This weekly compilation of stories from wire services, newspapers and other sources is intended to keep Mercer employees and registered visitors to mercer.com informed of benefits, compensation and HR developments around the world. Facts have not been independently verified, and opinions expressed are those of the editor. Readers are invited to clarify, correct or expand on these items.

Egypt

Health reform bill resurfaces
Almasryalyoum

The health reform bill (IH 04/28/10) is back on Parliament’s legislative agenda with its financing fortified by a higher levy. Workers have been protesting this proposal – along with continued stalling of a minimum wage hike (IH 05/05/10) – because the annual LE 120 (US $21.25) fee would be unaffordable for most Egyptians.

Nigeria

Employee’s Compensation Bill
Vanguard

The National Assembly is holding public hearings in advance of the third reading of Employees’ Compensation Bill (ECB), a more comprehensive – including gender-neutral – revision of Workmen’s Compensation Act of 1987. High-profile instances of the current legislation failing to secure compensation for victims of workplace accidents have prompted this bill, which would exchange disability income, medical care and rehabilitation for the right to sue employers.

Australia

Parental leave, sex discrimination legislation reviewed; Various
AAP, SMH, The Australian
Recent Senate hearings on Paid Parental Leave Bill 2010 (IH 05/19/10) have exposed a critical flaw in the legislation. While the bill would establish an entitlement to parental leave pay, it has not been harmonized with the Fair Work Act on the terms under which one is entitled to take parental leave. This coincides with the Attorney General’s announcement that the government is preparing amendments to Sex Discrimination Act 1984 that would enhance workplace protection from discrimination based on family responsibilities. There would be measures establishing the rights to equal discrimination protection for men and protecting against discrimination based on breastfeeding.

In other news:

• The Department of Immigration has slashed the Skilled Occupations List under the General Skilled Migration program from 400 occupations to 181.
  
  
• A Treasury press release notes that the superannuation clearing house is now accepting registrations from qualified employers. Enterprises with fewer than 20 workers may use the free service for administrative support when complying with the superannuation choice of fund rules.
  
  
• The Treasury has released Overhaul of Financial Advice, a package of reforms to curb financial advisor conflict of interest. From 2012, new “conflicted remuneration structures,” such as commissions and volume-based payments, would be banned for retail investment products including superannuation.
  
  
• The Australian Accounting Standards Board (AASB) has issued Exposure Draft ED 195 Defined Benefit Plans (proposed amendments to AASB 119). It mirrors the new IASB exposure draft on IAS 19 amendments (IH 05/05/10, IASB); the AASB is accepting submissions through August 9.

China

Wage regulations due this year
China Daily, Xinhua, ILO

The Ministry of Human Resources and Social Security (MOHRSS) is preparing regulations in support of a National People’s Congress goal of more equitable wage distribution. There would be collective bargaining on wages, equal pay for equal work and unspecified provisions on narrowing the growing income gap. Many provinces have announced or are planning double-digit wage hikes this year, and a large pilot project in Beijing is testing a model for collective bargaining on salaries and other employment conditions.

Hong Kong

MPF progress report
SCMP, The Standard

The 10th anniversary of the Mandatory Provident Fund (MPF) Scheme has occasioned a formal review that is due for publication by the end of this year. A progress report on the consultation process identifies themes that are likely to show up in the final product. Early withdrawals would be permitted in cases of serious illness and the provision allowing an unemployed person to clean out a dormant account may have a higher maximum threshold. The review is evaluating the investment models of other retirement schemes and the maximum monthly salary subject to MPF contribution may rise.

India

ULIP guidelines reconsidered; Various
Business Standard, Economic Times, Deccan Herald
The Insurance Regulatory and Development Authority (IRDA) will soon issue rules adding some flexibility to its recent guidelines on unit-linked insurance products (ULIPs, IH 05/19/10). The pension products that are due to be bundled with life insurance by July 1, 2010, will be allowed to select health insurance as an alternative or include both of them. The insurance advisory committee will meet tomorrow to discuss the details.

In other news:

• Payment of Gratuity (Amendment) Bill 2010 (IH 03/10/10) was one of 15 bills passed in a flurry of activity during the closing session of Parliament. It will nearly triple the maximum gratuity payment to Rs10lakh (US $21,302).
  
  
• The long-delayed draft bill Protection of Women against Sexual Harassment at Workplace is now before the Cabinet after minor revisions. Protection would now extend to all occupations, including the unorganized sector.
  
