PENSIONS : OCCUPATIONAL RETIREMENT PROVISION: COURT CONDEMNS PRAGUE AGAIN.

In the absence of a second pillar in the Czech pension system, the Czech Republic should have reproduced all the provisions of the directive relating to institutions for occupational retirement provision within a precise and transparent legal framework. Despite an earlier ruling by the EU Court of Justice, Prague failed to transpose all these provisions in time resulting in the court, on 25 June, ordering the Czech government to pay a fine of 250,000.

Occupational retirement pension systems in Europe are currently based on three pillars: statutory pensions (first pillar); the provision of occupational retirement benefits financed by employers (second pillar); and individual supplementary pensions (third pillar). By virtue of the principle of subsidarity, member states are free to organise their pension systems and to decide on the role played by each of the three pillars in their territory. In 2003, however, the European Commission proposed new rules (Directive 2003/41/EC) on occupational retirement provisions in order for them to benefit from the principle of free circulation of capital and the freedom to provide services.

The Czech Republic, whose pension system does not include a second pillar and which prohibits the establishment in its territory of institutions for occupational retirement provision, had initially failed to transpose certain provisions of Directive 2003/41/EC, to the extent that it imposed obligations on the member states in the territory of which such institutions are established.

The Commission referred the case to the ECJ and in its verdict of 14 January 2010 (Case C-343/08) the court found that the Czech Republic had failed to meet its obligations under the directive and had only complied fully...