The European Parliament’s supplementary pension fund is “offensive and unsustainable”

10 March 2023

The European Parliament has a controversial supplementary pension fund that, although it is being phased out, hangs over the Parliament’s budget like a sword of Damocles, ultimately also affecting the taxpayer. Yesterday, the European Court of Justice ruled on two objections related to the scheme. MEP Johan Van Overtveldt wants to use that ruling to make drastic adjustments to the pension scheme. “MEPs are already well compensated. This extra fund is particularly detrimental to the reputation of the Parliament.”

The supplementary pension fund was set up in 1990 and 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 their 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.

1,000 beneficiaries

In 2009, 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 fund, which has been managed by a Luxembourg-based investment fund since the start of the phase-out, is currently running losses of approximately EUR 400 million. The difference between the net asset value and the future obligations is invariably far too great. The pension fund and its board of directors are no longer a component of the European Parliament.  The question is also whether the fund has taken sufficient measures to avoid the current problems.

Particularly detrimental

Johan Van Overtveldt, MEP and chair of the Budget Committee, has warned several times in recent years about the financial and reputational consequences for the European Parliament: “I have repeatedly pointed out the problematic nature of this arrangement. It is offensive. 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. Nor can it be acceptable for the accumulated deficit to weigh on the functioning of Parliament, let alone on the taxpayer.

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