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EC launches pensions mobility consultation paper

BRUSSELS- The European Commission has launched a formal public consultation paper aimed at improving the portability of supplementary pension rights. It hopes to tackle existing pensions legislation that hinders the free movement of workers.

The Commission’s decision to consult EU employers and unions is the first step towards helping workers who are forced to change scheme when they move jobs, either within or between member states.

Launched today, the consultation paper analyses three regulatory aspects of supplementary schemes- the acquisition and preservation of pension rights, their transferability and the ability of scheme members to remain in the same fund while moving to a job in another member state.

EU employment and social affairs commissioner Anna Diamantopoulou said: "The loss of pension rights hampers workers' right to free movement around the EU and is an obstacle to labour mobility and the creation of jobs. Only an EU-wide solution can address this problem.

“Agreements such as the recent political consensus allowing EU-wide pension funds are important but they tend to mask the serious problems which individual workers will still face when they are forced to change from one company pension scheme to another, even within their own Member State.”

“We must therefore consider carefully what must be done about the conditions of acquisition, preservation and transferability of supplementary pension rights throughout the EU.”

Social partners will be asked for their views on various topics including:

* the need for EU action on the portability of pension rights,
* the form such action should take (collective agreement, directive, recommendation, code of practice, guidelines)
* the main features of such a measure and the types on schemes to be covered

According to the Commission, employees leaving a scheme to work for a new employer are faced with a number of problems when sorting out their supplementary pensions. A guaranteed entitlement to a new pension only exists if the worker has fulfilled certain conditions that often include vesting periods, a minimum age for eligibility and compulsory waiting periods before joining.

And even if a worker acquires the right to a pension, they often find their entitlement is not fully indexed or is frozen until retirement, making the pension smaller than that of a worker who always stays with the same employer.

Transfer of a worker's pension capital is often difficult, as is transferring payments to a scheme situated in another member state.

Even when a transfer is possible, it is subject to regulatory approval and often the level of tax is so punitive that, in practice, it prevents any cross-border transfer.

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