Brussels, 13/06/2002 (Agence Europe) - On Wednesday the Commission decided to launch the first consultation phase between social partners on the rules governing pension rights that hinder worker mobility when workers find employment in another Member State or even when they change job in their own country (se EUROPE 12 June page 10). The Commission decision to launch formal consultation of social partners - who have six weeks to give their recommendation - is the first step towards EU action to help workers who are forced to change pension scheme when they change their employer. The paper analyses three key parameters of supplementary pension schemes: 1) rules on acquisition and preservation of pension rights; 2) rules on transferability of pension rights; 3) rules on cross-border membership of pension schemes.
Obstacles that currently restrict the mobility of workers leaving a pension scheme when changing employer are due to factors such as age, training periods or career breaks for family reasons, explained Andrew Fielding (spokesman for Ms Diamantopoulou and Fabiana Peinin (DG Employment at the European Commission) in a press conference.
A guaranteed entitlement to a pension only exists if the worker has fulfilled certain conditions (minimum age for scheme membership, waiting periods before becoming a member, vesting periods, i.e. minimum scheme membership period required for acquiring a right to a pension). Mobility and career breaks (e.g. for family reasons) can make it difficult or even impossible to acquire a right to a supplementary pension. If a worker nevertheless acquires the right to a pension, he may find that his entitlement is frozen until retirement or not fully index-linked. This reduces his pension entitlement compared to a worker who always stays with the same employer. Also, transfers of a worker's pension capital may be difficult, the approval of the regulator or tax authority may be needed, or there may be a tax charge so high that it prevents, in practice, any cross-border transfer. As Andrew Fielding explained, "If a worker nevertheless acquires the right to a pension, he may find that his entitlement is frozen until retirement or not fully index-linked. This reduces his pension entitlement compared to a worker who always stays with the same employer. We need to ensure greater mobility of workers". "Furthermore", Mr Fielding added, "more flexible labour markets require greater mobility, thus adding to the importance of ensuring the greatest possible portability of pension rights". Ms Diamantopoulou's spokesman explained that Member States should try and priorities supplementary pension schemes in order to meet the challenges of an ageing population.
Commenting on the Commission decision, Ms Diamantopoulou explained that, "Only an EU-wide solution can address this problem, which is a serious headache for a growing number of workers in the EU". She also stated that, "Excessively lengthy qualifying periods for supplementary pension rights imply reduced pension rights for mobile workers and discrimination against women who are more likely than men to take career breaks for family reasons. Pension architecture of this kind is no longer acceptable on grounds of equity and is incompatible with the increased need for mobility in today's labour market".
In a press statement, the spokesman explained that: 1) Europeans were already relatively reluctant to change jobs: in 2000, only 16.4% of EU workers had been with their employer for less than one year, compared to 30% in the US; 2) The term "portability" of supplementary pension rights provided the possibility of acquiring and maintaining pension rights in the case of professional mobility; 3) The transfer of capital from one system to another represented acquired pension rights.