Proposal for a Directive of the European Parliament and of the Council on improving the portability of supplementary pension rights {SEC(2005) 1293 }
Date: 2005-10-20
Institutions: European Commission
Subjects: free movement of workers, pension scheme, social legislation, social security, transfer of pension rights, worker (EU)

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 20.10.2005 
COM(2005) 507 final 

2005/0214 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on improving the portability of supplementary pension rights 

{SEC(2005) 1293 } 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1)  CONTEXT OF THE PROPOSAL 

•  Grounds for and objectives of the proposal 

The revised Lisbon strategy1 and the Social Agenda2 stress how important mobility is 
to improving the adaptability of workers and the business sector and increasing labour 
market  flexibility.  Considering  the  increasing  importance  of  supplementary  pension 
schemes  to  cover  the  risks  of  old  age,  it  is  thus  particularly  important  to  reduce  the 
obstacles  to  mobility  which  stem  from  these  schemes.  The  Commission  states  in  its 
Lisbon action plan its intention to submit legislative proposals in this area.  

This  proposal  is  accordingly  designed  to  simultaneously  reduce  the  obstacles  to 
freedom of movement across Member States and to mobility within any Member State 
stemming  from  provisions  contained  in  these  supplementary  pension  schemes.  These 
obstacles  relate  to:  the  conditions  of  acquisition  of  pension  rights,  the  conditions  of 
preservation  of  dormant  pension  rights,  the  transferability  of  acquired  rights.  The 
proposal also seeks to improve the information given to workers on how mobility may 
affect supplementary pension rights. 

•  General background 

The  social  protection  systems  in  the  different  Member  States  have  to  address  the 
problem  of  demographic  ageing.  The  reforms  adopted  or  envisaged  in  most  Member 
States  are  moving  towards  further  development  of  supplementary  pension  schemes, 
something which is moreover actively encouraged by certain Member States. 

It is thus urgent to ensure that the rules governing the operation of these schemes do 
not hamper the mobility of workers and reduce the opportunities for mobile workers to 
build up sufficient pension rights by the end of their careers; otherwise the flexibility 
and  effectiveness  of  the  labour  market  would  be  reduced.  Even  if  there  are  many 
factors which can determine the choice of any person to change jobs, it is clear that the 
fact  that  any  such  person  could  stand  to  lose  a  substantial  part  of  his  supplementary 
pension  rights  may  make  that  person  seriously  think  again  about  wanting  to  change 
jobs. 

This proposal is the culminating point of several years of exchanges at European level 
on  the  need  and  how  best  to  improve  the  operation  of  these  supplementary  pension 

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'Working  together  for  growth  and  jobs.  A  new  start  for  the  Lisbon  Strategy',  COM(2005)  24,  Brussels, 
2 February 2005. 
Commission Communication on the Social Agenda, COM(2005) 33 final, Brussels, 9 February 2005. 

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schemes in order to facilitate worker mobility. 

•  Existing provisions in the area of the proposal 

The  lack  of  a  common  regulatory  framework  on  the  portability  of  supplementary 
pension  rights  remains  an  obstacle  to  the  freedom  of  movement  of  workers  and  to 
occupational mobility in general, including within the Member States themselves. 

A  first  step  with  a  view  to  reducing  these  obstacles  was  taken  through  Directive 
1998/49/EC3, which seeks inter alia to guarantee the right to equal treatment for people 
moving from one country to another. 

•  Consistency with other policies and objectives of the Union 

The  recent  Commission  Communication  to  the  2005  Spring  Council4  and  the 
integrated  guidelines5  stress  the  substantial  importance  of  policies  to  improve  the 
responsiveness  of  the  labour  markets  by  fostering  occupational  and  geographic 
mobility. The policy plan on legal migration which the Commission will adopt by the 
end of 2005 also will take initiatives in this respect. 

2)  CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

•  Consultation of the stakeholders 

Consultation methods, main sectors targeted and general profile of respondents 

The Commission has consulted the social partners on two occasions, the first time on 
the  case  for  and  the  means  of  Community  action  on  the  portability  of  occupational 
pension rights6. The social partners were generally in favour of Community action on 
this. The Commission therefore began a second phase of consultation of the European 
social partners7 on the possible substance of any Community action along these lines. It 
emerged  from  this  consultation  that  the  social  partners  had  divergent  views  on  the 
thrust  of  the  action  and  on  the  instruments.  They  did  not  therefore  start  any 
negotiations with a view to an autonomous agreement. 

