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European Parliament to vote on Portability Directive before elections

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The European Parliament is to vote on the current draft of the Portability Directive in its last plenary before dissolution ahead of parliamentary elections in April, confirmed the Rapporteur in charge of the directive, Ria Oomen Ruijten, in Brussels today.

Similarly, Ralf Jacob, head of unit for Active ageing, pensions, healthcare and social services at the European Commission, noted at the Handelsblatt meeting in Berlin yesterday that the vote would take place “at the beginning of April”.

“Member states will then have four years after it has been published in the official journal to translate the directive into national law,” he added.

Five years after that, they will have to report to the Commission.

Jacob confirmed it would only be applicable to contracts entered into after implementation, not existing pension plan memberships.

But Withold Galinat, vice-president of Benefits Policies & Coordination at German chemical group BASF SE, said the directive was “dispensable and unattractive”, offering the wrong incentives for HR policies.

“The directive favours those that already have occupational pension benefits and increases hurdles for those that do not have one yet,” he said.

He said he feared the new regulation would make it unattractive for employers to set up pension plans and argued it would “not help to promote occupational pensions”.

Similar to other pension industry representatives in Germany, he claimed that lowering the vesting period from the current five years to three, as set down in the draft of the Portability Directive, would lead to a flight of human capital and greater fluctuation.

“Employers might reconsider setting up a pension plan and rather top up people’s salaries with bonus payments,” Galinat said.

But Jacob argued that it was “inacceptable” that people who were changing their jobs more often could not profit from occupational pensions.

He pointed out that vesting periods in the Netherlands were shorter than in Germany, and said occupational pension schemes remained attractive for employers because the regulatory framework, as well as the tax environment ensured this attractiveness.

Jacob also dismissed arguments that the directive would only profit a very small minority of workers who were actually going cross-border, as “most member states have announced they will not discriminate” between domestic and cross-border migration when implementing the new regulations.

Georg Thurnes, board member at Aon Hewitt Germany, stressed that a solution would have to be found to the provision that exempts closed schemes from the directive, as this could lead to companies closing pension schemes, he said. 

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