EUROPA Summaries of legislation towards improved coordination of social systems

EUROPA - Summaries of legislation

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- Towards an improved coordination of social security systems

- Towards an improved coordination of social security systems With a view to simplifying and clarifying the Community rules governing the coordination of the Member States' social security systems, the European Parliament and the Council have endorsed Regulation (EC) No 883/2004. This Regulation is the new point of reference for the coordination of the Member States' social security systems. It considerably facilitates the life of European citizens exercising their right to move freely in the European Union; it reinforces the cooperation obligations between the administrations in the field of social security.

ACT

Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems

SUMMARY

The adoption of Community legislation in the field of social security is an essential prerequisite for effective exercise of the right of free movement of persons enshrined in the EC Treaty.

Rather than adopting measures designed to harmonise Member States' legislation, Community law provides for coordination of the national systems. In effect, the social security systems are the outcome of long-standing national traditions and reflect the culture of each State. In the framework of coordination, Member States retain the right to determine the types of benefits and the conditions for granting them. However, Community law imposes certain rules and principles so as to ensure that application of the different national systems does not harm persons who exercise their right to free movement.

This Regulation aims to rationalise the concepts, rules and procedures concerning the coordination of the Member States' social security systems. As regards the changes made by comparison with Regulation (EEC) No 1408/71 , note in particular:

• enhancement of the insureds' rights by extending the personal and material scope;

• extension of the scope to all Member State nationals covered by the social security legislation of a Member State and not just the active population;

• increase in the number of social security branches subject to the coordination regime so as to include preretirement legislation;

• amendment of certain provisions on unemployment: maintenance for a certain time (three months, up to a maximum of six months) of the right to unemployment benefits for unemployed persons who go to another Member State to seek work;

• reinforcement of the general principle of equal treatment, which is of particular importance for frontier workers, notably by inserting a provision stipulating the assimilation of facts;

• reinforcement of the right to export social security benefits;

• introduction of the principle of good administration.

GENERAL PROVISIONS

This Regulation stipulates that all persons residing in the territory of a Member State are subject to the same obligations and enjoy the same benefits under the legislation of any Member State as the nationals of that State. The general principle of equal treatment is widened in the framework of the new Regulation. While pursuant to Regulation (EEC) No 1408/71 the principle is applicable to persons residing in the territory of a Member State, this prior condition of residence on the territory of a Member State is no longer required.

Scope

The Regulation applies to all Member State nationals who are or who have been covered by the social security legislation of one of the Member States, as well as to the members of their family and their survivors. This means that not only employees, self-employed persons, civil servants, students and pensioners, but also non-active persons will be protected by the coordination rules.

The provisions of this Regulation apply to all the traditional branches of social security - sickness, maternity, accidents at work, occupational diseases, invalidity benefits, unemployment benefits, family benefits, retirement and pre-retirement benefits, and death grants. Hence the scope of the Regulation is extended to cover statutory pre-retirement schemes, which means that the beneficiaries of such schemes will have a guarantee that benefits will be paid, will be covered for health care and will receive family benefits even if they reside in another Member State. This is quite a new feature of this Regulation.

The new Regulation extends the principle of exportation of benefits acquired to all cash benefits other than the specified exceptions.
The Regulation also recognizes the principle of the aggregation of periods, pursuant to which periods of insurance, employment or residence in the legislation of a Member State are taken into account in all the other Member States. This means that a Member State must take into account, for the purposes of the acquisition of the right to benefits, periods of insurance, employment, self-employment or residence in another Member State.

DETERMINATION OF THE APPLICABLE LEGISLATION

The insured person is subject to the legislation of a single Member State only. The Member State concerned is the one in which he or she pursues a gainful activity (lex loci laboris). Title II of the Regulation contains particular rules, such as rules for civil servants, who are subject to the legislation of the Member State to which the administration employing them is subject or for persons who are employed or self-employed in several Member States.