Since  its  inception  in  2001,  the  committee  in  the  area  of  supplementary  pensions8 
(hereinafter referred to as the Pensions Forum) has been closely involved in examining 
the  obstacles  to  mobility  stemming  from  the  rules  governing  supplementary  pension 
schemes. The Pensions Forum comprises representatives of the Member States, of the 
social partners and of the pension funds and other organisations active in this area.  

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Council  Directive  98/49/EC  of  29 June  1998  on  safeguarding  the  supplementary  pension  rights  of 
employed and self-employed persons moving within the Community, OJ L 209 of 25 July 1998. 
‘Working  together  for  growth  and  jobs  –  a  new  start  for  the  Lisbon  strategy’,  Communication  to  the 
Spring European Council – COM(2005) 24, Brussels, 2 February 2005. 
Guideline 21 in particular. 
SEC(2002) 597, published on 27 May 2002. 
SEC(2003) 916, 12 September 2003. 
Committee  set  up  by  Commission  Decision  C(2001)  1775  of  9 July  2001,  OJ  L  196  of  20.07.2001, 
p. 26-27. 

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Summary of responses and how they have been taken into account 

The reactions of the members of the Pensions Forum, including those of the Member 
States  and  the  social  partners,  have  been  incorporated  into  the  impact  assessment 
which accompanies this proposal. 

•  Collection and use of expertise 

It has not been necessary to call in outside expertise. 

•  Impact assessment 

Even  though  this  proposal  is  not  formally  written  into  the  Commission’s  working 
programme  and  need  not  therefore  be  the  subject  of  an  impact  assessment,  the 
Commission  nonetheless  feels  that  in  the  interests  of  better  lawmaking  and  more 
transparency  the  different  options  in  terms  of  measures  which  could  be  taken  in  this 
area and their impact in terms of costs and benefits should be examined.  

3)  LEGAL ELEMENTS OF THE PROPOSAL 

•  Summary of the proposed action 

This proposal establishes common principles for improving the exercise of the right to 
freedom of movement, one of the fundamental freedoms of the European Union, and 
the operation of the internal market, principles which fit in with the adjustments of the 
supplementary pension schemes already under way in the Member States. 

Worker  mobility  both  at  national  level  and  from  one  Member  State  to  another  is  an 
essential  factor  in  a  smoothly-functioning  European  employment  market  and  is  an 
integral part of the ambition set out in the Lisbon strategy to strengthen  employment 
and economic growth. There is therefore a need to improve not only this mobility from 
one  Member  State  to  another  but  also  occupational  mobility  within  any  country. 
Certain  of  the  rules  governing  supplementary  pension  schemes,  particularly  those 
relating to acquisition of pension rights, hamper this internal mobility. This stifles the 
development  of  companies  from  other  Member  States  because  of  the  problems  of 
recruiting qualified personnel (this personnel being held back in their companies by the 
rules governing supplementary pension schemes). This Directive accordingly seeks to 
bring the laws of the Member States in this area closer together in order to improve the 
conditions of competition on the European employment market. 

•  Legal basis 

The  proposed  legal  bases  are  Articles  42  and  94  of  the  EC  Treaty.  Article  42  was 
already used as the legal basis for Directive 1998/49/EC. Article 94 of the EC Treaty is 
appropriate in that a genuine improvement in the portability of supplementary pension 
rights cannot be achieved unless there is an improvement in occupational mobility in 
general,  including  within  Member  States.  Furthermore,  better  general  occupational 
mobility  is  essential  to  allow  smooth  operation  of  a  common  market  using  a  flexible 
labour  force  unimpeded  by  the  implementation  of  certain  supplementary  pension 
scheme  rules,  such  as  those  whereby  a  worker  sometimes  has  to  stay  with  the  same 

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employer for a substantial period of time before acquiring rights.  

•  The principle of subsidiarity 

The  principle  of  subsidiarity  applies  in  so  far  as  the  proposal  does  not  affect  an  area 
covered by the exclusive competence of the Community. 

The objectives of the proposal cannot be sufficiently be achieved by the Member States 
for the following reasons. 

Employment markets do not end at the borders of the Member States, so a Community-
level measure needs to be taken in order to make these markets more flexible and more 
effective by removing certain obstacles to the mobility of the labour force which stem 
from these occupational pension schemes.  

The  objectives  of  the  proposal  can  be  better  achieved  by  Community  action  for  the 
following reasons. 