  
• The next session of Parliament will field a set of amendments to the Industrial Disputes Act 1947. Labour tribunals would be empowered to enforce their rulings and enterprises with at least 20 workers would have in-house grievance redressal mechanisms for quickly resolving disputes that needn’t clog the court system.

Malaysia

Foreign worker levy to rise; EPF offerings
Bernama, Business Times, AIF
A foreign worker levy hike that was postponed “until the economy improves” (IH 05/06/09) is now tentatively set to arrive at the start of next year. Factors in setting the new levies would include sector, skill level and the number of foreign workers in the sector. The International Trade and Industry Ministry will soon hold stakeholder consultations on this plan, and it is due to deliver a blueprint by the end of this month.

Meanwhile, the Employees Provident Fund (EPF) has published a booklet sharing its own corporate governance standards and principles with other institutional investors and with its investee companies. Another new EPF project is an application that older fund members or their families may use to track down unclaimed contributions.

New Zealand

2010 Budget; Various
Scoop, Tax Analysts, NZ Herald
The Treasury has published the 2010 Budget and Taxation (Budget Measures) Bill was passed “under urgency” in Parliament the following day. Royal Assent is expected this week. Some highlights of the express delivery package:

• The 6% tax credit on redundancy pay that spares a worker from ending up in a higher tax bracket after dismissal will be removed on October 1, 2010.
  
  
• The top tax rate for portfolio investment entitles (PIEs), including KiwiSaver schemes and other superannuation funds, will drop from 30% to 28% on October 1.
  
  
• Employers with new hires subsidized through the Job Ops scheme will be entitled to fire them in the first three months, with no right to appeal unfair dismissal.
  
  
• Public transportation subsidies for pensioners will be reprieved for another four years, but the program will remain under scrutiny.
  
  
• A follow-up on previous mentions of an earlier end to the superannuation fund contribution holiday (IH 04/28/10) was conspicuously absent.
  

In other news:

• Parliament’s Finance and Expenditure Committee has reported on Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Bill (IH 12/02/09). The report’s recommendation that several minor provisions be rejected or further examined could slow the bill’s progress.
  
  
• Last month, Inland Revenue posted an issue paper on possible scenarios for exempting non-residents investing in PIEs. Comments are welcome through June 4.
  
  
• The Commerce Minister has ruled out following Australia’s lead in banning commissions for financial advisors. He is confident that a forthcoming regulatory framework with full disclosure of commissions will suffice to curb conflict of interest.

Singapore

NWC wage guidelines
CNA, Straits Times, Business Times

The National Wages Council has published and the government has accepted NWC wage guidelines for 2010-11. They call for sustainable, modest increases reflecting both productivity and the partial restoration of the employer Central Provident Fund contribution (IH 05/05/10).

Sri Lanka

New retirement fund regulator
Sunday Times, Euclid

Soon after the introduction of a voluntary pension scheme for the private sector (IH 05/05/10), the government announced that regulatory authority over these as well as all existing private provident funds and pensions will be transferred from the Commissioner of Labor to the Insurance Board of Sri Lanka (IBSL). Quick development of an adequate regulatory framework and competent supervision for this sector will have better prospects under IBSL.

Taiwan

2G bill modifications
Taipei Times, CNA

The second-generation health insurance financing bill (IH 05/19/10) was amended in a legislative committee to avoid unintended consequences for returning expatriates (IH 04/14/10). Taiwanese who had been away for up to four years (a term more likely to encompass most degree programs and job postings abroad) would have to wait six months for national health insurance coverage, but would not be obliged to pay premiums for the period they were away. Also, legislators have conferred with the Department of Health on developing a fuller explanation of which incomes would be subject to these new premiums.

Czech Republic

Discriminatory pension ruling update
EIU

The Constitutional Court ruling that the state pension benefit formula discriminates against the well-off (IH 04/21/10) set a compliance deadline of September 2011, not 2010. It has been suggested that rebranding pension insurance as a pension tax would suffice to sidestep the legal requirement for an adequate rate of return.

Estonia

See also: EU, paragraph 1

Pension reform impasse
EU Observer, Baltic Daily, Baltic Reports

The recent retirement age legislation (IH 05/05/10) was just a portion of the administration’s pension reform agenda (IH 08/19/09). The social tax is lower than the benefit payout and the pension reserve fund is quickly depleting. Nonetheless, there is considerable resistance – even in the Cabinet – to dismantling the special pensions systems for the public sector and an array of private sector occupations.

