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TRANSCRIPT
EU social security coordination
rules. The provisions concerning
pensions
An overview of the main rulesin Regulations n°883/2004 & 987/2009,
Derek Coulthard
Mavrovo April 2011
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Matters covered:
•The legal provisions concerning pensions in the Regulations•The principles of coordination in the field of pensions•Calculation issues
• Rules on aggregation• Independent benefits and Pro-rata calculations• Waiver of pro-rata calculation• Overlapping rules
•Child raising periods•Invalidity benefits•Summary of processes involved in administering pensions under the Regulations
• Contact institution• Making a claim• Investigation• Notification• Right of review
• EESSI2
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Legislative Provisions:
•Regulation 883/2004 - the Basic Regulation (BR) •Regulation 987/2010 - the Implementing Regulation (IR) ---------------------•Invalidity Benefits – BR Articles 44 - 49 •Old age and survivors pensions – BR Articles 50 – 60•Implementation rules for both – IR Articles 43 -52•“Horizontal” provisions in BR and IR•AC Decision P1 and AC Recommendation P1
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Which “pensions” are covered by the Co-ordination rules?
BR Article 4 – states that the Regulation will apply to all legislation concerning the following branches of social security ……invalidity benefits , old age and survivors benefits…………
BR Article 1(l) – defines “legislation”
BR Article 1(w) – defines “pensions”
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BR Article 1(l)
“Legislation” – ..includes laws, regulations and other
statutory provisions…..excludes contractual provisions
other than those which serve to implement an
obligation arising from laws….provided that the
Member State makes a declaration to that effect…..
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BR Article 1(w)
“pensions” covers not only pensions but also lump-sum benefits which can be substituted for them and payments in the form of reimbursement of contributions….
(Note the exclusion of “supplementary pensions” provided for in Directive 98/49)
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What are the principles of pension
coordination”?
•The person is entitled to the determination
of a pension by every Member State in which
he was insured.
• Application of the “pro-rata” rules
• Application of the aggregation of periods
• Exportability
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Article 50 BR - General Provisions
Art 50.1 – All competent institutions shall determine
entitlement to benefits ….when the claim for award
has been submitted…..unless the person expressly
requests deferment of the award under the legislation
of one or more StatesArt 50-.2 – If the person does not satisfy …the conditions laid down by all the legislations…those institutions whose conditions are satisfied shall not take into account……periods completed under legislations where the conditions are satisfied…where this gives rise to a lower amount of benefitArt 50.3 (deferment)
Art 50.4 – A new calculation to be performed when
conditions in other states are fulfilled…..unless periods
already taken into account. (AC Decision P1).8
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Art 6 BR - Aggregation of periods
Unless otherwise provided for by this Regulation, the competent institution of a Member State whose legislation makes …..
the acquisition, retention, duration or recovery of the right tobenefits.
……………..conditional upon the completion of periods of insurance,
employment, self-employment or residence shall, to the extent necessary take into account periods of insurance, employment, self-employment or residence completed under the legislation of any other Member State as though they were periods completed under the legislation which it applies.
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Article 12 IR - Aggregation of Periods
• 12.1 – Institutions to contact each other for details of periods• 12.2 - Respective periods to be added together ..in so far as is necessary,
provided that these periods do not overlap• 12.3 – Where compulsory insurance overlaps with voluntary insurance in
another state…only the compulsory insurance is taken into account• 12.4 – Where period of insurance or residence other than an equivalent
period coincides with an equivalent period of another state, only the period other than an equivalent period shall be taken into account
• 12.5 – Overlapping equivalent periods – only to be taken into account by the state to which the person was last compulsorily subject before that period, or if person was not compulsorily subject to the legislation of a Member State before that period, the period shall be taken into account by the ….Member State to whose legislation the person was compulsorily subject for the first time after that period.
• 12.6 Unallocated periods – presumed not to overlap with periods in another state and account taken of them where advantageous to the person concerned insofar as they can reasonably be taken into consideration.