Persons who are normally employed in two or more Member States are subject to the legislation of the Member State of residence if they pursue a substantial part of their activity in that Member State; if they do not pursue a substantial part of their activities in the Member State of residence they are subject to the legislation of the Member State in whose territory the registered office or place of business of their employer is situated. However, in the case of self-employment, a person is subject to the legislation of the Member State of residence if he/she pursues a substantial part of his activity in that Member State; if the person does not reside in one of the Member States in which he/she pursues a substantial part of his/her activity, he/she is subject to the legislation of the Member State in which the centre of interest of his/her activities is situated.

SPECIAL PROVISIONS APPLYING TO DIFFERENT CATEGORIES OF BENEFITS

The new Regulation will allow all EU citizens, regardless of whether they are employees, self-employed workers, civil servants, students and pensioners or non-active persons, to keep their social benefit entitlements when they move within the EU

Sickness, maternity and paternity benefits
A person (and his family) affiliated in a Member State who resides in another Member State is entitled to benefits in kind provided by the institution of the place of residence at the expense of the competent institution of the Member State. If this person is staying in the Member State of affiliation for any reason, he is fully entitled to benefits in kind in that State. However, specific provisions apply to members of the family of frontier workers.

An insured person who stays in a Member State other than the one in which he/she is affiliated or in which he/she resides is entitled to benefits in kind required on medical grounds during the stay, taking account of the nature of the benefits and the expected duration of the stay. The new Regulation no longer restricts medical benefits to emergency treatment. These benefits are provided by the Member State in which the person is staying. However, cash benefits are paid by the Member State of affiliation.

The members of the family of a pensioner who reside in a Member State other than the Member State in which the pensioner resides are also entitled to cash benefits provided by the institution of their place of residence.

As regards cash benefits, individuals and members of their family living or staying in a Member State other than the competent Member State are entitled to cash benefits paid by the competent institution, i.e. the institution with which the person concerned is insured at the time when an application for benefits is made.
The new Regulation introduces several measures for retired frontier workers:

• they are entitled to medical treatment without restriction in the last Member State in which they worked in so far as this is a continuation of treatment which began in that Member State;
• persons who have been frontier workers for two years during the five years preceding their retirement or invalidity may continue to receive health care without restriction in the last Member State in which they worked, provided the Member States concerned have opted for this.
 

Benefits for accidents at work and occupational diseases
The victim of an accident at work or occupational disease staying or residing in a Member State other than the competent State is entitled to the special benefits in kind of the scheme covering accidents at work and occupational diseases. These benefits are provided by the by the institution of the place of stay or residence in accordance with the provisions of the legislation which it administers as though he/she were insured pursuant to the said legislation.
As regards the costs of transporting the victim of an accident at work or occupational disease, the competent institution of a Member State whose legislation provides for meeting the costs of transporting a victim shall meet such costs to the corresponding place in the territory of another Member State where the victim resides The institution must have previously reached agreement on this form of transport, except in the case of frontier workers.

Death grants
When an insured person or member of his/her family dies in a Member State other than the competent Member State, death is deemed to have occurred in the competent Member State. Hence the competent institution must provide the death grants payable under the legislation it applies even if the person entitled resides in another Member State.

Invalidity Benefits
As regards invalidity benefits, Member States apply one of two types of legislation (see Annex VI to the Regulation). Member States with Type A legislation are those in which the amount of the benefits is independent of the duration of periods of insurance or residence and which are expressly included in Annex VI, while the other Member States are considered as Type B.

Old-age and survivors' pensions
All Member States in which a person has been insured must pay an old-age pension when the insured person reaches the age of retirement.

The competent institution must take into consideration all the periods completed in the legislation of all other Member States, both in the case of general systems and special systems. However, if the Member State makes the granting of certain benefits conditional upon the periods of insurance having been completed only in a specific activity as an employed or self-employed person, the competent institution of that Member State takes into account periods completed under the legislation of other Member States only if completed under a corresponding scheme.

The Regulation also contains rules concerning the way in which the competent institutions calculate benefits and establishes rules to prevent overlapping.

A person receiving benefits under the legislations of different Member States whose amount is less than the minimum provided for in the legislation of the Member State of residence is entitled to a supplementary pension from the institution of the Member State of residence.

In the case of civil servants, the Regulation provides for a special scheme.

