“In a bid to help defuse Europe’s ‘pension time bomb,’ European Union governments agreed Tuesday to let private pension funds offer retirement policies across the 15-nation bloc,” says a story in today’s Wall Street Journal Online.

“European Internal Market Commissioner Frits Bolkestein hailed the decision by EU finance ministers as a ‘major achievement,’ ending a decade-long debate over how to remove national laws that restricted companies from providing cross-border pension plans.”

“Mr. Bolkestein said the law will generate safer pensions and let European workers ‘benefit from more efficient pan-European pension funds, and so make an important contribution to tackling the “pension time bomb”.’ “

“The EU law was approved as France was crippled by a transport workers’ strike aimed at forcing Prime Minister Jean-Pierre Raffarin to reconsider reforms in the retirement system.”

“The EU pension law is designed to take pressure off state-pension systems that are fast running out of money as Europe’s population gets older. Officials said it will also boost the EU’s underdeveloped capital markets and stimulate growth and jobs. EU governments have two years to implement the new rules.”

“The EU law allows companies to pool pension plans across national borders at a potential saving of up to 40 million euros ($46.2 million) a year, according to the European Federation for Retirement Provision. Currently, national legislation limits them to offering only side-by-side national plans.”

“The law will benefit pension schemes that now cover 25% of the EU labor force and manage assets worth 2.5 trillion euros, equal to 29% of the EU’s gross domestic product.”

“The new law allows pension funds to invest up to 70% of their assets in stocks and corporate bonds and up to 30% in non-domestic currencies.”

“In March, the European Parliament rejected German attempts to water down the bill. Germany wanted to export its more restrictive continental pension model to countries with a more liberal tradition, such as the U.K., Ireland and the Netherlands. Under Germany’s proposed changes companies would have been required to offer social benefits, such as disability insurance, on top of the pensions.”

“Some experts were skeptical the new law will create a truly single EU pension-funds market, pointing to tax regimes that favor domestic over foreign funds and punish workers for swapping jobs or moving abroad.”

” ‘The law won’t have much of an impact until we tackle the tax problem,’ said David Yeandle, deputy director of employment policy for Britain’s Engineering Employers Federation.”

“EU governments have two years to implement the new rules.”