REPORT on the proposal for a regulation of the European Parliament and of the Council amending Council Regulation (EEC) No 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community and Council Regulation (EEC) No 574/72 laying down the procedure for implementing Regulation (EEC) No 1408/71

12.10.2006 - (COM(2005)0676 – C6‑0442/2005 – 2005/0258(COD)) - ***I

Committee on Employment and Social Affairs
Rapporteur: Maria Matsouka

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

on the proposal for a regulation of the European Parliament and of the Council amending Council Regulation (EEC) No 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community and Council Regulation (EEC) No 574/72 laying down the procedure for implementing Regulation (EEC) No 1408/71

(COM(2005)0676 – C6‑0442/2005 – 2005/0258(COD))

(Codecision procedure: first reading)

The European Parliament,

–   having regard to the Commission proposal to the European Parliament and the Council (COM(2005)0676)[1],

–   having regard to Article 251(2) and Articles 42 and 308 of the EC Treaty, pursuant to which the Commission submitted the proposal to Parliament (C6‑0442/2005),

–   having regard to Rule 51 of its Rules of Procedure,

–   having regard to the report of the Committee on Employment and Social Affairs (A6‑0346/2006),

1.  Approves the Commission proposal as amended;

2.  Calls on the Commission to refer the matter to Parliament again if it intends to amend the proposal substantially or replace it with another text;

3.  Instructs its President to forward its position to the Council and Commission.

Text proposed by the Commission	Amendments by Parliament
Amendment 1 TITLE
Proposal for a Regulation of the European Parliament and of the Council amending Council Regulation (EEC) No 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community and Council Regulation (EEC) No 574/72 laying down the procedure for implementing Regulation (EEC) No 1408/71	Proposal for a Regulation of the European Parliament and of the Council amending Council Regulation (EEC) No 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community.
Justification
The reference to Regulation 574/72 is unnecessary, since the proposal is concerned only with amending Regulation 1408/71.
Amendment 2 ARTICLE 2, PARAGRAPH 2
Point 2 and point 6(b) of the Annex, regarding the Netherlands, shall apply with effect from 1 January 2006. Point 2 and point 6(b) of the Annex, regarding the Netherlands, shall apply with effect from 1 January 2006, save that section "Q. Netherlands", point 1(f), indent 6a of Annex VI, to Regulation (EEC) No 1408/71, as amended by point 6(b) of the Annex to this Regulation, shall apply from the date provided for in paragraph 1.

Amendment 3

ANNEX, POINT 1

Annex I, part 1, section X (Regulation (EEC) No 1408/71)

Persons who are engaged in gainful employment and who pay their own contributions on this income pursuant to Chapter 3 of the Social Insurance Contributions Act (2000:980) shall be considered as self-employed.	Persons who are engaged in gainful activity and who pay their own contributions on this income pursuant to Chapter 3 paragraph 3 of the Social Insurance Contributions Act (2000:980) shall be considered as self-employed.

Justification

The amendment introduces a more precise term and also a more detailed reference to the national law.

