May 24, 2024

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The European Parliament Pension Fund needs 300 million euros.  Does the taxpayer pay?

The European Parliament Pension Fund needs 300 million euros. Does the taxpayer pay?

Research site Investigate Europe ran a story this week: an old European Parliament pension fund in bad papers. Without a bailout, the fund will be empty during 2024 or 2025. About 900 former and current MPs will not be able to receive the pension to which they are entitled. Among them are Eurosceptics such as Britain’s Nigel Farage and France’s Marine Le Pen.

A problem that has been around for decades, according to Bart Stace. For twenty years he represented the Green Party in the European Parliament. As early as 2003, half the globe warned: This pension fund is doomed. And it is the European taxpayer who threatens to pay the money. “It’s just a scandal that this has not been resolved in all this time.”

Only a bailout with money from the European Parliament can keep the pension fund afloat. This means that the European taxpayer contributes between 308 and 313 million euros. And this is difficult because the accrued pension rights were very generous.

Big mutual differences

This fund comes at a time when MEPs do not yet have their own Statute and are being paid for by their National Parliament. So the differences between the members of parliament were enormous – some of them were not even paid an actual wage. To smooth things out, a pension fund was set up, which members of Parliament could join voluntarily. They build retirement equity through monthly subscriptions.

The system was very generous from the start. After only five years of contributions, and at a later stage even after two years, members of Parliament were entitled to a certain amount of pension until the end of their lives. The result: It soon became apparent that expenses would always be much higher than income.

According to Investigate Europe’s calculations, an average of €2,200 in pension per person was paid out by the fund last year. Some MPs are even entitled to a maximum of €6,800. The pension fund has been so beneficial that those who have sat in Parliament for one full term have already had their contributions fully refunded after four years of retirement. Everything after that was pure profit. Sooner or later the fund was doomed to collapse.

It closed in 2009

Staes addressed the problem in 2003 in the annual budget recommendations of the European Parliament. Year after year, the same concerns were expressed. Parliament has already intervened, including by raising the minimum age for payments and imposing a tax on the amount. In 2009, the Pension Fund was closed to newcomers.

But in the meantime, nine hundred members of Parliament had already joined. They retained their rights to future payments. Parliament had already repeated several times that the bill should not be passed to the European taxpayer, but the Bureau (the day-to-day management of the European Parliament, in other words) thought otherwise. And in 2009 they confirmed that the amounts would be paid in full even if the fund was empty.

Not unimportant: fifteen of the twenty members of the Bureau belonged to the Fund. They all voted on the guarantees of the pension fund. “The office has ignored warnings from Parliament for more than 20 years,” Stace says. “There was a very strong lobby, with names resounding from Parliament, not to abolish the Fund and to preserve its own benefits.”

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