Employer pension obligations
Under EU rules, employers have specific legal obligations related to both statutory pensions (state social security pensions) and supplementary occupational pensions.
Statutory pensions
Although each EU country is responsible for managing its own pension system, EU rules ensure that there is coordination between them if a cross-border element is present in a worker’s situation.
As an employer, you must register employees in the social security system of the country where they work. If an employee moves to work for you in another EU country, you must ensure that they are enrolled in the national social security system and make contributions in line with local rules.
Upon retirement, each country in which an employee has worked will calculate their pension entitlement separately, based on the insurance periods accumulated in each country. The retired employees will then receive separate payments from each country.
Warning
It is your responsibility to make sure employees are covered by only one country’s system at a time and to coordinate with the relevant authorities to avoid gaps in coverage. This does not mean that you have to register your business as a legal entity in every country where you employ staff.
If an employee is temporarily posted to another country (for up to 24 months), you must apply for a portable document A1 form, which keeps the employee under the social security system of the country they have
been posted from.
Supplementary occupational pensions
Supplementary occupational pensions are pensions provided via a scheme established by employers or by social partners jointly, separate from statutory pensions.
If an employee leaves your company and moves to another country, you must ensure that the employee's accrued supplementary pension rights are preserved. This means that the employee does not lose the pension benefits they have earned up to that point. Additionally, their dormant pension rights must be treated equally with workers who have never moved cross-border - up until the point of the pension’s payment.
You must give employees clear and detailed information about their supplementary pension rights, especially when the employee wishes to leave the company and move abroad. This includes information on how benefits are calculated, how they are preserved, and the conditions for eventual capitalisation and transfer of the vested pension rights.
If an employee wants to capitalise and transfer their supplementary pension rights to a new pension scheme in another country, you should try to facilitate the process where possible. However, not all schemes allow for transfers, and this depends on national regulations and the specific pension provider's rules.
You must also ensure that the time an employee must be enrolled in a pension scheme before acquiring rights is no longer than three years.
Pan-European pension schemes
If you operate in multiple countries, consider using a cross-border pension provider also known as an Institution for Occupational Retirement Provision (IORP). This makes it easy to manage pensions across countries and ensures you are following EU rules.
As an employer, your main task is to choose an IORP that meets all the necessary standards. You will need to check their governance and investment strategy including Environmental, Social, and Governance (ESG) factors.
You will also need to consider how to make it easy for employees to transfer their pension across borders if they choose to do so. This means choosing an IORP that can handle international pension transfers and keeping employees informed about their pension and any associated costs.