EU

See also: Germany

Eurozone, economic governance issues; Corporate governance green paper
EU Observer, IPE
The European Commission (EC) has given Estonia the nod to adopt the euro next year while advising eight other states that they are not yet ready. At a time when the Eurozone appears fragile and many are calling for a review of protocols on both entering and exiting the monetary union, the EC was heartened to find one member state both eager and qualified to join. Sweden and Poland, while not filing for a formal opt-out, have decided to indefinitely postpone application for Eurozone entry. Meanwhile, chastened by the economic crisis, the EC has published a set of economic governance proposals to reinforce the Stability and Growth Pact. An enhanced economic surveillance framework would strengthen budgetary surveillance and expand into other macro-economic areas of concern, particularly in the Eurozone.

In addition, a green paper on corporate governance that was initially scheduled to launch this month is now due on June 3. The authors aim to harmonize with the G20 on risk management and shareholder engagement issues. A consultation period will follow the green paper’s release, and the EC plans to implement its proposals by the end of 2012.

France

Retirement age hike plans confirmed
EIU, Financial Times, Reuters

Talk of extending the social security contribution period beyond the 41 years set to take effect in 2012 (IH 05/19/10) entails a de facto rise in the retirement age – now 60 – for many, so the population is acclimating to the inevitability of a higher retirement age, even polling in favor of it. After months of denying it, officials are now telling the press that pension reform legislation will include a retirement age increase to at least 62. Unions are holding a nationwide demonstration today to warn against it.

Germany

Ban on naked short selling
Euractiv, Euractiv, IPE

Next month, the European Commission (EC) will release a consultation document on the regulation of financial derivative products, including naked short selling. Concerned about the slow pace of the EC response to the risks associated with these products – particularly their alleged role in the Greek debt crisis – Germany’s Finance Minister announced an immediate ban on naked short selling and credit default swaps on euro government bonds. The EU plans to issue a formal proposal based on the consultation document next October.

Greece

More pension reform details; Labor reform negotiations
AFP, ANA, IPE
A few more details on the pension reform bill have emerged. A person  would work 37 years – up from 35 – for a full pension and there would be incentives to round it out to 40. The benefit, now matching 70% of final salary, would be no more than 65%. The early retirement penalty would be 6% per year. The bill will be submitted to Parliament by mid-June.

Also, the Labour and Social Insurance Minister has invited social partners to join talks on labor reform issues commencing May 31. Topics will include:

• A cap on fixed-term contracts and a one-year limit on trainee contracts
  
  
• Disincentives for firing older workers
  
  
• Distinct employment terms and minimum wage for people under age 25 in their first jobs
  
  
• A review of severance pay rules and a higher threshold for mass layoffs
  
  
• Protocols for arbitration

Ireland

Health insurance reform plan; Pension cuts previewed
Irish Independent, Irish Times, Irish Examiner
The Health Minister will soon submit a plan to the Cabinet on a new mechanism for stabilizing the community rating system for health insurance. We are advised to expect a complex risk equalization scheme. The plan would entail some new state funding for the statutory health insurer VHI, which has had its deadline for meeting solvency requirements deferred to January 1, 2012.

Also, officials have launched a trial balloon on benefit cuts for affluent pensioners or means testing for those who draw a pension while staying employed possibly turning up in the next federal budget. It has not been well-received and it would have trouble clearing Parliament if it was seen as affecting the middle class.

Italy

Guidance on maternity rights
Expatica

The social security administration (INPS) has provided some guidance on maternity leave benefits in Circular n. 62 (Italian only). One is entitled to paid maternity leave after three months of social security contributions in the preceding year and three months of contributions to a separate maternity fund in the 18th-9th months before birth. The leave not taken before a premature birth may be taken after the child’s birth, and women who take new jobs while on maternity leave forfeit their benefits.

Latvia

Social security reform proposal due next month
Baltic Daily

Last year, the Ministry of Welfare agreed to produce a pension reform proposal by July 1, 2010 (IH 09/16/09). The ministry has been consulting with social partners, and the Latvian Confederation of Free Trade Unions (LBAS) is not pleased with the drift of the discussions. It has threatened to force a referendum on some of the proposed changes, particularly if the prospective retirement age hike (IH 09/23/09) is included.

