commission has decided to refer the Czech Republic to the Court of Justice for failure to respect a previous EU Court ruling on occupational pension funds, where Czech law still fails to fully comply with EU pension fund rules (Directive 2003/41/EC). The Court ruled in January 2010 (C-343/08) that the Czech Republic had failed to fully implement EU law into national law before the 2005 deadline. The Commission sent a letter of formal notice to the Czech Republic in October 2010, requesting the Czech authorities to comply with the judgment (IP/10/1439). However, the legislation in question has still not been amended to bring it into conformity with EU law. The Commission has decided to ask the Court to impose on the Czech Republic a daily penalty payment of €22 364 for each day after the second Court ruling until the infringement ends and to impose a lump sum €5 644 per day for the period between the 2010 Court judgement and the second Court ruling.

What is the aim of the EU rules in question?

The 2003 Pension Funds Directive allows pension funds to manage occupational pension schemes for companies which are also established in another Member State, and allows a pan-European company to have only one pension fund for all of its European subsidiaries. Before the Directive entered into force occupational pension providers operated primarily in the Member State in which they were established. Consequently, a firm with a presence in ten Member States had to call on the services of ten different pension providers. The Pension Funds Directive eliminated this inconvenience and allows pension funds to benefit from the Internal Market principles of free movement of capital and free provision of services. At the same time, the Directive seeks to establish rigorous prudential standards ensuring that pension fund members and beneficiaries are properly protected.

How is the Czech Republic not respecting these rules?

The Czech Republic has still not adopted national legislation to implement the Pension Funds Directive, despite a ruling by the Court in 2010 that the Czech Republic should have fully implemented the Pension Funds Directive into national law before the 23 September 2005 deadline. Article 260 of the Treaty on the Functioning of the European Union requires Member States to take the necessary measures to comply with Court judgements. This is why the Commission is now asking the Court to impose financial sanctions on the Czech Republic.

How are citizens and businesses suffering as a result?

As a result of the Czech Republic's failure to implement the Pension Funds Directive, common rules on pension funds are not upheld at the same level across the EU, so that Czech members and beneficiaries of occupational pensions do not have the same level of protection, legal certainty and guarantees as elsewhere in the EU.

More information:

Occupational pensions:

Latest information on infringement proceedings concerning all Member States:

For more information on EU infringement procedures, see MEMO/11/162

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