Pensions

Updated conversion coefficients for transfer of pension rights

When you start in the European Institutions, you might already have worked somewhere else and gained pension rights that you can transfer into our pension scheme of European officials (PSEO), a so-called transfer-in. The same is possible or even compulsory when you leave the Institutions, a so-called transfer-out. For a transfer-in, your previous pension scheme transfers a certain amount of money to the PSEO: in return, you get credited with some more time that is used for the calculation of your future pension paid by the PSEO. For a transfer-out, the PSEO calculates what your accumulated ‘years’ are worth and transfers this sum to your next pension scheme.
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Generation 2004’s position on pensions

First, Generation 2004 welcomes the debate with U4U, which so far seems to be the only staff organisation in the ongoing electoral campaign in Brussels, besides Generation 2004, capable of coming up with clear and unambiguous positions on a range of topics. As far as pensions are concerned, we note the following interesting points made by U4U:

  1. U4U’s position is to defend acquired rights at all costs
  2. U4U argue that our pension scheme is fair to everyone
  3. U4U argue that our pension scheme is sound
  4. U4U recognises (end of their document) that “The worsening outlook for pay changes and career prospects and consequently the foreseeable decrease in pensions following the revisions of the Staff Regulations in 2004 and 2014 has already resulted in a fall in the contribution of active workers to the pension scheme (from 11.6% to 9.8% for employee contributions…)“.

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Transfer-out of pension rights

We are regularly contacted with questions on transfers-in of pension rights (from MS schemes to the EU pension scheme). It is unfortunately difficult to provide definite answers as each case is specific and each MS has its own complex pension system (France alone has 37 different pension schemes, although Macron has announced his wish to merge all the schemes into a single one – good luck!). Essentially everything we wrote in our special issue on pensions remains valid. In particular, transfers-in have become rather unattractive since the introduction of a new conversion coefficient on 1 Jan 2009 (coefficient that converts the capital that you transfer-in into a number of years of seniority in the EU pension scheme). Continue reading Transfer-out of pension rights

Brexit and Staff Cuts

The prospects for the EU and the UK reaching an agreement on the financial settlement of Brexit do not look good at the moment. Among many other issues, the issue of the UK contribution to the payment of our pensions is a topic of debate (See copy of Times article– obviously, the article makes no distinction between the extremely generous pensions of staff recruited before the 2004 reform of the Staff Regulations and the rest of the staff). Continue reading Brexit and Staff Cuts

Pensions and Brexit

Generation 2004 regularly alerts the staff with respect to the sustainability of our pension scheme. Commissioner Oettinger seems to agree with us (“He therefore recommended a rigorous [budgetary] approach, particularly as there would be a considerable increase in the cost of EU officials’ pensions in the coming years“, see middle of page 14 in the Minutes of the last meeting of the College in May). Some more reasons to worry according to an article in The Guardian: an “EU diplomat” is quoted as saying “we cannot trade pensions for the MFF” [during the Brexit negotiations]. Let us hope that this diplomat really means what (s)he said. The fact that the Brexit Task Force has so far not bothered informing the staff about what is in preparation with respect to the employees of the institutions, not even those who have British origins, almost a year after the Brexit referendum, is not a good sign. The article in The Guardian emphasises that the EU has promised transparency, as opposed to the UK negotiators who apparently want secrecy. We have some doubts about this transparency pledge by the EU, see top of page 4 of our May newsletter. Continue reading Pensions and Brexit

SOS your pension! – G2004 is exploring SOLUTIONS

  • Other institutions, in particular the European Investment Bank, have already taken precautionary measures. Indeed, the EIB recently switched from a notional pension scheme similar to the pension scheme of EU officials to a fully-funded pension scheme (see here).
  • Some more clairvoyant managers (as well as younger managers) are trying to move the lines on pensions. The Commission reviewed in February 2012 four scenarios to create a real pension fund (see here).

Continue reading SOS your pension! – G2004 is exploring SOLUTIONS

SOS your pension! – The EU pension scheme is a barrier to mobility

  • For those who choose to leave the institutions before reaching 10 years of service, “transfer-out” of pension rights to a private scheme is possible but under very strict conditions that limit the range of financial products available for the transfer (see here). In particular, the available private schemes charge a high entry fee because they are fully aware that their customers have no viable alternative.
  • For those who remain for more than 10 years in service, the “transfer-out” of pension rights can only be back to national systems where the applicable conditions are left to the discretion of national authorities. In particular, there is no transparency on the amount of pension rights that the “transfer-out” will generate in countries where pensions are based on an annuity principle (countries where in order to get a pension, you need to have contributed for a number of years).

Continue reading SOS your pension! – The EU pension scheme is a barrier to mobility

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

SOS your pension! – The facts: EU pension scheme for dummies

If you thought you were already shipwrecked by the 2004 and 2014 staff reforms as regards your career perspectives as well as your salary, you ain’t seen nothing yet. Wait until you are old and frail and want to draw on your well-deserved pension. That’s when the real trouble starts. In this article, Generation 2004 takes a closer look at the EU pension scheme. Can we avoid the many icebergs that lurk around our pension scheme? In particular, what are the chances that EU Member States (MS) pay the €40 billion pension liability accumulated since 1958? Can we prepare a lifeboat in case the scheme were to founder? Continue reading SOS your pension! – The facts: EU pension scheme for dummies