Newsletter from U4U : May 2018 – n°63
An ageing population, global warming, uncertainties about our energy future, the continued fragility of the banking system, tensions and violence at our external borders, threats to the rule of law within the European Union, loss of credibility to our citizens, growing inequalities: the challenges facing the EU are growing all the time.
The EU needs a suitable budget to overcome these challenges. And yet, in the budgetary context stemming from the withdrawal of the United Kingdom from the Union, the worsening political situation in Europe and the reluctance of most of the Member States, the Commission’s ambition has been limited. The new financial framework for 2021 / 2027 is similar to that for the current programming period (1.11% of GNP instead of 1.1%), itself down compared with previous periods (1.25% in 1993–1999!). This level will not enable us to do what is necessary: combine strict compliance with the Accountability Pact at national level with recovery at European level, in favour of sustainable development and employment, in order to meet our challenges and address the issue of populism.
It is true that, given the constraints, the Commission has done what it can to give added momentum to European integration by placing the emphasis on European added value (research, security, climate, defence) through its spending proposals. It has sought to offset the decrease in structural funds by increasing co-financing by regional stakeholders, and even by redrawing the map of eligible regions. It has also, for the first time, linked solidarity with respect for our democratic values: solidarity can only apply in an area that respects the rule of law and European values. Will this be enough to face up to our challenges, to overcome the impatience and disappointment of some of its citizens, to reverse the progression of populism? For the moment, we can only hope so. What is more, the game is not yet over as the Member States have not yet adopted this budget, on which they usually inflict severe cuts, even if the bloc of States wanting a limited budget is opposed by an equivalent bloc of States in favour of a more ambitious budget. The staff must stand alongside the Commission to defend this budget, or even increase it.
To meet all these challenges, the EU, now more than ever, needs a competent, motivated and efficient civil service. Defending the European Civil Service means defending the Union and its citizens. This is U4U’s battle and the motivation underlying the principles that our union emphasises to demand a coherent and forward-looking staff policy.
The Commission’s document on the multiannual financial framework includes a footnote that surreptitiously introduces the announcement of discussions that would lead to a major reform:
"In the framework of the mid-term review of the Multiannual Financial Framework in 2023, the Commission will reflect on the feasibility of the creation of a capital-based pension fund for EU staff."
During the various meetings with the Commissioner, the trade unions have never been informed of the Commission’s intention to have such discussions.
U4U believes that it is dangerous to start a discussion on the pension fund, as it could open the way to a third reform in under 20 years. Article 14 of annex XII of the Staff Regulations provides for an assessment of the budgetary implications of the scheme and of the actuarial balance that could lead the Commission to propose revisions of the Staff Regulations in this area.
At this stage, the actuarial balance is guaranteed by adjusting the level of contributions to the scheme and by the pensionable age, which has already been modified twice since 2004. At present, successfully completing discussions on the introduction of a pension fund based on capital formation, although the Member States are likely to refuse to settle their debts in regard to the budget, only raises concerns within the European Civil Service.
Opening the Staff Regulations risks causing other reconsiderations and weakening it at a time when the general atmosphere is far from calm. 2023 is also the date of the end of the current method, the renewal of which by tacit agreement could be a blackmail opportunity as far as the pension scheme is concerned.
The staff are very aware of the need to maintain the attractiveness of the European Civil Service, whose pension scheme is one of its main benefits. It is therefore important to preserve it, if only to guarantee the balance of nationalities within the institutions.
In less than 15 years, the last two reforms introduced elements that made it possible to significantly reduce the cost of our pension scheme. In future, according to the analyses conducted by members of the administration, it will not be commonplace for the pensions taken by officials to exceed 60% of their final salary, against the 70% maximum accrual rate provided for by the Staff Regulations.
With the above in mind, and to have an opportunity to express the views of staff, U4U has asked the Commissioner to organise a social dialogue meeting to present the Commission’s intentions and the reasons leading to the proposed creation of a fund referred to in the European Commission’s Communication on the MFF.
U4U asks to be partnered with the other trade unions in preparing the study prior to consideration of the pension fund.
See our complete file: Concerning the footnote on page 18 of the Communication of the European Commission of May 2018 on the Multiannual Financial Framework (MFF)
For more than ten years, the European Administrative School has demonstrated its expertise by establishing integrated development programmes (Certification, the training programme for newly appointed directors, etc.) and other programmes in the development of managerial and soft skills.
