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.

Cape Verde

Retirement savings plan; Draft labour code amendments
GIDA

The Cabinet has approved (Portuguese only) a draft Decree-Law that would bolster the economy with a trio of new savings schemes, including a retirement savings plan (PPR). The press release mentions transparency requirements and guarantees for these schemes, but there is no mention of a tax break. Also, the Cabinet has also okayed a package of labour code amendments. One measure would give the government a role, presumably including oversight, in the production of collective work contracts. The package has not been released to the public, but it reportedly does not include the long-awaited introduction of a minimum wage.

Malawi

2010-11 Budget
IBFD, Nyasa Times
The Finance Minister delivered the 2010-11 Budget to Parliament late last month. Noting that a tax break on the investment income of pension funds has helped neither the economy nor pensioners, he proposed a 10% tax on their investment gains. He also plans to remove the MK40,000 (US $265.30) in tax relief on end-of-service gratuities as the amount has become a small fraction of the typical benefit.

South Africa

“Solvency II” adoption
Risk.net, Insurance Exchange

Analysts have started to advise stakeholders on the Financial Services Board (FSB) Solvency Assessment and Management (SAM) regime for the insurance sector. Modeled closely after the EU’s Solvency II Directive – and often referred to as Solvency II – SAM will be implemented in January 2014.

Australia

Senate report on paid parental leave bill; Annual Wage Review
ABC, AFR, Smart Company
The Senate Standing Committee on Community Affairs has released its report Exposure Draft and Paid Parental Leave Bill 2010 (Provisions). The committee endorsed the bill, but requested a review of possible flaws in the eligibility requirements for casual workers, pointed out entitlement inconsistencies with existing laws (IH 05/27/10) and called for a comprehensive review two years after the plan’s inception. The review is already slated to address supporting partner leave and the treatment of existing employer-provided paid parental leave schemes.

Also, Fair Work Australia has issued Annual Wage Review 2009-10. Along with a robust minimum wage increase, it backs the principle of equal remuneration and discusses compensation issues under award modernisation. Earlier last week, the Fair Work Ombudsman published Guidance Note 7- Transitional arrangements in modern awards covering the transitional arrangements for the four-year phase in of wage-related entitlements under modern awards. The process starts on July 1, 2010.

Cambodia

Correction
In IH 06/03/10, a formatting glitch filed an item on the revision of Cambodia’s trade union legislation under the China heading. The full text of the entry follows:

The regulatory framework for trade unions is now a modest chapter of the Labour Law that emphasizes mandatory financial disclosures to stem union corruption. A tripartite group is near completion of a 17-chapter draft trade union law that would flesh out workers’ rights to form unions and provide guidance on the collective bargaining process.

China

See: Cambodia

Marshall Islands

Social security funding crisis
RNZ

The Social Security Administration has reported to the Cabinet on what one official described as a “death spiral” in fund depletion. The administration plans to appoint a task force to draft proposals on more stable funding and investment policies.

Taiwan

Union Act passed
China Post, CFO Innovation, Taiwan News
The Legislative Yuan has passed the Union Law, a set of measures that reinforce existing rights to form and join unions:

• Foreign workers will be allowed to join unions and to hold office in them.
  
  
• Employers may not dismiss or penalize workers for joining a union.
  
  
• The union protections in this bill will ease implementation of earlier legislation that called for union representation of workers in labour disputes.
  
  
• Union membership fees will be capped.
  
  
• Dispatched workers will not be allowed to join unions. Teachers will, but they will not be allowed to strike.
  

The Council of Labor Affairs has not yet decided whether to bring the law into effect on January 1, 2011, or wait until the following May Day.

Belgium

Gender discrimination directive transposed

The European Commission has now closed its infringement proceedings against Belgium over inadequate compliance with its rules on workplace gender discrimination. The state had already transposed the rules, but it had not yet ensured that all employers were made aware of the changes.

Bulgaria

First-reading approval for anti-crisis measures; Insurance premium tax proposed
BTA, Novinite, IBFD
Parliament has endorsed “in principle” the administration anti-crisis package (IH 05/19/10) in a first reading after rejecting counter-proposals from opposition coalitions. At this stage, the bill would:

• Remove the cap on unemployment benefits
  
  
• Eliminate any carryover entitlement for vacations not taken after December 31, 2011
  
  
• Permit unpaid leave arrangements 
  
  
• Allow reduced working hours (credited as full employment for social security purposes) for up to six months per calendar year
  
  
• Require employers to pay 70% of salary during the first three days of sick leave and have the government pay 80% for the balance
  

An insurance premium surcharge that was dropped from the package earlier has reappeared in the Finance Ministry’s draft Insurance Premiums Tax Act. From August 31, 2010, insurers would pay 2% on all collected premiums with the exception of life insurance policies.