The guidelines and recommendations formulated on several occasions over the past ten 
years by the European institutions have not brought about a significant approximation 
of  the  national  laws;  indeed,  there  is  a  risk  that  divergences  could  increase  in  a 
European Union of 25 countries. 

The current and future context of the development of European-scale pension systems 
makes it necessary to adopt a Community instrument today: on the one hand, the EU 
has since 2003 had a legal framework which favours the cross-border management of 
supplementary pension schemes; on the other, as shown in the recent study conducted 
by the Social Protection Committee in conjunction with the Commission on the future 
of  occupational  supplementary  pension  schemes,  these  schemes  are  set  to  grow 
significantly. The time has therefore come to provide a common reference framework. 

The proposal therefore complies with the principle of subsidiarity, 

•  The principle of proportionality 

The proposal complies with the principle of proportionality for the following reasons. 

The  choice  of  instrument  and  the  practical  aspects  are  in  line  with  the  principle  of 
proportionality:  the  form  opted  for  is  that  of  a  directive  and  not  a  regulation,  this  in 
order to respect the heterogeneous nature of the organisation of supplementary pension 
systems in the Member States, while establishing an overall framework setting out the 
objectives to be achieved by the Member States without prescribing how they are to be 
attained.  

Lastly, the provisions proposed have been gauged according to the minimum essential 
requirements  taking  due  account,  thanks  to  the  impact  assessment,  of  the  possible 
repercussions on existing national schemes; they also provide for a suitable time frame 
for transposing certain provisions contained in this Directive. 

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•  Choice of instruments 

Proposed instrument: directive. 

Other means would not be appropriate for the following reasons. 

A  less  binding  instrument,  such  as  a  code  of  conduct,  would  have  little  chance  of 
securing the desired result, as the discussions which have taken place for over 15 years 
at  European  level  have  failed  to  produce  a  voluntary  initiative  of  this  type. 
Furthermore, many  elements  on which  the  supplementary pension  schemes  are  based 
are governed by the laws of the Member States. 

A more binding instrument, such as a regulation, would not offer the flexibility needed 
to take due account of the vast diversity of supplementary pension schemes and the fact 
that they are often voluntary. 

4)  BUDGETARY IMPACT 

The proposal has no impact on the Community budget. 

5)  ADDITIONAL INFORMATION 

•  Correlation table 

The  Member  States  are  required  to  communicate  to  the  Commission  the  text  of 
national  provisions  transposing  the  Directive  as  well  as  a  correlation  table  between 
those provisions and this Directive. 

•  European Economic Area 

This draft instrument has to do with an area covered by the EEA Agreement and must 
therefore be extended to the European Economic Area. 

•  Detailed explanation of the proposal by chapter or by article 

Objective (Article 1) 

Article 1 lists and summarises the objectives described in paragraph 1.2. 

Scope (Article 2) 

In  the  interests  of  consistency  with  Directive  98/49/EC,  the  scope  of  this  proposal  is 
identical  to  that  of  the  previous  Directive.  It  thus  covers  all  supplementary  pension 
schemes (defined in Article 3) with the exception of the schemes covered by Council 
Regulation (EEC) No 1408/71 of 14 June 1971, as subsequently amended. 

Definitions (Article 3) 

In view of the substantial heterogeneousness of supplementary pension schemes across 
the Member States, it is essential to define certain terms used in this proposal. 

Paragraphs  a)  ("supplementary  pension  "),  b)  ("supplementary  pension  scheme”)  and 

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d)  (“pension  rights”)  contain  definitions  which  are  identical  to  those  used  for  the 
purposes of Directive 98/49/EC, in the interests of consistency with the scope of that 
Directive. 

It  should  be  noted  that  the  term  “portability”  used  in  this  proposal  refers  to  the 
possibility for an outgoing worker to acquire and retain supplementary pension rights. 

Conditions governing acquisition (Article 4) 

In  order  to  attenuate  the  adverse  effects  of  the  conditions  of  acquisition  of 
supplementary pension rights on the exercise of the right to freedom of movement, the 
draft Directive provides for the following elements of flexibility: 

–  A  worker  who  has  not  yet  built  up  any  acquired  rights  within  the  supplementary 
pension  scheme  but  who  has  already  paid  contributions  should  not  lose  them. 
Accordingly, contributions should be reimbursed or transferred in full. 

