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German government presents plan to implement Portability Directive

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The German government has presented its draft proposals for the implementation the EU’s Portability Directive.

As widely expected, it reduced the vesting period from five years to three, in addition to making other changes applicable for both cross-border workers and those changing jobs within Germany.

In the commentary published with the draft, the government claimed the Directive would have allowed the implementation of differing regimes for domestic and cross-border mobility.

Such a differentiation, it said, would have been “impractical”, leading to an “undesirable discrimination against employees remaining in Germany”.

Nor will the German legislation discriminate between benefits from old-age pensions, invalidity payments or those made to widows or children, the government said.

It said lowering of the starting age for the vesting period from 25 years to 21 would have a “positive effect on equality policies”, particularly for young women, who often leave work to have children before the age of 25.

One area where the new German law will discriminate, the government said, is where employers wish to pay out smaller pension accruals as a lump sum instead of continuing to keep them in the pension fund.

This will only be applicable to employees leaving to work in another EU country, not for domestic migration.

The government said it would make full use of the transition period suggested by the EU to allow sufficient time for affected company pension plans to be adjusted and to keep the financial burden on affected employers to a minimum.

If the law passes Parliament, it will come into effect from 1 January 2018.

Click here to read more on how the Portability Directive has informed the debate on proposed industry-wide schemes in Germany

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