Knowing who will pay out when we retire is a key issue for all mobile workers.
In February 2012, the European Commission published a report on pensions, in which it pledged to further protect the pension rights of mobile workers by creating a pensions tracking system across the EU as well as strengthening current legislation.
Coordination of social security is, however, already firmly in place across the EU to ensure that no one is deprived of the social security that they would have received had they stayed their whole life in only one Member State. Let’s take a look at what currently happens.
Every EU Member State (as well as Iceland, Liechtenstein, Norway or Switzerland) in which you have worked for a period of at least one year will pay you an old-age pension when you reach the national pensionable age of that country. (Note here that the pensionable age can differ across the EU). If you have worked in three different Member States you will be eligible for three separate old-age pensions.
One of the basic principles of EU social security coordination is the aggregation of periods of time spent working. Put more simply, you make a claim for a pension in the Member State in which you are residing. The institutions of that country will contact the institutions of the Member States in which you have worked. Each Member State will then calculate a rate for the actual number of years you have worked, based on the amount you would have received if you had spent your whole working life in that country. You will then receive a summary note detailing the rate at which each Member State will start paying to you.
The country in which you are resident and where you make your claim for an old-age pension will immediately provide a provisional pension. That is unless you have never worked in this country, in which case they will refer to the relevant institution in the Member State where you last worked, who will immediately pay the provisional pension.
This is only a very brief overview of a hugely complex subject that varies on a case-by-case basis. To further understand your pension rights visit the dedicated website on social security coordination, provided by the European Commission. For more tailored advice you can also contact your local EURES Adviser.
To find out more about your pension rights in the EU consult the following:
Read the full White Paper on pensions by clicking the link under the press release