–  The requirement for a high minimum age is a major disincentive to the mobility of 
young workers if a departure before reaching this minimum age results in the loss of 
pension rights for the period worked before the minimum age. A worker must start 
acquiring supplementary pension rights at the latest as of the age of 21. 

–  The  waiting  period  during  which  a  worker  cannot  yet  become  a  member  of  the 
scheme  should  be  reduced.  This  period  should  not  exceed  one  year  (unless  the 
minimum  age  has  not  yet  been  reached).  The  schemes  thus  maintain  in  particular 
the  possibility  of  linking  the  waiting  period  to  the  qualifying  period  (which 
generally does not exceed one year). 

–  In  order  to  allow  outgoing  workers  to  build  up  sufficient  supplementary  pension 
rights during their career, particularly for those who have had a succession of jobs, 
the  possibility  of  applying  qualifying  periods,  i.e.  the  period  of  membership  to  be 
completed before the worker obtains acquired rights, should be limited. This period 
should not exceed two years.  

Preservation of dormant pension rights (Article 5) 

A  mobile  worker  should  not  have  to  suffer  a  considerable  reduction  in  the  acquired 
rights  he  has  left  within  the  supplementary  pension  scheme  under  his  former 
employment  relationship.  Member  States  have  different  instruments  for  making  this 
adjustment, depending in particular on how the rights of active members develop. 

In order to avoid excessive administrative costs stemming from the management of a 
high number of low-value dormant rights, the proposal provides for the option not to 
preserve  these  pension  rights  but  to  use  a  transfer  or  a  payment  of  a  capital  sum 
representing  the  acquired  rights  when  these  do  not  exceed  a  threshold  established  by 
the Member State concerned. 

Transferability (Article 6) 

Under  the  proposal  for  a  Directive,  the  outgoing  worker  should  have  the  choice 
between  maintaining  his  rights  within  the  supplementary  scheme  of  his  former 
employment relationship and the transfer of his acquired rights, unless his new job is 

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covered  by  the  same  supplementary  pension  scheme  or  unless  the  scheme  makes  a 
capital payment because of the low value of the rights acquired. 

An  outgoing  worker  opting  for  a  transfer  of  his  rights  should  not  be  penalised  by 
calculations of the value of the rights transferred made by the two schemes involved in 
the transfer, or by excessive administrative charges. Information to be supplied (Article 
7) 

The purpose of Article 7 is to supplement the provisions which exist at European level 
with regard to the information to be supplied, as set out in Directive 2003/41/EC. The 
scope  of  this  Directive,  which  also  covers  schemes  which  do  not  function  using  the 
capitalisation principle, is wider than that of Directive 2003/41/EC, which means that 
additional provisions must be established in this area. Moreover, Directive 2003/41/EC 
makes provision only for the information to be supplied to members and beneficiaries; 
this  scope  needs  to  be  supplemented  by  giving  every  potentially  outgoing  worker, 
irrespective  of  whether  or  not  he  is  a  member  of  a  scheme,  information  on  how 
terminating an employment relationship could affect his supplementary pension rights. 

Minimum requirements – non-regression (Article 8) 

In  line  with  the  spirit  of  the  implementation  of  the  internal  market  and  the  social 
provisions  relating  thereto,  the  proposal  for  a  Directive  does  not  preclude  any  more 
advanced provisions on portability which Member States might take; it likewise rules 
out any initiative which would be tantamount to regression in relation to the existing 
degree of portability. 

Implementation (Article 9) 

Considering  the  diversity  of  supplementary  pension  schemes  across  the  Member 
States, this proposal for a Directive adopts a flexible approach in order to implement 
certain provisions linked to the conditions governing the acquisition of pension rights 
and  transfer.  Member  States  can  thus  have  more  time  to  transpose  certain  provisions 
which might be too binding in the short term. 

Considering the extent to which the social partners are involved in the organisation and 
management  of  supplementary  occupational  pension  schemes,  the  proposal  for  a 
Directive  allows  for  the  option  for  Member  States  to  entrust  its  implementation  to 
them. 

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2005/0214 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on improving the portability of supplementary pension rights 

(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 94 thereof, 

Having regard to the proposal from the Commission9, 

Having regard to the opinion of the European Economic and Social Committee10, 

Having regard to the opinion of the Committee of the Regions11, 

Acting in accordance with the procedure laid down in Article 251 of the Treaty12, 

Whereas: 

(1) 

(2) 

(3) 

The free movement of persons is one of the fundamental freedoms of the Community; 
in  Article  42,  the  Treaty  stipulates  that  the  Council,  acting  in  accordance  with  the 
procedure  referred  to  in  Article  251,  shall  adopt  such  measures  in  the  field  of  social 
security as are necessary to provide freedom of movement for workers. 

