Letter: Perils of transferring EU pension rights

Sir: It is reasonable for David Keith (Letters, 12 April) to argue that pension rights must be fully transferable within Europe to ensure greater job mobility. However, such a simplistic arrangement could lead to some pitfalls for the unwary unless there is some harmonisation of the basic rules.

In the UK, an employee need only be a member of an employer's pension scheme for two years to qualify for benefits. In Germany the period is frequently 10 years. Work for a shorter period, and you have no rights; there is no pension payable or preservable.

Take the case of a British employee with five years in a UK pension scheme (qualifying for a pension), who then goes to work in Germany. If he were able to transfer his pension rights to a German employer's scheme, as Mr Keith proposes, he might be in for a nasty surprise.

Suppose that after four years' work he were to find himself redundant - he would not qualify for any pension benefits because he would only have nine years' credit in the German scheme. Transferability within the EU might save his pension assets; but with high unemployment he might not find another employer and so might not have a new scheme to transfer his pension rights into. He would then lose nine years of pension assets, including the five years of UK assets which had previously been secure; and the German pension scheme would make a nice profit.

Yours faithfully,

PETER KOCH

Chairman

Pensions Committee

Managerial and

Professional Group of Unions

London, WC1