From portability to acquisition and preservation: the challenge of legislating in the area of supplementary pensions

Abstract

Although the Community institutions are keen to promote the mobility of workers within the EU and seek to address the obstacles posed by supplementary pension arrangements, legislation in this area has proved difficult to pass. This article looks at the amended proposal for a Directive in the area of worker mobility and supplementary pension rights. It seeks to unpack the ‘particular challenge’ associated with developing legislation in the area of supplementary pension rights and asks ‘where next?’ for EU action in this area.

Keywords:

• free movement of workers
• supplementary pensions
• social security

Notes

^1. This entails providing for both the aggregation of periods of contribution under the laws of other Member States and for the payment of benefits to persons resident in other Member States. Regulation 1408/71 was developed by the EU institutions on the basis of Art. 42 EC. It sets out the application of social security schemes to mobile employees, self-employed people and members of their families, when they move within the EU. An established body of case law has developed and refined the rights of migrant workers in relation to certain forms of state pensions (Heaton 2005).

^2. Supplementary pensions discussed here form pillar two of the standard three pillar ‘three pillar’ classification (COM (1997) 283 final). Article 3(b) of Directive 98/49/EC defines supplementary pension schemes as follows ‘any occupational pension scheme established in conformity with national legislation and practice such as a group insurance contract or pay-as-you-go scheme agreed by one or more branches or sectors, funded scheme or pension promise backed by book reserves, or any collective or other comparable arrangement intended to provide a supplementary pension for employed or self-employed persons’.

^3. The Regulations do not extend to supplementary pension schemes, except for schemes which are covered by the term ‘legislation’ as defined by Article 1(j) of Regulation 1408/71.

^4. In the area of supplementary pensions, Case C-57/95 France v Commission [1997] ECR I-1627, demonstrates the Court's willingness to ensure that Community institutions are acting within the limits of the competence conferred by the Treaty when developing acts that are intended to have legal effects.

^5. For example, Article 42 EC, Art. 94 EC, Art. 137(2)(b) in the context of the field referred to in Art. 137 (1)(c) and Art. 308 EC.

^6. Regulation 1408/71 sets out the application of social security schemes to mobile employees, self-employed people and members of their families, when they move within the EU. This Regulation does not extend to supplementary pension schemes, except for schemes which are covered by the term ‘legislation’ as defined by Art. 1(j) of Regulation 1408/71. Nevertheless the ECJ has indicated that Art. 42 itself is an appropriate legal basis from which to develop measures in the area of supplementary provision. Moore (1999) cites Case C-57/90 Commission v France [1992] ECR I-75 as authority that Art. 51 EC (now Art. 42) could be an appropriate legal basis for the development of legislation in the area of supplementary pensions.

^7. For a more in-depth analysis of the original proposal see Kalogeropoulou (2006).

^8. See Case C-240/90 Bachman v Belgium [1992] ECR I-248, Case C-80/94 G. H. E. J. Wielockx v Inspecteur der Directe Belastingen [1995] ECR I2493, Case C-118/96 Jessica Safir v Skattemyndigheten i Dalarnas Län, formerly Skattemyndigheten i Kopparbergs Län. [1998] ECR I-1897, Case C-136/00 Rolf Dieter Danner [2002] ECR I-8147, Case C-422/01 Försäkringsaktiebolaget Skandia (publ) and Ola Ramstedt v Riksskatteverket ECR I-06817, Case C-522/04 Commission of the European Communities v Kingdom of Belgium ECR I-5701.