Amendment 4 ANNEX, POINT 2 A (new) Annex II, part III, section R (Regulation (EEC) No 1408/71)
	(2a) In Annex II, Part III, section “R. Austria" is replaced by the following:
	“R. AUSTRIA
	None”
Justification
This amendment brings the text into line with the judgement handed down by the Court of Justice of the European Communities in Case C-286/03.
Amendment 5 ANNEX, POINT 5, POINT (B) Annex IV, part B, section G (Regulation (EEC) No 1408/71)
Scheme for lowering the retirement age of self-employed persons engaged in seafaring activities as described in Royal Decree No 2930/2004 of 30 December 2004.	Scheme for lowering the retirement age of self-employed persons engaged in seafaring activities as described in Royal Decree No 2390/2004 of 30 December 2004.
Justification
Correction of an error concerning national law.
Amendment 6 ANNEX, POINT 5, POINT (C), POINT (II) Annex IV, part C, section X (Regulation (EEC) No 1408/71)
Earnings-related old-age pensions (Act 1998:674) and guarantee pensions in the form of old-age pensions (Act 1998:702).	Income-based old-age pensions (Act 1998:674) and guaranteed pensions in the form of old-age pensions (Act 1998:702).
Justification
More precise wording.
Amendment 7 ANNEX, POINT 5, POINT (D), POINT (I) Annex IV, part D, point 1, point (i) (Regulation (EEC) No 1408/71)
(i) Swedish guarantee pension and guarantee supplement which tops up the full Swedish state pensions provided under the legislation on the state pension which applied before 1 January 1993, and the full state pension awarded under the transitional rules of the legislation applying from that date, and Swedish income-related sickness benefit and activity allowance.	(i) Swedish guarantee pension and guaranteed compensation which have replaced the full Swedish state pensions provided under the legislation on the state pension which applied before 1 January 1993, the full state pension awarded under the transitional rules of the legislation applying from that date and Swedish income-related sickness compensation and activity compensation.
Justification
More precise wording.
Amendment 8 ANNEX, POINT 5, POINT (D), POINT (II) Annex IV, part D, point 2, point (i) (Regulation (EEC) No 1408/71)
(i) Sickness benefit and activity allowance in the form of guarantee allowance (Act 1962:381, as amended by Act 2001:489), survivor’s pension, as calculated on the basis of insurance periods (Acts 2000:461 and 2000:462) and old-age pension in the form of guarantee pension calculated on the basis of previously credited periods (Act 1998:702).	(i) Swedish sickness compensation and activity compensation in the form of guaranteed compensation (Act 1962:381, as amended by Act 2001:489), survivor’s pension, as calculated on the basis of reckonable periods (Acts 2000:461 and 2000:462) and Swedish old-age pension in the form of guarantee pension calculated on the basis of previously credited periods (Act 1998:702).
Justification
More precise wording.
Amendment 9 ANNEX, POINT 6, POINT (B) Annex VI, section Q, point 1, point (a), introductory part (Regulation (EEC) No 1408/71)
(a) As regards entitlement to benefits in kind under Netherlands legislation, persons entitled to benefits in kind for the purpose of the implementation of Chapters 1 and II of Title III of this Regulation shall mean:	(a) As regards entitlement to benefits in kind under Netherlands legislation, persons entitled to benefits in kind for the purpose of the implementation of Chapters 1 and 4 of Title III of this Regulation shall mean:
Justification
Correction of an error concerning the national law.
Amendment 10 ANNEX, POINT 6, POINT (B) Annex VI, section Q, point 1, point (f), introductory part (Regulation (EEC) No 1408/71)
For the purposes of Articles 27 to 34 of this Regulation, the following benefits shall be treated as pensions due under Netherlands legislation:	For the purposes of Articles 27 to 34 of this Regulation, the following pensions shall be treated as pensions payable under the legal provisions mentioned in subparagraphs b (invalidity) and c (old age) of the declaration of the Kingdom of the Netherlands under Article 5 of the Regulation:
Justification
The original text which corresponding to Annex VI is replaced.

Amendment 11
ANNEX, POINT 6, POINT (B)

Annex VI, section Q, point 1, point (f), indent 3 (Regulation (EEC) No 1408/71)

– benefits for incapacity for work awarded under the Law of 7 June 1972 on benefits for incapacity for work for military personnel (Wet arbeidsongeschiktheidsvoorziening militairen) (Military Personnel Incapacity for Work Act);	deleted

Justification

This paragraph has already been mentioned in the Declaration of the Kingdom of the Netherlands under Article 5 of the Regulation. There is therefore no need to refer to it again.