The  social  protection  of  workers  with  regard  to  pensions  is  guaranteed  by  statutory 
social security schemes, together with supplementary social security schemes linked to 
the  employment  contract,  which  are  becoming  increasingly  common  in  the  Member 
States. 

The Council has wide powers of discretion regarding the choice of measures which are 
the  most  appropriate  when  it  comes  to  achieving  the  objective  of  Article  42  of  the 
Treaty;  the  system  of  coordination  provided  for  in  Council  Regulation  (EEC)  No 
1408/71  of  14  June  1971  on  the  application  of  social  security  schemes  to  employed 

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12 

OJ C […], […], p. […]. 

OJ C […], […], p. […]. 

OJ C […], […], p. […]. 

OJ C […], […], p. […]. 

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persons  and  their  families  moving  within  the  Community13  and  Council  Regulation 
(EEC) No 574/72 of 21 March 1972 fixing the procedure for implementing Regulation 
(EEC) No 1408/7114 and, in particular, the rules applicable to aggregation do not relate 
to  supplementary  pension  schemes,  except  for  schemes  covered  by  the  term 
“legislation”, as defined in the first paragraph of Article 1(j) of Regulation (EEC) No 
1408/71, or which have been the subject of a declaration to this effect by a Member 
State pursuant to this Article. Supplementary pension schemes should therefore be the 
subject  of  specific  measures  in  order  to  take  account  of  their  nature  and  specific 
characteristics  and  of  the  diverse  nature  of  these  schemes  within  the  Member  States 
and from one Member State to another, and in particular the role played by the social 
partners in their implementation. 

Council  Directive  98/49/EC  of  29  June  1998  on  safeguarding  the  supplementary 
pension  rights  of  employed  and  self-employed  persons  moving  within 
the 
Community15 represents an initial specific measure designed to improve the exercise 
of  the  right  of  workers  to  freedom  of  movement  as  regards  supplementary  pension 
schemes. 

Recourse  should  also  be  had  to  Article  94  of  the  Treaty,  given  that  the  disparities 
between the national legislation governing supplementary pension schemes are likely 
to hamper both the exercise of the right of workers to freedom of movement and the 
operation  of  the  internal  market.  Thus,  in  order  to  improve  the  portability  of  the 
supplementary  pension  rights  of  workers  moving  within  the  Community  and  within 
the same Member State, certain conditions governing the acquisition of pension rights 
must  be  harmonised  and  the  rules  on  the  preservation  of  dormant  rights  and  the 
transfer of acquired rights must be brought closer together. 

In  order  to  ensure  that  the  conditions  for  acquiring  supplementary  pension  rights  do 
not undermine the exercise of the right of workers to freedom of movement within the 
European  Union,  limits  must  be  established  concerning  the  conditions governing the 
acquisition of such rights so that workers, when they exercise their right to freedom of 
movement  or  move  within  a  Member  State, can receive a satisfactory pension at the 
end of their career. 

Steps must also be taken to ensure a fair adjustment of dormant rights so as to avoid 
that  outgoing  workers  are  penalised  .  This  objective  could  be  achieved  by  adjusting 
dormant rights in line with a variety of reference measures, including inflation, wage 
levels,  or  pension  contributions  which  are  in  the  course  of  being  paid,  or  the  rate  of 
return on assets under the supplementary pension scheme. 

In  order  to  avoid  excessive  administrative  costs  resulting  from  the  management  of  a 
large number of low-value dormant rights, pension schemes must be given the option 
not  to  preserve  acquired  rights  but  to  use  a  transfer  or  a  payment  of  a  capital  sum 
representing the acquired rights when these do not exceed a threshold established by 
the Member State concerned. 

OJ L 149 of 5.7.1971, p. 1. Regulation as last amended by Regulation (EC) No 631/2004 (OJ L 100 of 
6.4.2004, p. 1). 
OJ L 74 of 27.3.1972, p. 1. Regulation as last amended by Regulation (EC) No 77/2005 (OJ L 16 of 
20.1.2005, p. 3). 
OJ L 209 of 25.7.1998, p. 46. 

