Portability of rights
Portability of rights across EU Member States is a complicated issue. In terms of social security, there are factors that restrict portability. In the case of pensions, there is now, following lengthy discussions, an EU directive covering the transferability of occupational pension rights.
Portability of social security rights
In general, social security benefits must be paid in whichever Member State the beneficiary resides. The exception is ‘special non-contributory benefits’, which fall between the traditional categories of social assistance and social security. These address particular issues, such as care for people with disabilities or the prevention of poverty. They are payable only in the country that provides them and beneficiaries cannot export them to another Member State. A citizen is, however, entitled to receive benefits of this nature that are provided in the host country.
Any citizen temporarily staying or residing in a Member State other than the one in which they are insured against sickness is entitled to receive sickness benefits in kind according to the legislation of that Member State as if they were insured there. This is at the expense of the relevant insurance institution.
The European Commission has identified several problems that unduly restrict the portability of social security rights. Citing case law from the Court of Justice of the European Union (CJEU), it has stated, for instance, that it would be discriminatory not to allow equivalent tax deductions for a migrant worker’s contributions for an occupational pension or private sickness and invalidity insurance.
The European Commission identified similar problems in relation to specific social advantages, such as public transport reductions for large families, children's allowances and funeral payments.
Portability of pension rights
The term ‘portability of supplementary pensions’ refers to the transferability of occupational pension rights and is particularly important in the context of increasing worker mobility. There is no common framework in the EU regulating the transferability of company pension rights. However, the difficulty in transferring supplementary occupational pension rights from one country to another has become a serious obstacle to the free movement of workers within the EU.
The growing importance of supplementary pensions was recognised by the European Commission in a 1997 Green Paper, following which it published a Communication entitled Towards a single market for supplementary pensions. In June 1998, the Council adopted Directive 98/49/EC on safeguarding the supplementary pension rights of employed and self-employed people moving within the European Community. This directive ensured the right to equal treatment but did not cover the conditions of acquisition of supplementary pension rights or their transferability.
In June 2002, the European Commission launched the first consultation of the European social partners on the portability of supplementary pension rights. Both sides of industry responded positively to the consultation, acknowledging the need for Community action to improve the portability of occupational pensions and, consequently, mobility of workers across the European Union. The European social partners had different views, however, about the best way to tackle the problem.
The European Commission launched a second social partner consultation in September 2003, arguing strongly in favour of a legal framework and urging the social partners to negotiate on this issue. However, the social partners did not enter negotiations and, in 2005, the Commission issued a proposal for a directive on the portability of supplementary pension rights. This was finally adopted in 2014 as Directive 2014/50/EU on the minimum requirements for enhancing worker mobility between Member States by improving the acquisition and preservation of supplementary pension rights. The general thrust and main objective of the directive is to increase labour mobility across EU boundaries in tackling issues such as the acquisition of supplementary pension rights, the preservation of dormant rights and the transferability of rights. The directive covers all supplementary pension schemes with the exception of those within the scope of EC Regulation 1408/71 on social security.
The text of the directive states that a key objective is to ensure that mobile workers have the opportunity to build up sufficient pension rights by the end of their careers and that failure to achieve this will reduce the flexibility and effectiveness of the market. The directive covers:
- the conditions under which an individual acquires pension rights;
- how those rights are treated when an individual changes jobs;
- the right to information about how mobility affects the acquisition and preservation of supplementary pension rights;
- the treatment of the dormant pension rights of mobile workers.