The 2004 and 2014 staff regulations reforms introduced discrimination towards colleagues hired in the post 2004 generation, most of them from the – at the time – ten new Member States, which later got to 12 and eventually 13. These reforms introduced many changes affecting a wide range of working conditions for these newer colleagues while not touching most of the benefits of the already existing civil servants. Noteworthy are:
Continue reading A little reminder why Generation 2004 MUST exist
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.
Continue reading Updated conversion coefficients for transfer of pension rights
We said it all along; now it is official: EU officials unhappy
For several years, Generation2004 has been pointing out that something is not working well with how EU institutions are treating their own staff. Along the way, we have consistently proposed constructive solution to reverse the path towards unhappiness of staff. However, it looks like the “establishment”, with support of some staff organisations doesn’t see the same and proceeds with its own agenda serving personal interests and personal egos. We believe however, that staff should be treated differently and, most importantly, it should be listened to. Needless to say, but most of our claims have been disregarded throughout time. Continue reading We said it all along; now it is official: EU officials unhappy
Generation 2004’s position on pensions
*Update 21.03.2023 take advantage of the PMO events on pension rights and the transfer IN/OUT of pension rights*
As explained in our campaign manifesto, Generation 2004 defends the EU civil service but with a difference: we do not aim to defend the acquired rights at all costs. Instead we are in favour of equal pay for equal work. We do not want to open the staff regulations – although we have no doubt that this will happen again – but we try to promote concrete and realistic measures to go towards a more egalitarian treatment of all staff and pensioners. Continue reading Generation 2004’s position on pensions
Generation 2004’s position on pensions
First, Generation 2004 welcomes the debate with Union for Unity (U4U) [1], 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:
- U4U’s position is to defend acquired rights at all costs
- U4U argue that our pension scheme is fair to everyone
- U4U argue that our pension scheme is sound
- 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…)” [2].
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 [1]. 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 (EIB), 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).
The basic idea behind these scenarios is to move beyond the current “notional” fund, for instance by allocating all new pension contributions to a real pension scheme. However, the inertia of the pension scheme is such that MS and the decision makers in general, failed to take any action during the reform. In practice, setting up a real pension fund would mean that MS would have to pay real money to this fund, which is difficult to do while they are paying the huge cost of pensions of those who are already retired. However, some measures (see below) could help to kick-start a real pension fund.
In this context and in order to avert a potential disaster for our EU service pensions, Generation 2004 requests that without further delay, the Commission explore the following options:
- Introduce some form of special levy on current pensions. As this would formally entail a new reform of the staff regulations, which the current senior management of the institutions (in liaison with the old unions) will oppose at all cost, one possibility would be for the Council and the EP to introduce changes to the EU protocol on privileges and immunities. Indeed, the protocol specifies the rates of community tax. The protocol could be modified so that high pensions would be taxed at higher rates than salaries. A reform of the protocol, which is totally outdated anyway, could be carried out without opening again the Pandora’s box of the staff regulations.
- Introduce a separate calculation of the actuarial balance [1] of the pension scheme according to the pension benefits that one can anticipate: those with a high accrual rate [2] of pension rights (2%/year), a low retirement age (60) [3], and who benefitted from favourable conditions for “transfers-in” (before 2009) should contribute a higher fraction of their salaries to sustain the actuarial balance of the pension scheme than those who ended being lumped with the worst conditions. As long as the staff as a whole, 1/3 contributes overall to the actuarial balance of the pension scheme, changing contributions of different categories of staff to the scheme could be “internal cuisine” that could be implemented without touching the staff regulations (in particular without touching Article 83). Differentiated calculation of actuarial balances would be a way to ensure that those who have already paid the price of the 2004 and 2014 reforms do not pay again to sustain the pension rights of those who are more privileged in the likely event that MS embark on a new wide-ranging reform.
- A review of the retirement age is foreseen for January 2019. The retirement age could be differentiated according to the pension benefits that one is entitled to (those who receive the highest benefits would be asked to work longer).
- Introduce a fully-funded pension scheme. Such a scheme could either replace the current notional fund – like in the EIB (requiring a new reform of the staff regulations) or could supplement the current notional fund. In the latter scenario, the notional fund could become a first pillar and the fully-funded one a second pillar, as is in place in many MS. The second pillar could be designed so as to allow transfers-in/transfers-out in a more flexible and fairer manner than what is currently possible with the notional fund. This would allow newcomers (actually anyone who has not yet transferred-in pension rights) to transfer-in their rights under decent conditions and those who leave (either voluntarily or because their contract comes to an end) not to be penalised.
- Notwithstanding the proposal above, the Commission should propose a financial product to which employees who in total have worked less than 10 years in the Institutions could subscribe to when “transferring-out”. Such a fund would obviously be of use to the many precarious colleagues under contract and temporary agent conditions. It would also be of use to the ever-growing number of officials who are actively considering leaving the institutions and looking for better opportunities elsewhere. Directorate-General for Economic and Financial Affairs (ECFIN) already manages funds for the Commission and could propose a fund that would be much more favourable than the few funds that are currently available from the private sector (which are in most cases run by small financial institutions that might no longer be around when comes the time to pay the pension). Moreover, the possibility to transfer-out to several funds should be offered, so that no one would be forced to put more than €100000 into any individual fund (€100000 being the guarantee provided by MS on deposits in the EU in case of bankruptcy of a financial service provider).
- We particularly invite the new Commissioner for Human Resources – Vice-President Georgieva – as well as all responsible policymakers in the European Parliament (EP) and the Council to explore these proposals with us. In order to fuel the debate, Generation 2004 welcomes additional suggestions from its members and will study them in depth. In particular, those who have a good knowledge of their national pension schemes are invited to contact us as it is becoming more and more obvious that the senior management of DG HR has no clue as to how the national pension schemes function. In order to negotiate a solution with MS, it is important to understand how their schemes function and to understand how their reform could lead to a reform of our own pension scheme. Let’s not wait until our pension scheme hits the iceberg to think about whether there is a life-boat!!
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[1] The annual pension contribution of the staff as a whole is designed to finance one third of the service cost under the pension scheme, i.e. a series of payments that will arise in the future. For that purpose, the series of payments for European civil servants has to be evaluated at its present value (using an interest rate “discount rate”). The computation is thus an actuarial valuation.
[2] ‘Annual accrual rate of pension rights: The rate at which an employee build up pension benefits whilst working (2 %, 1.9 % or 1.8 % per year). For example, an annual accrual rate of 2 % means that, for each year of service, the employee accumulates 2 % of pension benefits.’ ECA, 2019, Special report no 15/2019: Implementation of the 2014 staff reform package at the Commission – Big savings but not without consequences for staff
[3] Pensions rights amount to 2% of the last salary accumulated per year of service for the pre-2004 staff, 1.8% for the post-2014 staff, 1.9% for the rest of the staff who presently represent the majority of staff members.
Annual pension accrual rates and retirement age were made worse with each staff reform (see Slide 13).
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
