EUobserver.com

EUOBSERVER / STRASBOURG – The European Parliament has voted for EU-wide minimum standards for supplementary pension rights to make it easier for EU citizens to move jobs both within their own country and within the EU. But the draft law has been watered down significantly from the original proposal by the European Commission.

MEPs meeting in Strasbourg agreed on Wednesday (20 June) to set minimum standards for getting and keeping supplementary pension rights for workers – such as group insurance contracts, pay-as-you-go schemes agreed by one or more sectors or funded schemes.

The report by Dutch centre-right MEP Ria Oomen-Ruijten came after the European Commission in October 2005 proposed a directive aimed to facilitate workers' mobility within and across 27-member bloc, by carrying along their supplementary pension rights when they change jobs.

The EU executive argued that the current situation hindered workers in changing jobs because the rights obtained could not be transferred or it was very difficult to do so.

"It is vitally important to make good arrangements for voluntary supplementary pension schemes if you want to stimulate the cross-border mobility of workers," said Ms Oomen-Ruijten after the vote in parliament.

The current draft law sets a maximum "vesting" period of five years meaning that after at most five years workers will have obtained rights that have to be paid or preserved after ending their employment with a particular workplace.

At the moment, some schemes in France and the majority of schemes in Portugal foresee vesting only at the moment of retirement if the workers still belong to the company at that time..

MEPs also emphasised that if the worker has not yet obtained vested pension rights when the employment is terminated, all the contributions paid, or their investment value if the employee bears the risk, should be reimbursed.

The report also calls on member states to take measures to ensure workers who have left their job - and therefore also their pension scheme – but left in their contributions can later rightfully claim the so-called "dormant" pension rights and protection against inflation.

Limited portability
However, the European lawmakers stopped short of including the portability of pension rights, which was a core point in the commission proposal saying that workers should be able to transfer their vested rights to their new employer.

The parliament argued that in some countries like Spain and Finland a transfer of occupational pension rights is not possible at the moment, while in others such as Denmark, Ireland, Italy and Sweden transfer is internally possible, but cross-border transfer might be hindered by taxation rules or is completely forbidden by law to prevent tax evasion.

Instead, MEPs called on member states to gradually improve the transferability of vested pension rights when introducing new supplementary pension schemes.

The EU member states have very different pension schemes and the new legislation would therefore affect the 27 nations differently.

In Sweden, for example, around 75 percent of all workers between 20 and 64 are members of occupational pension schemes, while in Poland only 0.6 percent of the working age population have a supplementary pension scheme.

Unanimity
"The European Parliament has gutted this proposed directive on transferring pension rights and adopted a text with little redeeming features," said UK Green MEP Jean Lambert after the vote.

"The purpose of the commission's text was to remove barriers to the mobility of workers in the EU by providing for the portability of supplementary pensions rights but both the EP and the [member states] have torn the heart out of the proposal, which would no longer provide for the transfer of these rights when changing jobs," she explained.

UEAPME, the European small to medium-sized employers' organisation, "deeply regretted" the outcomes of Wednesday's vote, saying it was a "missed opportunity" to really encourage workers' mobility in the EU.

German Europe minister Guenter Gloser – whose country currently holds the agenda-setting EU presidency – explained to the EU assembly that full portability of occupational pension rights was impossible.

"Of course there was much aim…for the increasing need of mobility for working men and women," he said, but stated that there was a question of unanimity among member states.

He explained that one member state was bound by a national parliamentary decision - a reference to the Netherlands - which meant the report had to take into account The Hague's position otherwise it would not get the required unanimity in the council.

MEPs agree to watered down pension plan