Worked in several EU countries? Read how your pension is calculated
Those who have worked in several EU member states may accumulate pension rights in each of them to collect their retirement pension when the time comes.
Nowadays there is an increasing number of people who throughout their life do jobs in different countries. Therefore, they accumulate pension rights in each of these countries to collect their retirement pension when the time comes.
Those who have worked in several countries of the European Union (EU), may have it easier to claim their pensions thanks to the existing coordination between the different member states..
According to information from the European Commission, the first thing applicants must take into account is that they will have to apply to the pension authority in the country where they are living or where they last worked.
If they never worked in the country where they live, then, at the time of retirement, their host country will forward their claim to the last one in which they worked. That country is then responsible for processing the claim and bringing together records of their contributions from all the countries they worked in.
In some countries, the pension authority sends pension application forms to applicants before they reach that country's retirement age.
The EU Commission recommends to start asking for information from the authorities on how to obtain the pension at least 6 months before the retirement date, because drawing a pension from several countries can be a long procedure.
Documents and retirement ages
These vary from one country to another, but usually applicants have to supply their bank details and some form of identification. For more exact details, the EU Commission recommends to contact the pension authority which will handle the claim.
In some EU countries, people have to wait longer to start drawing pensions than in others. So, it is important to bear in mind that you can only receive your pension from the country where you are living (or last worked) once you have reached the legal retirement age in that country. And if you have accumulated pension rights in other countries, you will only receive those parts of your pension once you have reached the legal retirement age in those countries too.
In this sense, you must find out in advance, from all the countries where you have worked, what your situation will be if you change the date on which you start receiving your pension. Because if you take one pension earlier than the other, it might affect the final amounts you receive.
A sample story
Caroline from France worked in Denmark for 15 years, then went back to France towards the end of her career. When she turned 60, she applied for her pension, as is usual in France, but only got a very low one.
At 60, Caroline is only entitled to the French part of her pension. She will receive the Danish part when she turns 67, which is the legal retirement age in Denmark for Caroline's age group.
The eligibility periods
In some EU countries, people must have worked for a minimum period of time to be entitled to a pension.
In such cases, the pension authority has to take into account all the periods they worked in other EU countries, as if they had been working in that country all along, to assess whether they are entitled to a pension (this is called the 'principle of aggregation of periods').
A sample story
Tom worked for 4 years in Germany and 32 years in Portugal.
In Germany, you must have worked for at least 5 years to be entitled to a pension. Tom would not normally qualify for the national pension scheme in Germany as he had worked there for only 4 years.
However, the German pension authority had to take into account the years Tom worked in Portugal. It recognised his entitlement and is paying him a pension for the 4 years worked in Germany.
How pensions are calculated
Pension authorities in each EU country you have worked in will look at the contributions you have paid into their system, how much you have paid in other countries, and for how long you have worked in different countries.
THE EU EQUIVALENT RATE
Then, each pension authority will calculate the part of the pension it should pay taking into account periods completed in all EU countries.
To do so, it will add together the periods you completed in all EU countries and work out how much pension you would get had you contributed into its own scheme over the entire time (this is called 'the theoretical amount').
This amount will then be adjusted to reflect the actual time you were covered in that country (this is called 'the pro-rata benefit').
THE NATIONAL RATE
If you meet the conditions for entitlement to a national pension irrespective of any periods completed in other countries, the pension authority will also calculate the national pension (known as an 'independent benefit').
The national authority will then compare the 'pro-rata benefit' and the 'independent benefit'; you will receive whichever is higher from that EU country.
Each country's decision on your claim will be explained in a special note, the P1 form, which you will receive.
A sample story
Rosa worked for 20 years in France and 10 years in Spain.
Both countries apply a minimum period of 15 years of work in order to have the right to a pension. Each country will calculate Rosa's pension:
The French authority will make a double calculation:
- It will calculate Rosa's national pension for the 20 years worked in France. Let us say it is 800 euros.
- It will also calculate a theoretical amount, the pension Rosa would have had if she had worked the full 30 years in France. Let us say it would be 1,500 euros. Then, it will determine the pro-rata pension, that is the part of this amount which should be paid for the years worked in France: 1 500x20 years in France/30 years: in total 1,000 euros.
In this case, from the point of view of the French authorities, Rosa is entitled to the higher amount 1,000 euros a month.
The Spanish authority will not calculate the national pension because Rosa has worked in Spain less than the minimum period required. It will only calculate the EU-equivalent rate, starting with the theoretical amount, the pension Rosa would have had if she had worked all the 30 years in Spain. Let's say it is 1,200 euros.
Then, it will determine the 'pro-rata pension'. This is the part of this amount which should be paid for the years worked in Spain: 1200x10 years in Spain/30 years in total = 400 euros.
In the end, Rosa will receive a pension of 1,400 euros.
The payment of the pension
Each country that grants you a pension generally pays the corresponding amount into a bank account in your country of residence, if you live within the EU.
If you do not live in the EU, you might need to open a bank account in each EU country which pays you a pension.