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.

Nigeria

Social security bill
Vanguard, Business Day, This Day

The Senate has passed in second reading a bill that would grant stipends of up to N15,000 (US $99.11) per month to aged people without a pension and to new college graduates who haven’t yet found a job. If passed, the law would go into effect on January 1, 2011.

Australia

Existing company scheme status under parental leave bill; Various
AFR, AAP, The Australia
There has been some uncertainty over whether employers would be allowed to replace their own paid parental leave schemes with the new parental leave entitlements if Paid Parental Leave Bill 2010 (IH 06/09/10) passes. The government’s advisor on work and family balance divulged during a recent debate that while the statutory paid parental leave is meant to “top up” existing schemes,  the legislation would not require it.

In other news:

• A worker coalition led by the Australian Services Union (ASU) will bring a test case on equal pay before Fair Work Australia later this year. The argument is that predominantly female sectors such as nonprofits pay less for the same work than the for-profits.
  
  
• The government is now destined to miss a July 1 deadline for implementation of a health care identifier service for control of e-health records.. The Health Ministry concluded from public consultations that Healthcare Identifiers Bill 2010 and its draft regulations had  to be revised for greater clarity and easier compliance.
  
  
• The Australian Tax Office (ATO) has published the guidance Employee Benefit Trusts: how do the taxation laws apply?. The ATO had been called to task in the past for an inconsistent tax policy on benefit trusts (IH 02/28/07).

China

“Income doubling plan”; Independent labor unions gain traction
WSJ, NYT, The Economist
The Ministry of Human Resources and Social Security (MOHRSS) has already committed to some serious wage reforms (IH 05/27/10). An MOHRSS official has now  revealed that a plan to double average wages over the next five years is under consideration. Inspired by an income-doubling initiative that Japan conducted in the 1960s, this proposal may turn up in the administration’s next five-year plan this fall.  

Meanwhile, a series of strikes (IH 07/03/08) staged by workers organizing independent of the state-affiliated China Federation of Trade Unions (ACFTU, IH 10/18/06) have met with little government resistance. Some observers are forecasting an independent trade union movement for China. Others noted that the strikes have so far just been staged against foreign-based multinationals.

Hong Kong

MPF choice safeguards
SCMP, 7th Space

The Mandatory Provident Fund Authority (MPFA) is conducting a review of marketing and disclosure to MPF scheme participants in advance of next year’s entry into force of MPF portability rules (IH 07/22/09). There is concern that members will be lured by sign-on gifts to providers with high-risk investments or hidden fees.

India

Draft guidelines on life insurance disclosure
AIR

The Insurance Regulatory and Development Authority (IRDA) has opened a consultation on the exposure draft Issuance of Key Feature Documents for insurance products. It would require all life insurance policies to append key feature documents with uniform disclosure of product details in a standardized format. Feedback is welcome through June 20.

Japan

Ruling on benefit cuts
Jiji Press, Nikkei Report, Japan Today

The Supreme Court has rebuffed a telecom giant’s final appeal to replace a fixed defined benefit formula with a benefit calculation pegged to a government bond yield. This would have significantly lowered benefits. A number of companies in difficult financial straits have been permitted to reduce their pension benefits in recent years, but this company was experiencing a modest setback under which it remained highly profitable.

Korea

Proposal to cut working hours
Joong Ang Daily, Korea Times, AFP

The Economic and Social Development Commission has adopted an agreement on reducing the nation’s average annual working hours from 2,256 to below 1,900 by 2020. Worker health, life/work balance and the birthrate are all expected to benefit from this. The commission supports flexible work initiatives (IH 02/24/10), but it would repeal the measure that allows workers to sell their vacations.

Malaysia

Job market reform
Bernama, Business Times, The Star

The Prime Minister’s 10th Malaysia Plan 2011-2015 (10MP) aims for a better-trained Malaysian workforce and a more selective approach to bringing in migrant workers.  A Talent Corp would complement the foreign worker levy formula (IH 05/27/10) to shift emphasis to those foreign workers whose skills are truly needed.

