Pension funds for former Members of the European Parliament are running out, and the European Union risks having to withdraw money from its taxpayer-funded budget to pay the dues. More than 23 million euros per year, which can be taken from the Community budget, financed with EU taxpayer money, may be needed to close the gap of more than 300 million euros. It is also for this reason that the Strasbourg Parliament is considering other options, such as changing the conditions for access to pension benefits.
Parliament created a supplemental pension scheme in 1990 and maintained it for 30 years until it was closed to new members in 2009 when a combined pension scheme came into effect. The fund, which continues to pay checks to hundreds of ex-politicians, is now in dire straits, Politico writes, partly because MPs’ contributions were stopped 14 years ago. The gap of around 308m euros will be difficult to fill, with the forecast that the fund will run out as early as 2024.
The fund, whose investments are managed by a Luxembourg-based company, currently has just 55m euros out of the 363m euros expected to be paid out after 2074. The condition of the fund deteriorated rapidly,” reads a note from the general secretary, Alessandro Chiocchetti.
“The fund will soon run out of capital,” wrote Chiocchetti in the document reviewed by Politico, while there is still uncertainty about what to do. There are three possible options, the first being to do nothing and let the fund go bankrupt, meaning that Parliament (and taxpayers) will “most likely” have to assume their retirement obligations. The second option would be to liquidate the fund and then offer the beneficiaries a large lump sum. Finally, disaster can be averted by making a number of changes, such as raising the retirement age or simply reducing the amount that beneficiaries receive.
“To be honest, I don’t think we should waste taxpayer money anymore on a structure that’s a bit like a pyramid scheme,” said Daniel Freund, the German lawmaker in charge of the Greens. Ponzi schemes (named after its creator) imply an economic model that promises early investors huge profits at the expense of later entrants, thus creating a kind of fraudulent investment that can only survive through entry. your new members
The head of the fund, Stephen Hughes, said Parliament must honor its commitment to pay retirees. “Parliament got into this situation with its eyes open,” Hughes repeated. “These members have served faithfully for years and are now uncomfortable with the way they are being treated,” he added.
The longer a person has served as a deputy, the higher the entitlement to retirement: According to the data, 914 people (many former MPs or surviving family members) currently receive an average of 2,206 € per month. Parliament has waged various legal battles against beneficiaries, for example it has succeeded in raising the retirement age (now 63). Following objections from fund representatives, the Court of Justice of the European Union issued a final decision in March confirming Parliament’s reasoning and reaffirming the Bureau’s legal right to reduce fees proportionately.
Lara Wolters, a Dutch lawmaker from the Socialists and Democrats group, argued that “no way forward should come at any cost to European taxpayers”. “Even if Parliament is obliged to ‘sustain’ this Fund, it is not legally obliged to guarantee current levels of payment”.
Source: Today IT
Karen Clayton is a seasoned journalist and author at The Nation Update, with a focus on world news and current events. She has a background in international relations, which gives her a deep understanding of the political, economic and social factors that shape the global landscape. She writes about a wide range of topics, including conflicts, political upheavals, and economic trends, as well as humanitarian crisis and human rights issues.
