Member States would be affected quite differently by this new legislation. In some Member States there are no supplementary pension schemes at all, in others the coverage is quite low (e.g. in Poland with only 0.6 % of the working age population). In Sweden, on the other hand, around 75 % of all workers between 20 and 64 are members of occupational pension schemes.
Acquisition conditions
The European Parliament strives for common minimum standards for acquiring supplementary pension rights. For example, MEPs set a maximum "vesting" period of five years i.e. after at most five years in job employees will have acquired rights that have to be paid or preserved after the termination of their employment. Currently some schemes in France and the majority of schemes in Portugal foresee vesting only at the moment of retirement if the workers still belong to the company by then.
Moreover, the report states that no vesting conditions shall be applied to members of a scheme once they have reached the age of 25. In Germany, for instance, the current minimum age is 30 years. MEPs also emphasised that if the employee has not yet acquired vested pension rights when the employment is terminated, all the contributions paid, or their investment value if the worker bears the risk, should be reimbursed.
Fair treatment of dormant pension rights
The EP calls on Member States to take measures to ensure that outgoing workers can retain their vested pension rights in the respective scheme. Member States shall also guarantee "fair treatment" of those dormant pension rights, says the text. The value of dormant rights should, therefore, generally develop in line with that of the rights of active members. MEPs underline that the values of dormant rights should be adjusted in accordance with, for example, inflation rates, salary levels, current pensions or the return on investment intended by the supplementary pension provider. At present only in Ireland and the United Kingdom former employees have the guarantee that their dormant rights are protected against inflation by adjusting them up to a certain ceiling.
Member States may also allow supplementary pension schemes to pay a capital sum to former employees instead of preserving their rights. This sum should be equivalent to the value of the vested pension rights and should be paid to the worker as long as it does not exceed the threshold established by the Member State.
Gradual improvement of the transferability of vested pension rights
The Parliament took a more cautious approach to the transferability of pension rights and spoke against the Commission's proposal to include this right into the new directive. The Commission proposed that workers should be able to transfer their vested rights to their new employer. In some countries like Spain and Finland a transfer of occupational pension rights is currently not possible at all. In others such as Denmark, Ireland, Italy and Sweden transfer is internally possible, but cross-border transfer might be hindered by taxation rules or is totally forbidden by law in order to prevent tax evasion.
MEPs state that when introducing new supplementary pension schemes, Member States should endeavour to gradually improve the transferability of vested pension rights. They also ask the Commission to draw up a report, no later than five years after the directive takes effect, on the conditions for transferring capital representing workers' supplementary pension rights. This report should be the basis for proposing any amendments to this directive.