Philippines

Wage subsidy, VAT discount for seniors
Tax Analysts

The Bureau of Internal Revenue’s Revenue Memorandum Circular No. 45-2010 gives people age 60 and over a 20% discount on value-added tax on a variety of products, most notably medicine and medical services. It also offers them job placement services in a scheme that will pay 15% of their wages to employers that will take them on for at least six months.

Taiwan

Minimum wage exemption for foreign workers nixed
China Post, Dow Jones

A group of Taiwanese investors, wary of higher salaries and industrial action in mainland China (cf. this issue’s China entry), have offered to move their operations back to Taiwan if foreign workers are exempted from the minimum wage (IH 04/21/10). The Prime Minister has now decided to rule out this exemption.

Thailand

Draft Provident Fund Act amendments
EIU
The Ministry of Finance has drawn up a package of significant amendments  to the Provident Fund Act:

• As early as late 2010, a mandatory National Provident Fund (IH 11/17/04) would be introduced for companies with at least 100 workers. It would be extended to companies with as few as 10 workers within six years.
  
  
• Employers and employees would contribute 3% each.
  
  
• Voluntary employee-sponsored provident funds with at least 6% contributions would qualify.
  
  
• The retirement age, already 60 for provident funds, would rise to 60 for social security.
  
  
• Independent professionals would be allowed to create their own voluntary provident funds.

UAE

New GPSSA responsibilities; Extended summer break season
WAM. MEIR, MENA
The General Pensions and Social Security Authority has been revamped to take on the responsibility of drafting pension and social security legislation. Also, the summer siesta requirement for outdoor work (IH 06/10/09) is expanded by a month under Decree No. 443/2010, covering June 15 through September 15. Decision No. 38/2010 specifies those emergency circumstances during which the siesta right would be waived.

Vietnam

Draft Labour Code update; Social security reform options
VNN, EIU
The Labour Ministry has revised its Draft Labour Code following stakeholder consultations. Among its prominent provisions:

• The 36-month limit on fixed-term contracts would be removed.
  
  
• The 36-month limit on work permits would be cut to 12 months.
  
  
• There would be a quota system for disabled workers.
  
  
• Employers would have greater freedom to unilaterally break an employment contract.
  
  
• The 200-hour annual limit on overtime work would rise to 300.
  
  
• Labour supply companies would be established to provide a ready source of temporary workers.
  

The bill will reach the National Assembly later this year.

Also, the Social Insurance Department (SID) anticipates a funding crunch in the near future. SID has outlined the range of social security reform options that it will soon present in a report to the National Assembly. They include a longer contribution period, a contribution formula based on full salary and professional advice on investing.

Armenia

Pension reform update
ARKA, Oreanda, Yerevan Report

After conducting studies on the ramifications of its pension reform plan (IH 03/17/10), the administration is submitting the legislation to the National Assembly where it is expected to win passage on first reading. The administration has confirmed that it will employ the two-pillar model with the basic state pension complemented by a privately managed multifund pension scheme. The President, while still expecting to implement the new system at the start of 2011, has indicated that stakeholder consultations will be necessary before the bill becomes law.

Belgium

Election results
RFE, BBC, Expatica
The Flemish separatist N-VA party won the most seats in Parliament of any single party (27 out of 150) in Sunday’s election and will pursue a coalition dedicated to devolving the nation into two largely autonomous states (IH 06/03/10). Its concession to the French-speaking contingent would be the largely symbolic (under this scenario) role of Prime Minister. There could be months of wrangling ahead. Belgium assumes the EU Presidency on July 1.

Croatia

Accession roadblock lifted
EU Observer, Euractiv
A referendum in Slovenia narrowly approved the government’s proposal to submit its border dispute with Croatia to international mediation. Slovenia will no longer block the accession process for Croatia, and backers view 2012 accession as a viable prospect.

