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Taxing time for EU pension reform
EU citizens planning to retire in the coming year should not crack open their piggy banks just yet. Many of them will lose a big chunk of the pension benefits they throught they were entitled to while collecting their paychecks during their working life, especially the increasing numbers who worked in more than one EU member state.
Internal Market Commissioner Frits Bolkestein has pledged to come forward with a long-awaited proposal in early 2000 aimed at prising open the EU pensions market. This will he says, call for Union citizens to be given the right to decide which private pension fund to subscribe to and give the funds themselves the freedom to invest where they like.
Over the next few years Bolkestein’s team will seek to disentangle more than 100 bilateral tax accords between member states which are designed to prevent EU citizens and companies from being taxed twice if they, or their business activities, cross borders.
Those close to retirement age can also take comfort from the fact that Bolkestein’s predecessor Mario Monti laid much of the groundwork for creating an EU framework for supplementary pensions. His ambitious plan, unveiled in May 1999, called for employer-run schemes to be allowed greater leeway in determining where to invest their assets instead of being forced to put the bulk of their funds into government bonds.
Monti also stressed the need to remove obstacles to labour mobility, arguing that this was being severely hampered by the current system under which employees lose their personal benefits when they move to another country.
The pressure for action is mounting as the proportion of retirement-age people in Europe grows, intensifying the burden on state coffers. By 2025, four out of ten Europeans will be aged 65 and over, compared with just one in ten now. .
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