Unemployment benefits
As regards unemployment benefits, the competent institution of a Member State must take into account the periods of insurance, employment or self-employment completed under the legislation of any other Member State as though they were completed under the legislation it applies.

The new Regulation mainly introduces two questions linked to unemployment benefits:
• the exportation of unemployment benefits to another Member State when a person goes there in order to seek work;
• the rights to unemployment benefits for workers who, during their last job, resided in a Member State other than the competent state.

As regards unemployment benefits paid in another Member State while seeking work, an unemployed person may move to another Member State in order to seek work while retaining entitlement to benefits for three months. The competent services or institutions may extend this period up to a maximum of six months. If the unemployed person does not return on or before the expiry of this period he/she loses all entitlement to benefits.

As regards the entitlement to unemployment benefits for workers who, during their last employment, resided in a Member State other than the competent state, the new Regulation allows unemployed frontier workers to make themselves available also to the employment services of the state in which they pursued their last activity. This rule makes it easier for workers to find work.

Preretirement
Statutory pre-retirement schemes have been included in the scope of this Regulation, hence guaranteeing equal treatment and the possibility of exporting pre-retirement benefits, as well as the granting of family benefits and health care to the persons concerned.

Since statutory pre-retirement schemes exist only in a very small number of Member States, this Regulation excludes the rule concerning the aggregation of periods for the acquisition of entitlement to pre-retirement benefits.

Family benefits
A person is entitled to family benefits in a competent Member State, including for members of his/her family residing in another Member State, as if they were residing in the former Member State.

In the case of overlapping benefits, family benefits are provided in line with the priority rules set out in the Regulation.
This Regulation puts an end to the existing distinction in Regulation (EEC) No 1408/71 between pensioners and orphans as opposed to other categories of insureds. In other words the distinction between family benefits and family allowances no longer applies and the same range of family benefits will be granted to all, including pensioners and persons responsible for orphans, just like workers and unemployed persons.

Special non-contributory cash benefits
Contrary to the general rule, these benefits are not exportable if they are listed in Annex X and if they satisfy certain criteria. The new Regulation defines the criteria which must be met by cash benefits of a non-contributory nature to qualify as such and hence promotes transparency and legal certainty. Besides, these criteria apply to all Member States, with the result that similar benefits will be treated in the same way.

COORDINATION INSTRUMENTS IN SOCIAL SECURITY SYSTEMS

The Regulation introduces the principle of good administration. The institutions must respond to all queries within a reasonable period of time and must in this connection provide the persons concerned with any information required for exercising the rights conferred on them by this Regulation. Besides, in the event of difficulties in the interpretation or application of this Regulation, the institutions involved must contact one another in order to find a solution for the person concerned.

The new Regulation contains a raft of mechanisms designed to guarantee smooth functioning and enhanced cooperation between Member States and institutions in the field of social security, notably:

• an Administrative Commission, responsible for handling any question of interpretation arising from the provisions of this Regulation or any accord or agreement concluded in the framework of the Regulation ;

• a Technical Commission within the Administrative Commission, responsible for assembling technical documents, studies and the associated activities;

• an Audit Board which will perform the calculations needed in connection with the decisions taken by the Administrative Commission;

• an Advisory Committee, responsible for preparing opinions and proposals for the Administrative Commission.

The Administrative Commission consists of a government representative from each of the Member States and a representative of the European Commission who participates in the meetings in an advisory capacity. The aim is to foster cooperation and coordination between the Member States and the Commission.

CONTEXT

Coordination of social security systems got under way in 1971 with the adoption of Council Regulation (EEC) No 1408/71. This Regulation guaranteed equal treatment and social security benefits to all workers who are Member State nationals, regardless of their place of employment or residence.

Since 1971 this Regulation was the subject of several amendments in order to accommodate trends in national legislation and progress resulting from the rulings of the Court of Justice of the European Communities. These amendments have added to the complexity of the Community coordination rules.

The need for a general review of legislation in this field was acknowledged by the Edinburgh Council in 1992, which called for a simplification of the rules. Besides, the Commission confirmed the importance of modernising the coordination rules in its 1997 Communication entitled " Action plan for free movement of workers ".

