EUROPE - Members of the ABSL voluntary pension fund for Members of the European Parliament (MEPs) have launched a legal action against the European Parliament over changes to the pension scheme.

The Bureau of the European Parliament - which comprises the president and 14 vice-presidents - implemented reforms to the scheme in April which extended the retirement age from 60 to 63, abolished early retirement and withdrew the right to a 25% cash lump sum. (See earlier IPE article: MEP reforms approved as EP votes against extra contributions)

However, 65 existing and former MEPs have launched a legal challenge in the European Court of Justice (ECJ) appealing against the reforms, particularly as the reforms also impact MEPs that left the parliament between five and 15 years ago, yet these 125 members have not been informed by the Parliament that their pension benefits have changed.

This means an MEP who left the European Parliament 10 years ago at age 48 could be working towards a retirement age of 60 and a lump sum, or early retirement at 58, yet the rules have changed and the benefits taken away without them being informed.

The case was lodged with the ECJ on 18 May, and at its meeting on 30 May the board of directors of the ABSL pension fund agreed to support the action of the MEPs over the issue of protecting members' "vested rights and legitimate expectations".

It said the "Bureau must in its decisions ensure respect for certain general principles of law" and added that "members' vested rights and legitimate expectations are required under such principles to be protected".

So following the Bureau's decision, it confirmed "the Board of Directors of the Fund have agreed to support a number of members of the European Parliament's Voluntary Pension Scheme in taking legal action in the European Court of Justice against the European Parliament".

Richard Balfe, chairman of the pension fund, added: "Whilst it is regrettable that this action is necessary, the Board of Directors believes it has a duty and responsibility to protect the acquired rights and legitimate expectations of members of the pension scheme and their families whether they be current, or former Members, of the European Parliament."

The changes were introduced by the Bureau in April following confirmation that the deficit in the scheme had quadrupled to €120m at the end of 2008. However, the removal of the early retirement and lump sum benefits may actually negatively impact the fund, as the way these are calculated make them cost-neutral to the scheme and even beneficial over the long-term. (See earlier IPE article: MEP's pension faces reforms to cut deficit)
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