Supplementary pension schemes continue to pose obstacles to mobility for workers across Europe according to two new independent studies, presented by the European Commission. The studies support the case for a Europe-wide initiative to improve people's access to supplementary pension rights when changing jobs or working in another EU country. The Commission's proposal for a directive on the issue – revised in October 2007 – forms part of the work programme for the Slovenian EU Presidency.
"We need to enable workers to move freely around the EU without losing important work-related pension benefits," said EU Commissioner for Employment, Social Affairs and Equal Opportunities Vladimír Špidla. "Tackling obstacles to worker mobility in Europe forms a key plank of the EU's strategy for growth and jobs and is an example of flexicurity – balancing flexibility on the labour market with employment security – in action.
"These new studies clearly demonstrate the need for an effective and proportionate directive to reduce obstacles to mobility without placing undue burdens on pension providers. I look forward to working with the Slovenian Presidency on finding agreement with Council and Parliament on this."
The first study released today – conducted by Hewitt Associates – examines supplementary pension scheme rules in major organisations from nine EU countries. The study sheds light on common practices regarding the acquisition, preservation and transfer of supplementary pension rights for workers. Key findings show that many pension schemes do not impose any vesting period – the amount of time required for workers to accumulate pension rights – although there are still 32% of Defined Benefit (DB) schemes requiring workers to contribute to a pension scheme for more than two years before they acquire a right to a pension in retirement. The study also shows that a quarter of DB schemes offer no revaluation of workers' dormant pension benefits when they move jobs. In effect these rights are frozen until retirement.
These results clearly demonstrate the need for a directive to introduce minimum standards to improve mobile workers' access to supplementary pension rights, and the need for these rights to be protected in the years between leaving an employer and retiring. The measures proposed by the Commission in its amended proposal of October 2007 and subsequently developed during the Portuguese Presidency can be seen as both a proportionate response to the problem and a meaningful step towards reducing obstacles to mobility found in some supplementary pension systems across the EU.
The second study, undertaken by researchers at the Higher Institute for Labour Studies (K.U. Leuven), is an investigation of Eurobarometer data on how long people spend in their jobs, when they expect to change jobs and on career lengths of workers across the EU. It shows that on average nearly 40 per cent of current workers change jobs within five years and are therefore potentially disadvantaged by the operation of long vesting periods found in supplementary pension schemes. Figures for workers' expected future mobility show a similar theme and in both cases there are marked differences between Member States, demonstrating that countries where acquisition periods are comparatively lengthy, job mobility tends to be low and vice-versa.
Over the coming months the Commission will be working together with the Slovenian Presidency to make progress on finding agreement within Council and with the European Parliament for an effective and proportionate directive that reduces obstacles to mobility without placing undue burdens on pension providers. The two studies can be found on the Commission's website.