WRITTEN QUESTION E-1971/98

by Frederik Willockx (PSE) to the Commission

(30 June 1998)

Subject: Refusal by Austrian pension institutions to transfer Austrian pensions to recipients resident in Belgium

It is reported that the Austrian pension authority refuses to transfer pensions to the Belgian accounts of recipients resident in Belgium. Its refusal to do this is costing recipients a considerable part of their income. For example, Mrs X is entitled to an Austrian pension of ÖS 171,10 per month, but is required to submit documentary proof that she is still alive twice yearly and to pay charges totalling ÖS 813,37 to the Austrian bank. The charges on these transfers are clearly out of all proportion to the amount of pension payable.

Does this arrangement conform to EU Regulations 1408/71(1) and 574/72(2), in particular Articles 53 (cross-referenced to Annex 5) to 59, and if so why?

If this is so, is the Commission prepared, having regard to the completion of the single market - including one in banking services - and the introduction of the euro, to amend the relevant provisions in order to ensure that pension recipients resident in an EU country other than that in which pension entitlement was acquired can have their pensions paid without charge into a bank account of their choice?

Answer given by Mr Flynn on behalf of the Commission

(11 September 1998)

The Commission would like to draw the Honourable Member's attention to the fact that the provisions of Community law, more specifically Regulations (EEC) 1408/71 and 574/72 on employed persons, self-employed persons and members of their families moving within the Community(3), ensure the payment of old-age pensions to persons who are not resident in the competent Member State (see Article 10 of Regulation (EEC) 1408/71). However, the Regulations do not specify modes of payment. In order to avoid bank charges or other costs, some institutions prefer to transfer payments to an account in their own country. Others send a postal cheque directly to the recipient.

The Commission has been informed that the Austrian institution in question is intending, in the near future, to introduce arrangements for transferring pensions directly to a bank account in another Member State.

Finally, on the question of bank charges for cross-border transfers, the Commission would like to point out that the European Parliament and Council Directive of 27 January(4) on cross-border credit transfers (amounts of less than ECU 50 000) lays down rules on transparency (both before and after a payment is made), execution requirements particularly in terms of time and performance, and, finally, complaints and redress procedures offered to customers, both individuals and small and medium-sized enterprises (SMEs). It also aims to improve the operation of the internal market in this sector, especially with a view to the implementation of economic and monetary union, and to provide adequate protection for customers, particularly consumers. This Directive does not directly address the question of bank charges, but the Commission feels that the conditions it establishes will encourage more competition on the transfer markets, thus leading to a reduction in the charges applied.

Furthermore, on 23 April 1998 the Commission adopted a Recommendation concerning banking charges for conversion to the euro(5), in which it recommends application of the "standard of good practice" in this area, including both practice considered to be legally required and other recommended practice, i.e.: conversion without charge of payments from the national currency unit to the euro and vice versa during the transitional period; conversion without charge of accounts from the national currency unit to the euro during and at the end of the transitional period; charging for services denominated in the euro at the same rates as for identical services denominated in the national currency unit; the exchange without charge to customers of household amounts of national currency banknotes and coins for euro banknotes and coins during the final period (banks should define "household amounts" in terms of volume and frequency).

(1) OJ L 149, 5.7.1971, p. 2.

(2) OJ L 74, 27.3.1972, p. 1.

(3) Updated by Council Regulation (EEC) 118/97 of 2 December 1996, OJ L 28, 30.1.1997.

(4) Directive 97/5/EC of the European Parliament and of the Council of 27 January 1997 on cross-border credit transfers, OJ L 43, 14.2.1997.

(5) Commission Recommendation of 23 April 1998 concerning banking charges for conversion to the euro (98/286/EC), OJ L 130, 1.5.1998.