U4U suggests that, capitalising on this experience, the European Administrative School should become a school of public management like those that already exist in several Member States. The mission of this school would not only be to develop managerial skills, but also to develop a common sense of identity within the institutions and ethical attitudes based on respect and service.
Finally, this new version of our administrative school must include a languages section in its programme. While it is not necessarily a question of integrating all the language teachers, it nevertheless remains necessary to integrate enough to consolidate a certain expertise in this field internally. Acquiring new languages is an integral part of the job of a European official, above and beyond the requirements of the Staff Regulations, which stipulate knowledge of a third language on promotion or for contract staff in order to obtain a fixed-term contract.
During its plenary session this May, the Sickness Insurance Management Committee (SIMC) approved the principle of revising the GIP, some of the provisions of which need to be reviewed. On the one hand, medical developments, new treatments, the emergence of new pathologies, and the reforms of health systems in some Member States invite the reconsideration of some rules and limits; on the other hand, the wording of some provisions has made it difficult to interpret the rules, as it has resulted in them being implemented in a sometimes controversial manner.
With more than a decade’s experience of managing the scheme under the current provisions, the SIMC will therefore adapt them to the current circumstances and plan some simple adjustment mechanisms – such as ceilings, for example – to take account of inflation and the Staff Regulations, which set the reimbursement rates for costs actually incurred (80%, 85%, 100%) though these cannot always be achieved under previous ceilings. This exercise should also make it possible to take account of the contrasting situations of all members, in all places of employment, especially those for whom it is more difficult to access health care and other paid facilities.
This review should take approximately two years. It is an opportunity to review each of the chapters in the light of the needs that emerge and of past difficulties experienced. It also requires the initiation of ethical and/or financial considerations. The calm approach needed requires time for information, training and debate in order to guarantee a stable and robust legal basis for the future and the best possible scheme for members and their families, while ensuring that it remains sustainable.
This project will be carried out using a specific working method to guarantee control of the review process, which is yet to be finalised. A steering group has been formed to set the priorities and schedule, and the SIMC should rapidly create working groups to examine each chapter.
There are therefore a number of different aspects to be reviewed, such as disability, to clarify what is covered by art. 76 of the Staff Regulations and what falls within the scope of the JSIS, and to integrate certain materials more effectively. This process must also include in vitro fertilisation on account of recent changes in society, as in science, meaning that certain frameworks have to be reconsidered. In dentistry, the introduction of annual preventive visits might be considered, along with the improved integration of new techniques and a review of the rules on care and frequency, as well as certain price packages and agreements; homeopathy could be reviewed in light of the numerous studies and advances; the significant developments in ophthalmology should be given more consideration; the medical costs related to dependence should also be reviewed in view of the changing demographic of our population; psychotherapy as a means of preventing psycho-social risks could be rethought; and the question of neglected and rare diseases integrated, etc. This list is far from being exhaustive.
In U4U’s opinion, this project should not be limited to members of the SIMC, the Medical Council and the PMO, but should bring in external experts to shed light on certain areas and the different approaches in the Member States that could provide inspiration. The expectations of staff, which do not necessarily coincide with those of the scheme’s managers, must also be heard.
Our scheme is an original and unique system, one of a kind. Its only source of funding is our employee and employer social security contributions. While it must, of course, ensure continued sustainability, it does have a financial reserve (surpluses from the scheme’s previous financial years) that enables it to cover medical developments.
During the forthcoming works, U4U will ensure that the review process takes account of the specific features of our population, its geographic dispersion, demographic changes and the growing number of seniors. U4U will take particular care to ensure that the provisions are reviewed with the open-mindedness needed to address certain topics, without dogmatism and excessive economic tension. Investment in health is a fundamental need for members, for their employers and for our scheme.
The strength of our scheme, its principal cornerstone, is solidarity. Illness affects us all, with no regard for grade, gender or age. At any time, any of us may have need of the scheme in ways that are out of proportion to our level of contribution. U4U will ensure that nothing can undermine the principle of solidarity.
I- The pension scheme
year, the DG HR and the DG ESTAT will be obliged to apply the provisions of art.