Croatia

Collective bargaining law amendment
SETimes

The Finance Minister has drafted a labour law amendment that would resort to individual contracts if a collective agreement could not be renegotiated within six months after expiration. The unions are planning a petition drive to force a referendum on this measure.

Czech Republic

New ruling coalition
Prague Post, Ceske Noviny, Reuters

A trio of center-right parties has signed a statement of coalition following the general election. An agenda outline mentions six top priorities, including pension reform and health system reform. Before the election, the three parties agreed on the classic three-pillar model for pensions. They would split the health system into a basic package of care and supplemental health insurance. Two parties favor assigning the latter to the private sector.

EU

Green paper on corporate governance; Various
EU Observer, Euractiv, IPE
The European Commission has opened a consultation on the green paper Corporate governance in financial institutions and remuneration policies. The draft regulations would require institutional investors to follow stewardship codes and to publish their voting records. For now, the scope is limited to financial institutions, but there are plans to expand the rules to all publicly traded companies. The consultation closes on September 1, 2010.

In other news:

• The European Commission paired the green paper on corporate governance with a proposal for a more centralized EU role in the supervision of Credit Rating Agencies (CRA, IH 05/19/10). Existing plans to coordinate member state CRA authorities would be superseded by a model giving the European Security Market Authority (ESMA) direct supervisory powers. An FAQ accompanies the press release.
  
  
• Tripartite negotiators have reached an impasse in negotiations on refinements to the Posting of Workers Directive. High-profile European Court of Justice ruling on social dumping (IH 04/10/08, 12/19/07) motivated social partners to review the directive, but they could not arrive at a proper balance for protecting the rights of both mobile workers and host-state workers.
  
  
• A package of amendments to the Capital Requirements Directive is up for a committee vote later this month. It would give shareholders the right to vote on excess remuneration in the banking sector.

Finland

Guidance on harmonized retirement scheme taxation
IBFD
The tax authorities have released guidance Dnro 461/32/2010 expanding on the recent extension of the tax breaks on voluntary pension scheme contributions to the money placed in long-term savings vehicles (IH 01/07/10):

• The tax on both the principal and the interest will rise by 50% in cases of pre-retirement withdrawal or transfer to a non-qualifying scheme.
  
  
• Contributions made on behalf of a spouse are not subject to gift tax if they are below €5,500 per year.
  
  
• Distributions from these schemes do not fall within the scope of Finland’s tax treaties.

France

Expat health coverage gap
The Connexion

The European Commission has entered into talks with France over a policy that denies early retirees from member states the option of immediately joining the public health system (IH 01/09/08) through the CMU (couverture maladie universelle) plan. Those who have arrived in France since November 23, 2007, may not join CMU for five years after the move and there is no requirement for private health insurers to provide coverage to expats with pre-existing conditions.

Germany

ECJ referral over pension tax discrimination; Health insurance premium proposal; Another flexible work model
Global Pensions, GIDA, IBFD
The European Commission has referred Germany to the European Court of Justice (ECJ) over its discriminatory tax policy toward foreign pension plans (IH 11/04/09). The disparity is in the treatment of dividends and interest payments under the regimes for Pensionskassen and Pensionsfunds.

Also, the Health Minister plans to introduce a flat €30 per month premium for members of the public health insurance system. It would not be strictly flat as there would be some adjustments for people earning over €3,000 per month to offset the cost for low-income participants. The income-based portion of the health insurance contribution, now 7% from employers and 0.9% from workers, would become an employer-only contribution of 7.3%.

In addition, the Families Minister has unveiled (German only) another flexible working scheme for caregivers (IH 06/03/10). They would work 50% of normal hours at 75% of normal salary for up to two years, then work an equal period full-time at 75% of pay. Critics of the proposal have asked about contingency plans for those who cannot return to a full-time schedule.

Greece

Discrepancy in pension reform details
ANA, La Specula, Dow Jones

Greek authorities and the International Monetary Fund (IMF) have denied widespread reports that Greece is trying to renegotiate some painful details of their agreement on pension reform (IH 05/27/10). The fact remains that the Greek draft legislation would set the normal contribution period at 37 years with incentives for 40, while the IMF agreement sets it at 40 years. The two camps are also said to differ on whether “fictitious” years of work credited for military service, child raising or attending college will still count as part of the contribution period.

