Directive on supplementary pension rights
Pensions: Commission welcomes final adoption of Directive on supplementary pension rights
From EU press releases website: http://europa.eu/rapid/press-release_IP-14-445_en.htm
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.
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.