83 bis, para. 3 concerning the five-yearly assessment of the actuarial balance
of the pension scheme:
"The balance of the pension scheme shall be guaranteed by the pensionable age and the rate of contribution to the scheme. On the occasion of the five-yearly actuarial assessment in accordance with Annex XII, the rate of contribution to the pension scheme shall be updated to ensure the balance of the scheme.”
This five-yearly assessment is updated annually (art. 83 para 4), thus making it more comprehensive. As a result, the adjustment of the contribution rate will depend on changes in pay and on the mortality table of the agents, in accordance with the provisions of Annex XII.
At this stage, we have no information on the possible change to the rate of contribution to the scheme applicable from 1 July 2018. The situation will be clearer at the beginning of July 2018.
II- Adjustment of salaries from 1 July 2018
It should be noted that there may be significant changes in the pay indicator (not including inflation) due to changes in officials’ salaries in several countries of the European Union (+ 7% in Germany for 2018 and 2019; increases in the UK and Spain).
However, it is not certain that these increases will be effective and officially communicated to the Commission when EUROSTAT makes its evaluation in September 2018 for the report to the Commission in October. It is therefore impossible to predict the salary adjustment for the end of 2018.
We can imagine an adjustment that is at least in line with the average annual adjustments of recent years (+1.5%). Of course, these figures are no more than the application of an average, and it will be necessary to wait for the information from the DG ESTAT in September 2018 to have a clearer view.
III- 2011 and 2012 adjustments: CJEU judgement expected for summer 2018
Following the refusal of the Council to adjust pay in 2011 and 2012 on the basis of the method then in force, several colleagues brought legal actions. As a reminder, the Commission proposed +1.7% in 2011 and +1.7% in 2012, and the Council granted +0.8% for two years instead of the +3.4% that resulted from the Commission’s calculations. The Court should give its decision before the summer. It is possible that, if the Court rules in favour of the petitioners, the Commission will appeal, as the financial consequences could be very substantial.
With 15 other European associations (see list), U4U has created a European Citizen Platform, supported by several parties (LRM, Generation.s., The Young Socialists, etc.)
The aim of this platform is to encourage a citizens’ debate to defend European integration. It also organised two European rallies on 25 March and 9 May 2018 (see The Link 61, and The Link 62). It also organised a concert at Flagey. The Olla Vogala orchestra played and sang scores from all of the European countries, as safeguarding European integration is also a cultural issue.
The ECP has prepared a questionnaire, the responses to which will be used in citizens’ workshops. You can also take part: please complete this questionnaire.
What is social dialogue? According to the International Labour Organisation, social dialogue includes all forms of negotiation, consultation and exchanges of information between representatives of governments, employers and workers on matters of common interest related to the economic and social policy. It comprises all the processes used within an administration, for example, to ensure optimal understanding between its different components. It is intended to improve the social climate, in particular by resulting in agreements in which there is something for everyone.
Dialogue presupposes mutual respect, and optimal understanding presupposes the desire to … understand one another. Which means listening. And for there to be a dialogue, people must talk to each other. All this can be found in articles 4 to 8 of the framework agreement between the OSPs and the European Parliament Administration: "Cooperation enables all parties to state their positions and aims to achieve common positions."
At the European Parliament, however, social dialogue consists only of informing the Staff Committee of the changes planned by the Administration.
Whether it is the working conditions of interpreters, translators or security staff, or AST transfers, to name but a few topical themes, at the European Parliament it is the Administration that decides, and no one else. And even if the Staff Committee and, more generally, staff representatives have different views, these are neither discussed nor taken into consideration by the Administration.
At the European Parliament, social dialogue is a sham. At the European Parliament, the Administration does not negotiate anything.
March 2018, the Staff Committee issued a resolution concerning the compulsory
transfer of AST staff after the Secretary General, who had simply sent his new
strategy to the Committee for approval, had not used ANY of the suggestions made
by staff to make AST transfers a beneficial exercise for staff or for the
On 26 April, it was the turn of the interpreters’ Delegation to send a resolution to the Secretary General, following the breakdown of negotiations that had no intention of considering the sensible suggestions from staff, but only imposing, by rejecting any change, the new working conditions.
Such an attitude is nonsensical in a place that claims to be an agency of the people, yet holds its agents in contempt, despite the fact that they are also citizens. On the other hand, it has done a good job of uniting the staff, as they are now firmly set against this high-handed and authoritarian administration that pays no heed to the difficulties of staff and their suggestions for improvement.