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Article 13 IR Rules for conversion of periods
To be applied where periods under the legislation of a Member State are expressed on units different from those provided for in another Member State
For example:• Days to weeks (scheme using days to notify whether a week based on 5,6 or
7 days)• Weeks to months (and vice versa) - (Done by means of conversion to days
in accordance with provisions in Article 13.1.b) • Months to quarters • Weeks, months, quarters to years.• Periods expressed in fractions – figure rounded down, (unless fraction of a
year in which case converted to months, unless the scheme involved is based on quarters)
• If conversion results in a fraction – rounded up.
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Example of the pro-rata rules in operation
(1)
A person has the following insurance history:
8 years in State A
20 years in State B
17 years in State C
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Example of the pro-rata rules in operation (2)
(Looking at the position of State A only)•State A calculates the pension the person would be entitled to on the basis of insurance in that state alone – BR Article 52.1a (“the independent benefit”).•Under State A’s rules in this example a person must be insured there for 10 years to be entitled to a pension.•Therefore the independent benefit in this case = NIL
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Example of the pro-rata rules in operation (3)
•State A then applies BR Article 52.1b and calculates a “theoretical pension” as though all the EU insurance periods had been completed in that state.•Total insurance in the EU (A, B and C) = 45 years•In state A 45 years in this example would give a 100% pension entitlement.•Let us call this amount “T”.
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Example of the pro-rata rules in operation (4)
•State A then reduces this amount T in proportion to the time insured in A to the whole time insured in the EU.
•This gives the amount T x 8/45 = 18%T.
•The person receives the higher of this pro-rata calculation or the “independent pension”– in this case, obviously the pro-rata amount is the higher.
•States B and C perform the same calculations.
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Situations where a pro-rata calculation is not necessary:
BR Articles 52.4 and 52.5, Annex VIII Parts 1 and 2.Annex VIIIPart 1 – Where the independent benefit is invariably ≥ the pro-rata benefitPart 2 – Where the periods of time are of no relevance (e.g. funded state schemes)
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Member States declaring schemes to which BR Art 52.5 applies(BR Annex VIII Part 2)
BulgariaEstoniaFranceLatviaHungaryAustriaPolandSloveniaSlovakiaSweden UK
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Article 53 BR - Rules to prevent overlapping.
• Benefits of the same kind – where the benefit is calculated or provided on the basis of periods of insurance and/or residence completed by the same person
• Benefits of a different kind – benefits which cannot be considered of the same kind
Common provisions:• National legislation must permit benefits or other
income acquired abroad to be taken into account• Gross amount by a another state taken into account,
unless national legislation provides otherwise• Benefits acquired on the basis of voluntary insurance
shall not be taken into account 18
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Article 54 BR – Overlapping of benefits of the same kind
The rules do not apply to pro-rata benefit
The rules apply only to independent benefit only if:Amount of benefit does not depend on the duration of
periods of insurance or residence (Type A benefit).
or
(See agreements listed in Annex IX)
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Article 55 BR – Overlapping of benefits of a different kind
If receipt of benefits of a different kind or other income requires the application of the overlapping rules:
• For two or more independent benefits – the income in question is divided by the number of benefits affected
• For one or more pro-rata benefits the other income taken into account is a function of the ratio between the periods of insurance or residence referred to in Art 52.1.b.ii (i.e. the pro-rata fraction).
• For one or more independent and one or more pro-rata – above rules applied to each element mutatis mutandis
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Article 56 – Additional rules for calculation• Where the total period is greater than that maximum
required for a full pension of a Member State – this maximum amount is used instead of the total period.
• Where benefits are calculated on the basis of earnings etc. the competent institution shall determine the basis for calculation in accordance only with periods completed under the legislation it applies,
• In order to determine the amount to be calculated in accordance with periods in another state, the state involved shall us the same elements ….as it applies in its own legislation or in accordance with procedures laid down in Annex XI.
