EUROPE - Staff at the European Central bank (ECB) are planning to hold an initial 90-minute strike next month, in protest against the bank's "unilateral decision-making" concerning changes to its defined benefit (DB) pension fund.

ECB sources have confirmed reforms to the pension scheme will come into effect from 1 June 2009 which mean while the normal retirement age will stay at 65, the subsidy for early retirement has been reduced and contribution rates have been increased by 1.5% for both staff and the ECB.

Despite a two-year consultation process, however, the International and European Public Services Organisation (IPSO) union, which represents over 40% of ECB staff, has told the bank that members will hold a 90-minute strike on 3 June 2009 over labour issues, including pensions, with the objective of:

Negotiating and concluding a framework agreement between the ECB and IPSO on the implementation of collective bargaining in relation to changes to conditions of employment and other labour issues; Concluding a collective agreement between the ECB and IPSO on the Pension Plan with the aim of "full grandfathering", or providing equivalent value, for members and their dependants concerning their pension entitlements, so no change is made to the scheme as it is laid down in the original Conditions of Employment.

The IPSO did confirm in its letter to the ECB's executive board that the strike "is not intended to impair the ECB's operational capability but serve as a public communication device to raise awareness about the democratic deficit at the ECB", and added "this deterrent/warning strike action will constitute the first of our announced further action".

In response to the strike announcement, the ECB stated: "The strike has been announced with the appropriate notice period. IPSO has announced the intention of its members to strike on 3 June 2009 between 16:00 and 17:30 (and invited also non-IPSO members to join). A framework is in place at the ECB to guarantee that minimum services as approved by the Executive Board are ensured."

The reforms to the ECB retirement plan, which at the end of December 2008 had 1,471 active members, were approved by the governing council of the ECB on 5 May 2009, and the bank claimed "several suggestions made by staff representatives were taken on board, such as an increase of contribution, to finance revised factors for early retirement and compensation for staff without a spouse at retirement".

It said the reforms are "necessary, as a matter of good governance, in view of structural changes in the demographic and economic environment - specifically the increase in longevity and decline in long-term interest rates - to ensure that the plan remains viable in the long run without a structural funding gap".

The ECB also suggested the new plan will be simpler, with a "clearly defined two-pillar structure". The first pillar is said to provide a DB pension for staff and their dependents at the same level as the minimum guaranteed pension of the old plan - 2% of revalued earnings per year of service - while the second pillar is a DC section that allows members to make additional voluntary contributions to increase their pension.

The changes will also see contribution rates increase from 4.5% to 6% of basic salary for members, and from 16.5% to 18% for the ECB, while staff will also be able to make additional monthly contributions of up to 12% of basic salary in the voluntary second pillar of the new scheme.

Ahead of the introduction of the new scheme, the ECB is tendering a contract for actuarial services for both the ECB Retirement Plan and the new Pension Plan for the period between 2009 and 2013.

Responsibilities will include providing actuarial advice, producing annual actuarial valuations of the assets and liabilities of the schemes on both an IAS19 basis and for the annual accounts; conducting triennial valuations, with the next one scheduled for 2014, and issuing actuarial statements.

The tender notice confirmed that the new ECB pension scheme will become operational on 1 June 2009, and "from that moment, the rights obtained under the Retirement Plan will be frozen and pension rights will continue to be built up in the new scheme. Consequently as from that moment 2 schemes will be operational".

The closing date for applications for the five-year contract is 2 July 2009, while full details of the changes to the pension scheme will be published shortly in an updated conditions of employment document on the ECB website.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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