Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Council Regulation (EEC) No 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community and Council Regulation (EEC) No 574/72 laying down the procedure for implementing Regulation (EEC) No 1408/71

(presented by the Commission)

EXPLANATORY MEMORANDUM

I. INTRODUCTION

Regulations (EEC) No 1408/71 and No 574/72 were updated by Regulation (EC) No 118/97 [1] and last amended by Regulation (EC) No 1399/1999 [2].

[1] OJ L 28, 30.1.1997.

[2] OJ L 164, 30.6.1999.

The purpose of this proposal is to update these Community Regulations to take account of changes to national legislation as well as to clarify the legal situation as concerns certain Articles of the implementing Regulation.

II. COMMENTS ON THE ARTICLES

Article 1

Amendments to Regulation (EEC) No 1408/71

Article 1 indicates that Annexes IV and VI are amended in accordance with the Annex to the Regulation.

Article 2

Amendments to Regulation (EEC) No 574/72

1. Amendment of Article 34(5)

Article 34(4) and 34(5) of Regulation (EEC) No 574/72 must be clearly separated so that Article 34(5) no longer refers to the reimbursement procedure subject to a ceiling where expenses have been incurred during a stay in a Member State which does not provide for rates of reimbursement. Furthermore, the amendment offers an opportunity to correct errors in certain language versions, primarily in the English and Swedish versions, which refer to the "State of residence" rather than the "State of stay".

2. Amendment of Article 93(1)

With the adoption of Regulation (EC) No 307/1999 of 8 February 1999, the personal and material scope of Regulations (EEC) Nos 1408/71 and 574/72 were extended to cover students and the special schemes for students.

The new Regulation introduced in Chapter 1 of Title III a new Section 5a entitled "Persons who study or receive vocational training and members of their families" and two new Articles, i.e. Article 34a with the subtitle "Special provisions for students and member of their families" and Article 34b with the subtitle "Common provisions".

With the introduction of these two new Articles, the existing Article 22c with the subtitle "Studies in a Member State other than the competent State - stay in the State where the studies are pursued" became irrelevant and was deleted. When Article 22c was introduced by Regulation (EC) No 1290/97 of 27 June 1997, a subsequent amendment was made to Article 93(1) of Regulation (EEC) No 574/72 to include Article 22c. However, Regulation (EC) No 307/1999 does not contain any changes of Article 93 of Regulation (EEC) No 574/72 to the effect that this Article still covers Article 22c but not the new Articles 34a and 34b.

3. Amendment of Article 107

Further to the introduction of the Euro on 1 January 1999, the European Monetary System has ceased to exist, the reference to national currencies has become obsolete, and the European Currency Unit (ECU) has been replaced by the Euro. As a consequence, the European Commission does not calculate the official ECU rates anymore, but the responsibility for the quotation of Euro reference rates has been assumed by the European Central Banks (ECB). Although Article 2 of Regulation (EC) No 1103/97 already provides for a catch-all Article, the proposed amendment intends to clarify the current legal situation.

III. COMMENTS ON THE ANNEX

1. Amendments of Annex IV, Part C, and Annex VI concerning France

Regulation (EEC) No 1408/71 does, in principle, cover only statutory pension schemes and the system of coordination provided for in this Regulation does not, therefore, extend to supplementary pension schemes, except for schemes in respect of which a Member State makes a declaration under subparagraph (ii) of Article 1(j), in line with the provisions of Article 97 of that Regulation. To bring the French supplementary pension schemes ARRCO and AGIRC under the material scope of Regulation (EEC) No 1408/71, the French Government has notified to the President of the Council a declaration to make the Regulation applicable to these two schemes. The entries into Annexes IV Part C and Annex VI intend to facilitate the application of Regulation (EEC) No 1408/71 to the schemes, chiefly to take account of their supplementary nature by comparison with the basic regimes.

Annex IV, Part C

The aim of the entries under E. FRANCE to Annex IV is to avoid the institutions which run the ARRCO and AGIRC schemes from having to carry out the dual calculation referred to in Article 46(1)(a) of Regulation (EEC) No 1408/71 - "national pension" of Article 46(1)(a)(i) and "prorata pension" of Article 46(2) - since such dual calculation is unnecessary.

The amount of benefits disbursed by these institutions does not depend on the duration of the insurance periods completed by the person involved. Such amount is equal to the product of (i) the number of retirement points accumulated by the applicant on a continuous or interrupted basis and of (ii) the disbursement value of the point on the date the benefit takes effect, such amount possibly being subject to a decrease factor when early settlement of rights is applied for. Calculation of the national pension and that of the proportional pension (with reference to the provisions of point 5 of Section E. FRANCE in Annex VI to Regulation (EEC) No 1408/71) thus leads to the same result for these institutions.

In Annex VI, Section "E. FRANCE" is amended as follows:

(i) France's ARRCO and AGIRC schemes permit employed workers pursuing an activity outside France to join or continue to belong to the said schemes, either individually or via their employer.

