Working in different EU countries can create pension entitlement in multiple states

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Those working and making social security contributions in multiple EU states should take advantage of additional pension entitlements created in the home and host states.

For many employees working in different EU countries for certain periods has become quite common; either for the same company on secondment or for different employers.  In all cases social security issues should be considered well in advance. This article deals with the consequences for statutory pension schemes.

No total EU-pension but addition of social security periods of coverage

According to EU law, there is no total EU-pension on the basis of all working periods in the EU.

Aggregating social security periods of coverage to determine entitlement but not the amount

However, there is an entitlement to take all periods into account to comply with the different requirements for determining entitlement to pension benefits in all member states.  Each member state will verify whether the conditions pursuant to the national law are met and how much time an employee was pursuing his employment or profession subject to social security in the relevant member states. Regularly this does not include self-employed activities.

For example in Germany, the requirement to be entitled to pension benefits at all is to have pursued an employment or profession subject to social security for at least 60 months.  Periods of contribution in other EU member states are also taken into consideration in Germany.  The same applies to other EU countries: all periods will be aggregated in order to check if the employee complies with the local requirements for pension benefits.  Therefore, the employee may receive pension from several EU states.

Calculating the amount of the entitlement to pension benefits

However, the amount of pension payments in the different EU countries is not calculated according to the aggregated total periods but according to the time spent working in each single country (there are special regulations for employment periods of less than 12 months).   Hence, the individual amounts of pension payments may differ.

Commentary

In order to show a complete course of pension scheme periods at retirement age, we recommend that employees declare regularly all periods during which they  were pursuing an employment or profession subject to national  insurance in EU countries in order to avoid having to look for old records many years later when they will be needed.  In Germany this is called "Kontenklärung" ("adjustment of pension account").

Resources

Art. 50 et seq. VO (EG) 883/2004

For further information or to discuss the issues raised, please contact Jutta Wittmann  on +49 89 24 22 300