EUROPE - The European Parliament has approved a watered-down version of the portability directive but the paper will now go back to the Commission for more amendments in order to get the Council's approval.

The amended directive now accepted by MEPs in its first reading will guarantee a maximum vesting period of five years after which workers will be entitled to a pension under any supplementary pension arrangement offered by employers.

That said, companies will not be compelled to offer a supplementary pension.

Likewise, pension funds will not be required to make these rights portable but the directive seeks to ensure that people leaving a company will remain entitled to any supplementary pension benefits they accrued, and these dormant pension rights will also be protected against inflation.

"[In the first draft of 2005] the Commission had made a much more ambitious proposal which would have enabled workers to enjoy true portability of their pensions," commented Vladimír ·pidla, EU commissioner for Employment, Social Affairs and Equal Opportunities.
However, he welcomed parliament's work on the directive as a "real step in the right direction" and said he was "encouraged by the high level of debate on what is a complex and sensitive issue".

He believes the current draft "will greatly contribute to ensuring mobile workers face fewer barriers and that supplementary provision will continue to be successful and sustainable".

In its next step, the Commission will have to draft an amended proposal as the Council of Ministers, which will have to approve the directive unanimously in order for it to become law, had stated in May it would not be able to agree to the current draft.

The Dutch government had stated it feared the present proposal will allow deferred members to claim higher additional pensions without having made contributions and wants to prevent active members from having to pay the bill.
Once the commission has come up with an amended draft directive, it will then go through Parliament's employment committee again, followed by a second reading in a plenary session. The council will then have to negotiate a compromise it can unanimously agree to.

A spokeswoman for the EU Parliament told IPE it was very difficult to say when the portability directive would return to parliament.

"It will depend on when the commission can come up with the amended draft and whether the Portuguese EU presidency [which will take over from Germany from July 1] will make the topic a priority," she said.

Portugal is one of the European countries where occupational pensions tend only to be paid out to employees who stay with the company until their retirement. Any European regulation which forced companies to guarantee a pension to every employee above the age of 25 and who has been with the company for five years would mean a major change for Portugese employers.