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Workers' mobility: facilitating the acquisition and preservation of supplementary pension rights

This proposal is designed to reduce the obstacles both to freedom of movement between the Member States and to occupational mobility within a Member State by optimising the conditions for acquiring supplementary pension rights and harmonising the rules governing dormant pension rights and the transfer of acquired rights. A further aim of the proposed directive is to improve the information given to workers on how mobility may affect supplementary pension rights.

PROPOSAL

Implementing the Community Lisbon Programme: proposal for a Directive of the European Parliament and of the Council on improving the portability of supplementary pension rights.

SUMMARY

This proposal for a directive provides for four main measures to protect the supplementary pension rights * of workers moving within the European Union (EU).

In the event of adoption, this directive will not apply to:

  • supplementary pension schemes which, as at the date of entry into force of the Directive, will no longer be open to new members;
  • supplementary pension schemes that are subject to measures intended to preserve or restore their financial situation;
  • insolvency protection systems, compensation arrangement schemes or national reserve funds.

Conditions governing acquisition

The Member States are to take the necessary steps to ensure that:

  • where active scheme membership is made conditional upon a period of employment, this period shall not exceed one year;
  • where a minimum age is stipulated for the accrual by an active scheme member of acquired rights, this age shall not exceed 21 years;
  • where an acquisition period is applied, this shall under no circumstances exceed one year for active scheme members over the age of 25, or five years for active scheme members below that age;
  • where an outgoing worker has not yet acquired pension rights when the employment relationship is terminated, the supplementary pension scheme * shall reimburse the contributions paid by the outgoing worker, or paid on the worker's behalf in accordance with national law or collective agreements or contracts.

Preservation of dormant pension rights

The Member States are to take measures to:

  • guarantee that pension rights acquired by outgoing workers may be preserved in the supplementary scheme where they acquired them;
  • ensure that dormant pension rights * or their values are treated in line with the value of the rights of active scheme members.

Information

This proposal supplements Directive 2003/41/EC on the activities and supervision of institutions for occupational retirement provision as regards information. The aim is to ensure that every potentially outgoing worker, whether or not a member of a scheme, will receive the necessary information on how terminating an employment relationship could affect supplementary pension rights.

Active scheme members who so request may receive information concerning:

  • the conditions for acquiring supplementary pension rights;
  • the consequences of the application of these conditions when the employment relationship is terminated;
  • the value of their acquired rights or an evaluation of their acquired pension rights going back a maximum of 12 months from the date of the request;
  • the conditions concerning the future treatment of dormant pension rights.

Deferred beneficiaries who so request may receive information concerning:

  • the value of their dormant rights * or an evaluation going back no further than 12 months from the request;
  • the conditions concerning the future treatment of dormant pension rights.

Minimum requirements

This proposal provides for the principle of non-regression.

Accordingly, the Member States may adopt or retain more favourable provisions than those laid down in the proposal.

The implementation of the directive may in no case lead to a diminishing of rights concerning the acquisition and preservation of supplementary pensions.

Implementation

The Member States must adopt the necessary laws, regulations and administrative provisions, or ensure that they are put in place by the social partners, within two years after adoption of this Directive at the latest.

Given the diversity of supplementary pension schemes, the Member States may be granted an extended period of five years (beyond the initial two-year transposition deadline) for transposing certain provisions which might be too restrictive in the short term.

Report

With effect from the year following the two-year deadline for adoption of this directive, the Commission shall draw up, every five years, a report based on the information sent by the Member States.

Background

The revised Lisbon Strategy and the Social Agenda (2006-2010) underline the importance of mobility for improving the adaptability of workers and businesses and increasing labour-market flexibility. Faced with the problem of an ageing population, the Member States are placing greater emphasis on supplementary pension schemes to cover the risks of old age. It is thus becoming particularly important to reduce the obstacles to mobility which stem from these schemes.

A first step in this direction was taken in 1998 with the adoption of a directive on safeguarding supplementary pension rights, aimed mainly at guaranteeing the right to equal treatment for people moving from one country to another.

The present proposal for a directive is designed to supplement the 1998 text. It has been preceded by two rounds of consultation of the social partners, with the Pensions Forum being closely involved.

Key terms used in the act
  • Supplementary pension: pension provided for by the rules of a supplementary pension scheme established in conformity with national legislation and practice.
  • Supplementary pension scheme: any occupational retirement pension scheme established in conformity with national legislation and practice, which is linked to an employment relationship and is intended to provide a supplementary pension for employed or self-employed persons.
  • Dormant pension rights: acquired pension rights which are retained under the scheme in which they have been accrued by a deferred beneficiary.
  • Value of dormant rights: capital value of the pension rights calculated in accordance with national law and practice.

REFERENCES AND PROCEDURES

ProposalOfficial JournalProcedure
COM(2005) 507-Codecision COD/2005/0214
Last updated: 27.11.2007
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