Amendment 12 ANNEX, POINT 6, POINT (B) Annex VI, section Q, point 1, point (f), indent 4 (Regulation (EEC) No 1408/71)
– pensions awarded under the Law of 15 February 1967 on pensions for employees of the NV Nederlandse Spoorwegen (Netherlands Railway Company) and their survivors (Spoorwegpensioenwet) (Railway Pensions Act);	– pensions awarded under the Law of 15 February 1967 on pensions for employees of the Netherlands Railway Company (NV Nederlandse Spoorwegen) and their survivors (Spoorwegpensioenwet) (Railway Pensions Act);
Justification
More precise wording.
Amendment 13 ANNEX, POINT 6, POINT (B) Annex VI, section Q, point 1, point (f), indent 6 (Regulation (EEC) No 1408/71)
– benefits awarded to retired persons before reaching the pensionable age of 65 years under a pension scheme designed to provide income for former employed persons in their old age, or benefits provided in the event of premature exit from the labour market under a scheme set up by the state or by an industrial agreement for persons aged 55 or over whereby the percentage benefit is set at at least 70% of the latest salary.	– benefits awarded to retired persons before reaching the pensionable age of 65 years under a pension scheme designed to provide income for former employed persons in their old age, or benefits provided in the event of premature exit from the labour market under a scheme set up by the state or by an industrial agreement for persons aged 55 or over.
Justification
This part of the paragraph may be deleted since the restriction in question was linked to the minimum level of income required for insurance under the regime of the previous Health Insurance Law.
Amendment 14 ANNEX, POINT 6, POINT (B)
Annex VI, section Q, point 1, point (f), indent 6 a (new) (Regulation (EEC) No 1408/71)
- benefits awarded to military personnel and civil servants under a scheme applicable in the event of redundancy, superannuation and early retirement;
Justification
The addition of these benefits makes it possible to bring within the scope of Regulation 1408/71 military personnel with entitlement under the Dutch law on benefits for former military personnel and civil servants on reduced pay, so ensuring that this category is also properly insured. This is not the case at present
Amendment 15 ANNEX, POINT 6, POINT D, POINT (I) Annex VI, section X, point 1 (Regulation (EEC) No 1408/71)
(i) Point 1 is replaced by the following:	(i) Point 1 is deleted
“1. For the purpose of determining a parent’s income during 240 days before the birth of the child under Chapter 4 section 6 of Lag (1962:381) om allmän försäkring (the National Insurance Act):
(a) where during part of that period the parent had income in Sweden, and during another part of that period had income in another Member State, the parent’s annual income in the other Member State shall be considered to be equal to the parent’s annual income in Sweden;
(b) where during that period a parent had no income in Sweden but had income in another Member State, this income shall be considered to be above the minimum guaranteed level (lägsta nivå) provided the parent has been economically active in that other Member State to the extent that the activity would have given rise to an income above the required minimum guaranteed level (lägsta nivå) if it had been carried out in Sweden.”
Justification
Point 1 of the Regulation is redundant, since it refers to conditions provided for under a Swedish law which has been amended and has been implemented for a short time in its new form.
Amendment 16 ANNEX, POINT 6, POINT (D), POINT (II) Annex VI, section X, point 2 (Regulation (EEC) No 1408/71)
2. The provisions of this Regulation on the aggregation of insurance periods shall not apply to the transitional provisions in the Swedish legislation on entitlement to guarantee pension for persons born in or before 1937 who have been resident in Sweden for a specified period before applying for a pension (Act 2000:798).	2. The provisions of this Regulation on the aggregation of insurance periods or periods of residence shall not apply to the transitional provisions in the Swedish legislation on entitlement to guarantee pension for persons born in or before 1937 who have been resident in Sweden for a specified period before applying for a pension (Act 2000:798).
Justification
The amendment replaces the original text corresponding to Annex VI. There is therefore no need to exclude periods of residence from the aggregation provisions. Moreover, the Swedish law also takes them into account.

Amendment 17
ANNEX, POINT 6, POINT (D), POINT (III)

Annex VI, section X, point 3, introductory part (Regulation (EEC) No 1408/71)

3. For the purpose of calculating notional income for income-based sickness benefit and earnings-related activity allowance in accordance with Chapter 8 of Lag (1962:381) om allmän försäkrings (the National Insurance Act), the following shall apply:	3. For the purpose of calculating notional income for income-based sickness compensation and income-based activity compensation in accordance with Chapter 8 of Lag (1962:381) om allmän försäkrings (the National Insurance Act), the following shall apply:

Justification

More precise wording.

Amendment 18
ANNEX, POINT 6, POINT (D), POINT (III)

Annex VI, section X, point 3, point (a) (Regulation (EEC) No 1408/71)

(a) where the insured person, during the reference period, has also been subject to the legislation of one or more other Member States on account of activity as an employed or self-employed person, income in the Member State(s) concerned shall be deemed to be equivalent to the insured person’s average gross income in Sweden during the part of the reference period in Sweden, calculated by dividing the earnings in Sweden by the number of months over which those earnings accrued;	(a) where the insured person, during the reference period, has also been subject to the legislation of one or more other Member States on account of activity as an employed or self-employed person, income in the Member State(s) concerned shall be deemed to be equivalent to the insured person’s average gross income in Sweden during the part of the reference period in Sweden, calculated by dividing the earnings in Sweden by the number of years over which those earnings accrued;

Justification

Calculations in Sweden are based on years and not months. This correction is based on national legislation.

Amendment 19
ANNEX, POINT 6, POINT (D), POINT (III)

Annex VI, section X, point 3, point (b) (Regulation (EEC) No 1408/71)

(b) where the benefits are calculated pursuant to Article 40 of the Regulation and persons are not insured in Sweden, the reference period shall be determined in accordance with Chapter 8(2) and (8) of the abovementioned Act as if the person concerned were insured in Sweden. If the person concerned has no pension-generating income during this period under the Act on earnings-related old-age pension (1998:674), the reference period shall be permitted to run from the earlier point in time when the insured person had income from gainful employment in Sweden.	(b) where the benefits are calculated pursuant to Article 40 of the Regulation and persons are not insured in Sweden, the reference period shall be determined in accordance with Chapter 8(2) and (8) of the abovementioned Act as if the person concerned were insured in Sweden. If the person concerned has no pension-generating income during this period under the Act on income-based old-age pension (1998:674), the reference period shall be permitted to run from the earlier point in time when the insured person had income from gainful activity in Sweden.

