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As part of the general effort to tackle obstacles to employee mobility, companies across Europe are beginning to reorganise their pension schemes. We look at how a recent directive from the EU aims to facilitate the process.European graduate Maria was thrilled to accept a job offer with a European company shortly after her 21st birthday. Two years later, she was entitled to become a member of the organisation's pension scheme. At 27 Maria received a lucrative job offer from another organisation in another member state. However, there was a catch.
Her first company's pension scheme contained a clause stating that an employee must be 30 to have built up pension rights.
Maria was faced with the choice of pursuing a career opportunity but losing her pension rights — receiving back only her own contributions to the scheme, or staying on in her current position until she reached the qualifying age.
This age-related clause, which results in the employee losing the funds built up on the employer's part of the pensions scheme was developed in some European countries as a way of rewarding company loyalty rather than purely to provide pension.
However, as Europe strives to boost and develop its economies through encouraging flexibility and mobility within its workforce, this approach appears outmoded.
To help EU member states address such hurdles to mobility within company pension plans, the European Commission published a proposal for a directive on 20 October 2005.
Overall, the proposed directive aims to improve the conditions related to the building up of rights and the preservation of dormant rights which are left behind in the schemes, and also increase the possibility for employees to transfer the rights to the new job.
Finding common ground
However, the directive, which is currently under discussion in the European Parliament and in the Council, is tackling a complex issue due to the diversity of occupational pension systems across the EU and arguments have been raised based on the principal that this is an area which should be dealt with by social partners rather than the legislator.
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