GERMANY - Thomas Mann, a German MEP, has fired another broadside at the European Commission's proposed pensions portability directive, saying that if it were enacted as is, it would seriously threaten occupational pensions in Germany. 

According to Mann, vice president of the European Parliament's labour and social affairs committee, the directive still has serious flaws despite being amended since it was unveiled by the European Commission in 2005.

Mann noted that the directive unfairly benefited "job hoppers" - who account for just 1.5% of the EU's workforce - for two reasons.

First, it grants employees the right to a portable corporate pension after two years of service instead of five currently. Second, it lowers the minimum age for employees to qualify for the portable pension to 21 instead of 30 currently.

"Between the ages of 21 and 30 is the share of job hoppers very high. The implementation of both provisions in the directive would, therefore, significantly increase costs on employers," Mann told a conference of the German pensions association aba in Hanover.

Mann cited an estimate by the German parliament whereby costs on employers would, through management of short-term pension rights, increase by up to 20%.

Mann also took aim at a provision in the directive to which Germany's occupational pensions industry is most hostile. That is a requirement under which employers must, with respect to inflation, adjust pension benefits from employees that have left the company.
 
Said Mann: "By requiring that employers treat pension benefits from existing and former employees equally is wrong, as existing employees are penalised for their loyalty to the firm." Again, he cited an estimate from the German parliament under which this would increase employer costs by up to 30%.

"Because of these potential costs, which would seriously threaten Germany's voluntary system of corporate pensions, I will do my best to have these provisions removed," he added.

Due in part to the directive's unpopularity both within and without Brussels, the Parliament's vote on the directive has been postponed until February. This is to allow for further debate and possible changes.

Topics