The European Commission has unveiled its delayed pensions portability proposal. But the planned directive on ‘improving the portability of supplementary pension rights’ has come in from criticism from several quarters.
The proposed directive gives EU employees the basic right to take accrued pension benefits with them when they change jobs after a two-year vesting period. The Commission estimates that one out of three workers in the former EU-15 changes jobs every five years.
“If we expect workers to be mobile and flexible we cannot punish them if they change jobs. Pension rights must be fully transferable. This directive has been long overdue,” says Vladimir Spidla, the European employment and social affairs Commissioner.
But the measure has met with at best qualified support from the EFRP and outright hostility from German unions.
The EFRP said it still has many reservations about putting the concept into practice because of the diversity in occupational pension schemes and types of funding vehicles in the EU.
“Increasing the coverage of affordable and adequate occupational pension provision calls for simplification and cost-effectiveness,” says EFRP chairman Jaap Maassen. “Increased costs ultimately mean lower pensions unless contributions increase significantly. “And, increased contributions would risk endangering the competitiveness of the European economy.”
And Germany’s political left and unions teamed up to berate the Commission for changing the proposal to suit employers.
Due in part to lobbying by the German Employers Association (BDA), the Commission allowed for an exemption for book reserves pension when accrued entitlements are transferred. The exemption, said EFRP, does not apply for qualifying and vesting periods, minimum age requirement or preservation of dormant rights. The exemption will be reviewed after 10 years.
As book reserves account for two-thirds of the €366bn in German pension assets, the employers feared that barring the exemption, their costs would have exploded. BDA was assisted in the lobbying effort by aba, Germany’s occupational pensions association.