Trevor Sargent (Dublin North, Green Party)
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Question 19: To ask the Minister for Social and Family Affairs the position regarding the European Commission's new proposed portability of pensions directive; and if he will make a statement on the matter. [37132/05]

Séamus Brennan (Dublin South, Fianna Fail)
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The EU Commission has recently published the Proposal for a Directive on Improving the Portability of Supplementary Pension Rights, commonly referred to as the pension portability directive. The purpose of the directive is to facilitate free movement of workers within and between EU member states by removing obstacles to mobility within and between member states which may be caused by present supplementary pension scheme provisions.

The draft directive covers second pillar pension plans. It does not include statutory or mandatory employer plans that are already covered under EC Regulation 1408/71 on social security schemes for workers. My Department has primary responsibility for negotiating and transposing the requirements of the directive.

The EU Commission says there is empirical evidence that mobile workers risk ending their careers with lower supplementary pension rights than employees who remain with the same employer during their entire career; and that workers will be less inclined to move to another job when they know that their pension rights at the end of their career will be reduced. With the prospect of increasing numbers of employees covered by supplementary pension provision the Commission consider that this problem is likely to continue to increase.

The perceived obstacles to mobility relate to the conditions of acquisition of occupational pension rights, the preservation of dormant pension rights, the transferability of acquired occupational pension rights and provision of information to employees on their pension rights.

Ireland is already compliant with many of the requirements of the directive. For example, the Pensions Act already provides for transferability of pension rights, preservation of rights for those who leave the scheme and revaluation of those accrued rights. These conditions apply whether the person is moving within the State or, subject to Revenue law, within the EU member states. However, there are some additional conditions which will impact on costs for schemes. For example, the directive specifies a minimum waiting period of one year for access to a scheme. Under current legislation, there are no legal maximum waiting periods. This requirement may result in employers having to fund for higher benefits and possibly higher administration costs for these schemes. In relation to public sector schemes, a number of issues arise mainly because transfers are generally restricted to the public sector network and, within that network, transfers relate to service rather than the transfer of a capital sum.

At EU level, discussions at the social questions group have just commenced. Ireland raised these and other issues during the course of recent negotiations at the group under the UK Presidency. Most member states have raised issues with the directive and these will all need to be discussed in detail in the group. The next meeting is scheduled for mid-January 2006 under the Austrian Presidency.