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International Headlines - 6 April 2011


Written by: Patrick Sweeney

 

                       

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Africa
Asia/Pacific
Europe
North America
South America
Worldwide
Country index
Australia
Brazil
Canada
China
East Africa
Egypt
Estonia
EU
France
Germany
Hong Kong
IASB
India
Ireland
Japan
Moldova
Nepal
Netherlands
New Zealand
Philippines
Poland
Portugal
Qatar
Romania
Russia
Slovakia
South Africa
Saudi Arabia
Sri Lanka
Sweden
Tanzania
Uganda
UK
US
 
 

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.

 

Top stories in this issue:

EU: Boardroom gender quota deadline
France: Consultation on profit sharing tax deduction
Hong Kong: Proposals on regulation of MPF intermediaries
Poland: Parliament passes pension reform bill
UK: Pension reform green paper
US: Proposed rules on compensation committees and consultants

 

Africa

 

East Africa

 

Social security harmonization
New Vision, Financial Journal

 

The East African Community (EAC) Secretariat announced that it is working with the East and Central Africa Social Security Association (ECASSA) on harmonization of social security systems in support of cross-border mobility. The EAC’s own multilateral social security agreement (IH 07/14/10) is progressing slowly because social security systems of member states are so dissimilar. The secretariat has commissioned a report, due this June, on member state obstacles to social security coordination.

 


 

Egypt

 

Anti-strike decree
Al-Ahram, DNE

 

The Justice Minister has introduced a temporary draft decree that would criminalize protests and strikes that “damage the economy.” Local unions and the global union movement have objected to the decree because it is understood to extend to strikes that hamper productivity. The decree, which would lapse before the September elections, would punish unlawful strikes with fines and a prison term of up to one year.

 


 

South Africa

 

Labour reform bills update
New Age, IOL, Business Day

 

The administration’s package of labour reform bills (IH 02/09/11) has long been under fire for being poorly drafted. Major revisions were expected during the National Economic Development and Labour Council (Nedlac) stage, but the President has forwarded them to Parliament for revisions without formal public comment from Nedlac, though one participant in its social partner negotiations pronounced the text of the bills “just not acceptable.”

 


 

Tanzania

 

Social security harmonization
Busiweek, This Week, IEA

 

The state pension regulator, Social Security Regulatory Authority (SSRA) (IH 01/21/10), has now been launched and its first major task is to harmonize the benefits of the six different social security funds. This will facilitate its second mandate, which is extending coverage to the informal sector.

 


 

Uganda

 

Pension reform update
The Monitor, New Vision, ISI

 

After some false starts – much of the delay attributed to resistance from the National Social Security Fund (NSSF), which would lose its monopoly under reform (IH 06/08/10) – Retirement Benefits Authority Bill, 2010 (IH 05/19/10) finally reached the debate stage in Parliament. It was withdrawn that same day with workers, employers and legislators united in the judgment that it failed to clearly define some key issues. MPs added that this bill should not be debated until after passage of Retirement Benefits Regulatory Authority Bill, 2010, which would formally end the NSSF monopoly before the authority is created to regulate the sector.

 

Asia/Pacific

 

Australia

 

Welfare reform preview
The Australian, The West Australian, Crikey

 

The federal budget is due on May 10 and much of the lead-in to it is debate over welfare reform plans that would be stricter on eligibility for unemployment benefits and disability pensions. The Prime Minister is already trying to differentiate her approach from the opposition’s "tough love" welfare reform plan, which recently added a proposal for mandatory work assignments for people under age 50 who have received unemployment benefits for over six months.

 


 

China

 

AIDS job discrimination ruling
Xinhua, Shanghai Daily

 

An appeal in the nation’s first HIV/AIDS-related job discrimination case (IH 11/24/10) confirmed that China’s 2006 AIDS discrimination in employment law is toothless. The People’s Intermediate Court of Anqing affirmed a lower court’s ruling that this law does not take precedent over an older law that bans people with HIV/AIDS from public sector jobs.

 


 

Hong Kong

 

Proposals on regulation of MPF intermediaries; Policyholders Protection Fund; Minimum wage law tweaks
SCMP, The Standard, China Daily

 

The Financial Services & the Treasury Bureau (FSTB) has posted the Legislative Council paper, Enhanced Regulation of Mandatory Provident Fund Intermediaries, for consultation through April 30, 2011. It is a preliminary draft of legislative proposals to significantly strengthen the regulation of MPF intermediary sales and marketing activities. The paper arrived in advance of revised Mandatory Provident Fund portability legislation introducing Employee Choice Arrangements (IH 02/16/11), which has been delayed – in part – over concerns that there would be rampant misselling. The target date for implementation of this legislation has been pushed back to July 1, 2012.

