21 April 2015

IPE: German government presents plan to implement Portability Directive

The German government has presented its draft proposals for the implementation of the EU’s Portability Directive. If the law passes Parliament, it will come into effect from 1 January, 2018.

As widely expected, it reduced the vesting period from five years to three, in addition to making other changes applicable for both cross-border workers and those changing jobs within Germany. In the commentary published with the draft, the government claimed the Directive would have allowed the implementation of differing regimes for domestic and cross-border mobility.

Such a differentiation, it said, would have been “impractical”, leading to an “undesirable discrimination against employees remaining in Germany”. Nor will the German legislation discriminate between benefits from old-age pensions, invalidity payments or those made to widows or children, the government said. It said lowering of the starting age for the vesting period from 25 years to 21 would have a “positive effect on equality policies”, particularly for young women, who often leave work to have children before the age of 25.

One area where the new German law will discriminate, the government said, is where employers wish to pay out smaller pension accruals as a lump sum instead of continuing to keep them in the pension fund. This will only be applicable to employees leaving to work in another EU country, not for domestic migration.

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