15 May 2006

IPE: Pensions portability plan „not workable“

The European Parliament has been told in no uncertain terms by the European Federation for Retirement Provision that the Commission's proposed pensions portability directive is “not workable'.

'I am sorry to have to say this: in our view the proposal: is not workable, fails to respect subsidiarity [and] lacks clearly defined policy objectives and concepts,' EFRP secretary general Chris Verhaegen told the parliament's Committee on Employment and Social Affairs.

She told a mini-hearing on portability that, unless coupled with economic viability, portability alone would not facilitate labour mobility nor improve pension values.

And it wouldn't extend the social umbrella of workplace pensions to those workers not yet benefiting from them, she said.

'Portability is a useful but auxiliary mechanism.'

Verhaegen said the EFRP supports mobility of workers within and across borders – but that the Commission’s proposal as it stands was unlikely to improve this.

She said the directive should add value - not disrupt the systems it is meant to serve. She called for a “practicable system that minimizes pension loss on job move over an impracticable system pretending to guarantee no loss”.

The measure could involve a cost increase of up to 30% she said.

In addition, the proposal made no clear distinction between funded and unfunded pensions or between defined contribution and defined benefits. “This is a basic issue,” she said.
By Daniel Brooksbank

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