Czech Republic

Bezdek Commission pension reform report
CTK, PDM, Ceske Noviny

The prospective ruling coalition (IH 06/09/10) has not quite gelled yet, but a panel representing the three parties has endorsed the conclusions of the Bezdek Commission on pension reform. The report offers two main options. One would cut the pension contribution from 28% to 23% and add a voluntary second pillar. The other would feature the same cut, but 3% of the 23% would be diverted to a mandatory second pillar scheme for those aged 40 and under. The pensionable salary cap would be halved to three-times the average wage. A value-added tax (VAT) hike for some products, notably food and medicine, would offset the lower contributions. The reform would launch in 2015 and benefit increases would be pegged to inflation from 2025.

Denmark

Early retirement cutback proposed
Copenhagen Post

The Economics Council, also known as the “Wise Men,” has issued a report on the administration’s austerity plan (IH 06/03/10) that calls for extra cost-cutting measures. One would defer early retirement eligibility to age 62 from 2015. The leader of the opposition Social Democrats has asserted that early retirement cuts could only be avoided by other concessions, such as  adding an hour to the workweek without adjusting salaries.

EU

European Council advances cross-border health care; Pensions Green Paper previews
EU Business, IPE, Euractiv
A European Council meeting of member state employment and health ministers agreed to some breakthrough compromises on the Patients Rights Directive (IH 12/09/09). Under the revised draft directive:

• Patients receiving health care in another member state would be reimbursed by the home state health system at the same level as they would if treated in their own country.
  
  
• There are contingency plans for checks and balances when one state’s health system is disproportionately affected by cross-border health traffic.
  
  
• Prior authorization would be necessary for non-emergency hospital stays of more than one night or for particularly costly procedures.
  
  
• Both public and private hospitals would qualify for reimbursement.
  
  

The Council will formally adopt a position once all the translations are completed and reviewed, then the directive will be submitted to Parliament for a second reading. The ministers also approved a draft regulation on portability of social security entitlements for resident third party nationals crossing borders in the EU. Another accomplishment was political agreement on limited social security coordination with the accession states Croatia and Macedonia as well as four Mediterranean neighbors– Morocco, Algeria, Israel and Tunisia.

Meanwhile, the EU Green Paper on pensions (IH 06/03/10) is due to arrive next Wednesday, June 23. The latest previews discuss member state autonomy for pension systems, but an “open method of coordination” for some level of harmonization. Risk management is perceived as a major problem and pension portability is due for a review. In advance of the Green Paper, a European Council meeting of Economic and Finance Ministers adopted conclusions endorsing the Interim EPC-SPC Joint Report on Pensions. The Economic Policy Committee and the Social Protection Committee reviewed issues of sustainability and risk management. The final EPC-SPC report is due by the end of the year.

Finland

Cabinet approves health reform measures, faster track to citizenship
YLE, Helsinki Times

The Cabinet has approved a proposal to initially give patients choice of any health facility within their municipalities. By 2014, they would be entitled to treatment in any municipality and their home municipality would shoulder the costs. It would also set limits on how long a patient must wait for various treatments. Another measure that recently cleared the Cabinet would trim the minimum residence period for naturalization from six years to five and drop another year for those proficient in the Finnish or Swedish language.

France

Pension reform bill
Xinhua, Intelligence-RH
The Labour Ministry will unveil draft pension reform (IH 05/27/10) legislation today.  Press accounts are very confiden about a few measures:

• There would be a special surcharge on income over €11,000 per month.
  
  
• From age 35 on, citizens would receive a few different types of written guidance – and a counseling session at age 45 – on preparing for adequate retirement income.
  
  
• The retirement age would gradually climb from 60 to 62 over the next eight years.
  
  

The Council of Ministers will review the bill in early July, and Parliament is expected to vote on it in September.

Germany

New austerity package
Tax Analysts, EU Observer, Deutsche Welle
The administration’s fiscal consolidation plan for 2011-14 finds most of its savings in social benefit cuts:

• There would be curbs on long-term benefits to the unemployed.
  
