EUROPE - Non-accumulated pension assets from various first pillar pension systems might lead to problems for people wanting to buy an annuity, a representative of the Slovak ministry for social affairs has warned at a conference in Vienna.
Under current EU regulations, migrating workers receive pensions from the first pillar of each member state they have worked in but as some countries - especially CEE countries - have introduced a funded component to their state pension system, a new debate on pension asset transfers will be triggered.
“The current EU regulations on co-ordination of first pillar pensions do not consider the nature of funded schemes,” Andrea Vanovicova, from the Slovak ministry of social affairs told delegates at an AEIP conference in Vienna yesterday.
“The problem of small amounts being accumulated in each member state is that the migrant workers do not have enough money to buy a decent annuity and we cannot force insurance companies to pay out annuities with higher administrative costs than their worth,” she explained.
She proposed the money migrates with the worker to the pension institution in the next member state and only stays in a member state if the new country of residence does not have any funded first pillar pension institutions.
Alternatively, the Slovak ministry suggested leaving non-accumulated assets in the different countries and only transfer them to the member state in which the worker retires.
A representative of the European Commission’s DG Employment and Social Affairs admitted that this question “will have to be looked into”.
However, he pointed out that similar discussions around the IORP directive, which is only applicable to supplementary pension systems in the member states, have shown that there is no majority support for a migration of pension assets.
Currently the Commission is preparing the final stages of the application of Regulation 883/2004 from 1 May, which replaces the old Regulation 1804/1971 on the co-ordination of first pillar pension systems in Europe.
The revised and updated regulation includes a better co-ordination of child-care sabbaticals and other non-working periods which count towards retirement provision in some countries.
A new right to a pension review will also be introduced “if rights are adversely affected by the interaction of decisions by two or more institutions”. This right will then exist in addition to the right of appeal.
It also paves the way for a fully electronic information exchange between pension institutions in the various member states.