Luxembourg

State of the Nation Speech
Tax News, Hello News
The Prime Minister’s State of the Nation speech (French only) last month outlined the budget bill (IH 05/19/10) and offered some other notable proposals:

• The limit on deductible travel expenses would be halved in 2011.
  
  
• The 1.9% pension adjustment scheduled for January 1, 2011, would be halved on that day and the remaining 0.95% would arrive on January 1, 2012.
  
  
• The parental leave scheme would be left alone for now, but a report proposing alterations is due in 2012.
  
  
• The reduction in the maximum unemployment benefit from 2.5x minimum wage to double the minimum wage would come after nine month rather than six. Also, the minimum age for continuation of unemployment benefits after 12 months would drop from 50 to 45.

Moldova

Growth incentive in social security levy
IBFD

The Finance Ministry’s Medium Term Expenditure Framework for 2011-13 includes a measure on lowering social security premiums for employers that increase their payrolls. The 29% social security contribution would drop to as low as 17% for companies seeing 30% payroll growth.

Netherlands

Post-election prospects
DutchNews.nl, RNW, IPE
Today’s general elections are expected to produce an environment that will allow formation of a center-left ruling coalition (IH 06/03/10). The social partners have now reached an agreement on flexible retirement that holds few alarming surprises, so it has a fair likelihood of support from this administration. Agreement provisions, in addition to the measures mentioned last week, include:

• People who are now at least age 55 would be able to retire at 65 on full benefit.
  
  
• After the retirement age is raised to 66 in 2020, there would be reviews of the need for further increases at five-year intervals. This and other measures would help to better align the system with longevity.
  
  
• The AOW state pension would be pegged to the salary index.
  

Along with supporting a retirement age hike, this coalition is inclined to resist proposals for partial privatization of the health insurance system and to back a sharp reduction in the 38-month maximum unemployment benefit entitlement. Incidentally, while the outgoing administration opposed it, a solid majority in Parliament (likely to further solidify today) would back a proposal to ban naked short selling.

Romania

Pension reform endgame
Mediafax, Rompres, Reuters

With a general strike over its austerity package (IH 06/03/10) due this week and early retirement claims spiking, the government will seek a confidence vote on its pension recalculation bill. Along with cutting all but the lowest pensions by 15% (there would be at least a partial rebound in 2011), it would curb the excesses of public sector special pensions and introduce a prison sentence for fraudulent disability pension claims. The Chamber of Deputies Labor Committee has approved this bill, but only after modifying the formula for early retirement penalties and altering the retirement age goal from 65 for both sexes to 65 for men and 63 for women.

Russia

Prime Minister supports eventual compulsory unemployment insurance
Bnott, Itar-Tass

The Prime Minister has embraced a Federation of Independent Trade Unions proposal to establish a mandatory unemployment insurance scheme, but he noted that it could not be introduced until the economic crisis is over.

Slovakia

Reasoned opinion over sex discrimination rules

The European Commission has entered the second stage of infringement proceeding against Slovakia with a reasoned opinion over its faulty transposition of workplace gender equality rules. The largest gap is the failure to guarantee preservation of rights for women returning to work from maternity leave.

Slovenia

Foreign Labour Act amendments
STA
The Labour Ministry has circulated a set of draft amendments to the Foreign Labour Act that would both incorporate the EU’s blue card rules and add several measures on the protection of foreign workers:

• Employers setting out to hire foreign workers would first have to show that they are not in arrears on tax and social security payments for those already in their employ.
  
  
• Foreign workers would be entitled to apply for their own work permits after 22 months of employment in Slovakia.
  
  
• Regional information offices would advise the immigrant workforce of the rights.
  
  
• Foreign workers who lose their jobs would be allowed to stay in Slovenia for the full duration of unemployment benefits.
  
  
• Cross-border workers who pay into the Slovenian unemployment insurance program would be eligible for unemployment benefits.

Sweden

Labour reform proposals on the campaign circuit
The Local

The ruling coalition – currently ahead in the polls – is eager to make preservation of the Swedish job market model an issue in the lead up to national elections in September. It has rejected proposals from both  the left and the right to end its “last in – first out” rule for redundancies, but it aims to improve hiring prospects for younger workers by doubling the probation period to one year.