In 1998, the Council presented a proposal for a Regulation designed to simplify Community rules governing the coordination of social security systems. This proposal resulted in the current Regulation.

This Regulation will repeal Regulation (EEC) No 1408/71 from the date of entry into force of the new implementing Regulation. However, Regulation (EEC) No 1408/71 will remain in force and its legal effects will remain valid for the purposes of the following acts:

• Council Regulation (EC) No 859/2003 of 14 May 2003 for nationals of third countries who are not already covered by those provisions solely on the ground of their nationality;
• Council Regulation (EEC) No 1661/85 of 13 June 1985 laying down the technical adaptations to the Community rules on social security for migrant workers with regard to Greenland;
• the Agreement on the European Economic Area, the Agreement between the European Community and its Member States, of the one part and the Swiss Confederation, of the other, on the free movement of persons and other agreements containing a reference to Regulation (EEC) No 1408/71 ;

• Council Directive 98/49/EC on safeguarding the supplementary pension rights of employed and self-employed persons moving within the Community.
The new Regulation (EC) No 883/2004 shall not be applicable until the date of entry into force of the new implementing Regulation.The new Regulation extends the principle of exportation of benefits acquired to all cash benefits other than the specified exceptions.
The Regulation also recognizes the principle of the aggregation of periods, pursuant to which periods of insurance, employment or residence in the legislation of a Member State are taken into account in all the other Member States. This means that a Member State must take into account, for the purposes of the acquisition of the right to benefits, periods of insurance, employment, self-employment or residence in another Member State.

DETERMINATION OF THE APPLICABLE LEGISLATION

The insured person is subject to the legislation of a single Member State only. The Member State concerned is the one in which he or she pursues a gainful activity (lex loci laboris). Title II of the Regulation contains particular rules, such as rules for civil servants, who are subject to the legislation of the Member State to which the administration employing them is subject or for persons who are employed or self-employed in several Member States.

Persons who are normally employed in two or more Member States are subject to the legislation of the Member State of residence if they pursue a substantial part of their activity in that Member State; if they do not pursue a substantial part of their activities in the Member State of residence they are subject to the legislation of the Member State in whose territory the registered office or place of business of their employer is situated. However, in the case of self-employment, a person is subject to the legislation of the Member State of residence if he/she pursues a substantial part of his activity in that Member State; if the person does not reside in one of the Member States in which he/she pursues a substantial part of his/her activity, he/she is subject to the legislation of the Member State in which the centre of interest of his/her activities is situated.

SPECIAL PROVISIONS APPLYING TO DIFFERENT CATEGORIES OF BENEFITS

The new Regulation will allow all EU citizens, regardless of whether they are employees, self-employed workers, civil servants, students and pensioners or non-active persons, to keep their social benefit entitlements when they move within the EU

Sickness, maternity and paternity benefits
A person (and his family) affiliated in a Member State who resides in another Member State is entitled to benefits in kind provided by the institution of the place of residence at the expense of the competent institution of the Member State. If this person is staying in the Member State of affiliation for any reason, he is fully entitled to benefits in kind in that State. However, specific provisions apply to members of the family of frontier workers.

An insured person who stays in a Member State other than the one in which he/she is affiliated or in which he/she resides is entitled to benefits in kind required on medical grounds during the stay, taking account of the nature of the benefits and the expected duration of the stay. The new Regulation no longer restricts medical benefits to emergency treatment. These benefits are provided by the Member State in which the person is staying. However, cash benefits are paid by the Member State of affiliation.
The members of the family of a pensioner who reside in a Member State other than the Member State in which the pensioner resides are also entitled to cash benefits provided by the institution of their place of residence.

As regards cash benefits, individuals and members of their family living or staying in a Member State other than the competent Member State are entitled to cash benefits paid by the competent institution, i.e. the institution with which the person concerned is insured at the time when an application for benefits is made.
The new Regulation introduces several measures for retired frontier workers:

• they are entitled to medical treatment without restriction in the last Member State in which they worked in so far as this is a continuation of treatment which began in that Member State;
• persons who have been frontier workers for two years during the five years preceding their retirement or invalidity may continue to receive health care without restriction in the last Member State in which they worked, provided the Member States concerned have opted for this.
 

