Portability slips out of view again
Like the apparition of Hamlet's murdered father continuously vanishing from view above Elsinore Castle, the legislation to upgrade supplementary pensions rights for European employees has again disappeared from view. The ill-fated Portability Directive has met with a rebuff having failed to get unanimous approval at the last meeting of the EU Council meeting of employment and social affairs ministers. As Shakespeare puts it, "'tis here! …'tis here!", but, as the crowing of the cockerel signals dawn, "'tis gone!"
Hopes had been raised for the Portability Directive when a version cleared through the European Parliament in June. The latest unexpected setback now puts it into the hands of the Slovenians.
The major cause of the latest of several reversals comes from Germany. Its opposition is because a Commission version of the legislative package, based on a modified version of the Parliamentary text, would not bring the qualification period to anything lower than five years. Further opposition came from Luxembourg, with objections thought to be founded on its high holdings of book reserves.
As things are, European job changers can lose their supplementary pension rights in full or in part as a result of a hotchpotch of national rules that pre-date the recent call for flexible labour markets. According to European Parliamentary rapporteur, Ria Oomen-Ruijten, under some supplementary pension schemes, a 30-year-old employee with eight years' work experience with three different employers could still not have acquired any entitlement to a supplementary pension.
A quick resolution is not anticipated. Oomen-Ruijten is gloomy over prospects for an early resolution between the fiercely opposing sides to the debate. Speaking of the Slovenian presidency she says: "I know that they want to come with a proposal, but I don't know if they will succeed." The Dutch MEP even foresees the possibility of slippage into the French presidency period, starting on 1 July. Similar discontent, but for quite different reasons, comes from Chris Verhaegen, secretary general of the European Federation for Retirement Provision: "There will be enormous pressure to get the directive through," she adds.
In contrast, a Commission spokesperson takes a rosier line that agreement could come within months. But she adds that whatever agreement may be reached, a directive will not achieve implementation before 1 July 2013. It will not apply to pensioners retroactively, but only to newly acquired rights.
The progress of this directive conforms to an unfortunate Brussels tradition of altercations and horse-trading across 27 countries lumbering on indefinitely. Here, the history of the wrangling goes back to the 1998 ‘Safeguarding Directive', previously described by Jerome Vignon, European Commission director, as providing "very minimal conditions". Since then, various formulae included the Commission seeking provisions based on a minimum age of 21, a waiting period of one year, and a vesting period of two years. Dormant rights of mobile employees would be preserved.
Last May, the German Council presidency suggested a minimum age of 23, and a five-year vesting period. In June, the Parliament suggested that employees over 25 would not have to wait for vesting to start. Then, the subsequent Commission proposal, sought vesting of one year.
Confirmation that the vesting period is the main bugbear comes from a German diplomat. Filling in on details, he says, "We want five years, which is the minimum that we can do, because we have already reduced the period from 10 years to five." He explains that, for Germany, "it is extremely difficult to come down [even] to five. It would not be possible to come down to three, which is the idea. Our position is to achieve a balance between the rights of the employee and the employer. If the employers are squeezed too much, they will [resist taking] on more employees."
In late autumn, the European employers' federation Business Europe issued a paper that may also have contributed to the directive's current situation. The organisation does support the objective of the portability of pensions directive, it first wants a reform of pension systems. They have to be financially sustainable in the face of ageing, says Steven D'Haeseleer. He adds that the organisation advocates a "voluntary approach". This would mean replacing the proposed EU directive with a non-binding "recommendation".
Chris Verhaegen takes a similar view on the "voluntary approach" She says that an official recommendation from Brussels could set out policy goals. It would give member states clear guidelines to progressively reform their entire pension systems - including occupational pensions. But this, like Hamlet's father's ghost, remains elusive.