The European Parliament has just approved the ‘directive on improving the portability of supplementary pension rights’, which foresees minimum standards for ‘second pillar’ occupational pension schemes that should improve the ability of workers to carry the pension rights with them as they move across countries.
The coordination of social security in Europe has already been agreed guaranteeing so-called ‘pension portability’ for Europeans, but this new directive extends this right to supplementary pension systems (the “second pillar”), financed or co-financed by employers.
This directive has been debated since 2005 and has now reached the final stage when the revised draft proposed by the European Commission was signed by both the EP and the Council on 16 April 2014.
The new rules harmonise the conditions required by a member state: the vesting or waiting period that is necessary to acquire minimum rights from an occupational pension scheme should not be longer than three years and the minimum age for having pension rights guaranteed not be higher than 21. Workers who leave an occupational pension scheme before retirement will still preserve their rights, including indexation, in the same way as workers who stay in the scheme. If a worker has not completed the vesting or waiting period, he or she can be reimbursed of the contributions paid. Those who have left a pension scheme must be informed about the value of their rights. Member States have until 2018 to transpose the directive.
However, the original proposal in 2005 foresaw that pension assets could be transferred to another pension scheme. This proposition would have strengthened the rights of mobile workers even further. While AGE regrets that it was not possible to reach a consensus on this issue, the directive does constitute an important step forward for ensuring that occupational pension beneficiaries’ enjoy an improved set of rights.
To access the directive: