When Great Britain became a Member of the European Union in 1975, it demanded a change in the pension scheme for the employees of all EU institutions. Other EU Member States at the time did not object, and so the pension fund of EU civil servants was absorbed by the EU budget.
Since then, all pensions of retirees are paid out by the EU budget, which keeps all social security contributions of all EU employees.
So far so good, however….
For some time now, and especially after the Brexit, the European Union is not in good shape – no matter what its leaders think. For the first time since the establishment of the EU in 1956, the possibility of the dismemberment of the Union, even remote, cannot be excluded.
Reasons for a possible dismemberment are more than one: deep divisions among Member States over the refugee issue, galloping unemployment, protracted austerity resulting in endemic misery and the asymmetric threat stemming from the uncontrolled growth of non-conventional parties. These are all issues, which the Union’s leadership does not have the power to address in a satisfactory manner since these all depend on the Member States.
In the worst case scenario, even if remote and within the limits of statistical error, taking as a working hypothesis the “what if” as regards EU dismemberment, the next question should be who will pay for the pensions of the EU employees?
In this “what if” scenario there will be no community budget anymore. Each Member State will have to include EU retirees in its own pension scheme. Therefore, let’s take the case of a retired Head of Unit of the Commission with 35 years of service. His pension may range from €400 to €3,000 per month, before national taxes.
This is unfair. First of all, with few exceptions, the great majority of EU staff is honest people who committed their lives to the success of the European project, which become the project of their existence. They deserve to be respected for what they are and must not be deprived of their pensions for which they have paid huge contributions every year.
By just thinking of the possibility of reducing their pensions on the average to approximately 20% of what they should be, nobody in the Commission or in any other institution is in the mood to work productively and with the imagination needed to address today’s problems and avoid the collapse.
In this context, the uncertainty of their future, the best and most sophisticated administration of the world is turning into a body of pen-pushers.
The solution is that now the UK is politically out and before anything else, to re-establish the EU employees’ funds and give them back from the EU budget what it is due. This includes initial capital, contributions since 1975, and a reasonable interest.
Now that the Brits (presumably) are on the way out, it is an opportunity to review the UK-inspired, Neil Kinnock reform. On this issue, Kassandra will return.