WRITTEN QUESTION E-0230/02

by Bartho Pronk (PPE-DE) to the Commission

(6 February 2002)

Subject: Barriers to free movement posed by the system of non-statutory supplementary pensions

The system of non-statutory supplementary pensions poses barriers to mobility for EU citizens who are employed, or have been employed, in a number of Member States in the course of their working lives. Examples of such barriers are the fact that some schemes stipulate a qualifying period before pension rights can be built up or the fact that and this occurs more frequently periods cannot be aggregated. As non-statutory supplementary pensions do not come under the relevant regulations, there are no arrangements to compensate for barriers placed in the way of the free movement of workers.

Does the Commission agree that the system of non-statutory supplementary pensions poses barriers to the free movement of workers within the Union? Does the Commission intend to introduce compensatory measures?

Answer given by Mrs Diamantopoulou on behalf of the Commission

(3 April 2002)

As the Honourable Member rightly points out, current Community legislation on social security for migrant workers (Regulation (EEC) No 1408/71(1)) does not cover non-statutory supplementary pension schemes.

These schemes fall under Directive (EC) No 98/49(2) which guarantees equality of treatment as regards preservation of pension rights. Member States are obliged to take the necessary measures to ensure the preservation of vested pension rights for members of a supplementary pension scheme, in respect of whom contributions are no longer being made to that scheme as a consequence of their moving from one Member State to another, to the same extent as for members in respect of whom contributions are no longer being made but who remain within the same Member State.

Member States should also ensure that, in respect of members of supplementary pension schemes, as well as others holding entitlement under such schemes, supplementary pension schemes make payments in other Member States, net of any taxes and transaction charges which may be applicable, of all benefits

due under such schemes. Directive (EC) No 98/49 also enables contributions to continue to be made to a supplementary pension scheme established in a Member State by or on behalf of a posted worker who is a member of such a scheme during the period of his or her posting in another Member State.

However, this directive does not address other problems such as that of qualifying periods. Given the complexity of this issue, which concerns, both social protection and taxation matters, it is important to involve all interested parties in the development of appropriate solutions. The Commission has therefore created a European Pensions Forum which gives the Member States, the social partners and pensions institutions and funds the opportunity to examine jointly the main obstacles and try to identify the best solutions. On the basis of the outcome of these discussions the Commission will, as announced in its Action Plan for skills and mobility of 13 February 2002(3), formally consult with the social partners in Spring 2002 with a view to further action in order to make progress in the portability of the supplementary pension rights for migrants workers.

Furthermore, the taxation of supplementary pensions often creates barriers to the free movement of workers. Therefore, the Commission issued its Communication on the elimination of tax obstacles to the cross-border provision of occupational pensions on 19 April 2001(4). On the basis of this Communication the Ecofin Council has undertaken to work on improvement of the exchange of information on occupational pensions between Member States, and on double taxation and double non-taxation issues. The Ecofin has given itself until the end of this year to conclude this work. The Commission for its part is currently examining Member States' tax rules on occupational pensions, and will take the necessary steps to ensure effective compliance with the fundamental freedoms of the EC Treaty, including bringing the matter before the Court of Justice on the basis of Article 226 of the EC Treaty. There are already two cases pending in the Court of Justice, the Danner case and the Skandia-Ramstedt case(5). Both cases could contribute strongly to the elimination of tax barriers, if ruled in favour of the taxpayers.

(1) Regulation (EEC) No 1408/71 of the Council of 14 June 1971 on the application of social security schemes to employed persons and their families moving within the Community, OJ L 149, 5.7.1971. Regulation updated by Council Regulation (EC) No 118/97of 2 December 1996 (OJ L 28, 30.1.1997) and last amended by Regulation (EC) No 1386/2001 of the Parliament and of the Council of 5 June 2001 (OJ L 187, 10.7.2001).

(2) Council Directive (EC) no 98/49 of 29 June 1998 on safeguarding the supplementary pensions rights of employed and self-employed persons moving within the Community, OJ L 209, 25.7.1998.

(3) COM(2002) 72 final.

(4) Communication from the Commission to the Council, the Parliament and the Economic and Social Committee, OJ C 165, 8.6.2001.

(5) Cases C-136/00 and C-422/01 respectively.