Benefits for accidents at work and occupational diseases
The victim of an accident at work or occupational disease staying or residing in a Member State other than the competent State is entitled to the special benefits in kind of the scheme covering accidents at work and occupational diseases. These benefits are provided by the by the institution of the place of stay or residence in accordance with the provisions of the legislation which it administers as though he/she were insured pursuant to the said legislation.
As regards the costs of transporting the victim of an accident at work or occupational disease, the competent institution of a Member State whose legislation provides for meeting the costs of transporting a victim shall meet such costs to the corresponding place in the territory of another Member State where the victim resides The institution must have previously reached agreement on this form of transport, except in the case of frontier workers.

Death grants
When an insured person or member of his/her family dies in a Member State other than the competent Member State, death is deemed to have occurred in the competent Member State. Hence the competent institution must provide the death grants payable under the legislation it applies even if the person entitled resides in another Member State.

Invalidity Benefits
As regards invalidity benefits, Member States apply one of two types of legislation (see Annex VI to the Regulation). Member States with Type A legislation are those in which the amount of the benefits is independent of the duration of periods of insurance or residence and which are expressly included in Annex VI, while the other Member States are considered as Type B.

Old-age and survivors' pensions
All Member States in which a person has been insured must pay an old-age pension when the insured person reaches the age of retirement.
The competent institution must take into consideration all the periods completed in the legislation of all other Member States, both in the case of general systems and special systems. However, if the Member State makes the granting of certain benefits conditional upon the periods of insurance having been completed only in a specific activity as an employed or self-employed person, the competent institution of that Member State takes into account periods completed under the legislation of other Member States only if completed under a corresponding scheme.

The Regulation also contains rules concerning the way in which the competent institutions calculate benefits and establishes rules to prevent overlapping.
A person receiving benefits under the legislations of different Member States whose amount is less than the minimum provided for in the legislation of the Member State of residence is entitled to a supplementary pension from the institution of the Member State of residence.

In the case of civil servants, the Regulation provides for a special scheme.

Unemployment benefits
As regards unemployment benefits, the competent institution of a Member State must take into account the periods of insurance, employment or self-employment completed under the legislation of any other Member State as though they were completed under the legislation it applies.

The new Regulation mainly introduces two questions linked to unemployment benefits:
• the exportation of unemployment benefits to another Member State when a person goes there in order to seek work;
• the rights to unemployment benefits for workers who, during their last job, resided in a Member State other than the competent state.
As regards unemployment benefits paid in another Member State while seeking work, an unemployed person may move to another Member State in order to seek work while retaining entitlement to benefits for three months. The competent services or institutions may extend this period up to a maximum of six months. If the unemployed person does not return on or before the expiry of this period he/she loses all entitlement to benefits.

As regards the entitlement to unemployment benefits for workers who, during their last employment, resided in a Member State other than the competent state, the new Regulation allows unemployed frontier workers to make themselves available also to the employment services of the state in which they pursued their last activity. This rule makes it easier for workers to find work.

Preretirement
Statutory pre-retirement schemes have been included in the scope of this Regulation, hence guaranteeing equal treatment and the possibility of exporting pre-retirement benefits, as well as the granting of family benefits and health care to the persons concerned.

Since statutory pre-retirement schemes exist only in a very small number of Member States, this Regulation excludes the rule concerning the aggregation of periods for the acquisition of entitlement to pre-retirement benefits.

Family benefits
A person is entitled to family benefits in a competent Member State, including for members of his/her family residing in another Member State, as if they were residing in the former Member State.

In the case of overlapping benefits, family benefits are provided in line with the priority rules set out in the Regulation.
This Regulation puts an end to the existing distinction in Regulation (EEC) No 1408/71 between pensioners and orphans as opposed to other categories of insureds. In other words the distinction between family benefits and family allowances no longer applies and the same range of family benefits will be granted to all, including pensioners and persons responsible for orphans, just like workers and unemployed persons.

