Pensions and Investing Summit 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

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

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 __________________________________________________________________________

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 __________________________________________________________________________

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 __________________________________________________________________________

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 __________________________________________________________________________

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 __________________________________________________________________________

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… __________________________________________________________________________

Pan-European Pension Funds 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 __________________________________________________________________________