04 May 2007

IPE: Portability compromise by end of May?

The German EU presidency is hoping to reach a compromise on the portability directive by the end of the month. 'Germany has started its EU-presidency by setting the aim to achieve a compromise within the Council by the end of May,' Gerd Andres from the German Ministry of Labour and Social Affairs, told a conference on portability. He added this was 'an ambitious target in view of the different and complex occupational pension systems in almost every country of the community'.

But Andres also pointed out one of the major concerns any provision on the portability of pension rights within the EU would bring with it: The question of additional costs for employers which might lead to fewer occupational pension schemes being set up. Indeed, this issue was one of the major themes at the portability conference organised by EAPSPI and AEIP.

Last month, Germany managed to erase a paragraph from the current draft on the directive which would have required employers to adjust accrued pension benefits for former employees according to inflation. German employers had criticised the measure arguing it would bring pension costs up by as much as 30%.

But given the prevailing differences in pension schemes all over Europe Klaus Stürmer from the Association of Local Church Pension Schemes (AKA) in Munich said employees will need to get detailed information on whether or not it is advantageous to actually transfer pension money or leave it dormant in the old scheme.

However, according to Georg Fischer from the European Commission's directorate-general of Employment, Social Affairs and Equal Opportunities (EMPL), it is unlikely EU-wide regulations on the actual transferability will make it into the final compromise because of various obstacles and reservations.

Nevertheless, Fischer thinks it will still be an achievement to regulate the preservation of dormant pension rights and the conditions for acquisition. He added this should facilitate flexibility in the labour market.

In mid-March an amended draft of the directive passed the EU commission's employment directorate-general and it will next be discussed in a plenary session of the EU parliament on May 22. After that the European Council will have to approve the legislation should Parliament vote in favour.

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