Proposal for a Directive on Improving the Portability of Supplementary Pension Rights
| Author | Frans Pennings |
| Date | 01 September 2005 |
| DOI | 10.1177/138826270500700305 |
| Published date | 01 September 2005 |
| Subject Matter | News and Cases |
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NEWS AND CASES
PROPOSAL FOR A DIRECTIVE ON IMPROVING THE
PORTABILITY OF SUPPLEMENTARY PENSION RIGHTS
In October of this year the European Commission presented a Proposal for a Directive
of the European Parliament and of the Council on improving the portability of
supplementary pension rights (COM/2005/0507 final).
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/
EC, which seeks inter alia to guarantee the right to equal treatment for people moving
from one country to another.
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 rights. 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 partners 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.
The 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.
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 (these personnel being held back 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 in the European employment market.
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Conditions of acquisition
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 at 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
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
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the rights transferred made by the two schemes involved in the transfer, or by excessive
administrative charges.
THE GOUDSWAARD-VAN DER LANS DECISION
The Goudswaard-Van der Lands decison concerns a widow whose right to survivors’
benefit was withdrawn as a result of a new Law on survivors’ benefits. She invoked the
property protection rules of the First Protocol to the Convention on Human Rights.
Her application proved to be unsuccessful.
Decision
European Court of Human Rights, Application no. 75255/01
THE FACTS
The applicant, Mrs A.C. Goudswaard-van der Lans, is a Netherlands national, who
was born in 1942 and lives in Aalsmeer. She was represented before the Court by Ms T.
Spronken, a lawyer practising in Maastricht. The respondent Government was
represented by Mr R.A.A. Bo¨cker of the Ministry for Foreign Affairs, The Hague.
In the interest of the proper administration of justice, the President granted leave
to submit written comments to Mrs J.M. Breugem-Westerkamp, Mrs G. Gosschalk-
Wigboldus, Mrs M.E.C. Santoro-van Halm Braam, Mrs W. Hop-Bloemberg, Mrs
M.J.C. Braspenning, Mr M.J. Lens, Mr J.H.M. Boerland, Mrs M. Scholte-Sleumer, Mrs
W.C. Monster and Mr M.C.A. Glas (Article 36 of the Convention and Rule 44 § 2 of
the Rules of Court). These persons, referred to hereinafter as ‘third parties’, are
represented by Mr T. Barkhuysen, a lawyer practising in Amsterdam.
A.
THE CIRCUMSTANCES OF THE CASE
The facts of the case, as submitted by the applicant and the respondent Party, may be
summarised as follows.
The applicant’s husband died on 18 January 1977. The applicant was left with two
children born in 1970 and 1972 respectively. She was granted a pension under the
General Widows’ and Orphans’ Benefits Act (Algemene Widower- en Wezenwet;
’AWW’).
She entered into a relationship with a Mr H., by whom she had a child in 1980, and
set up home with him some time before 1 July 1996.
At the time of the events complained of, the applicant’s AWW pension amounted
to 21,981.12 Netherlands guilders (NLG) annually.
The AWW was repealed on 1 July 1996 and replaced by the Surviving Dependants
Act (Algemene Nabestaandenwet; ‘Anw’).
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By a decision of 1 December 1997 the competent executive authority, the Social
Insurance Bank (Sociale Verzekeringsbank), reduced the applicant’s pension to NLG
6,815.40 annually, with effect from 1 January 1998. The reason for this reduction was
the fact that the applicant had been living together with Mr H. on 1 July 1996, the date
on which the Anw entered into force, and was expected to continue thus beyond
31 December 1997.
On 8 January 1998 the applicant lodged an objection against this decision with the
Social Insurance Bank. This was dismissed on 17 February 1998.
On 26 March 1998 the applicant lodged an appeal with the Amsterdam Regional
Court (arrondissementsrechtbank).
On 30 June 1998, due to the entry into force of new transitional legislation (the Act
of 18 June 1998 – see below), the Social Insurance Bank raised the applicant’s pension
to NLG 8,449.44 annually, with effect from 1 July 1998.
On 23 September 1998 the applicant’s representative wrote to the Regional Court
informing it that the applicant’s appeal was one of several selected as pilot cases
intended to allow the courts to establish case-law. On 22 October 1998 the Social
Insurance Bank also wrote, confirming this.
The Regional Court gave a decision on 17 March 1999 declaring the appeal well-
founded on grounds not relevant to the case before the Court. It quashed the decisions
of 17 February and 30 June 1998 but left the effects of the latter decision unaffected.
On 21 April 1999 the applicant lodged a further appeal with the Central Appeals
Tribunal (Centrale Raad van Beroep), the highest tribunal with competence in social-
security matters. The Social Insurance Bank also lodged an appeal, directed against
aspects of the Regional Court’s decision with which it was displeased.
The Central Appeals Tribunal dismissed the applicant’s further appeal in a decision
pronounced in public on 24 January 2001 and transmitted to the applicant on the
same day. It accepted that there was a ‘partial deprivation of possessions’ within the
meaning of Article 1 of Protocol No. 1 to the Convention. Its reasoning included the
following:
‘In...
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