Plan to lift free movement hurdle diluted

Date: 27/03/1997

By Simon Coss

PLANS aimed at making it easier for EU citizens to transfer private pensions to other member states have been watered down in the face of member state opposition.

Officials in the European Commission's Directorate-General for social affairs (DGV) admit their only hope of persuading social affairs ministers to accept the plan is to abandon attempts to specify a maximum qualifying time (the so-called 'vesting period') before workers can transfer supplementary pension schemes elsewhere.

In effect, this means employees in countries with relatively short vesting periods would be able to take their pensions with them if they moved to another member state more easily than their counterparts in other countries (notably Germany and Austria), who have to remain in the same job for up to ten years before they can transfer their schemes.

The Commission was forced to shelve plans to reduce vesting periods progressively to a five-year maximum last year when it became clear that Germany would block the move in the Council of Ministers.

DGV began work on its new plans following interim recommendations made last November by a panel of experts chaired by France's former Deputy Prime Minister Simone Veil, which published its full report on obstacles to free movement of people within the Union earlier this month.

“Our new approach is less ambitious than the older proposal, but more practical. We very much see it as a first step rather than the end of the line,” explained one DGV official.

Under the new scheme, it would be up to member states to decide on the controversial issue of vesting periods. But the proposal is likely formally to guarantee cross-border payment of pension schemes - a concern highlighted by the Veil group. The Commission also hopes to ensure employees seconded to work in another member state can continue to build up pension rights through occupational schemes taken out in their home country.