 

Another FSTB release is the consultation on Policyholder Protection Funds. Consumers would be protected from insurer insolvency in two separate funds: a Life Scheme and a Non-Life Scheme. Insurers would be levied 0.07% of applicable premiums to fund these schemes. The deadline for submissions is June 24, 2011.

 

Also, the Labour Department has posted the leaflet Special Arrangement for Persons with Disabilities under the Minimum Wage Ordinance, which explains how someone with disabilities that affect job performance could arrange for a productivity assessment that could warrant a salary below the statutory minimum wage. In theory, only the employee would be able to request the assessment. In addition, the Secretary for Labour has advised the press that the government is nearing a decision on requiring all government contractors to pay minimum wage for meal breaks and rest days (IH 03/30/11). The administration will have a firm position on this before the May 1 launch of the law.

 


 

India

 

Impasse over taxation of EPF early withdrawals; New director compensation limits planned
Times of India, Economic Times, Domain-b

 

The Income Tax Department has formally requested that the Employees’ Provident Fund Organisation (EPFO) assume responsibility for taxing any EPF withdrawals made before conclusion of the five-year vesting period. The tax is already required by law and employers who manage their own provident funds do collect it, but the EPF is wary of the complex calculations involved and disputes the legality of taxing such small amounts.

 

Also, the Ministry of Corporate Affairs (MCA) has divulged that its revision of the Companies Bill (IH 03/09/11) would end the practice of sitting fees for corporate directors. There will be a quarterly cap on the remuneration of independent directors and “whole time” directors would have a pay formula linked to company profits.

 


 

Japan

 

Social security reform on hold
Dow Jones, Nikkei Report

 

Social security reform missed an April deadline (IH 03/02/11) and will miss a June deadline in the wake of the earthquake and tsunami. Last week, the Prime Minister advised the upper house budget committee that rather than setting a new date, his administration will put this reform on a back burner while addressing the natural disaster.

 


 

Nepal

 

Minimum wage deal not final
Republica, Himalayan Times

 

Nine significant splinter unions called for an industrial shutdown in response to the “no work, no pay” provision of the social partner agreement on a minimum wage (IH 03/30/11). They sought to influence the outcome of the agreement because the deal will not be final until the government signs it. At press time, the unions announced a deal with the Labour Minister to postpone the strike while his office revises the agreement.

 


 

New Zealand

 

Debate revived as employment law changes take effect; Tax treatment of employer earthquake relief
IBFD, Tax Analysts, NZPA

 

The government marked the entry into force of some major employment law changes (IH 02/24/11) last Friday with a modest press release, but the debate raged anew in the press and the opposition Labour Party has now pledged to repeal this package.

 

Also, the Inland Revenue Department has posted an array of resources on the Christchurch Earthquake Support Package. Forthcoming legislation will offer employers tax relief on a variety of welfare benefits provided within eight weeks of the past year’s two major earthquakes. These include accommodations, “sundry benefits” and cash up to a total of NZD$3,200 per employee. This is provided that the benefits are not in lieu of ordinary wages and are not provided in a discriminatory manner.

 


 

Philippines

 

Fringe benefits tax exemption narrowed
Business World, PNA

 

The Bureau of Internal Revenue (BIR) Revenue Regulations No. 5-2011 imposes new limits on the range of de minimis fringe benefits that are tax exempt. It supersedes earlier regulations that supplied a non-exhaustive list of typical benefits qualifying for this regime with a fairly short list of the only ones that still qualify. Stakeholder balked at particularly insensitive deletions such as flowers for a sick employee. The changes are retroactive to January 1, 2011.

 


 

Qatar

 

Permanent residency precedent
Gulf News, Khaleej Times, GIDA

 

Qatar National Development Strategy 2011-2016 includes setting criteria for granting permanent residency to highly skilled foreign workers. This would coincide with another review of the sponsorship system (IH 11/17/10) and establishment of a labor dispute tribunal. There was a curious precedent set on permanent residency last month. Two foreigners were granted residency, substituting local property they own in the sponsorship role normally assigned to an employer.