So as this workforce has had enough of a dialogue without dialogue, listening or respect, the European Parliament Administration will not be surprised when there are calls for strike action.
The social movements and disruption brought on the work of the Institution will be its responsibility alone.
pension scheme can be seen as an investment fund placed in the public debt of
the Member States.” This is a statement confirmed by the Report of the
“In the absence of a specific IPSAS standard covering liabilities related to pension obligations and bearing in mind that the IFRS standards do not fully meet the needs of the public sector, it was decided to apply the rules currently in force. Accordingly, with the Member States collectively guaranteeing the payment of pension benefits, according to the contribution scale set for the financing of expenditure, a debt obligation will be recorded in the assets against the Member States to reflect their commitments.” (…)
The pension scheme is funded by annual contributions and, to maintain the balance of the scheme, if necessary, the rate of these contributions is adjusted annually in accordance with the Staff Regulations. Each year, the contributions must finance the pension rights acquired by the officials during the current year. The officials contribute one-third of the financing of the pension scheme. The annual contributions to cover the pension rights are not built up in a “pension fund” but, rather, kept by the Member States within the framework of the annual budget balance. On the other hand, article 83 of the Staff Regulations for EC officials stipulates that the Member States collectively guarantee the payment of pensions. This applies above and beyond their membership of the EU and the existence of the EU.
Member States’ debt
Until 2005, the accounts of the European Union recorded on the liabilities side of the balance sheet a provision for the acquired pension rights of officials and on the assets side of the balance sheet, a debt obligation on the Member States for the same amount (26 billion Euro in 2004).
2004, within the framework of the modernisation of EU accounting, a Committee of
international experts suggested bringing the EU accounting rules in line with
international standards. The new Accounting Rules of 28 December 2004, after
consulting the accountants in all European Institutions and Agencies, were
published by the Commission’s Accounting Officer and confirmed that the debt of
the MS must be recorded on the assets side of the EU balance sheet.
The experts are in no doubt: the MS have capitalised the contributions and have a debt in regard to officials and former officials. The debt of each Member State corresponds to its fixed share in the contribution scale for the financing of this expenditure.
International accounting standards
In its report of 31 October 2006, the Court of Auditors notes that the Commission’s Accounting Officer failed to comply with his new Accounting Rule no. 12. When granting discharge of the accounts for the 2005 financial year, the European Parliament regretted that the Commission had not complied with the Accounting Rules and asked for the debt of the MS to be recorded on the assets side of the balance sheet.
To justify the disappearance of the debt of the MS (€ 60.5 billion on 31/12/2016), the Commission’s Accounting Officer claimed that the international accounting rules for the public sector had been complied with, which was not true. Indeed, in 2004, in the absence of a specific rule for the public sector (IPSAS5), the Committee of Experts decided to observe the rule for the private sector (IAS6) with regard to the accounting of pension rights.
In October 2006 the International Public Sector Accounting Standard (IFAC) published a draft accounting standard for the accounting of pension rights in the public sector. It contained, word for word, the standard for the private sector, but explained that “in the international organisations, when the Member States undertake to pay the pension rights, this commitment must be recorded on the assets side of the balance sheet”. The International Public Sector Accounting Standard is identical to that for the private sector, and there was no longer any reason not to comply with it.
Creating a pension fund based on capital formation?
"In the framework of the mid-term review of the Multiannual Financial Framework in 2023, the Commission will reflect on the feasibility of the creation of a capital-based pension fund for EU staff."
The pension fund already exists, but it is capitalised in the national treasuries without the hazards of fluctuating rates on the financial markets.
addition, the draft agreement between the United Kingdom and the European Union
(Brexit) stipulates that the UK must repay the share of its debt corresponding
to the acquired pension rights:
"the United Kingdom will make contributions for its share of the EU’s liability for pensions and other benefits to staff on 31 December 2020. The payments linked to this liability will be paid when the amounts reach maturity."
Although the current failure to comply with the accounting rules does not in any way affect the very clear legal provisions of the Staff Regulations, we believe that now is the time to return to compliance with the international accounting standards and to record the liability of the other Member States in the accounts of the European Union. Thus, our pension fund will once again become a reality in the EU balance sheet. This will help to clear up unnecessary confusion on the subject of our pension scheme in the minds of some.
Read the letter in full...
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