EUROPE - Reforms to the voluntary pension fund for members of the European Parliament (MEPs) should allow the scheme to continue to pay benefits "for as long as necessary", and without the need for taxpayers to cover the actuarial deficit of €120m.

The Bureau of the European Parliament  - which comprises the president of the parliament and 14 vice-presidents - yesterday formally confirmed three reforms to the scheme by adopting the minutes of its meeting on 1 April 2009.

Under these reforms, members of the voluntary pension fund will no longer be able to take early retirement, they cannot take a 25% cash lump sum from their pension and the retirement age will increase from 60 to 63. (See earlier IPE article: MEPs pension faces reforms to cut deficit)

The Bureau - which lays down the rules of the European Parliament - claimed at yesterday's meeting that the measures will ensure "the fund's liquidity will be maintained and taxpayers will not be asked to cover the fund's actuarial deficit", after it was recently confirmed that the deficit had quadrupled from €30m at the end of 2007 to around €120m a year later.

The Bureau admitted the "cover ratio of the MEPs' additional pension fund has significantly decreased, as is the case with many other pension funds", however it added that it had now formally confirmed its decision "not to make provisions for covering any losses".

That said, the body recognised the European Parliament "has a legal obligation to guarantee the pension rights of the current members of the fund and it therefore took the above-mentioned measures to improve the fund's liquidity".

It noted despite the current economic circumstances the pension fund "should be able to honour its commitments until well into the 2020s", and claimed the reforms should allow it to continue for "as long as necessary", as the pension fund is being "phased out" with the application of the single Statute for Members in July.

It therefore claimed the fund's commitments are "finite", because under the new Statute any differences in the remuneration of MEPs, which are dependant on their country of origin, will be removed and replaced with a basic monthly salary of €7,000.

In addition, salaries will be paid from the European Community budget and not national budgets and the retirement age will be set at 63, with "the whole cost of pensions being borne by the European Parliament".

Meanwhile, in a plenary session of the European Parliament today, MEPs approved the budget of most institutions including the parliament, although following on from the report of the Budgetary control committee last month members voted that "under no circumstances will Parliament in the prevailing economic situation provide extra money from the budget to cover the [pension] fund's deficit".

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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