 


 

Sri Lanka

 

Pension bill update
Daily News, Asian Tribune, Daily Mirror

 

The Treasury expects to stay on schedule for May 1 implementation of its pension reform legislation (IH 03/16/11), including the Employees’ Pension Fund for private sector workers. The benefit formula is 30% of final salary, with the minimum pension after 10 years of contributions earning 25% of average from the final 10 years of work. Expatriate workers would be eligible for this scheme.

 

 

Europe

 

Estonia

 

Industrial accident insurance; Government’s four-year agenda
BBD, Tax Analysts

The new ruling coalition has assented to a Social Affairs Ministry proposal for the creation of an industrial accident and vocational disease insurance scheme. The public health insurance scheme currently bears the costs of treating injured workers. This would differ from many workers' compensation programs in that both employers and employees would contribute. The idea is that employers and employees would have equal incentive for maintaining workplace safety.

 

The governing coalition has also issued a four-year agenda featuring some notable tax measures:

 

  • A not yet determined cut in unemployment insurance contributions would arrive in 2013.

     

  • The income subject to social tax (but not the health insurance levy) would be capped at €4,000 per month from January 1, 2014.

     

  • Employer compensation of costs associated with adult education would no longer be taxed as a fringe benefit.

 


 

EU

 

Gender quota deadline; Consultation on Working Time Directive
M&C, Egov Monitor, EIS

 

The EU Justice Commissioner recently delivered a speech on the European Commission’s new gender equality strategy, featuring a tighter deadline for voluntary compliance with boardroom quotas (IH 03/09/11), to show results. She will review the commitments to boardroom parity in March 2012 and will pursue the regulatory route promptly if there has not been sufficient progress.

 

Also, the social partners are starting informal discussions in advance of negotiations on what could prove a major revision to the Working Time Directive. The second round consultation (IH 01/06/11) has concluded that on-call time and compensatory leave need to be addressed. The European Trade Union Confederation (ETUC) aims to take the opportunity to challenge the opt-out to the 48-hour workweek.

 


 

France

 

Consultation on profit-sharing tax deduction
DRE

 

The tax administration has opened a consultation (French only) on alterations to a tax deduction for companies negotiating profit sharing schemes between December 4, 2008, and December 31, 2014. The 20% deduction would rise to 30%, but only enterprises with fewer than 50 workers would be eligible. No company would benefit by more than €200,000 under this arrangement. This would be retroactive to January 1, 2011. The Confederation of Small and Medium-Size Enterprises (CGPME) will meet with the Prime Minister tomorrow to appeal the retroactivity. The consultation will close on April 18.

 


 

Germany

 

Female board member summit
Financial Times, Expatica, Deutsche Welle

 

The Labor Minister met with the heads of the top 30 DAX-listed companies to discuss a commitment (German only) to female employment quotas on corporate boards (IH 02/09/11). The managers agreed to annual disclosure of female ratios in boards and other levels of corporate hierarchy but begged off from statutory quotas. The minister is now speaking of a statutory one-third quota by 2018 or 2020 if the 2.5% yield from the last 10 years of voluntary compliance isn’t dramatically improved. The Chancellor seems to be warming to this approach, having called the boardroom glass ceiling “a true scandal” repeatedly in recent months. Incidentally, the government has posted a press release on the new process for recognizing the credentials of skilled foreign workers (IH 03/30/11).

 


 

Ireland

 

Stock option PRSI levy additional guidance
Tax Analysts

 

Irish Revenue’s e-Brief no. 17/11 elaborates on the recent Department of Finance clarification (IH 03/30/11) on how the PRSI levy is being introduced for share-based compensation under the National Recovery Plan.

 


 

Moldova

 

Social security reform
AZI, Moldpress, GIDA

 

Parliament has passed a major set of amendments to the state pension law. The contribution period for a full pension will rise from 30 years to 35. A variety of public sector privileged pensions with retirement age ranging as low as 50 will be brought into harmony with the state retirement age for the private sector (57 for women, 62 for men) by 2034.

 


 

Netherlands

 

Stricter nationality requirements; Various
DutchNews.nl, Bloomberg, Dow Jones

 

The Home Affairs Minister has set out draft requirements (Dutch only) for obtaining Dutch nationality:

 

  • A new language test would set higher standards for proficiency.

     

  • Dual nationality would no longer be allowed, so applicants would have to give up their current nationality.

     

  • Self-sufficiency would be demonstrated by household income above the minimum wage and either a professional qualification or two years' work experience.

 

A consultation closes on April 22.