(4) 

(5) 

(6) 

(7) 

(8) 

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(9)  Workers who change jobs must be granted the possibility of choosing either to retain 
their  pension  rights  acquired  under  the  original  supplementary  pension  scheme  or  to 
transfer  the  corresponding  sum  to  another  supplementary  pension  scheme,  including 
one in another Member State. 

(10)  For reasons of financial sustainability of supplementary pension schemes, the Member 
States  have  the  possibility  in  principle  to  exempt  unfunded  schemes  from  the 
obligation  to  allow  workers  to  transfer  acquired  rights.  However,  to  ensure  equal 
treatment for workers covered by funded schemes and workers covered by unfunded 
schemes, Member States should endeavour to progressively improve the transferability 
of rights from unfunded schemes. 

(11)  Without  prejudice  to  Directive  2003/41/EC  of  the  European  Parliament  and  of  the 
Council  of  3  June  2003  on  the  activities  and  supervision  of  institutions  for 
occupational  retirement  provision16,  workers  who  exercise  or  plan  to  exercise  their 
right  to  freedom  of  movement  should  be  suitably  informed  by  those  responsible  for 
managing  supplementary  pension  schemes,  particularly  regarding  how  a  termination 
of their employment would affect their supplementary pension rights. 

(12) 

In  view  of  the  diverse  nature  of  supplementary  social  security  schemes,  the 
Community must confine itself to establishing the objectives to be achieved in general 
terms, which means that the directive is the appropriate legal instrument. 

(13)  Given that the objectives of the measures envisaged, namely to reduce the obstacles to 
the exercise of the right of workers to freedom of movement and to the operation of 
the internal market, cannot be achieved satisfactorily by the Member States and may 
therefore,  because  of  the  scope  of  the  measures,  be  achieved  more  effectively  at 
Community level, the Community may take action in accordance with the subsidiarity 
principle  set  out  in  Article  5  of  the  Treaty.  In  accordance  with  the  principle  of 
proportionality  referred  to  in  that  Article,  this  Directive,  based  on  an  impact 
assessment  conducted  with  the  help  of  the  committee  in  the  area  of  supplementary 
pensions, will not go beyond what is necessary to achieve its objectives. 

(14)  This Directive establishes minimum requirements, thus enabling the Member States to 
adopt  or  maintain  more  favourable  provisions.  The  implementation  of  this  Directive 
cannot be used to justify a regression vis-à-vis the existing situation in each Member 
State. 

(15) 

In view of the need to take account of the effects of this Directive, in particular on the 
financial sustainability of supplementary pension schemes, the Member States may be 
granted more time in which gradually to implement those provisions which are likely 
to have effects of this kind. 

16 

OJ L 235 of 23.9.2003, p10. 

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(16) 

the  organisation  of 
the  national  provisions  governing 
In  accordance  with 
supplementary pension schemes, the Member States may grant the social partners, at 
their  joint  request,  responsibility  for  implementing  this  Directive  as  regards  the 
provisions relating to collective agreements, provided that they take all the necessary 
steps to ensure that they are at all times able to guarantee the outcomes prescribed in 
this Directive, 

HAVE ADOPTED THIS DIRECTIVE: 

Article 1 

Objective 

The  aim  of  this  Directive  is  to  facilitate  the  exercise  of  the  right  of  workers  to  freedom  of 
movement  and  of  the  right  to  occupational  mobility  within  the  same  Member  State,  by 
reducing the obstacles created by certain rules governing supplementary pension schemes in 
the Member States. 

Article 2 

Scope 

This Directive applies to supplementary pension schemes apart from the schemes covered by 
Regulation (EEC) No 1408/71. 

Article 3 

Definitions 

For the purposes of this Directive, the following definitions shall apply: 

(a) 

(b) 

“'supplementary  pension”  means  retirement pensions and,  where provided for 
by the rules of a supplementary pension scheme established in conformity with 
national legislation and practice, invalidity and survivors' benefits, intended to 
supplement or replace those provided in respect of the same contingencies by 
statutory social security schemes;  

“supplementary pension scheme”  means any occupational scheme established 
in conformity with national legislation and practice, such as a group insurance 
contract, a pay-as-you-go scheme agreed by one or more branches or sectors, a 
funded  scheme  or  a  pension  promise  backed  by  book  reserves,  or  any 
collective  or  other  comparable  arrangement 
to  provide  a 
supplementary pension for employed or self-employed persons;  

intended 

(c) 