Justification

More precise wording.

Amendment 20
ANNEX, POINT 6, POINT (D), POINT (IV)

Annex VI, section X, point 4 (Regulation (EEC) No 1408/71)

4. a)    For the purpose of calculating notional pension income for earnings-related survivor’s pension (Act 2000:461), if the requirement in Swedish legislation for pension entitlement in respect of at least three out of the five calendar years immediately preceding the insured person’s death (reference period) is not met, account shall also be taken of insurance periods completed in other Member States as if they had been completed in Sweden. Insurance periods in other Member States shall be regarded as based on the average Swedish pension base. If the person concerned has only one year in Sweden with a pension base, each insurance period in another Member State shall be regarded as constituting the same amount.	4. a)    For the purpose of calculating notional pension asset for income-based survivor’s pension (Act 2000:461), if the requirement in Swedish legislation for pension entitlement in respect of at least three out of the five calendar years immediately preceding the insured person’s death (reference period) is not met, account shall also be taken of insurance periods completed in other Member States as if they had been completed in Sweden. Insurance periods in other Member States shall be regarded as based on the average Swedish pension base. If the person concerned has only one year in Sweden with a pension base, each insurance period in another Member State shall be regarded as constituting the same amount.

Justification

More precise wording.

• [1]  Not yet published in OJ.

EXPLANATORY STATEMENT

Introduction

Since 1971 Regulation (EEC) No 1408/71[1] provided the foundations for granting social security benefits to citizens moving from one Member State to another. Every year essentially Regulation No 1408/71 and its implementing Regulation (Regulation (EEC) No 547/72[2]) are amended in order to take into account developments in national social security schemes, to incorporate the changes which have taken place in national legislation and also to accommodate the jurisprudence of the Court of Justice of the European Union. The regulation plays an important role in implementing one of the four fundamental freedoms of the European Union, namely freedom of movement of citizens. Freedom to live, work and move freely within the European Union - with the dismantling of economic and administrative barriers as far as possible - constitutes a tangible advantage which the EU provides to its citizens.

This proposal is not concerned with the content or the wisdom of specific social security provisions, given that, under Community law, Member States are responsible for determining their own social security schemes. This proposal merely sets out to update Regulation (EEC) 1408/71 in order to reflect changes in the national legislation of Member States, especially in respect of amendments to guarantee pensions in Sweden and Finland as well as an amendment to the health care benefits in the Netherlands with a view to ensuring the effective coordination of Member States as regards the social security benefits.

Although the proposed changes are essentially technical in nature, they have an impact on the daily lives and the entitlement to social security benefits of EU citizens living, working or travelling in another Member State.

One important aspect of this framework deserves special mention: the present proposal comes at a time at which the radical overhaul and replacement of Regulation 1408/71 have already been approved (Regulation (EC) No 883/2004[3]). However, the new text which has already entered into force cannot yet be implemented because the new implementing regulation (which will replace the old Regulation No 574/72) has not yet been completed. These two new regulations which abolish the old Regulations 1408/71 and 574/72 are expected to be implemented only after the adoption of the implementing regulation in 2007. It is therefore important that this annual review of the regulations which remain in force should continue in order to ensure legal certainty and better protection of the rights of those concerned. This annual review is also important because of its content: the definition of the terms 'employed persons' or 'self-employed persons' where these cannot be determined from national legislation (Annex I, Part I), the definition of the term 'member of the family' where national legislation does not enable a distinction to be drawn between members of the family and other persons (Annex I, Part II), special non-contributory benefits granted to the persons concerned exclusively in the territory of the Member State in which they reside which therefore constitute derogations in respect of the benefits which may be transferred (Annex IIa), existing bilateral agreements which were in force prior to the application of the Regulation in the Member States concerned (Annex III) and special procedures for applying the legislation of certain Member States (Annex VI).

In short, the regulation continues to determine whether citizens retain the right to enjoy the special benefits provided by their Member State of origin - if so they may therefore be exported - or whether a corresponding benefit is available in the new Member State of residence of the party concerned.