 

In other news:

 

  • As expected, the Cabinet backed the Finance Minister in rejection of the Parliament’s non-binding bonus clawback motion (IH 03/30/11). Under the Finance Minister’s alternative proposal, bonus programs would be suspended under new bailouts until state loans are fully repaid.

     

  • As expected, social partners missed their April 1 deadline for negotiating pension reform (IH 03/16/11). The unions cited an impasse on a proposal for an occupational defined benefit plan model that would link the benefit to stock performance.

     

  • The Social Affairs Ministry has drafted the European Works Councils Act Amendment Bill (Dutch only), a transposition of the 2009 recast of the Works Council Directive.

 


 

Poland

 

Parliament passes pension reform
PNB, PAP, Euractiv

 

The committee referrals that were initially portrayed as a major setback for the administration’s fast-tracked pension reform bill (IH 03/23/11) did not prove much of a hurdle and a plenary session of the Lower House passed the bill on March 25. The Senate followed suit within a week. It passed both stages without significant amendments, but the administration has since issued a new provision adding to the menu of investment instruments for OFE second-pillar funds. These would include infrastructure bonds and instruments backing the mortgage market. The opposition has threatened to take the law before the Constitutional Court if the President signs it.

 


 

Portugal

 

Ban on unpaid internships
Expatica, Euro Topics; Euractiv

 

The Cabinet has agreed on a measure that would essentially outlaw unpaid internships. There would be exemptions for law firms, architectural firms and training sessions of “very short duration.” The President has dissolved Parliament and called for a snap election on June 5, so this bill’s status is uncertain.

 


 

Romania

 

Senate rejects pension tax break; Health reform launch; Labor Code signed
Mediafax; Actmedia

 

The Senate has again voted down a measure backed in the Chamber of Deputies that would exempt the first 2,000lei (US$684) in state pension income from income tax (IH 11/04/10). There will be a formal request that the Chamber of Deputies reconsider the bill and the chamber will have the final vote on it.

 

Also, the Executive has passed a pair of health reform acts by Executive Decision. There would be a “minimal” basic package of medical services to encourage complementary private health insurance. An automated medical system with health cards will boost quality of care and there will be a more careful allocation of health resources and services. Meanwhile, the President has signed the Labor Code (IH 03/30/11) and it will come into effect on April 30.

 


 

Slovakia

 

Law on Health Insurance takes effect; Labour reform consultation feedback
SITA

 

Just a note that the amended health insurance law (IH 02/09/11) went into effect on April 1. The cap on co-payments for drugs is now €45 per quarter for pensioners, €30 for the disabled. Also, the contracts between health providers and insurers will now be available for public examination. Meanwhile, the Labour Ministry has released two separate (Slovak only) statements (Slovak only) in preliminary response to the recently closed consultation on Labour Code amendments (IH 03/16/11). Both conclude that much of the strife over the package stems from misunderstanding and, possibly, misinformation.

 


 

Sweden

 

Pension portability expansion mulled
Esmerk

 

Consumers who signed their pension insurance agreements after July 1, 2007, are free to change providers, but those who signed earlier are locked in. The Finance Ministry has come to suspect that providers sometimes exploit the immobility of the latter. It has commissioned a study – due March 31, 2012 – on the viability of pension portability for all.

 


 

UK

 

Pension reform green paper; Finance Bill 2011; Pensions Bill debate; Bribery Act guidance; Equality Act guidance
AFP, Reuters, Daily Telegraph

 

The pension reform green paper, A state pension for the 21st century, launched a public consultation on Monday. It considers the universal state pension model (IH 03/16/11) as well as a scenario for a two-tier flat rate pension. The universal pension proposal has an automatic CPI peg in place now, so the flat £140 per week should be in the £155-158 range when the scheme arrives in 2015 or 2016. People who had retired before the scheme’s introduction would not qualify for the benefit and all state second pension rights would be protected. The consultation also examines options for regular adjustments to the state retirement age. Comments are welcome through June 24, 2011.

 

Finance Bill 2010-11 arrived in Parliament last week for its first reading. It incorporates tax provisions of the 2011 Budget (IH 03/30/11) and the June 2010 Budget (IH 06/23/10) including the pension tax relief reductions and the disguised remuneration rules. The latter saw some amendments after complaints about unintended consequences under the earlier draft (IH 12/15/10), but stakeholders remain concerned about some legitimate types of compensation that would be ensnared. HM Revenue & Customs has revised its FAQ on the topic. Second reading debate is set for April 26.

