Commission adopts draft Directive on Supplementary Pensions

On 8 October 1997, the European Commission adopted a proposal for a Directive on safeguarding the supplementary pension rights of employed and self-employed people moving within the European Union. This proposal represents one more step towards the completion of the single market, and is aimed at removing one of the remaining obstacles to the free movement of workers across the EU.

The issue of supplementary pension schemes and their implications for freedom of movement for workers has been around for some time and was first addressed in a European Commission Communication to the Council of Ministers in July 1991. The Communication set out basic guidelines and mapped out future EU action in this area. In 1996, the Commission asked the "high-level panel of experts on free movement" to examine the issue and prepare a report. The panel concluded that any legislation should aim to preserve acquired rights, based upon the principle of equal treatment. Therefore, employees who choose to work for employers in more than one Member State should not, as a result, lose supplementary pension rights. In its Communication on modernising and improving social protection in the European Union of March 1997 (EU9705124F), the Commission noted the absence of any legislation regarding supplementary pension schemes and concluded that there was a need for EU legislation based upon the panel's recommendations.

On 8 October 1997, the Commission proposed a Directive on safeguarding the supplementary pension rights of employed and self-employed people moving within the European Union. The proposed Directive covers supplementary pension schemes and concerns: the preservation of acquired rights; the guarantee of cross-border payments; the possibility for workers temporarily posted by their employer to another Member State to remain affiliated to the supplementary pension scheme in the state they were previously working; and information rights.

The proposal lays down a set of principles which would apply across the European Union. If the Directive is adopted, Member States will be free to determine how to incorporate these principles into their different national systems.

This draft fills a significant gap in existing EU legislation as current provisions are limited to statutory schemes, which are covered by EU free movement legislation (Regulation 1408/71). There is an obvious need for additional legislation as for many workers supplementary pension schemes are more significant in financial terms than state pensions, and their importance is expected to grow.

This proposal goes towards addressing the problem whereby people who move from one job to another across Europe lose all or part of their supplementary pension rights. Commissioner Padraig Flynn, commenting on the problem, said "What this means is that there is a penalty on mobility. This is bad for the individual worker, and bad for the operation of the single market which is bad for the European economy as whole".

Among the first to react to the publication of the draft Directive was Eurocadres- the Council of European Professional and Managerial Staff affiliated to the European Trade Union Confederation- which issued a statement welcoming the draft. The statement perceives this to be the first step towards overcoming some of the obstacles to mobility: "We hope that the Directive will be adopted quickly. However we are aware that the proposal will not solve all problems. It must be improved during the discussions by the European Parliament and by the Council."

Eurocadres argues, in particular, that the vesting periods required in certain countries contradict the principle if free movement enshrined in the Treaty. The future Directive should establish that no new vesting periods should be created and that there should be no increase in existing vesting periods which, in fact, should be progressively diminished.

In addition, the organisation calls for a meeting of a "forum" or "coordinating group" on supplementary pensions. It is argued that this should be connected to the existing advisory committees and should be composed of representatives from Member States and from the European social partners. Eurocadres argues that this is necessary in order to find solutions to the remaining difficulties and to facilitate further progress.

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