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).

With respect to transfers-out (from the EU scheme to a national scheme), the points made in the special issue on pensions remain valid too. In particular, there is little flexibility for “transfers out” and Contract agents are the primary victims of this barrier to mobility. This latter point is even more worrying now than when the special issue on pensions was published because the number of CAs has gone through the roof since then. Indeed, in order to save money, the Commission is replacing permanent officials with CAs on a massive scale while claiming to the outside world that it stands for workers’ rights.

It is thus worth recalling a few points that are directly relevant to the CA3bs who are going to be forced to leave the institutions in the coming years because of the 6 year rule.

The first point is that unless you have reached 10 years of seniority in the EU pension scheme, or expect to do so during your professional life, or expect to be again in service in the institutions when you reach pensionable age, you are supposed to transfer-out. 3 options are available to you for transfers-out:

  • Do nothing. This option is valid if you expect to find another EU job in the foreseeable future so that you manage to reach the required 10 year seniority or reach pensionable age during your last contract. Beware, though, of the erosion of the value of your pension rights because of inflation. Your pension rights are currently worth a certain amount (determined according to a complex formula, (see Art 4 of pdf), they will be worth much less in 10 years-time if inflation picks up again. What will happen to the accumulated pension rights of UK citizens after Brexit is even more uncertain at this stage.
  • Transfer out to a private pension 3 funds are recognized by the Commission in Belgium.
  • Transfer out to a national pension scheme. This seems to work if one transfers out to the Belgian pension service (Office National des Pensions) are they are well aware of the rules. In other countries, the situation is more complex. In France, for instance, unless one is an expert in their 37 pension schemes, one should transfer to the main scheme, the Caisse Nationale d’Assurance Vieillesse (CNAV). We have contacted CNAV. They essentially replied “transfer-out the money, we will tell you later how much it is worth in our scheme”. Tough luck if they decide that the capital that you transferred-out is worth peanuts in their pension scheme!

In the event that the Staff Regulations are re-opened in the wake of Brexit, the Commission would be well-advised to propose new rules for transfers-out that would be more favourable to CAs. Leaving them alone to deal with the extremely complex rules in their MS of origin or in the MS where they find a new job is unacceptable. We would expect that the Commission exerts the same level of care for its (former) CAs as it did in the past when enshrining and defending acquired rights of generously paid pre-2004 staff and pensioners!

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