 

Pensions Bill (IH 03/23/11) amendments were debated in the House of Lords last week. Two measures that would have modified the controversial acceleration of the retirement age increase for women (IH 02/09/11) were narrowly defeated. This provision will face a tougher fight in the House of Commons. The bill’s third reading in the House of Lords is scheduled for April 27.

 

The Justice Ministry announced the publication of final guidance on compliance with the Bribery Act (IH 09/22/10). The guidelines are a bit gentler on multinationals than stakeholders had feared. The act would not necessarily apply to foreign firms listed in London or UK incorporated subsidiaries of foreign firms, but the courts would retain some leeway in determining jurisdiction. The Bribery Act’s entry into force is deferred to July 1, 2011.

 

Also, the Equality Act 2010 comes into effect today. In the lead-up to enactment, the Equality and Human Rights Commission has published guidance, codes of practice and summaries. The Government Equalities Office also boasts a formidable resource page.

 

 

North America

 

Canada

 

Ontario 2011 Budget; Opposition campaign issues; Bill to ban replacement workers defeated
Canadian Press, Responsible Investor, Investment Executive

 

The Ontario Finance Ministry has released the province’s 2011 Budget. There were a few proposals worth noting:

 

  • Ontario pension plan sponsors will again be required to file a Statement of Investment Policies and Procedures (SIPP) with the Financial Services Commission. The SIPP would have to feature a statement on whether ESG (environmental, social and governance) issues factor into investment selection.

     

  • The administration expressed continued commitment to an "enhancement" of the Canadian Pension Plan (CPP) as the model for national pension reform. Federal and provincial finance ministers will convene this summer to discuss the topic.

     

  • Forthcoming amendments to the Pension Benefits Act would allow extension of the life income fund (LIF) to Nortel pensioners (IH 01/12/11).

 

Also, the opposition Liberal Party is stocking its campaign platform in advance of the May 2 snap election (IH 03/30/11). The “Secure Retirement Option” would top up the Canada Pension Plan (CPP) with tax-exempt contributions to a voluntary savings scheme. The CPP itself would see higher premiums and benefits. The Family Care Plan would support caregivers with a tax credit and the Family Care Employment Insurance Benefit, a six-month paid leave entitlement modeled after the employment insurance parental leave benefit.

 

In addition, Ontario’s Bill 45 Labour Relations Amendment Act (Replacement Workers), 2011 was defeated in second reading last week. A group of union members occupied the legislature, demanding that the Premier make a commitment to a ban on hiring replacement workers during a strike. The Labour Minister met with them on Monday.

 


 

US

 

Proposed rules on compensation committees and consultants; Various
WSJ, Washington Post

 

The Securities and Exchange Commission (SEC) has announced a brief consultation on the proposed rules Listing Standards for Compensation Committees. The rules would set standards for the independence of compensation committees and require that they vet the independence of any consultants and lawyers who advise them. Proxy statements would have to disclose any consultation relationship and discuss any conflict of interest that arose in the service. Feedback must be received by April 29.

 

In other news:

 

  • All seven relevant federal regulators have now approved a joint proposed rule on limiting excessively risky incentive compensation arrangements at financial institutions. There will be a 45-day consultation when the proposed rule is published in the Federal Register.

     

  • The Internal Revenue Service has published interim guidance on the new requirement to disclose group health insurance cost on an employee’s W-2 form. The disclosure is not mandatory until 2012 and small employers (<250 workers)="workers)" have="have" an="an" additional="additional" year’s="year’s" reprieve.</li="reprieve.&lt;/li">

     

  • The Department of Labor’s Employee Benefits Security Administration (EBSA) has released the transcripts of public hearings on the proposed rule that would broaden the definition of plan fiduciary (IH 11/04/10). The hearings are posted for a brief comment period, which closes on April 12.

 

 

South America

 

Brazil

 

Pension funds may now invest in BDRs
Mondaq

 

The Securities and Exchange Commission (CVM) has published guidance (Portuguese only) on the issuance and trading of Brazil Deposits of Receipt (BDRs) representing the stock of publicly held companies domiciled overseas. Occupational pension plans are among the entities that will be allowed to invest in them.

 

 

Worldwide

 

IASB

 

IAS 19 amendments overdue
Business World

 

The International Accounting Standards Board missed its March 31 deadline for release of final IAS 19 amendments on defined benefit plans (IH 03/09/11) and has now moved the official target date to “by” mid-May, still sooner than initially forecast (IH 05/05/10).

 



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.

 


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