UK

Revised corporate governance code
Financial Times, Investor Chronicle
The Financial Reporting Council has released a major revision of its Corporate Governance Code. It calls for:

• Basing performance-related pay on long-term goals
  
  
• Holding annual elections for all directors of FTSE 350 companies
  
  
• Seeking greater board diversity, including gender diversity
  
  
• Increasing transparency and accountability in risk taking

Ukraine

Pension reforms in State of the Nation Address
Interfax, Kyiv Post, Voice of Russia

The President’s State of the Nation Address provided a long-range forecast that set completion of a three-pillar pension system in the middle distance. Legislation on the establishment of a second-pillar accumulative pension should reach Parliament in 2012 and a three-pillar model should be fully installed in 2014. He also endorsed a proposal to raise the retirement age for women from 55 to 60 over a 10-year period, but he did not commit to a start date for that.

Barbados

Labour law reforms under way
Barbados Advocate

The Minister of Labour debriefed the Barbados Employers’ Confederation (BEC) on imminent labour law revisions last week. The Holidays with Pay Act and the Safety and Health at Work Act are under review, but the spotlight shone on the long-gestating Employment Rights Bill (Please note that this is a 2009 version for which both the Cabinet and Parliament have since approved drafting instructions, so it is likely that there have been significant changes.). The bill details the information that should be in an employment contract. It would provide protection against unfair dismissal and entitle terminated employees to a  certificate on the terms of their employment, including an explanation for the dismissal. There will be another round of social partner consultation before Parliament can vote on it.

Canada

Clarification; Correction
Ottawa Citizen

A new article on Bill C-501 (IH 06/03/10), the popular legislation on protecting pensions in a bankruptcy, notes that the retroactivity issue is on the agenda for committee debate, so Nortel pensioners may yet benefit, and it cautions that final passage may be difficult without the administration’s support. Also, there was a typo in the first Canada item in issue #623. Ontario’s Pension Benefits Amendment Act is Bill 236, not 235.

Trinidad & Tobago

Social security hike(s); New administration’s agenda
Trinidad Express, Newsday, The Guardian
Shortly before last month’s general election, the Prime Minister’s “election love thing” featured a rise of up to 35% in the minimum pension, setting a monthly floor of $2,500 (US $394.17 ). One of the new Prime Minister’s first bills before Parliament when it reconvenes this month would “bring back Social Security” with a $3,000 monthly minimum. Her Labour Minister has laid out an ambitious agenda:

• A top priority will be to appoint a minimum wage board to fulfill the campaign promise of raising the hourly minimum from $9 to $20.
  
  
• There would be a 14-week maternity leave and “provisions for paternity leave.”
  
  
• Unions and workers’ rights to join them would have new protections.
  
  
• The Occupational Safety and Health Act is due for a review.
  
  
• He would promote flexible hours in the private sector and mandate it in the public sector to help relieve urban traffic congestion.

US

Congressional agenda
Market News, Business Week, Reuters

Legislators have returned from a brief recess to a crowded field of urgent priorities. The President is pressing congressional leaders on clean energy legislation and immigration reform (IH 05/05/10). A conference committee is reconciling the House and Senate financial reform bills (IH 05/27/10) in the hope of final passage by July 4. HR 4213 (IH 06/03/10) may face a protracted battle in the Senate where the Republicans threaten to hold out until it is revenue neutral. While the subsidy on COBRA post-employment health insurance premiums is running out for many, backers concede that a COBRA extension bill would be a hard sell in this Congress.

Brazil

Veto for measure ending early retirement disincentive; Ban on worker HIV testing
Jus Brasil, MNI, GLM

The administration has advised the Senate that the President will use a line-item veto on a provision in a recent bill that would eliminate the “fator previdenciario” early retirement disincentive (IH 05/27/10). He has not yet decided on the rest of the bill, which includes a controversial 7.7% pension increase. Also, the Ministry of Employment has issued an administrative act banning HIV testing at any stage of the employment process. An employer may sponsor an initiative promoting voluntary HIV testing, but it may not access the results of these tests.

Venezuela

Health insurance provisions of new insurance law
GIDA, Corporate Counsel, BNamericas
The President is expected to sign the insurance reform bill that cleared the National Assembly last week. Banks would be barred from selling insurance and insurance market regulator Sudeseg will set licensing and capitalization requirements. Of particular interest are the health insurance measures (Spanish only):

• Restrictions on new clients – including pre-existing condition clauses – would be banned.
  
  
• Hospital emergency room staff would no longer be allowed to quiz a patient on his or her insurance status before providing emergency care.
  
  
• Health insurers would contribute 1% of total premiums to the national public health system.
  
  
• “Solidarity insurance policies” would subsidize coverage for low income patients.

Mercer International Headlines is published by the US international consulting practice library of Mercer. Comments or queries may be directed to Patrick Sweeney at +1 212 345 2462. Click here to find your local Mercer office.