Johan Van Overtveldt: “The European pension fund deficit must not disadvantage the taxpayer”

23 May 2023
Johan Van Overtveldt

The European Parliament is taking measures to limit the budget of the Parliament’s supplementary pension fund. “It’s a step in the right direction, but not enough,” says Johan Van Overtveldt, chairman of the EU Budget Committee. In recent years, he has repeatedly warned of the financial consequences and reputational damage associated with this “irresponsible system”.

The supplementary pension fund that, although it is being phased out, carries a loss of EUR 400 million and hangs over the Parliament’s budget like a sword of Damocles. It can ultimately also affect the taxpayer. “It is an unreasonable and untenable arrangement,” Van Overtveldt said earlier this year.

The Bureau of the European Parliament has now decided to intervene. It proposes halving the fund’s payouts to former MPs, stopping indexing, raising the entitlement age from 65 to 67, and inviting beneficiaries to accept a one-off exit scheme. This package would most likely extend the life of the fund until the second half of 2027 and reduce the gap of nearly EUR 400 million to around EUR 86 million. The question of what should ultimately be done with the fund and the deficit will thus also be shifted to after the 2024 elections.

Deficit pushed forward

“This is a step in the right direction, but it is not enough,” responds MEP Johan Van Overtveldt. “It is good that limits are placed on a system that cannot be justified. But the problem is only partially addressed; the remaining deficit is being pushed forward.”

Financed with taxpayers’ money

The supplementary pension fund was set up in 1990. This provides MEPs with an additional pension Bonus Career break for the calculation of, specifically, civil servant’s pension. In order to obtain the annual pension amount in the public sector, the reference salary is multiplied by the number of employment years. That result is then multiplied by the 1/60 career break, the so-called bonus. An advantageous break applies for certain employees, so that they can reach the maximum pension more quickly. bonus on top of the regular European Parliament pension. The contributions made by MEPs to the fund could be deducted from a monthly expense allowance, which the European Parliament subsequently replenished by two-thirds. In fact, that meant that the supplementary fund was largely financed with taxpayers’ money. In 2009, the fund was stopped, or rather, it was decided to phase out the scheme. From then on, it was no longer possible to join it. However, the fund still has about 1,000 beneficiaries, including the widows and orphans of former MEPs.

The regular pension is sufficient

Van Overtveldt repeatedly pointed out the problematic nature of this arrangement in the past. He remains critical: “MEPs are generously compensated for their work, and the regular pensions are more than sufficient. This supplementary pension fund - actually almost entirely financed with community money - may be phasing out, but it remains particularly detrimental to the reputation of the Parliament. They have actually waited too long to intervene. I repeat my appeal: the deficit must not disadvantage the taxpayer.”

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