This type of insurance is compatible with the provisions of Article 15 of Regulation (EEC) No 1408/71 because it meets the conditions set out in paragraph 3 thereof. It is a voluntary or optional continued insurance scheme limited to the contingency of old age and death (pensions), whose overlapping with compulsory old-age insurance under the basic scheme of the State of activity is allowed by the French regulations.

The aim of the entry added in Annex VI is simply to align (i) the conditions under which a Community national not pursuing his activity on French territory can voluntarily join a French supplementary pension scheme with (ii) the conditions earlier laid down for the person concerned to voluntarily join a basic French old-age insurance scheme.

(ii) The aim of making this addition is to specify that this provision, originally referring to certain basic old-age insurance schemes, or parts thereof, for self-employed workers in which entitlement is expressed in terms of points, also applies to supplementary pension schemes for employed workers in so far as such schemes also provide old-age pensions calculated on the basis of the number of retirement points acquired by the person concerned, and not on the basis of insurance periods completed or pay received by that person.

(iii) The purpose of this provision is to indicate that the two levels constituting the "first tier" of pension provision in France, i.e. compulsory basic scheme(s) and compulsory supplementary scheme(s), are connected for the purposes of applying the provisions of the chapter on old-age and death (pensions) in the Regulation, whether this involves compulsory membership, validation (usually of periods for basic schemes and of points for supplementary schemes), especially validation of periods of unemployment (Article 45(6)), or settlement of rights.

2. Further amendments to Annex VI

Annex VI lists the special procedures for applying the legislation of certain Member States.

The entry (b) to "K. AUSTRIA" aims at removing any uncertainty concerning the applicability of Regulation (EEC) No 1408/71 to the only Austrian statutory pre-retirement scheme, i.e. special assistance under the Special Assistance Act (SUG). It proposes to expressly include this benefit and, secondly, to make clear that this benefit is to be granted under Title III Chapter 3 (Old-age and death) of Regulation (EEC) No 1408/71.

Point (c) to "N. SWEDEN" takes account of the ruling of the European Court of Justice that had established that the Swedish parental benefit must be treated as a family benefit rather than a maternity benefit.

IV. APPLICATION IN THE COUNTRIES OF THE EUROPEAN ECONOMIC AREA

Freedom of movement for persons is one of the objectives and principles of the Agreement on the European Economic Area (EEA), which entered into force on 1 January 1994 [3]. In Chapter 1 of Part III on the free movement of persons, services and capital, Articles 28, 29 and 30 are devoted to the free movement of workers and self-employed persons. Article 29 more specifically reiterates the principles set out in Article 42 of the EC Treaty relating to social security for persons moving within the Community. Consequently, this proposal for a Regulation, if adopted, must be applied to the member countries of the EEA.

[3] OJ L 1, 3.1.1994, as amended by Decision of the EEA Joint Committee No 7/94 of 21 March 1994 (OJ L 160, 28.6.1994).

Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Council Regulation (EEC) No 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community and Council Regulation (EEC) No 574/72 laying down the procedure for implementing Regulation (EEC) No 1408/71

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Articles 42 and 308 thereof,

Having regard to the proposal from the Commission [4], presented after consulting the Administrative Commission on Social Security for Migrant Workers,

[4]

Having regard to the Opinion of the Economic and Social Committee [5],

[5]

Acting in accordance with the procedure laid down in Article 251 of the Treaty [6],

[6]

Whereas:

(1) It is appropriate to make certain amendments to Council Regulations (EEC) No 1408/71 of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community [7] and (EEC) No 574/72 of 21 March 1972 laying down the procedure for implementing Regulation (EEC) No 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community [8]. These amendments are linked to changes which Member States have made to their social security legislation.

[7] OJ L 149, 5.7.1971, p. 2. Regulation as updated by Regulation (EC) No 118/97 (OJ L 28, 30.1.1997, p. 1) and last amended by Regulation (EC) No 1399/1999 (OJ L 164, 30.6.1999, p. 1).

[8] OJ L 74, 27.3.1972, p. 1. Regulation as updated by Regulation (EC) No 118/97 (OJ L 28, 30.1.1997, p. 1) and last amended by Regulation (EC) No 1399/1999 (OJ L 164, 30.6.1999, p. 1).

(2) Following the notification by the French Government to the President of the Council of a declaration making Regulation (EEC) No 1408/71 applicable to the two French supplementary pension schemes ARRCO and AGIRC, it seems appropriate to facilitate the application of Regulation (EEC) No 1408/71 to the schemes by adding new points to Annexes IV Part C and Annex VI, chiefly to take account of the supplementary nature of these schemes by comparison with the basic regimes, and of the fact that the benefits they grant are calculated on the basis of the number of pension points acquired, independent of the periods completed.

(3) It is appropriate to clarify that benefits of the Austrian statutory pre-retirement scheme are to be granted according to the provisions of Title III Chapter 3 of Regulation (EEC) 1408/71.

(4) To take account of the judgment of the Court of Justice of the European Communities of 11 June 1998 in Case C-275/96 Kuusijärui v Riksförsäkringsverket [9], section "N. SWEDEN" of Annex VI should be amended.

