PENSION

WHY PENSION RIGHTS ARE ONE OF EUFASA’S CONCERNS

Loss of pension: spouses/partners are unable to accumulate pension years while on postings abroad

Spouses and partners are citizens of their countries and they should not be disadvantaged by the fact that they are accompanying a Ministry of Foreign Affairs (MFA) Officer who is serving the state, abroad. They should be able to acquire their own personal pension, which is payable at the age of retirement, because they cannot contribute to a private pension fund or a state pension scheme on an ongoing basis due to our mobile life. Furthermore, in most of the countries that they are posted to, especially outside the EU, it is almost impossible to find paid work. Since the early nineties in all EU countries dual income households are increasing, a trend driven by the willingness to work of both partners, and also by economical and financial factors. We think that MFA spouses, and among them the foreign-born spouses, are exposed to discrimination by not being able to follow a career as they would have at home. Therefore, respective member states should take responsibility for this situation by providing compensation for the loss of pension rights.

What EUFASA has done about it

  • Pension compensation – EUFASA Conference Madrid 2002.
  • Pension schemes – EUFASA Conference Berlin 2007.
  • Pension compensation – EUFASA Conference Paris 2008.
  • Update on Pension compensation – EUFASA Conference Bern 2013.

BEST PRACTICE

Iceland There is a Pension Fund for spouses of MFA Officers, who are on postings abroad. The MFA of Iceland pays a contribution into a special pension account for the spouses of MFA Officer while the employee is on posting abroad. This account is the property of the spouse. The spouse of the officer signs a contract with the MFAs in order to enter into the Pension Fund whereby the spouse allows the MFA to establish a bank pension account in his/her name.

Estonia Each month a non-working accompanying spouse of MFA officer is paid an allowance of double minimum wage of Estonia. Pension contributions are automatically paid to the first pension pillar (state pension) from that allowance. This allowance enables the spouse to make pension contributions to the second pension pillar. The pension payments are paid for the period of time that a spouse accompanies a MFA Officer working on a foreign assignment.

UK Partner Compensation is paid only when posted abroad and only after a spouse/partner has been overseas for at least three years. The spouse/partner must indicate the desire to work and be globally mobile. If earnings are above £500 per month, the spouse/partner is still paid half of the compensation. It is also available if the spouse/partner is able to prove that at least 15 hours per week is spent on mission-related business. In all instances, the compensation is paid into the MFA Officer’s bank account as part of the overseas allowance so that it is not taxable.

RECOMMENDATIONS

EUFASA Conference, Berlin 2007:

  • Compensation for lost pension as in the case of Finland, Denmark, Iceland, Norway, the Netherlands, the UK, Lithuania and Estonia, but at level comparable to peer groups at home.
  • Compensation for loss of earnings. This compensation should not be connected to residency, to income, to citizenship and it should be paid even if one has not previously worked in paid employment.
  • Recognition of years of contribution into the state pension plan during the years we are not able to work. Every spouse should have the option to pay privately into the state pension fund.
  • Pension plan or a private pension plan, should be possible without time limit.

EUFASA Conference, Paris 2008:

Two models of pension compensation were proposed:

Maximum:

  • The compensation is always given to every spouse/partner when posted abroad and (at least) several months before leaving and after returning home.
  • The compensation is given irrespective of having worked directly before the posting.
  • The compensation is paid directly into a pension fund for the spouse/partner or to a separate bank account.
  • Mission-related business of the spouse/partner is acknowledged.
  • The amount of compensation is sufficient, tax disadvantages are compensated.

Minimum:

  • Compensation for all spouses when posted abroad (after having worked directly before posting).
  • Compensation paid to the civil servant (allowances) or directly to a pension fund.

RECOMMENDATIONS

The minimum model should be the target for all Member States who do not have any form of compensation for loss of pension rights yet.