  
• The unemployment benefit would be means-tested, social security contributions would be suspended for those in the second stage of unemployment benefits and the unemployed would be ineligible for paid parental leave.
  
  
• The income replacement target in maternity leave would drop from 67% to 65% for those with a monthly income over €1,200.
  
  

The Cabinet has approved the package.

Greece

Health reform package
ANA, Kathimerini

The Health Ministry will release a draft law on National Health System (NHS) reform within days. Each hospital would have a patient advocate’s office, and the distribution of medical supplies would be coordinated better so that there aren’t shortages of vital equipment at the same time that large supplies of medicine are stockpiled past their expiration date. The reform would also attempt to address a recent exodus from private health providers into an overburdened  public health system.

Hungary

Pension nationalization plan denied
MTI, Budapest Times, IPE

The administration has contested press reports that it plans to shore up the state pension by nationalizing the privately managed second pillar pension. It has since been disclosed that this proposal was given careful consideration and that it still has its supporters.

Italy

Retirement age rise forecast
AFP, Le Figaro

It was widely – but erroneously – reported that the retirement age would rise from 60 to 65 for all women by 2012. The European Union has demanded this, but only for the public sector. However, the President recently signed the implementing decree for a 2009 measure (IH 07/22/09) that will peg the retirement age to longevity from 2015. A leaked  technical document estimates that the retirement age for both men and women will rise by nearly five years from 2015 to 2050 under this rule.

Kosovo

Revised labour law before Parliament
KosovaLive Balkan Insight

A revision of the employer-friendly labour law that would tilt the scales toward worker protection is said to be making slow progress n Parliament. One amendment to the bill that has yet to be approved would expand the 12-week parental leave right to 12 months.

Netherlands

Election results
DutchNews.nl, NIS, Euractiv

The conservative Liberal Party edged out the Labour Party by one seat in last week’s election, setting the course for an awkward bout of coalition building. The other conservative party has anti-immigration policies that are toxic to many, so a right-left coalition – already advocated by key employer and union groups - could be more viable. The Liberals are shopping for parties amenable to its reform agenda, which includes the social partner agreement on flexible retirement (Dutch only, IH 06/09/10).

Poland

Vacation carryover extension endorsed
PNB
The Labour Ministry has approved a National Labour Inspection (PIP) proposal to extend the unused vacation carryover deadline from the end of March to the end of August. It has been added to the set of Labour Code amendments under preparation in the Trilateral Commission.

Romania

Pension reform no-confidence vote
Financial Times, Rompres, Mediafax

The administration survived yesterday's no-confidence vote (IH 06/09/10) by a slim margin. The opposition will also challenge the legislation in Constitutional Court this week.

Russia

Compulsory health insurance bill
GIDA, RNL

A mandatory health insurance scheme (IH 12/09/09) has been on the administration’s agenda since 2003. A draft is now circulating in the Duma, but it has not been released to the public. While citizens – and migrants – would not be allowed to opt out, they would be free to choose their insurers, hospitals and doctors. Those who have seen it have expressed concern about inadequate detail on funding, particularly for the subsidies for the elderly and unemployed.

Slovenia

Revote on profit sharing
STA

The National Assembly is scheduled to hold a second vote on the mandatory profit-sharing bill (IH 06/03/10) this week. A late-stage compromise is reportedly brewing. 

Spain

Labour reform bill is due today
El Pais, Reuters, AFP

A discussion of the President’s labour reform decree and today’s Cabinet meeting to review it should appear here shortly. In the interim, a few more details have been leaked. The salary guarantee fund (Fogasa) is an insurance scheme that would subsidize eight  of the 33 days in the new severance pay formula (IH 04/21/10), but only for those employers that must lay off workers for financial reasons. Employers and the government would both contribute to this fund. Also, there would be a more generous severance pay formula for early termination of a fixed-term contract.  The decree is slated for a June 22 vote in Parliament.  By definition, a decree need not go through the amendment process, but the government would consider opposition amendments to the final law after the bill’s passage.

