The UK and the EU
The UK has been part of the EU since 1976, and EU law is consequently part of its jurisprudence. This has not always been an easy fit. There is scope for argument about the overlap in the historical, social, economic and political background of the UK and its EU partners, but few would dispute that there are differences in outlook and emphasis that go some way to explain the equivocal nature of the UK’s relationship with the EU. At its heart is the divergence between the UK’s traditional view of the EU as an economic institution, and the largely political objectives of the original six member states. One of the criticisms of EU policy often heard in the UK is its ‘creep’ into areas that are supposed to be within the competency of member states.
In strictly legal terms, English common law developed differently from legal systems in most other European countries. It developed pragmatically on the basis of decided cases. It is not based on Roman law, nor codified into a coherent set of legal principles. Familiar concepts, such as the law of trusts, are not found in most other EU states. The capacity for misunderstanding due to these different legal traditions is obvious – for example, the approach to interpreting legislation.
The impact of the worldwide financial crisis on attitudes within the EU to funded pension provision cannot be overstated
UK commercial life has also developed distinctive traditions. Funded workplace pension provision, for example, is not widespread in the EU, being found principally in the UK, Ireland and the Netherlands. Many EU member states have historically had a more generous state pension system than the UK, and a much smaller proportion of workplace or occupational schemes. Where there was funded private provision, investment restrictions and provisions requiring home country investment were often imposed, contrasting with the ‘prudent person’ English law approach.
The impact of the worldwide financial crisis on attitudes within the EU to funded pension provision cannot be overstated. UK-style schemes had previously been lauded as a way of accumulating pools of liquid capital for investment while also providing pensions security. The adoption of the ‘prudent person ‘ approach in the IORP Directive was the result. Not everyone agreed with this approach and they may have felt following the financial crisis that their caution was justified. Others genuinely fear the risk of failure by such schemes. The result has been a move towards toward greater prescriptive regulation.
EU law has had its biggest impact on UK pensions in the areas of discrimination – particularly sex and age discrimination (see Market Knowledge).
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