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28th Feb 2024

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Borrell gets pension from MEP fund set for taxpayer bailout

  • Borrell is drawing a pension from an EU parliament fund that may require a taxpayer bailout (Photo: European Commission)
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Josep Borrell, the EU's foreign policy chief, is currently drawing a pension from a European Parliament fund that is some €400m in debt and may require a taxpayer bailout at a time when inflation and high energy costs are hitting many Europeans.

The 75-year old socialist is entitled to the pension payouts, which come on-top of his monthly take-home salary of well over €20,000, not including benefits.

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  • Nigel Farage, the 'godfather' of Brexit, had also signed up to the scheme while an MEP (Photo: European Parliament)

"Yes. HRVP [his official title, EU high representative for foreign affairs and security policy] is drawing a pension from this voluntary pension fund," confirmed Borrell's spokesperson, in an email.

But the scheme, also known as the European Parliament voluntary pension fund, has proven controversial given it is running a massive deficit that continues to balloon.

The difference between the future obligations and the net asset value (actuarial deficit) of the pension fund as of 31 December 2018 was €286.1m. This increased to €379m as of 31 December 2021.

The fund is set to go bust between 2024, the year of the European elections, and 2026, and at which time taxpayers will be forced to bail out a scheme that has proven a headache for the European Parliament leadership.

The parliament has been unable to find a solution, posing tricky questions by MEPs overseeing budgets.

Among them are Monika Hohlmeier, a German MEP and Johan van Overtveldt, a former Belgian finance minister.

In a joint letter to EU Parliament president Roberta Metsola earlier this year, they say that the fund poses "potential devastating reputational risks for the European Parliament".

They say there is no "future-fit solution, even though it has been known that the voluntary pension fund will be insolvent in the near future."

Investments kept secret

People who signed up to the scheme were MEPs prior to 2009 — and only had to pay into it for two years before being guaranteed the pension.

Those payments were deducted from a controversial monthly expense allowance, which the European Parliament then topped up with a two-third contribution.

The whole thing was then managed by a Luxembourg investment fund known as a 'SICAV-FIS', overseen by Credit Agricole Indosuez Luxembourg.

The bank won't disclose the investments, including bonds and equities, it made on behalf of the SICAV-FIS. Asked why, it won't explain. The EU parliament won't release documents on the investments either, claiming it would undermine commercial interests.

But Bart Staes, a former Belgian Green MEP, has suggested investments include the arms industry and nuclear energy.

"It is not the fair or ethical investments that you could think that a pension fund linked to the European Parliament would take into account," he had told this website back in 2018.

Who signed up?

Meanwhile, the fund's deficit has only continued to increase as more and more former MEPs, including current ones who were also in office before 2009, hit 65.

Among them are anti-EU French rightwing nationalists Marine Le Pen and her father, Jean-Marie.

Nigel Farage, who helped usher the UK out of the European Union, had also signed up to the scheme while an MEP.

So too did Malta's disgraced former prime minister, Joseph Muscat, as well as Italy's 69-year old minster of foreign affairs [and ex-EU parliament president] Antonio Tajani.

The EU parliament projects that at least 872 people will draw a pension from the fund by 2024, up from 623 in 2009. Widowers and orphans also get payouts.

Few opted out after signing up to the scheme, according to EU parliament documents.

This apparently includes Margaritis Schinas, the current vice-president of the European Commission in charge of promoting the "European Way of Life."

"I confirm that the VP [Schinas] did originally sign up but he since opted out and has not been part of this as of 2009," said a European Commission spokesperson, in an email.

A similar statement was made on the behalf of the Socialists & Democrats group leader, Iratxe García Perez.

EUobserver obtained their names after filing a freedom of information request.

The European Parliament has since published the names of every MEP who subscribed to the pension scheme, highlighted in yellow in three documents linked here, here and here.

One of those documents highlights Manfred Weber, who leads the European People's Party.

But Weber's spokesperson said he is not member of the voluntary pension fund as one of the parliament documents seems to suggest.

Other noteworthy names include 63-year old Mairead McGuinness, who is the EU finance commissioner.

EU taxpayers risk bailing out MEP pension scheme

An MEP voluntary pension scheme is running a €326 million actuarial deficit. The Luxembourg-based fund, set to manage to scheme, is said to have invested the money in controversial sectors like the arms industry.

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An MEP voluntary pension fund held millions of euros in shares in petrochemical companies at a time when a UN climate change treaty, backed by the European Parliament, was demanding a sharp reduction in CO2 emissions.

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