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At the same time the measure was criticised by the German occupational pension association, aba, whose managing director argued that occupational pension schemes should first be promoted before facilitating their portability.
Voting on the directive, ECON members decided in favour of including unfunded pension schemes but excluding already existing pension rights.
Furthermore, they proposed that member states should have to decide for themselves whether or not pension assets could be transferred.
The committee also proposed that the directive should be evaluated two years after its enforcement.
However, it voted against a proposal to reject the whole directive.
UK MEP Derek Clark, a member of the committee on employment and social affairs (EMPL) which will consider the proposal next, made a written amendment to fellow MEPs urging that the directive be voted down.
“This directive would not be necessary if pension firms were allowed to offer their services across borders,” he argued in his proposal.
“Pension companies are perfectly capable of being able to look after this for themselves,” he told IPE. He explained that his arguments were based on opinions voiced by pension experts heard by EU committees on the issue. “One of them said the proposal is too much too soon and all of them doubted that subsidiarity was being observed.”
But the majority in the ECON committee disagreed with Clark. “There is most definitely a need for this regulation,” Austrian MEP and vice-chairman of the European People’s Party Othmar Karas told IPE.
“If workers fear losing their pension rights should they change their employer or home country, they will be less inclined to exercise their freedom of movement,” he added.
Karas also pointed out that the directive is meant to ensure that transfer of pension rights does not leave companies with higher costs for occupational pension schemes.
It was exactly this point that Aba managing director Klaus Stieferman highlighted during a conference in Germany. He said that while costs of schemes will rise, benefits for employees will go down.
Karas conceded that the “new directive will definitely generate some additional costs for business”, but that these may be justified “if they are low and outweighed by the gains”.
It was to keep costs and the administrative burden for employers to a minimum that ECON voted to restrict the directive to new pension rights, Karas said.
The committee’s other major amendment to the Commission’s draft was that members of unfunded schemes not be excluded from the directive. Instead, the EU should not make transfer of pension assets compulsory, it recommended.
The right to transfer capital from pension schemes “could easily threaten the existence of SMEs providing an unfunded scheme”, Karas explained. “A sudden retreat of capital might be impossible to sustain.”
If the committee’s amendment is accepted it would be up to the member states to decide whether there has to be a transfer of pension assets or not. “But workers keep their pension rights in any case,” Karas said. “If their capital is not transferred their pension will be paid out by their former employer from one member state into another. In times of the Single European Payment Area this seems acceptable.”
A provision was retained that urges member states to stimulate convergence of actuarial estimates and projections of interest rate trends in order to facilitate portability, according to Dutch MEP Ieke van den Burg. Furthermore, the committee demanded equal treatment for dormant pension rights.
The committee also voted an amendment requiring the Commission to draw up a report on “the convergence of actuarial prognoses and interest rate projections as well as the effects of differences in fiscal treatment related to transfer of pension rights” no less than two years after July 2008, when it is envisaged that the directive will come into effect. The Commission had suggested a 10-year time frame.
After further discussion in the EMPL the directive will go to a plenary session of the European Parliament for a final vote. This could occur as early as March