EC welcomes final adoption of Directive on supplementary pension rights
16 Apr 2014 12:40 PM
The
European Commission welcomes the final adoption by the European Parliament of
the Directive improving the protection of supplementary pension rights for
mobile workers. The new rules will help to remove current obstacles to free
movement, such as the requirement for very long periods of employment to
acquire these rights or the risk of the rights being lost when leaving a
pension scheme.
"Workers need to rely more and more on
supplementary pensions across Europe. It is vital to ensure that those who move
across borders are not penalised with regard to their supplementary pension
rights. This Directive complements the protection of state pension rights by
ensuring that occupational pension rights are guaranteed after a limited period
and that they are preserved when people move to another Member
State.", EU Commissioner for Employment, Social Affairs and Inclusion
László Andor commented.
The
Directive will improve the protection of mobile workers' supplementary
pension rights (i.e. rights under occupational pension schemes –
so-called 'second-pillar' pension schemes which are linked to an
employment relationship) in three ways:
-
Acquisition: pension rights should be vested
(guaranteed) after three years of employment at the latest. When a minimum age
for vesting is stipulated, it must not be higher than 21
years.
-
Preservation: the rights of workers who leave an
employer-run pension scheme before retirement ("deferred
beneficiaries") must be preserved and treated fairly compared to the
rights of those workers who remain in the scheme, for example as regards
indexation.
-
Information: workers have the right to know how
potential mobility would affect their pension rights, and those who have left
the scheme (deferred beneficiaries) must be informed about the value of their
rights.
Background
Statutory pension rights of people working in another
Member State have been well protected nearly since the beginning of the
European Economic Community thanks to EU-wide coordination of social security
systems. Equivalent protection for the increasingly important occupational or
'second pillar' pensions had never been established. Therefore,
citizens who move between Member States – or even between different
occupational schemes within one state – risked losing out on their
occupational pension, for instance, because of long qualifying (so-called
'vesting') periods.
Improved acquisition and preservation rights will be
particularly important for non-nationals who work in EU countries where these
pension schemes are widespread and requirements about membership years
particularly high. For example, in Germany about half of the employed work
force of 42 million has some occupational pension coverage but typically have
to work some years before they begin to acquire entitlements and for five years
before accrued right are vested. In Ireland and the UK, where these schemes
cover about a third of the working age population, rights will now also be
acquired after fewer years.
The
European Commission first tabled a proposal in 2005 (see IP/05/1320 and MEMO/05/384). The current Directive differs from the original
proposal in the sense that it no longer includes the right to have one's
pension assets transferred to another scheme.
The
proposed Directive was endorsed by the EU's Council of Ministers on
17th February.
For more information
On supplementary pensions
László Andor's
website
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