SOS your pension! – Generation 2004’s analysis: drastic further reductions are looming

The service cost of EU staff pensions is rising very quickly while cost of salaries is decreasing rapidly because of the hiring of new officials at low grades, the massive recruitment of underpaid CAs and the reduction in staff numbers. As a result, Generation 2004 reckons that the service cost of pensions will exceed the cost of salaries around 2025. It is unlikely that MS will accept to spend more on pensions of retired staff than on salaries of active staff. Since MS do not seem to find any value in increasing our salaries, the most likely decision will be drastic reduction of pension benefits.

 

So be prepared: the EU pension system is like a ship heading at full speed among a pack of icebergs. The staff regulations, essentially designed in the 1950s and 1960s, make no provision for a life-boat in case the ship sinks, which will leave many EU civil servants, particularly those from new MS, stranded on an icy sheet or drowning in a sea of bureaucratic coldness, which we know only too well.

  • A first indication of what might be coming was the proposal by 8 MS during the (2012/2013) negotiations on the latest reform to calculate pension rights on the average of the career instead of the last year. Similar measures have been imposed by the Commission on MS as part of fiscal consolidation. How on earth could the institutions’ own staff be spared?
  • Senior officials of the Commission managed to deflect the pressure during the reform of the Staff Regulations last year by introducing measures to reduce pension rights of newcomers and young staff. However, the reform did nothing to rescue the pension scheme as it will produce its effects only in the very long term (i.e. long after 2025 when the situation of the pension scheme of EU employees becomes critical).
  • Obviously, those who negotiated the deal with MS (including the Rapporteur in the EP, who happens to be the spouse of the former DG who led the 2004 reform) made sure they will not suffer from the reform. Their strategy has been to postpone the problems until they are too old or dead to care.
  • If you think this is scaremongering, look at article 14 of Annex XII of the 2014 Staff Regulations: a new reform of the pension scheme is already planned for 2022. Don’t be fooled by the somewhat obscure complexity of the annex. Changing the parameters that ensure the actuarial balance of the pension scheme is nothing but a reform of the scheme. Just remember how the supposedly minor changes in the method for annual salary adjustments have led to a €3 billion-worth reform of the staff regulation last year.

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