Sunday

4th Jun 2023

Exclusive

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)
Listen to article

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.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

  • 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.

Investigation

How Europe's pension funds are gambling with food prices

Some of Europe's largest pension funds are investing billions of euros in volatile commodity markets, risking the hard-earned income of millions of workers while fuelling a global hunger crisis caused in part by such investments, a new investigation has found.

Exclusive

MEP luxury pension held corporate assets in tax havens

While the European Parliament was demanding a clamp down on tax havens, many of its own MEPs were using their monthly office allowances to finance a luxury pension scheme that held corporate assets in the Cayman Islands, Bermuda and elsewhere.

Column

What a Spanish novelist can teach us about communality

In a world where cultural clashes and sectarianism seems to be on the increase, Spanish novelist Javier Cercas (b.1962) takes the opposite approach. He cherishes both life in the big city and in the countryside.

Opinion

Poland and Hungary's ugly divorce over Ukraine

What started in 2015 as a 'friends-with-benefits' relationship between Viktor Orbán and Jarosław Kaczyński, for Hungary and Poland, is ending in disgust and enmity — which will not be overcome until both leaders leave.

Latest News

  1. Spanish PM to delay EU presidency speech due to snap election
  2. EU data protection chief launches Frontex investigation
  3. Madrid steps up bid to host EU anti-money laundering hub
  4. How EU leaders should deal with Chinese government repression
  5. MEPs pile on pressure for EU to delay Hungary's presidency
  6. IEA: World 'comfortably' on track for renewables target
  7. Europe's TV union wooing Lavrov for splashy interview
  8. ECB: eurozone home prices could see 'disorderly' fall

Stakeholders' Highlights

  1. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  2. ICLEISeven actionable measures to make food procurement in Europe more sustainable
  3. World BankWorld Bank Report Highlights Role of Human Development for a Successful Green Transition in Europe
  4. Nordic Council of MinistersNordic summit to step up the fight against food loss and waste
  5. Nordic Council of MinistersThink-tank: Strengthen co-operation around tech giants’ influence in the Nordics
  6. EFBWWEFBWW calls for the EC to stop exploitation in subcontracting chains

Stakeholders' Highlights

  1. InformaConnecting Expert Industry-Leaders, Top Suppliers, and Inquiring Buyers all in one space - visit Battery Show Europe.
  2. EFBWWEFBWW and FIEC do not agree to any exemptions to mandatory prior notifications in construction
  3. Nordic Council of MinistersNordic and Baltic ways to prevent gender-based violence
  4. Nordic Council of MinistersCSW67: Economic gender equality now! Nordic ways to close the pension gap
  5. Nordic Council of MinistersCSW67: Pushing back the push-back - Nordic solutions to online gender-based violence
  6. Nordic Council of MinistersCSW67: The Nordics are ready to push for gender equality

Join EUobserver

Support quality EU news

Join us