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Stress test for employee benefit obligations – EU Mobility Directive goes into implementation

Stress test for employee benefit obligations – EU Mobility Directive goes into implementation

Frankfurt/Main, August 13, 2015 – The EU Mobility Directive is intended to simplify the adaptability of corporate pension schemes when moving to other EU member states. The new regulations, scheduled to go into effect starting in 2018, should apply to corporate pension schemes in the case of a cross-border change of employer, as well as on a national level.

Therefore, employers will be faced with an additional administrative and financial burden. After all, the new regulations are essentially designed so that the employer-sponsored company pension rights are already considered vested, if the entitlement has existed for three years. In addition, the age that one is permitted to leave the employer, while still maintaining vested pension rights, was reduced from 25 to 21 years of age.

Furthermore, company pension rights for former employees must be maintained and, under certain circumstances, dynamically adjusted. Thus, in the future, companies will be required to make additional investments even for former employees, since pension rights must be increased for certain types of entitlements. “These regulations implicate a need for action with regard to the changing of entitlements, procedural and technical modifications as well as the communication measures,” emphasizes Matthias Edelmann, a member of Lurse AG’s management board.

According to Matthias Edelmann, the EU Mobility Directive once again urges companies to set up sustainable pension plans early on. “The focus thereby should be on a thorough analysis of existing systems and subsequently the establishment of calculable and transparent systems. Targeted communication measures from the beginning on as well as online portals, which employees themselves can administrate, ensure the success of modern systems that are financially feasible in the long term.”