EU Coordination Rules
The EU Social Security Coordination Regulations (EC) Nos. 883/2004 and 987/2009
Coordinating Social Security Schemes in the EU
One of the major principles within the European Union (EU) is the right to freedom of movement enjoyed by workers, pensioners and their families. As such the EU has regulations aimed at coordinating social security systems in all member states. The aim of these regulations is to safeguard social security rights of EU citizens when moving from one member state to another, not by harmonizing social security systems, but by coordinating them.
In theory and in practice, EU citizens moving from one member state to another shall not lose any of their social security rights earned when staying in one member state. Although this is simple in principle, given the fact that social security systems in all EU member states differ substantially from one another, the coordinating instruments are quite complex to manage.
As mentioned previously, the Department of Social Security had expertise in this field on a bilateral level, gained from years of coordinating four bilateral agreements currently in force prior to 2004. As from 1st May 2004, the Department of Social Security, through the International Relations Unit became responsible for the implementation of the EU social security regulations which are much more comprehensive in the social security issues they cover than the mentioned bilateral agreements.
EU Social Security Regulations
The coordination of the various EU Member States’ social security systems, including that of Malta, is done by EU Regulations (EC) Nos. 883/2004 and 987/2009 (the latter Regulations contains detailed rules for implementing the former Regulation), which came into force on the 1st May 2010, replacing the previous Regulations (EC) Nos. 1408/71 and 574/72 respectively. These new Regulations are the new point of reference for the coordination of Member States’ social security systems. These are intended to facilitate the life of European citizens exercising their rights to move freely in the European Union.
The aim of the regulations is to protect the acquired social security rights of those moving within the EU. The regulations contain detailed rules which coordinate rights granted under the different national social security regimes. Also, these regulations aim to ensure that those covered do not experience any disadvantages in relation to social security cover, including health care, when they move within the Union.
Under the new Regulations, the basic principles of social security coordination, established under Article 42 of the EC Treaty, remained unchanged:
Discrimination on grounds of nationality is prohibited. Member States must not discriminate against the nationals of other Member States (the “equality of treatment” principle);
Each eligible person should be covered by a social security system, but should not contribute to more than one for the same coverage (the “applicable legislation” principle). The regulations provide detailed instructions to determine which states legislation applies;
Entitlement accumulated in one Member State should be recognized when calculating benefit entitlement in another (the “aggregation” principle). The regulations allow for relevant periods of insurance, employment and residence in any Member State to be taken into account (i.e. aggregated) to help people obtain certain benefits in another Member State;
Benefits are payable outside the national territory (the “export” principle). Member States have an unconditional obligation to export pensions to any other Member State.
The new Regulations further provide for modernised coordination with the aim of making citizen’s rights more effective. The main principles of the new Regulations are the following:
- Updating & Clarification
- Modernization & Simplification
- Transparency & Flexibility
- Enhanced cooperation between institutions
- Improved protection of citizens’ rights
- Electronic Data Exchange (EESSI)
The new Regulations provide a number of new systems for making citizens’ rights more effective and for facilitating the coordination of work of social security institutions and national authorities. In particular, rights are made more effective by requirements to provide an efficient service and to provide information to persons with rights under the Regulations. This is complemented with procedures to help institutions to exchange with each other the necessary information smoothly and in good time.
These principles imply the exchange of information between social security institutions. An effective and coherent co-ordination system of social security schemes between Member States is therefore essential in order to achieve the objectives of the regulations. This is the responsibility of the International Relations Unit.
This unit acts as the liaison body between the competent units within the Division handling claims under the EU regulations and our counterparts in all the other Member States. It is also supervises and monitors the implementation process, while disseminating information to the general public about various related issues.
People and Matters covered by the EU Regulations
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 concerning social security benefits covered by Regulation (EC) No 883/2004 are found in the 8 chapters it contains. The benefits paid by the Department of Social Security in Malta thus can be classified as follows:
Legislation and Schemes referred to in Article 3 of Regulation(EC) No. 883/2004
Legislation: Social Security Act (Cap. 318 of the Laws of Malta)
Date of entry into force: 7 May 1956
Schemes covered: All of the branches of social security referred to in Article 3 are provided for in this Act, with the exception of death grants and pre-retirement benefits for which Maltese legislation makes no provision.
- Sickness benefits
- Sickness Benefits in Cash
- Sickness Benefits in Kind
- Maternity and equivalent paternity benefits
- Maternity Benefit
- Maternity Leave Benefit
- Invalidity benefits
- Invalidity Pension
- Increased Invalidity Pension
- National Minimum Invalidity Pension
- Old-age benefits
- Two-Thirds Pension
- Retirement Pension
- Increased Retirement Pension
- National Minimum Pension
- Increased National Minimum Pension
- Decreased National Minimum Pension
- Contributory Retirement Grant for Non- Pensioners
- Survivors’ benefits
- Survivor’s Pension
- Widow/er Pension
- Benefits in respect of accidents at work and occupational diseases
- Injury Benefit
- Injury Pension
- Injury Grant
- Death grants
- Unemployment benefits
- Unemployment Benefit
- Pre-retirement benefits
- Family benefits
- Children’s Allowance
- Disabled Children’s Allowance
- Orphan’s Allowance
- Supplementary Orphan’s Allowance
- In- Work Benefit
- Special non-contributory cash benefits
- Age Pension
- Supplementary Allowance
The above benefits and schemes have been declared by Malta under Article 9 of Regulation (EC) No. 883/2004
The general principle is that a worker should be subject to the legislation of only one Member State at any one time. Workers are generally subject to the legislation of the state in which they are working, regardless of their place of residence or the location of the employer. 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 the 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 arrangements exist to provide for employees temporarily posted by their employer to work in another Member State. If the anticipated duration of the posting does not exceed 24 months (as provided by the new Regulations) and the employee is not replacing someone whose tour of duty has ended, the worker may remain insured in their “home” state’s scheme. If the work unexpectedly lasts longer than 24 months, the Member States involved may enter into a common agreement under Articles 16 of Regulation 883/2004, whereby the person may remain insured in the sending state. This agreement should be made in the interest of certain categories of persons and professions.
More information about the conditions under which a posting can take place within the legal framework of the Regulations can be found in the Practical Guide: The legislation that applies to workers in the European Union (EU), the European Economic Area (EEU) and in Switzerland.