Out-Law News 1 min. read
28 Nov 2013, 12:41 pm
The changes were first proposed by the European Commission in 2005 and endorsed by the European Parliament's Employment and Social Affairs Committee (EMPL) in 2007. However, negotiations between the EMPL and member states broke down due to differences between national schemes and the previous requirement for a unanimous vote on the measures.
"European workers can now enjoy full pension rights when they move to another member state," said Ria Oomen-Ruijten, the Dutch MEP behind the changes. "The legislation will help to eliminate barriers to the free movement of workers."
The informal agreement must now be endorsed by member states' permanent representatives and the EMPL as a whole before a final vote in the European Parliament.
Pensions expert Matthew de Ferrars of Pinsent Masons, the law firm behind Out-Law.com said: “The new rules should have minimal impact in the UK since we already have a short vesting period. The Government will need to pay attention to the details to check, for example, that any new legislation to implement the 'pot follows member' proposals is compliant.”
Workers' statutory pension rights, or those provided by the state, are already secured under EU law when they move to work to another member state. However, equivalent protection has previously been unavailable for 'supplementary' pension schemes financed or co-financed by employers. This has resulted in cross-border workers risking the loss of their entitlement to an occupational pension accrued in another member state if they did not work there for long enough.
The new rules place a three-year cap on the minimum 'vesting period', or period of active membership of a supplementary pension scheme, that member states can set before allowing a worker who transfers out of the country to keep their accrued benefits. Once approved, it will apply not just to EU workers who move within the EU but also to those who work in one member state while living in another.