| Author (Person) | McLauchlin, Anna |
|---|---|
| Series Title | European Voice |
| Series Details | Vol.11, No.37, 20.10.05 |
| Publication Date | 20/10/2005 |
| Content Type | News |
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By Anna McLauchlin Date: 20/10/05 European pension funds have hit out at a European Commission proposal to allow people moving between member states to transfer their pension rights or to maintain a pension kept at home. The plans, they say, are unworkable and will place an unacceptable burden on their business. The proposal, to be adopted by the College of commissioners today, (20 October), aims to make it easier for people to move between European countries without fearing that their pension provisions will suffer as a result. It sets out pan-EU conditions for acquiring supplementary pension rights and gives a worker the choice, when moving to another member state, between preserving pension rights granted under the scheme of his former employer or transferring the acquired rights to the new employer. But Chris Verhaegen, secretary-general for the European Federation for Retirement Provision, argued that the move was too costly. The most worrying aspect for her was the need to preserve 'dormant' pension rights. "There are no miracles in pension plans," she said. "If there are no contributions but the rights have to be preserved, someone has to pay and if it is the employer that will be problematic." The result, she warned, would be the disappearance of defined benefit schemes in favour of defined contribution schemes. Under defined benefit schemes, the employer, who usually contributes a part of this along with the employee, bears the investment risk. With defined contribution schemes the employee defers a part of his salary into the scheme and bears the investment risk himself. "I read often about the need for more occupational pensions, but if they are more expensive, then people will not offer them," Verhaegen warned. Portability of pension rights will only work if there are pan-EU rules for acquiring pension rights. To prevent those workers who change job frequently losing their pension rights, the Commission proposes to limit the vesting period - the membership time required for workers to contribute before they get pension rights - to two years. The executive would also set a minimum age of 21 years at which pension rights can be acquired. "The requirement for a high minimum age is a major disincentive to the mobility of young workers," the proposal reads. But Thérèse de Liedekerke from European employers federation UNICE said that limiting the vesting period would not work for some types of pensions and that setting a low minimum age for acquiring rights will be unworkable in some member states. In certain countries, particularly where people tend to enter the workforce later such as Germany, the minimum age can be as high as 28. Belgium has just lowered its minimum age, but only to 25. De Liedekerke said that the Commission risks going too far. "The concern is that these are really rules for the creation of national occupational pensions, going beyond the issue of cross-border pensions which is what it is trying to deal with," she warned. But Henri Lourdelle from the European Trade Union Confederation (ETUC) argued that the proposal was minimalist and would have little impact on workers. Firstly, the proposals' priority seemed to be mobility rather than the interest of the workers, and secondly, it did not abolish the obstacles to movement, only reduced them, he said. On the issue of dormant pension rights, Lourdelle said that the Commission was too vague, and that the end result might not be that the real value of money accumulated would be preserved. "The Commission hasn't taken the measures it needs to to really make a difference," he said. And he expressed disappointment that possible derogations meant that the directive would only come into force by 2014 in some cases. Article reports that European pension funds were opposing the European Commission's proposed Directive on the portability of supplementary pension schemes, presented on 20 October 2005. |
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| Source Link | http://www.european-voice.com/ |
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| Subject Categories | Employment and Social Affairs, Internal Markets |
| Countries / Regions | Europe |
