Our man in Brussels wonders where the post-Brexit burden of UK officials’ pensions might lie

Future negotiations over the UK’s shock decision to leave the European Union (EU) could raise questions over annual payments and capital liability related to pensions for British citizens who work, or have worked, at the various EU institutions. On current estimates, the sums involved represent around €16.4m per year, or a capital total of something to the tune of €2.2bn.

As a result, there exists some disquiet among the estimated 1,730 UK nationals now retired from EU institutions. Also involved are the existing British-citizen, EU employees with future pension claims. Their total head count is roughly the same, and includes a precise 1,164 currently working in the European Commission.

The vital question is where the burden should fall following the finalisation of the Brexit process. From a legal point of view, the remaining EU 27 member states will have to continue paying the pensions of former staff. This position was supported by a recent letter from EC president Jean-Claude Juncker to British personnel, reassuring them that they “remain Union officials”. Martin Schultz, head of the European Parliament, related a similarly cosy message.

Further reinforcing the position of British personnel is Article 83 of the EU staff regulations, which states that “benefits paid under this pension scheme shall be charged to the budget of the Union”, while member states “shall jointly guarantee payment of such benefits”.

Félix Géradon, of the Union Syndicale, the major union for public-service employees, thus says that one could imagine the remaining EU member states could well request that the UK assume some responsibility for the overall pension expenditure, as part of the ultimate Brexit agreement.

As for background figures, the total annual outgoings towards pension payouts for all national groups and for all the EU institutions are estimated, by the Commission, at more than €1.6bn for this year. It is on this – and on the basis that UK participation in the total head-count is low (3.8% in the Commission itself, for example) – that the annual €16.4m pension cost for Brits is based.

When it comes to capital liability, according to a Commission source, the EU officials’ pension scheme functions as a “notional fund”, not as a pay-as-you-go scheme. Hence, the argument is, if the liability were to be handed over to a fund, it would have been, for 2014, €58bn. This pension liability is as calculated annually under the International Public Sector Accounting Standard (Ipsas-25). Along the same lines, the total proportion of capital liability for the UK appears to be around €2.2bn.  

Evidence of anxiety among British pension beneficiaries, present and future – including, presumably, from Brits in the London-based European Banking Authority – is in the air. One senior British official in Brussels tells IPE that instructions had been sent to Commission staff not to answer questions from the press. And, unusually for him, he did not.

Another commentator adds to the disquiet – a Commission retiree informs IPE that enforcement of any judgment, from the European Court of Justice would be beyond the remit of the court. Backing this up, the court itself states that it is up to the relevant member states to implement any ruling.

Bearing this in mind, when it comes to the crunch, will the 27 national governments remaining in the EU take their payment-obligation position lying down? Will they agree, during forthcoming Brexit negotiations, to have their taxpayers support the “treacherous” interests of its British “adversary”? And could the opposite, then, apply to any future UK government as well?

All of these unanswered questions would seem to justify British officials’ increasingly nervous nail-biting. 

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