Friday

26th Aug 2016

Paymasters seek cuts to EU officials' pensions

  • Even if the pensions cuts go through, they will save little in the coming years (Photo: European Commission)

The eight countries which make a net contribution to the EU budget want to cut EU officials' pensions.

The group - Austria, Denmark, Finland, France, Germany, the Netherlands, Sweden and the UK - put forward its ideas in an internal letter sent to the European Commission on 17 September.

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For any EU staff reading the text, the scariest bits come on page three.

The paper - seen by EUobserver - says EU own contributions to the pension fund should go up from 33 percent to as much as 50 percent.

It also advocates an "average wage-based system for the calculation of pensions."

Under current rules, the pension is based on what you are being paid when you retire. But the new system would see people who start on a low grade and work their way up get a pension based on their average income over the years.

The letter paid homage to the economic crisis.

The group-of-eight said it is "very concerned" EU spending on staff and buildings will go up by €15 billion in 2014-2020 compared to 2007-2013 and that annual EU pension costs will double by 2045.

It noted that: "Most MS [member states] are responding to current economic and fiscal circumstances with efficiency measures or other reforms affecting the terms and conditions of their national civil servants. The staff of the European institutions should share the burden."

The increase in EU pension costs comes from the Brussels' bubble own demographic bubble.

Pension costs were negligible for decades because it took time for the first few generations of EU officials who began work in the 1950s and 1960s to age.

But the number of staff hitting retirement is now at a high, while the level of new intakes to help pay for them is falling.

For its part, the commission on Tuesday (16 October) said it will not fight over the next budget until all 27 countries come up with a joint position - a development expected at the November summit.

But its spokespeople noted that existing commission proposals call for a 5 percent staff cull and a freeze on non-pension-related spending in years to come.

Some EU trade unions are planning to go on strike on 8 November if member states opt go further.

Meanwhile, there is comfort in the fact the September letter makes no mention of retroactive effect.

A legal opinion drafted on 25 April by the EU Council's internal legal service - also seen by EUobserver - shows the eight countries know all too well that if they try to back-date the measures, the move would be thrown out by the EU court in Luxembourg.

"The principle of acquired rights is a general principle of Union law ... Where legal provisions have already given rise to rights or benefits, their retroactive withdrawal would be contrary to such general principle of law," it says.

"Thus the factors determining the pension rights of officials who retire before new measures enter into force cannot be modified. The same applies to officials who have not yet retired by that date," it adds.

If the lower pensions only hit staff hired after the reform, it will have next to no impact on the EU budget for a long, long time.

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