WRITTEN QUESTION E-3418/02

by Joaquim Miranda (GUE/NGL) to the Commission

(2 December 2002)

Subject: Retirement pensions for migrant citizens

According to information received from Portuguese citizens living and working in other Member States, the fact that such citizens have divided their professional activity between their country of origin, i.e. Portugal, and another Member State places them at a disadvantage in terms of the calculation of their retirement pension.

This situation mainly arises when the Member States in which pension contributions were paid lay down minimum periods for awarding the maximum retirement pension. For example, someone who has worked in Portugal for 19 years and has subsequently worked in Germany for a further 27 years (making a total of 47 years of pension contributions to the respective social security systems) would receive less with two pensions than someone who was entitled to a single pension and had worked for only 35 years in the latter country.

What solution does the Commission see to this problem, which represents an objective obstacle to the free movement of European Union citizens? Bearing in mind the current revision of Directive 1408/71, which deals specifically with the coordination of social security systems, what changes does it intend to make to the Directive to bring about a solution to this situation?

Answer given by Mrs Diamantopoulou on behalf of the Commission

(14 January 2003)

The purpose of Council Regulation (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(1) is to coordinate national social security systems in order to avoid a situation where migrant workers lose social security entitlements as a result of moving within the EU.

As the Court of Justice has ruled on a number of occasions, Regulation (EEC) No 1408/71 is not designed to harmonise social security systems, but to coordinate them. In its judgment of 28 April 1998 (Case C-120/95(2)), the Court stated that In the absence of harmonisation at Community level, it is therefore for the legislation of each Member State to determine, first, the conditions concerning the right or duty to be insured with a social security scheme (Case 110/79 Coonan v Insurance Officer [1980] ECR 1445, paragraph 12, and Case C-349/87 Paraschi v Landesversicherungsanstalt Württemberg [1991] ECR I-4501, paragraph 15) and, second, the conditions for entitlement to benefits (Joined Cases C-4/95 and C-5/95 Stöber and Piosa Pereira v Bundesanstalt für Arbeit [1997] ECR I-511, paragraph 36). It is thus up to each Member State to determine its system of social security, including the rate for old-age pensions.

The aim of Regulation (EEC) No 1408/71 is also clearly mentioned in Article 42 of the EC Treaty itself, which states that it must ensure effective freedom of movement for workers by putting in place coordination arrangements based in particular on the principle of aggregation, for the purpose of acquiring and retaining the right to benefits, and for calculating the amount of benefits for all periods taken into account under the laws of the different countries.

This principle has been applied to the field of old-age pensions in particular. The aim is thus not to guarantee a pension corresponding to the highest amount to which a person would have been entitled if they had spent their entire working life in a single Member State, but to safeguard the principle of aggregation mentioned above. A Member State must take account of periods of insurance completed in the other Member States irrespective of whether this is for the purpose of acquiring rights in cases where a State's legislation requires a minimum period of employment, or for calculating the amount of a pension. The Regulation referred to also stipulates that each Member State must carry out a double calculation of pensions; the first is solely on the basis of its applicable legislation (without taking account of periods of insurance completed under a different legislation; this is the national pension) and the second entails a theoretical pension amount being determined on the basis of all periods of insurance completed under the various legislations to which a worker has been subject. Each Member State then calculates the amount of benefit on the basis of the theoretical amount and the pro rata entitlements accruing from periods of insurance completed under legislation which the institution applies (proportional pension). Finally, each State must then pay out whichever pension is more favourable, i.e. the national pension or the proportional pension.

For all the reasons mentioned, the proposal to simplify the Regulation, which was presented by the Commission in 1998(3), does not contain any substantial amendments to the method for calculating old-age pensions.

(1) OJ L 149, 5.7.1971.

(2) Decker [1998] ECR I-1831.

(3) Proposal for a Council Regulation (EC) on coordination of social security systems, presented by the Commission on 4 January 1998, COM(98) 779 final.