Brexit triggers row over British EU civil servants' pensions

Written by Martin Banks on 3 August 2016 in News
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Battle lines are being drawn for a potentially bitter dispute over liability for paying pensions owed to thousands of British EU civil servants when the UK finally leaves the EU.

It is unclear who will be responsible for paying EU pension promises post-Brexit | Photo credit: Fotolia


The EU has estimated its pensions liability at €60bn for all retired and current officials, with annual payments currently running at about €1.4bn. 

Some 1730 British nationals currently make up almost eight per cent of the 22,000 retired EU officials, but the UK insists it cannot be held responsible for their pension entitlements which, it says, are the responsibility of EU institutions.

But EU officials say Britain would be expected to pay its part of the EU's pension promises when it finally quits the EU.


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Félix Geradon, deputy head of Union Syndicale-Bruxelles, the biggest EU union, said, "The UK is correct in its point that paying the pensions is the responsibility of the European budget. But the budget is a common responsibility of the member states."

According to some senior EU officials, one compromise could involve the UK paying a lump sum to close its exposure and create a standalone pension fund.

Britain has long argued that the EU's pensions are too generous and pensions are one of many areas where complex joint liabilities will need to be unravelled. 

Failing to find a solution could put at risk pension payments to about 3000 UK officials who have worked in the EU institutions, including the Commission and Parliament, since 1973.

The typical EU official is entitled to a pension worth no more than 70 per cent of final basic salary, at a 1.9 per cent accrual rate - the proportion of salary earned as pension each year.

An average EU yearly salary is approximately €78,503, rising to about €91,064 if an employee can claim a tax free 16 per cent expatriate allowance. An estimated 70 per cent of EU staff do this.

In the past, the Council has voiced concerns about EU pay, tax, pensions and career-related issues.

Partly as a response, the Commission plans to cut its administration costs by €6bn in the period to 2020. Basic gross monthly salaries for Commission staff currently range from about €2600 for a secretary to about €18,000 for a head of department, and about €20,000 for a Commissioner.

The issue hit the headlines recently, with demands that the Commission withhold the EU pension of its former President José Manuel Barroso, who was appointed chair and senior adviser at the international wing of the American investment bank Goldman Sachs. MEPs said the appointment "damages the reputation of the Commission and threatens the credibility of the EU."

For three years after they leave office, former presidents of the Commission are allowed to claim 60 per cent of their salaries, or €15,000 per month.

 

About the author

Martin Banks is a senior reporter for the Parliament Magazine

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