*Update 20.11.2024 We add this cross reference in relation to questions received. Even though the PSEUI does not recognise pension contributions ‘gifted’ by national schemes, it deals with non-work-related pension contributions made to its own system differently: see question 4 General pension FAQs [1]*
Original article: It’s been some time now (in many cases decades) since it became possible to have pension contributions made on your behalf in many Member States while you are not working. These ‘gifted’ contributions might cover periods of long-term sickness, of unemployment, military service[1] or of caring responsibilities, depending on the national authority.
The idea is that such a period of economic inactivity should not result in someone losing out when it comes to receiving a pension. The idea is an admirable one and the institutions do this too e.g. with parental leave [2]. Nevertheless, our own staff regulations have not kept pace with this change and continue to count only those contributions generated from employment (Article 11, Annex VIII [3]) when undertaking the process of transfer in [4] to the EU pension scheme. The Commission will not ask about ‘gifted’ contributions and the national authority has no obligation to provide them.
‘Only contributions regarding pension rights obtained in the course of a professional activity can be taken into account.’(Calculator tab, Calculator for estimating the result of a transfer IN of pension rights [5])
Whom does this non-recognition affect?
This has the potential to impact colleagues who have received any type of ‘gifted contributions’ from a national authority: whether for being sick, unemployed or caring for others e.g. Home Caring credit [6] (Ireland), périodes assimilées [7] (France), Coverage of home caregivers’ pension contributions [8] (Luxembourg) Credited social insurance contributions [9] (Ireland), prestations assimilées [10] (Belgium) or carrying out their obligations with regards to military service (e.g. Austria).
We note that for the most unfortunate of reasons, while this may affect AST/SC colleagues[2] the non-recognition of ‘gifted contributions’ makes no difference in terms of the pension received in the end; regardless of any transfer in [4], AST/SC colleagues will almost always get the minimum pension. That minimum will always be significantly higher than the basic retirement pension (See Point 4: minimum pension by design, Stop the AST/SC exploitation NOW [11]).
Generation 2004 believes that, given the very recent, uneven and limited availability of paternity leave, this non-recognition of national contributions is unlikely to be an issue for many. Particularly since, in many countries, fathers are routinely denied the leave and flexibility ostensibly available to them [12].
Why is this non-recognition significant?
It is a failure of the institutions to validate choices already made by Member States to recognise the:
- value of caring work,
- benefits of a social-security safety-net to help people through difficult times,
- obligatory nature of military service.
Those who are economically inactive either through no choice of their own or through well-justified reasons may well have won the right to be protected by national authorities, but that protection does not extend the equivalent institution provisions.
‘… caregiver credits can be designed in multiple ways and often for multiple objectives, including improving benefit adequacy for caregivers (primarily women), promoting higher fertility rates, facilitating the return to the labor force following childbirth, and rewarding the act of providing unpaid care. … it bears repeating that these credits are only a small part of a larger set of measures undertaken in these countries to protect women. Other measures, such as minimum pension guarantees and a broad range of family benefits, are used alongside caregiver credits to protect the most vulnerable populations.’ (‘Caregiver Credits in France, Germany, and Sweden: Lessons for the United States’, John Jankowski Social Security Bulletin, Vol. 71, No. 4 [13], 2011)
What to do if you are considering making a transfer-in or transfer out of your pension rights [14]:
Check what’s available to you. Submit a request [15] and see what comes back and what it includes. There is no obligation to proceed from this point, but it allows you to make an informed decision.
Transfer in: Let’s take a fictional example of a colleague with 9 years of contributions in Spain which are then converted to roughly 1 year and 9 months in the EU institutions pension system. If any part of those contributions had been generated via ‘gifted’ contributions (e.g. la prestación contributiva [16]) then the amount available to transfer might be reduced accordingly, as would the resulting calculation. The value of those contributions remains 9 years in Spain but might be significantly less than 1 year and 9 months in the institutions.
Are these Member State contributions of any use outside the institutions? E.g. in Spain the minimum period of contributions to be entitled to a pension is 15 years [17]. With a minimum of 6 years worked in the EU institutions, Spain would be legally required to consider the colleague to have passed the threshold of 15 years and to be entitled to a pro-rata pension. The contributions are not lost.[3]
Consider what might happen if you then do the opposite and transfer out [18] e.g. if/when you leave the institutions. This process is already rather laborious, administratively speaking, and there may be value lost in the operation, but what about those ‘gifted’ pensions credits lost on the transfer in? Are they recovered? Can they be recovered? It is not clear how this would work.
What does the future hold?
Generation 2004 finds that the Member States are adapting their systems to deal with changing ideals. They are moving on while the institutions continue to apply rules which are known to disproportionately impact those who find themselves lower on the socioeconomic scale, that is, those who needed the help which was awarded to them and now find that their credit is no good here. Does losing a couple of years of pension contributions make a difference? Yes! Particularly when there is no mechanism by which to make voluntary additional contributions (VACs) to recover the loss: those years, once lost, are gone forever within the institutions and may well be unrecoverable for those who leave. Please check out for yourselves whether any contributions ‘left behind’ in a national system entitle you to a pro-rata pension[3].
Get in touch with Generation 2004 before making any final decision: be aware of lost money for a pension transfer-in [4]. Don’t lose out!
Generation 2004 strongly support equality, fairness, and equal opportunities for all.
As always, we welcome your feedback. [19]
——————————————
[1] 11.10.2023, Thanks very much to the colleague who highlighted the issue of military service to us where the pension contributions made by the national authority are not counted by the Commission (there is a related Case C- 179/18 [20]: Pension rights under the national pension scheme for employed persons — Refusal to take into account the period of compulsory military service completed by an official of the European Union after taking up his post — Principle of sincere cooperation).
Let’s take an example of 4.5 years of military service in Austria. The national authority applies a 1:1 transfer of those years served in the military as pensionable years to any of the Austrian pension systems. But because there is no monetary value attached to this, none of these entitlements are transferred in to the EU pension.
[2] the AST/SC function group is 78% women [21].
[3] 10.10.2023, Thanks very much to the colleague who supplied the correction and additional information: All Member States are obliged to take into account years of EU service when determining at national level the entitlement of a staff member (and survivors) to employment-related social benefits (judgements of 04/02/2015, Case C-647/13 [22] and of 07/03/2018, Case C‑651/16 [23]) including old-age/invalidity/survivor’s pensions (judgement of 16/12/2004, Case C-293/03 [24]; see also judgement of 13/02/1019, Case C- 179/18 [20]).
Older updates
*Update 11.10.2023: we have added details on how national systems deal with time in EU service and also on military service: many thanks to the colleagues who highlighted these situations to us. It is much appreciated.*