Parliament plans to slash MEP pension fund amid deficit crisis
The European Parliament plans to cut by 50% its pensions programme for former lawmakers in a bid to reduce the pension fund’s deficit from €310 million to €86 million, following an agreement by the Parliament’s leadership on Monday evening.
The system pays former MEPs 3.5% of their salary for each full year in office, up to a ceiling of 70% of their salary. At present, the post-tax monthly wage for MEPs is €7,647. There are currently 914 ex-members benefiting from it.
The agreement will reduce pensions by 50%, freeze the automatic indexations, increase the pensionable age from 65 to 67, and introduce a voluntary clause of withdrawal from the pension scheme via a one-off payment, the size of which depends on time served in Parliament.
The deal was made at a behind-closed-door meeting of the Parliament’s bureau, which brings together President Roberta Metsola and the Parliament’s 14 vice-presidents and is responsible for the internal functioning of the assembly.
MEPs aged under 63 who have served one parliamentary term are eligible for a pre-tax payment of €50,900.
The deficit had become an existential problem. With annual pension payments set to cost €23 million per year until 2030, the fund would have run out of capital in the first half of 2025.
Under the new proposal, the total future payment obligation has been reduced from €353 to €130 million and it is foreseen that the fund will run out of money by the second half of 2027.
Without reform, the Parliament’s liabilities under the pension scheme are estimated to be above €20 million until 2047, according to a document circulated ahead of the bureau meeting and seen by EURACTIV.
However, the agreement, which still needs to be formally approved by MEPs, would still leave an €86 million deficit that would likely have to be covered by European taxpayers. Should the Parliament simply default on the pension payments, an option which was discussed by the Bureau, it would face a legal challenge.
The pension regime came into force following the 2009 European elections, which saw the creation of a new statute for MEPs as part of a wider overhaul of the rules on pay and benefits for staff in the Parliament.
However, the European Parliament specified that further actions can be taken on the matter.
“The measures decided, once finalised, would safeguard general and EU tax payer’s interest while complying with EU law and securing minimum level of subsidence of beneficiaries,” a Parliament press officer told EURACTIV.
“It was further agreed to review the situation and the impact of these decisions in 2024. If necessary, further action can be envisaged,” the officer added.
In the meantime, some MEPs, including Heidi Hautala, a Green vice-president of Parliament, have urged better off deputies to quit the scheme.
In 2024, a new European Parliament will be constituted following the European elections that will be held between 6 and 9 June.
2024 EU elections confirmed between 6 and 9 June
The next elections for the European Parliament will be held between 6 and 9 June 2024, according to a letter by the Swedish minister of EU affairs, whose country holds the rotating EU Council presidency, to the European Parliament President Roberta Metsola.
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