OREANDA-NEWS. July 28, 2014. The introduction of pension mobility within the emerging Eurasian Economic Union is an essential step towards regional economic integration, according to the “Pension Mobility within the Eurasian Economic Union and the CIS” report, launched in Russia.

Initiated by the Centre for Integration Studies of the Eurasian Development Bank (EDB Centre) and the World Bank (MIRPAL regional migration program), the report introduces the concept of labor pension mobility between labor recipient countries (Russia, Kazakhstan, and Belarus) and labor donor countries (Kyrgyzstan, Tajikistan, and Armenia).

 Pension mobility is a process of inter-state reciprocal recognition of labor migrants’ pension rights. According to the report, introduction of pension mobility in the context of labor migration processes within the emerging Eurasian Economic Union can build on the EU countries’ best practice experience.

“Providing the free movement of labor is one of the fundamental functioning principles of any economic union. However, lifting registration barriers and simplifying regulatory approvals for labor force migration between countries of the Common Economic Space and the Eurasian Economic Union could not be effective unless social guarantees are to be provided,” says Stepan Titov, World Bank senior economist and MIRPAL program head.

International best practice proves that if donor and recipient countries use different social security systems, the issue of pensionary payments could be resolved through coordination of pension assignment rules. This coordination provides that pensionary assignments and payments are to be made by the pension fund of the country where the labor worker resides and applies for pensionary support. The pension fund of that country will then receive transfers (compensation) from the pension fund of the other country, where a labor migrant has worked. Compensation payments / transfers can be pro-rated based on the number of years that have been worked abroad.

 Today, overall coordination between countries and their pension funds has not yet been developed in the CIS countries, nor within the framework of the Common Economic Space. However, there is a necessity to improve living standards and provide a decent life for labor migrants as they get older. From the macroeconomics point of view, an efficient pension mobility system could help improve the mobility, flexibility, and efficiency of the labor force as a production factor, as well as help raise the global competitiveness of the Eurasian Economic Union.

“Pension mobility should become part and parcel of the free movement of workers, as should concerted social policies within the emerging labor market of the Common Economic Space,” says Yevgeny Vinokurov, Director of the EDB Centre for Integration Studies. “In the long-term, formation of a common pension space in the countries of the Common Economic Space and the Eurasian Economic Union can mark a step forward to reducing the scope of illegal labor migration and to developing labor relations of a higher quality.”

Introduction of labor migrants’ pension mobility is an important item on the agendas of the Common Economic Space and the Eurasian Economic Union. The proposed pension mobility mechanisms could help resolve problems related to labor migrants’ pension payments that are of vital importance to tens of millions of people.