“scheme members” means those persons whose occupation entitles them or is 
likely  to  entitle  them  to  a  supplementary  pension  in  accordance  with  the 
provisions of a supplementary pension scheme;  

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(d) 

(e) 

(f) 

(g) 

(h) 

(i) 

(j) 

“pension  rights”  means  any  benefits  to  which  scheme  members  and  others 
holding  entitlement  are  entitled  under  the  rules  of  a  supplementary  pension 
scheme and, where applicable, under national legislation;  

“termination  of  employment”  means  a  decision  to  terminate  an  employment 
relationship; 

“outgoing  worker”  means  a  worker  who,  before  becoming  eligible  for  a 
pension,  leaves  an  employment  relationship  through  which  he  has  acquired 
pension  rights  or  could  have  acquired  such  rights  by  remaining  in  that 
employment relationship; 

“portability”  means  the  option  open  to  workers  of  acquiring  and  retaining 
pension  rights  when  exercising  their  right  to  freedom  of  movement  or 
occupational mobility;  

“deferred  beneficiary”  means  any  former  scheme  member  whose  pension 
rights  remain  dormant  under  the  supplementary  pension  scheme  until  the 
eligibility requirements for receipt of a supplementary pension have been met;  

“dormant  pension  rights”  means  pension  rights  retained  under  the  scheme 
under  which  they  have  been  acquired  by  a  deferred  beneficiary  who  will 
receive  a  pension  through  this  supplementary  scheme  once  the  eligibility 
requirements have been met;  

“transfer” means the payment by a supplementary pension scheme of a capital 
sum  representing  all  or  part  of  the  pension  rights  acquired  under  the  scheme, 
with  the  possibility  of  transferring  this  sum  to  a  new  supplementary  pension 
scheme or another financial institution which provides pension rights.  

Article 4 

Conditions governing acquisition 

The Member States shall take all necessary steps to ensure that: 

(a) 

(b) 

(c) 

(d) 

where  pension  rights  have  not  yet  been  acquired  when  employment  is 
terminated, all the contributions paid by, or on behalf of, the outgoing worker 
are reimbursed or transferred; 

where a minimum age is stipulated for the acquisition of pension rights, this is 
not more than 21 years; 

a worker may join a supplementary pension scheme after a maximum period of 
employment of one year or, where necessary, no later than once he has reached 
the required minimum age; 

a worker acquires pension rights after a maximum membership period of two 
years.  

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1. 

2. 

1. 

2. 

3. 

4. 

1. 

Article 5 

Preservation of dormant pension rights 

Member States shall adopt the measures they deem necessary in order to ensure a fair 
adjustment  of  dormant  pension  rights  so  as  to  avoid  that  outgoing  workers  are 
penalised. 

The  Member  States  may  allow  supplementary  pension  schemes  not  to  preserve 
acquired  rights  but  to  use  a  transfer  or  payment  of  a  capital  sum  representing  the 
acquired  rights  when  these  do  not  exceed  a  threshold  established  by  the  Member 
State  concerned.  The  Member  State  shall  inform  the  Commission  of  the  threshold 
applied. 

Article 6 

Transferability 

Unless a capital payment is made in accordance with Article 5(2), the Member States 
shall take the necessary action to ensure that if an outgoing worker is not covered by 
the  same  supplementary  pension  scheme  in  his  new  job,  he  may  obtain  on  request 
and within 18 months after the termination of his employment the transfer within the 
same Member State or to another Member State of all his acquired pension rights. 

Member  States,  in  accordance  with  their  national  practice,  shall  ensure  that  where 
actuarial  estimates  and  those  relating  to  the  interest  rate  determine  the  value  of  the 
acquired rights to be transferred, these shall not penalise the outgoing worker.  

Under  the  supplementary  pension  scheme  to  which  the  rights  are  transferred,  the 
rights shall not be subject to conditions governing acquisition and shall be preserved 
at least to the same extent as dormant rights in accordance with Article 5(1). 

Where administrative costs need to be paid during a transfer, the Member States shall 
take the necessary action to prevent them from being disproportionate to the length 
of time the outgoing worker has been a scheme member. 

Article 7 

Information 

Without  prejudice  to  the  obligations  of  the  institutions  for  occupational  retirement 
provision  stemming  from  Article  11  of  Directive  2003/41/EC,  concerning  the 
information  to  be  provided  to  members  and  beneficiaries,  the  Member  States  shall 
adopt  the  necessary  measures  to  ensure  that  workers  are  informed  by  the  person 
responsible for managing the supplementary pension scheme of how a termination of 
employment will affect their supplementary pension rights. 

