- On 4 May the Council of Ministers approved the draft law transposing Directive 2014/50/EU on supplementary pension rights.
- It sets at most a minimum age of 21 and a waiting period of three years to vest rights; collective bargaining may shorten them.
- It extends to those changing jobs within Spain; in practice it mainly affects companies’ group insurance policies.
On 4 May 2018 the Council of Ministers approved the draft law amending the consolidated text of the Pension Plans and Funds Regulation Act to transpose Directive 2014/50/EU, on minimum requirements for enhancing worker mobility between member states by improving the acquisition and preservation of supplementary pension rights.
The directive aims to ensure that an employee who leaves a company before retirement and moves to another EU country does not lose the rights accumulated in a supplementary pension scheme. The transposition deadline expires this same month of May. Spain has gone beyond the European minimum and applies the rules also to job changes within the country.
What supplementary rights are
In addition to the public pension, many companies offer their employees occupational pension plans or group insurance funded by contributions from the company, the employee or both. The employee thus accumulates rights that, on leaving the company, they can keep, transfer or lose, depending on the scheme’s conditions.
The question is when those rights vest, that is, stop depending on the employee remaining with the company. The longer the period required, the greater the risk of losing what has been accumulated when changing jobs, something increasingly common in careers.
What the rule sets
The draft law incorporates the directive’s minimum requirements. First, a minimum age for vesting rights that may not exceed 21. Second, a maximum period of three years of service with the company. Collective bargaining may set a lower age or period, but never a higher one.
Supplementary pension rights must be recognised when workers end their employment before retirement. With the extension to the national level, the Government avoids discrimination between those who move to another country and those who change company without leaving Spain.
Where it will have effect
In Spain, the practical impact is concentrated on group insurance, that is, policies taken out by the company for the benefit of its workers. Occupational pension plans and company social-welfare plans already provide in our rules for a regime of vesting rights, so for them the change is smaller.
This is a draft law: it must complete the preliminary steps, return to the Council of Ministers as a bill and be processed in Parliament. The final text could vary in some respects. But the direction is clear: more protection for the worker who changes jobs and more transparency about what has been accumulated.
What to review
Companies with group insurance or pension commitments should review the terms of their policies: whether they provide waiting periods to vest rights, what age is required and how departures before retirement are treated. If they exceed the limits of the future law, they will have to be adapted, after negotiation with workers’ representatives.
Employees, for their part, can ask their company for information on accumulated rights and the conditions for keeping them when changing jobs. This information is general and is not financial advice; your adviser can help assess each case.
Someone who changes jobs should not lose what they have saved for retirement.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