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Art 57 BR Periods of insurance or residence less than one year
•An institution is not required to provide benefits if in respect of periods completed under the legislation it applies which are taken into account when the risk materialises, if:
•The duration of the said periods are less than one year, and •Taking only these periods into account no right to benefit is acquired under that legislation
•The institutions in the other Member States will take account of the period referred to above for the purposes of Art 52.1.b.ii (i.e. the pro-rata calculation)
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Child rearing periods
Art 44 IR
44.1 Definition of a child rearing period
Any period which is credited under the legislation of a
Member State or which provides a supplement
which…explicitly for the reason that the person has
raised a child…whether those periods accrue during the
time of child raising or are acknowledged retroactively
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Art 44.2
Where the legislation of the Member State is which is
competent under Title II BR does not provide for child
raising periods,…..the legislation of the Member State
applicable….when under that legislation the child
raising period started to be taken into account shall
continue to be responsible for taking into account a
child raising period…as if the child raising took place in
ites own territory
Art 44.3
Part 2 shall not apply if the person concerned is or
becomes subject to the legislation of another state due
to pursuit of an employed or self-employed activity24
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Invalidity benefits
BR Article 44
Type A – where the amount of invalidity
benefit is independent of the period of
insurance, and expressly included in Annex VI
Type B – any other invalidity benefit
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Calculation of Invalidity benefits
BR Article 44
•Type A – Benefit is payable only by the state
with which the person was insured when the
incapacity followed by invalidity arose
(subject to aggregation provisions if
necessary).
•Type B – Benefit is calculated under the
same rules as for old age and survivors
pensions.
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Processes for Old age, Survivors Pensions and Type B invalidity Benefits
IR Articles 45 – 48• Submission of the claim• Role of the “contact institution”• Information to be submitted• Notification of decisions to the claimant
IR Article 52•Measures to accelerate the pension calculation process IR Article 87.5•Provisions to improve labour market readinessAC Decision H5•Cooperation on reporting of deaths
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Art 45 IR Submission of claim
For Type A benefits, claim to be submitted to:•Institution of last insurance, or•Institution in state of residence, which shall forward the claim to the above
For Type B benefits, claim to be submitted to:•Institution in place of residence, or•Institution of the last Member State whose legislation was applicable •NB If the person was not at any time subject to the legislation of the state of residence, that institution shall forward the claim to the institution of the last Member State whose legislation was applicable
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Art 45.5 and 45.6 Date of claim
•The date of submission of the claim shall apply in all the institutions concerned•By way of derogation – if person does not mention insurance or residence in a State, despite being asked –the date of claim in that State is when does eventually receive notification
Article 46 – Certificates and information to be submitted with the claim by the claimantAll available supporting documents including those relating to:•Periods of insurance•Employment•Residence in each state.
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Article 47 IR Contact institution•Institution to which the claim submitted is known as the “contact institution”.(But not the institution in the state of residence if the person has never been insured there)•In addition to investigating the claim under its own legislation the contact institution shall promote:
• the exchange of data• the communication of decisions• the operations necessary for the investigations of
the claim• supply the claimant upon request with any
information relevant to the Community aspects of the investigation
• keep the claimant informed
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Art 48 BR – Notification
•Each institution shall notify the claimant of the decision in his case.•Notification to specify remedies and appeal rights•When the contact institution has received notification of all decisions it shall provide a summary of the decisions to the claimant (Portable document P1)•Where it appears to the claimant that his rights have been adversely affected by the interaction of two or more decisions he can ask for a review of the relevant decisions.
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Art 4.2 IR – Electronic data exchange
•The transmission of data between institutions shall be carried out by electronic means….
•The EESSI project
•Replacement of E-forms by Structured Electronic Documents (SEDs)
•The new Portable Documents (PDs)
•Transitional Period
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