The rapporteur's position

The Commission proposes that Regulation 1407/71 be updated, taking into account the amendments to national social security legislation, particularly in the Netherlands, Finland and Sweden. It also seeks to present technical amendments and improvements to the regulation. In other words, this is a technical and transitional Regulation given that the new Regulation 883/2004 and its provisions are about to be implemented.

Your rapporteur welcomes the proposed amendments which seek to facilitate the coordination of social security scheme. She has tabled a number of amendments, also of a technical nature, aimed at simplifying the proposal, correcting errors and omissions and updating the annexes to Regulation 1408/71.

Your rapporteur has carefully considered the possibility of presenting more substantive changes in her report, but finally decided that it was preferable at this stage merely to present a number of amendments which are deemed absolutely essential at the moment for the smooth functioning of Regulation 1408/71, since it is soon to be replaced by Regulation 883/2004.Your rapporteur takes the view that it would be more appropriate to table any substantive amendments in the proposal amending Regulation 883/2004 on the coordination of social security schemes, in particular the content of Annex XI (Bozkurt report) and the proposal for a regulation establishing the procedure for implementing Regulation 883/2004 on the coordination of social security schemes (Lambert report), which are due to be debated in our Committee this autumn.

This view is also shared by the social partners who have been consulted.

In her contacts with the Commission and the Council, your rapporteur noted the purely technical nature of the proposal, and the fact that both these institutions had reached an agreement on the Commission proposal and the proposed amendments.

These amendments which seek to make the text more transparent and clearer, are intended to ensure legal certainty until the new Regulation and its implementing Regulation enter into force completely, and to contribute to strengthening the legal protection of citizens and removing the barriers which continue to impede the mobility of workers within the EU. It is important to facilitate the implementation of this principle of mobility which was confirmed at the Lisbon Summit as an instrument for promoting employment and which has been assiduously promoted throughout 2006, the European Year of Workers' Mobility. It is therefore important to define precisely the conditions, particularly the social conditions, relating to mobility.

• [1]  Regulation (EEC) No 1408/71 of the Council on the application of social security schemes to employed persons and their families moving within the Community (OJ L 149, 5.7.1971, p. 2).
• [2]  Regulation (EEC) No 574/72 of the Council of 21 March 1972 fixing the procedure for implementing Regulation (EEC) No 1408/71 (OJ L 074, 27.3.1972, p. 1).
• [3]  Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems (OJ L 166, 30.4.2004, p. 1).

PROCEDURE

Title		Report on the proposal for a regulation of the European Parliament and of the Council amending Council Regulation (EEC) No 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community and Council Regulation (EEC) No 574/72 laying down the procedure for implementing Regulation (EEC) No 1408/71
References		COM(2005)0676 – C6-0442/2005 – 2005/0258(COD)
Date submitted to Parliament		21.12.2005
Committee responsible   Date announced in plenary		EMPL 14.2.2006
Committee(s) asked for opinion(s)   Date announced in plenary
Not delivering opinion(s)   Date of decision
Enhanced cooperation   Date announced in plenary
Rapporteur(s)   Date appointed		Maria Matsouka 18.1.2006
Previous rapporteur(s)
Simplified procedure – date of decision
Legal basis disputed   Date of JURI opinion
Financial endowment amended   Date of BUDG opinion
European Economic and Social Committee consulted – date of decision in plenary
Committee of the Regions consulted – date of decision in plenary
Discussed in committee		10.7.2006	12.9.2006
Date adopted		5.10.2006
Result of final vote	+ – 0	31 0 1
Members present for the final vote		Jan Andersson, Iles Braghetto, Philip Bushill-Matthews, Milan Cabrnoch, Alejandro Cercas, Ole Christensen, Derek Roland Clark, Luigi Cocilovo, Jean Louis Cottigny, Harald Ettl, Carlo Fatuzzo, Ilda Figueiredo, Joel Hasse Ferreira, Roger Helmer, Stephen Hughes, Ona Juknevičienė, Sepp Kusstatscher, Bernard Lehideux, Elizabeth Lynne, Thomas Mann, Mario Mantovani, Ana Mato Adrover, Maria Matsouka, Csaba Őry, Pier Antonio Panzeri, Jacek Protasiewicz, José Albino Silva Peneda, Kathy Sinnott, Ari Vatanen, Gabriele Zimmer
Substitute(s) present for the final vote		Udo Bullmann, Françoise Castex, Richard Howitt, Elisabeth Schroedter
Substitute(s) under Rule 178(2) present for the final vote
Date tabled		12.10.2006
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