Montenegro

EU fast track
Euractiv; Euractiv

The Stabilization and Association Agreement (SAA) between Montenegro and the EU came into force at the start of this month and the EU’s executive opinion on Montenegro’s accession is due at the end of this year. Montenegro has made a strong case for membership and its top economic ally, Hungary, aims to help expedite its accession during its EU presidency term in the first half of 2011.

Netherlands

Tighter FTK assumptions; Status of severance cap, fixed-term extension bills
ACC, IPE
The Social Affairs Minister expanded on his proposal for a stricter financial assessment framework (IH 04/14/10) in a written consultation with Parliament. His plan to lower the upper limit for return assumptions has raised pension industry concerns about sharp contribution hikes, but he downplayed their impact.

Also, the bill capping severance pay at one year’s salary for those earning above €75,000 (IH 02/10/10) is back before Parliament with a new clause on exceptions in cases where the restriction would be unreasonable. The bill is frozen in “controversial” status (IH 04/21/10) until after next month’s election. One current bill not tagged as controversial would raise the 36-month maximum on fixed-term contracts to 48 months for people under age 27 until January 1, 2012.

Poland

Guaranteed Benefits Fund regulations
PNB
The Fund of Guaranteed Employee Benefits (FGSP) saw a spike in claims from employees of insolvent companies last year. FGSP remains well-funded, but there were administrative problems with getting the payments to workers within a reasonable period. Amendments to FGSP regulations will now require the insolvent company or the administrator of its assets to produce a register of all worker payment obligations within a month of declaring insolvency.

Portugal

President to sign gay marriage bill
Deutsche Welle

With the Pope’s visit to Portugal over (IH 05/05/10) and the gay marriage bill’s backers holding a veto-proof majority, the President has decided to concede defeat and sign the bill so he can focus his attention on the economic crisis.

Romania

Austerity package would feature second pillar contribution drop
Mediafax, Reuters, IPE

Crisis measures under negotiation with the International Monetary Fund (IMF) now include another reversal for the second pillar pension scheme, more than cancelling the latest contribution hike (IH 03/24/10) by cutting the levy from 2.5% to 0.5% until January 2012. The Finance Minister backs this while the Central Bank opposes it. A decision is expected this week.

Slovenia

Mandatory profit sharing bill passed
STA

The National Assembly has passed the mandatory profit sharing bill (IH 05/19/10) by a comfortable margin. The other chamber of Parliament, the National Council, represents the corporate sector and employers oppose this bill, but the most it can do is vote a “suspensive veto” that would require the National Assembly to review its concerns with the legislation.

Spain

Pension freeze
El Pais, Expatica, Reuters

The Prime Minister’s latest austerity package includes a provision that would freeze the state pension for all except those receiving the minimum benefit in 2011. Another would end the €2,500 childbirth benefit for births and adoptions registered after January 31, 2011. The Cabinet has approved this package.

Switzerland

Minimum wage initiative
Swiss Info, WRS

The Social Democrat Party will support the Swiss Federation of Trade Unions in a petition drive this fall to set a minimum hourly wage of CHF 22 (US $19.50). Collection of 100,000 signatures would force a national referendum on the issue.

UK

Coalition agenda
Guardian, Financial Times, IPE
The Coalition: our programme for government and the Queen’s Speech have expanded on the coalition government goals outlined in the coalition agreement (IH 05/19/10):

• The Pensions and Savings Bill, due after the summer recess, would tackle the default retirement age issue (the coalition programme uses the term “phase out,’ but the bill summary avoids it.) and restore the earnings peg to the state pension in a triple guarantee format (IH 05/19/10). The latter is due to return in April 2012.
  
  
• All workers would be entitled to reasonable accommodation of flexible schedule requests.
  
  
• The coalition will promote equal pay and gender equality in the boardroom.
  
  
• There would be no further ceding of power to the EU. Most EU hedge funds are based in the UK, so the administration is smarting over the draft Alternative Investment Fund Manager Directive (IH 05/19/10, EU). Some degree of opt-out from the Working Time Directive is on the coalition agenda.
  
  
• There would be a flexible parental leave system.
  
  
• The annual inflow of non-EU economic migrants would be capped.
  
  
• The gatekeeper role of general practitioners would be reinforced, patients would have a right to choose their own GPs and patient ratings of health care providers would be published.
  
  
• The administration will conduct a study on additional options for early pension withdrawal.
  
  
• A commission on long-term care will report within a year on possible improvements to the sector, including a voluntary insurance scheme.
  
