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 EC 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 EU executive arm said Monday it 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 judgment and the second Court ruling.
Aims of the Directive
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 10 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, it seeks to establish rigorous prudential standards ensuring that pension fund members and beneficiaries are properly protected.
