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European Commission

MEMO

Brussels, 20 June 2013

Pensions: Commission welcomes Council agreement on pension portability to facilitate EU worker mobility

European Commissioner for Employment, Social Affairs and Inclusion László Andor has welcomed the 20th June agreement by the EU's Council of Employment, Social Policy, Health and Consumer Affairs on a general approach on the Commission's proposal for a Directive on improving the portability of supplementary pension rights.

Commissioner Andor commented: "The Council's endorsement of the proposed pension portability Directive is an important step towards ensuring that people can move to work in another Member State without losing their occupational pension benefits. People who exercise their right to free movement should not be penalised. This is important not only for the mobility of individuals, but also for the functioning of a genuine EU labour market. I now urge the European Parliament to adopt the Directive as soon as possible"

The Directive, as it has been agreed upon in Council, requires Member States to implement minimum requirements for the acquisition and preservation of pension rights for people who go to work in another Member State. Member States remain responsible for the conditions under which people change jobs within the same country but the Commission expects that Member States will decide to apply the standards laid down by this Directive also to internal mobility.

Eliminating barriers to the free movement of workers is part of the solution to tackling unemployment, as confirmed in the Commission's April 2012 Employment Package (see IP/12/380). The Council's agreement on the general approach paves the way for adoption of the Directive in the current mandate of the European Parliament.

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. An equivalent protection for the increasingly important occupational or 'second pillar' pensions has never been established. Citizens who move between Member States – or even between different occupational schemes within one state – may lose out on their occupational pension, for instance, because of long qualifying (so-called 'vesting') periods.

Directive 98/49/EC on safeguarding the supplementary pension rights of employed and self-employed persons moving within the Community sets out certain rights and obligations for members of supplementary pension schemes and constitutes a first, but very important, step on removing obstacles to free movement relating to supplementary pensions. However, this Directive does not cover the "portability" of supplementary pensions, i.e. the possibility of acquiring pension rights (even for shorter periods of employment than the required minimum "vesting period" or at the beginning of one's career) and keeping pension entitlements by transferring them to a new scheme in the event of professional mobility. A lack of portability can act as a serious disincentive on worker mobility. This is why the Commission proposed on 20 October 2005 a "Directive on improving the portability of supplementary pension rights" (see IP/05/1320 and MEMO/05/384).

The Irish Presidency in May 2013 tabled a revised proposal, which limits the scope of the Directive to cross-border mobility. This was done by defining an "outgoing worker", for the purposes of the Directive, as a worker who engages in employment in another Member State within 2 years. At the same time, Member States are encouraged to ensure equal treatment of workers exercising mobility within a single Member State.

Following extensive preparatory discussions at working group level, the Council has now reached a broad agreement on all the outstanding issues, including the scope, conditions governing acquisition, and the role of employer and trade union representatives.

The current proposal respects the autonomy of employer and trade union representatives, so that Member States can allow employer and trade union representatives to lay down different provisions, if they provide no less favourable protection and do not create obstacles to the free movement for workers.

For more information

On supplementary pensions

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