Special non-contributory cash benefits
Contrary to the general rule, these benefits are not exportable if they are listed in Annex X and if they satisfy certain criteria. The new Regulation defines the criteria which must be met by cash benefits of a non-contributory nature to qualify as such and hence promotes transparency and legal certainty. Besides, these criteria apply to all Member States, with the result that similar benefits will be treated in the same way.

COORDINATION INSTRUMENTS IN SOCIAL SECURITY SYSTEMS

The Regulation introduces the principle of good administration. The institutions must respond to all queries within a reasonable period of time and must in this connection provide the persons concerned with any information required for exercising the rights conferred on them by this Regulation. Besides, in the event of difficulties in the interpretation or application of this Regulation, the institutions involved must contact one another in order to find a solution for the person concerned.

The new Regulation contains a raft of mechanisms designed to guarantee smooth functioning and enhanced cooperation between Member States and institutions in the field of social security, notably:

• an Administrative Commission, responsible for handling any question of interpretation arising from the provisions of this Regulation or any accord or agreement concluded in the framework of the Regulation ;
• a Technical Commission within the Administrative Commission, responsible for assembling technical documents, studies and the associated activities;
• an Audit Board which will perform the calculations needed in connection with the decisions taken by the Administrative Commission;
• an Advisory Committee, responsible for preparing opinions and proposals for the Administrative Commission.
The Administrative Commission consists of a government representative from each of the Member States and a representative of the European Commission who participates in the meetings in an advisory capacity. The aim is to foster cooperation and coordination between the Member States and the Commission.

CONTEXT

Coordination of social security systems got under way in 1971 with the adoption of Council Regulation (EEC) No 1408/71. This Regulation guaranteed equal treatment and social security benefits to all workers who are Member State nationals, regardless of their place of employment or residence.

Since 1971 this Regulation was the subject of several amendments in order to accommodate trends in national legislation and progress resulting from the rulings of the Court of Justice of the European Communities. These amendments have added to the complexity of the Community coordination rules.

The need for a general review of legislation in this field was acknowledged by the Edinburgh Council in 1992, which called for a simplification of the rules. Besides, the Commission confirmed the importance of modernising the coordination rules in its 1997 Communication entitled " Action plan for free movement of workers ".

In 1998, the Council presented a proposal for a Regulation designed to simplify Community rules governing the coordination of social security systems. This proposal resulted in the current Regulation.

This Regulation will repeal Regulation (EEC) No 1408/71 from the date of entry into force of the new implementing Regulation. However, Regulation (EEC) No 1408/71 will remain in force and its legal effects will remain valid for the purposes of the following acts:

• Council Regulation (EC) No 859/2003 of 14 May 2003 for nationals of third countries who are not already covered by those provisions solely on the ground of their nationality;
• Council Regulation (EEC) No 1661/85 of 13 June 1985 laying down the technical adaptations to the Community rules on social security for migrant workers with regard to Greenland;
• the Agreement on the European Economic Area, the Agreement between the European Community and its Member States, of the one part and the Swiss Confederation, of the other, on the free movement of persons and other agreements containing a reference to Regulation (EEC) No 1408/71 ;

• Council Directive 98/49/EC on safeguarding the supplementary pension rights of employed and self-employed persons moving within the Community.
The new Regulation (EC) No 883/2004 shall not be applicable until the date of entry into force of the new implementing Regulation.

REFERENCES

Act Entry into force - Date of expiry Deadline for transposition in the Member States Official Journal
Regulation (EC) No 883/2004 20.5.2004 - OJ L 314 of 7.6.2004

RELATED ACTS

Proposal for a Regulation of the European Parliament and of the Council laying down the procedure for implementing Regulation (EC) No 883/2004 on the coordination of social security systems [COM(2006) 16 - Not published in the Official Journal].
  

Act Entry into force - Date of expiry Deadline for transposition in the Member States Official Journal
Regulation (EC) No 883/2004 20.5.2004 - OJ L 314 of 7.6.2004

RELATED ACTS

Proposal for a Regulation of the European Parliament and of the Council laying down the procedure for implementing Regulation (EC) No 883/2004 on the coordination of social security systems [COM(2006) 16 - Not published in the Official Journal].