[9] [1998] ECR I-3419.

(5) It is appropriate to amend Article 34(5) of Regulation (EEC) No 574/72 in order to separate it from Article 34(4) and hence no longer to refer to the reimbursement procedure subject to a ceiling where the expenses have been incurred during a stay in a Member State which does not provide for rates of reimbursement.

(6) It is necessary to amend Article 93(1) of Regulation (EEC) No 574/72 to take account of Council Regulation (EC) No 307/1999 [10], extending Regulation (EEC) No 1408/71 to students;

[10] OJ L 38, 12.2.1999, p. 1.

(7) It is appropriate to amend Article 107 of Regulation (EEC) No 574/72 following the introduction of the Euro on 1 January 1999.

(8) In order to attain the objective of free movement for workers, it is necessary and appropriate to amend the rules relating to the coordination of national social security schemes through a Community legal instrument that is binding and directly applicable in each Member State.

(9) With the exception of Article 42, the Treaty does not provide, for the adoption of this Regulation, powers other than those under Article 308,

HAVE ADOPTED THIS REGULATION:

Article 1

Annexes IV and VI to Regulation (EEC) No 1408/71 are amended in accordance with the Annex to this Regulation.

Article 2

Regulation (EEC) No 574/72 is amended as follows:

1. Article 34(5) is replaced by the following:

"5. If the legislation of the State of stay does not provide for rates of reimbursement, the competent institution may effect the reimbursement in accordance with the rates it administers, without the agreement of the person concerned being necessary. In any case, the amount of reimbursement shall not exceed the amount of the expenses actually incurred."

2. Article 93(1) is replaced by the following:

"1. The actual amount of benefits in kind provided pursuant to Article 19(1) and (2) of the Regulation to employed and self-employed persons and to members of their families residing in the territory of the same Member State, and benefits in kind provided pursuant to Articles 21(2), 22, 22a, 22b, 25(1), (3) and (4), 26, 31, 34a or 34b of the Regulation, shall be refunded by the competent institution to the institution which provided the said benefits as shown in the accounts of that institution."

3. Article 107 is amended as follows:

(a) Paragraph 1 is replaced by the following:

"1. For the purposes of the following provisions:

(a) Regulation: Article 12(2), (3) and (4), Article 14d(1), Article 19(1)(b), last sentence, Article 22(1)(ii), last sentence, Article 25(1)(b), penultimate sentence, Article 41(1)(c) and (d), Article 46(4), Article 46a(3), Article 50, Article 52(b), last sentence, Article 55(1)(ii), last sentence, Article 70(1), first subparagraph, Article 71(1)(a)(ii) and (b)(ii), penultimate sentence;

(b) implementing Regulation: Article 34(1), (4) and (5),

the rate for the conversion into a currency of amounts denominated in another currency shall be the rate calculated by the Commission and based on the monthly average, during the reference period specified in paragraph 2, of reference rates of exchange of currencies published by the European Central Bank."

(b) Paragraph 3 is deleted.

Article 3

This Regulation shall enter into force on the first day of the second month following its publication in the Official Journal of the European Communities.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

For the European Parliament For the Council

The President The President

ANNEX

Annexes IV and VI to Regulation (EEC) No 1408/71 are amended as follows:

1. In Annex IV, Part C, Section "E. FRANCE", the word "None" is replaced by the following:

"All applications for pension benefits or survivor's benefits under supplementary pension schemes for employees."

2. Annex VI is amended as follows:

(a) Section "E. FRANCE" is amended as follows:

(i) In point 3, the following indent is added:

"- The preceding conditions also hold good when applying to other Member States' nationals the provisions which allow a French employed worker pursuing his activity outside France to voluntarily join a French supplementary pension scheme for employed workers either directly or via his employer."

(ii) Point 5 is replaced by the following:

"5. For the calculation of the theoretical amount referred to in Article 46(2)(a) of the Regulation, in basic or complementary schemes in which old-age pensions are calculated on the basis of retirement points, the competent institution shall take into account, in respect of each of the years of insurance completed under the legislation of any other Member State, the number of retirement points arrived at by dividing the number of retirement points acquired under the legislation it applies by the number of years corresponding to these points."

(iii) The following point 9 is added:

"9. The French legislation applicable to an employed worker or a former employed worker for the purposes of applying Chapter 3 of Title III of the Regulation is deemed to apply both to the basic old-age insurance scheme(s) and to the supplementary pension scheme(s) to which the person concerned has been subject."

(b) In Section "K. AUSTRIA", the following point 7 is added:

"7. Special assistance under the Special Assistance Act (SUG) of 30 November 1973 shall be considered as an old-age pension for the purposes of applying the Regulation".

(c) In Section "N. SWEDEN", point 1 is replaced by the following:

"1. For the application of Article 72 of the Regulation, a person's entitlement to parental benefit shall be determined by regarding employment periods completed in another Member State as being based on the same average income as the Swedish employment periods with which they are aggregated."