  
• There will be a review of the notoriously confusing IR35 regime for determining whether a worker is and independent contractor.
  
  

Canada

Ontario generic drug reform status
Benefits Canada, Dow Jones

The legislature has passed Bill 16 Creating the Foundation for Jobs and Growth Act, including a measure that would cut the price of generic drugs by ending “professional allowances” to pharmacies (IH 04/14/10). A draft regulation banning professional allowances was supposed to take effect on May 20, but the Health Minister has postponed it for at least a month to allow adequate time for review of public comments. Observers expect to see some concessions to the pharmaceutical industry but no retreat on professional allowances. Changes to the regulations would probably require revisions to the corresponding provisions in Bill 16.

Guatemala

Life insurance reform bill
BNamericas, LBR

With insurance market reform due by June 30 under the Central American Free Trade Agreement (CAFTA), Congress is expected to meet the deadline for life insurance reform legislation to clear up an overcrowded and shady “grey market.” The law would close a loophole allowing foreign life insurance companies to operate in Guatemala without authorization and offer unregulated products without penalty. The bill includes an amnesty period for grey market insurers to come into compliance.

US

Tax bill with pension funding measures; Senate passes financial reform bill; IRS rules on company stock
LTN, Global Pensions, Tax Analysts
This week both the House and Senate are scheduled to debate HR 4213, a tax bill covering much territory:

• Democrats in both houses have agreed on pension funding relief measures similar to those the Senate passed in March (IH 03/17/10), but with the seven-year option extended to nine years with interest waived for the first two years. Also, the formula for determining the excess employee compensation that warrants higher amortization installments now has a broader definition for compensation.
  
  
• Fee disclosure requirements for 401(k) schemes and other defined contribution plans would require service providers and plan sponsors to detail all charges. Participants would have fee disclosure included in their quarterly statements.
  
  
• Unemployment benefit extension, the COBRA post-employment health insurance subsidy and an employer wage credit for active military reservists would continue through the end of this year (IH 04/21/10).
  
  
• The European Commission has protested that a measure on denying tax deductions to foreign-based insurers and reinsurers violates US commitments under the General Agreement on Trade in Services.
  

Also, the Senate has passed S.3217 Restoring American Financial Stability Act of 2010 (IH 04/28/10). Amendments did not significantly affect our recent synopses. The bill must now be reconciled with a companion House bill (IH 12/23/09) that is similar in spirit, but not quite so strict. Final passage is expected by the end of next month.

In addition, the Treasury has published the final regulations Diversification Requirements for Certain Defined Contribution Plans. 401(k) plans that include company stock will now have to grant participants at least three alternative investment options and allow them to diversify out of company stock as frequently as from other investments. The regulations apply for plan years starting on or after January 1, 2011.

Argentina

Gay marriage bill
AP, MercoPress, Daily Nation

The House of Deputies has approved legislation that would legalize gay marriage nationwide. Same-sex partners already have survivor pension rights under social security (IH 08/27/08). The Senate is expected to pass the bill, and the President has already committed to signing it.

Bolivia

Revised Labor code stalled
GIDA, La Patria, Kaosenlared

Last month, the Labor Ministry’s Ministerial Resolution 212/10 (Spanish only) gave notice that a package of major draft legislation featuring a revised labor code (IH 03/03/10) would need to slow the consultation process in the interest of achieving consensus. The grievances aired in this month’s general strike included objections to this legislation and to the pension reform bill (IH 05/19/10). The Finance Minister is now trying to revive consultations with the trade unions on both bills.

Brazil

Senate votes to abandon early retirement disincentive
Business Week, Dow Jones, Global Pensions

The Senate has passed a bill that would increase pensions by 7.7% and rescind the “fator previdenciario’’ actuarial formula that reduces benefits for early retirement and encourages retirement deferral. The President is likely to veto the latter provision and may reject the entire bill.

Chile

AFP corporate governance role
BNamericas

Pension regulator SP has submitted a proposal to AFP private pension fund managers on their roles in corporate governance. Reinforcement of their roles as major shareholders in the companies in which  they have significant investment would include more aggressive deployment of their independent board members.

Uruguay

Raising infrastructure investment cap
EIU, Euclid

The government has presented a bill to Congress that would double the limit on private pension fund manager (AFAPs) infrastructure investments to 50%. AFAPs and their clients appear to have some trepidation about these investment products.

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