UK

TPR guidance; Various
Professional Pensions, Financial Adviser, The Telegraph
The Pensions Regulator has published a trio of significant guidance documents:

• Understanding employer support for DB schemes builds on earlier trustee guidance on employer support for a defined benefit plan in an economic downturn (IH 07/01/09). It outlines a strategy for monitoring company developments that might affect the scheme and for maintaining employer commitment to it.
  
  
• Record-keeping: measuring member data is the final guidance following a consultation (IH 02/10/10) on raising standards for scheme recordkeeping. There is a December 2012 compliance deadline, and TPR is empowered to take “enforcement action.”
  
  
• Winding up: avoiding delays revises earlier guidance (IH 07/10/08) on streamlining the scheme wind-up process. It concludes that the two-year deadline for concluding the exercise is reasonable.
  
  

In other news:

• The new Health Secretary has outlined an outcomes-based reform agenda for the National Health Service (NHS).  There would be greater transparency and patient consultation in treatment. Quality upgrades would include “zero tolerance” for iatrogenic diseases. The hospitals would be responsible for monitoring progress for 30 days after treatment and they would not be reimbursed if a patient was re-admitted with a related condition attributed to premature discharge.
  
  
• In a foretaste of the “difficult decisions” coming in the June 22 emergency budget, the Work and Pensions Secretary served notice that a consolidation of all return-to-work programs will entail early termination of the first round of the Flexible New Deal contracts.
  
  
• The coalition government has indicated that the “triple guarantee” earnings link for the basic state pension will arrive in April 2011, and that its plans to review the National Employment Savings Trust (NEST) scheme will not require delaying its implementation.
  
  
• The UK Border Agency announced that non-European migrants applying for visas to marry UK citizens will be tested for a “basic command” of the English language.
  
  

Canada

Finance ministers discuss pension reform
Global Pensions, Globe and Mail, Toronto Star

Prior to Monday’s meeting with provincial counterparts, the Finance Minister sent them a letter outlining a plan to gradually raise the Canada Pension Plan (CPP) premium and to create a broader range of defined contribution models serving multiple employers and the self-employed. The Ontario Finance Ministry has come out in support of these proposals.  CPP expansion is also prominently featured in the British Columbia pension reform proposal (IH 02/10/10).  Early reports indicate that most of the provinces back this approach, with only Alberta firmly opposed.

US

Interim rules on grandfathered health plans; Health reform guidance resource ;Extenders bill sheds 401(k) fee disclosure measures
Dow Jones, ACC, USN&WR
The Department of Health and Human Services has released interim final regulations detailing how employer-sponsored health insurance plans are grandfathered under the Affordable Care Act (IH 03/24/10).  All health plans must comply with certain minimum conditions for plan years starting on or after September 24, 2010.  Annual and lifetime limits will be banned as well as pre-existing condition exclusions for children and recissions for sick participants.  The rules set the terms under which grandfathered plans may modify the plan that was in place on March 23, 2010, without losing grandfathered status.  The rules took effect on June 14, but a consultation on possible adjustments for the final regulations will run through August 16.

Also, there has been a steady trickle of regulations and guidance following passage of the health reform legislation . The HHS Office of Consumer Information and Insurance Oversight has assembled a resource page of regulations, instructions, FAQs, consultations and more. The documents supporting the Early Retiree Reinsurance Program now include an application with instructions.

Meanwhile, S. AMDT 4301 is the amendment in the nature of a substitute for HR 4213 American Jobs and Closing Tax Loopholes Act (IH 06/03/10). The Senate has decided to remove the House-authored provisions on 401(k) fee disclosure because the Department of Labor is due to publish regulations on the issue by the end of this month. The Senate Majority Leader has filed cloture on the bill and expects a final vote this week.

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