2. 

Sufficient  information  shall  be  provided  within  a  reasonable  period  of  time  to 
workers who request it. It shall relate, in particular, to the following: 

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(a) 

the  conditions  governing  the  acquisition  of  supplementary  pension  rights  and 
the effects of applying them when employment is terminated; 

(b) 

the pension benefits envisaged when employment is terminated; 

(c) 

the conditions governing the preservation of dormant pension rights; 

(d) 

the conditions governing the transfer of acquired rights . 

A deferred beneficiary who so requests shall receive from the person responsible for 
managing the supplementary pension scheme information on dormant pension rights 
and  on  all  changes  to  the  rules  governing  the  supplementary  pension  scheme 
concerning them. 

The information referred to in the present article shall be provided in writing and in a 
comprehensible form. 

Article 8 

Minimum requirements — non-regression 

The  Member  States  may  adopt  or  maintain  provisions  on  the  portability  of 
supplementary  pension  rights  which  are  more  favourable  than  those  set  out  in  this 
Directive. 

The implementation of this Directive may not under any circumstances be used as a 
reason for reducing the degree of portability of supplementary pension rights which 
exists in the Member States. 

Article 9 

Implementation 

The  Member  States  shall  adopt  the  laws,  regulations  and  administrative  provisions 
necessary to comply with this Directive no later than 1 July 2008, or may grant the 
social partners, at their joint request, responsibility for implementing this Directive as 
regards the provisions relating to collective agreements. In that case, Member States 
shall  ensure  that,  no  later  than  1  July  2008,  the  social  partners  have  introduced  the 
requisite  measures  by  agreement;  the  Member  States  concerned  must  take  all  the 
necessary  steps  to  ensure  that  they  are  at  all  times  able  to  guarantee  the  outcomes 
prescribed in this Directive. They shall forthwith inform the Commission thereof. 

Notwithstanding  the  first  paragraph,  the  Member  States  may  be  granted,  where 
necessary, an extension of 60 months starting on 1 July 2008 in order to achieve the 
objective referred to in Article 4 (d). Any Member State wishing to be granted this 
extension  shall  inform  the  Commission  accordingly,  indicating  the  provisions  and 
schemes concerned and the specific reasons for the extension. 

Notwithstanding  the  first  paragraph,  and  in  order  to  take  account  of  specific 
conditions duly substantiated and linked to financial sustainability of supplementary 

3. 

4. 

1. 

2. 

1. 

2. 

3. 

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pension  schemes,  the  Member  States  may  exempt  pay-as-you-go  schemes,  support 
relief  funds  and  companies  which  constitute  book  reserves  with  a  view  to  paying 
pensions  to  their  workers  from  the  application  of  Article  6(1).  Any  Member  State 
wishing  to  make  use  of  this  possibility  shall  immediately  notify  the  Commission, 
indicating  the  schemes  concerned  and  the  specific  reasons  for  the  exemption, 
together  with  the  measures  adopted  or  planned  with  a  view  to  improving  the 
transferability of rights from the schemes concerned. 

When the Member States adopt these measures, these shall contain a reference to this 
Directive or shall be accompanied by such reference on the occasion of their official 
publication.  The  methods  of  making  such  reference  shall  be  laid  down  by  the 
Member States. 

The Member States shall inform the Commission of the measures taken in order to 
implement the provisions of Article 5. 

Article 10 

Report 

Every  five  years  after  1  July  2008,  the  Commission  shall  draw  up  a  report  for 
submission  to  the  Council,  the  European  Parliament,  the  European  Economic  and 
Social Committee and the Committee of the Regions on the basis of the information 
provided by the Member States. 

No  later  than  10  years  after  1  July  2008,  the  Commission  shall  draw  up  a  specific 
report  on  the  application  of  Article  9(3).  On  the  basis  thereof,  if  appropriate,  the 
Commission  shall  present  a  proposal  containing  any  amendments  to  this  Directive 
which prove necessary in order to ensure equal treatment in terms of transferability 
of acquired rights for workers covered by funded schemes and workers covered by 
schemes as referred to in Article 9(3). 

4. 

5. 

1. 

2. 

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Article 11 

Entry into force 

This Directive shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

Article 12 

Addressees 

This Directive is addressed to the Member States. 

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

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