Transferability of pensions

EUROCADRES reply to the second stage consultation

This reply was sent on the 10th of November 2003 to Mrs. Diamantopoulou, member of the European Commission We are pleased to respond to the Commission’s request for comments on this second stage consultation paper. EUROCADRES confirms the view, which it has frequently expressed that safeguarding supplementary pension rights of workers making use of their right to free movement is a crucial issue for professional and managerial staff. Supplementary pensions schemes contribute to social protection and must be seen as deferred income. We have argued for many years that action is urgently required in terms of the acquisition, maintenance, and portability of pensions rights, and of cross-border membership, in line with the following four principles:
 Recognition of pensions rights independently of the time spent in a country or in a company;
 Guarantee of the permanence of rights whatever is the situation of the company;
 Guarantee of the permanence of the rights of those working successively in several countries, with no undue loss;
 Recognition of the freedom and the role of collective bargaining in defining supplementary pension schemes and their management. A multi-layered approach is, in our view, desirable.  A framework agreement on principles and general rules should ideally be negotiated at European level between the European social partners, and then implemented through a directive. But if this proves for any reason not to be possible, then a directive should be prepared directly. In terms of priority, we continue to highlight the fact that many existing vesting periods contradict these principles. This means that, in our view, no new vesting periods should be created, and that existing vesting periods should be reduced and limited to the trial period (with a maximum of one year). We support in general terms the problems raised by the Communication from the Commission for this second stage consultation. It should facilitate the opening of a negotiation process between the European social partners. This consultation document is based partly on three reports accepted in 2001 by the European Pensions Forum: acquisition and preservation of supplementary pension rights; transferability of supplementary pension rights; and cross-border membership in supplementary pension schemes. This has been a positive contribution of the forum to the preparatory process. We believe that supplementary pensions should be regarded as deferred income and not as a device for rewarding staff loyalty; and that long vesting and waiting periods, and high minimum ages, are not compatible with the needs of today’s labour markets.  Action should be taken urgently to ensure the shortest possible waiting/vesting periods and minimum ages.  We believe that an appropriate combination of preservation/transfer could solve mobility problems in both defined benefit/contribution schemes, and that employer concern about cost could be met by reducing current, excessive vesting periods gradually over a transition period.  Specific arrangement to facilitate the transition from one pension scheme to another might be considered through social dialogue not only for professionals and managers, but also for sectors such as construction. We think that an action aimed at removing obstacles to pension portability should cover equally both workers moving within a country and those moving across borders. EUROCADRES believes that a social partner agreement in line with those generally-agreed principles can make a major contribution towards improving the portability of supplementary pensions, and thus achieving the European single market. In the absence of such agreement, legislative action should be urgently undertaken by the European Commission. We look forward to making our contribution to that process in greater detail at the appropriate time. Yours sincerely, Michel Rousselot President