EUROPE - One of the UK MEPs involved in legal action against the European Parliament’s decision to alter the terms of its ABSL voluntary pension scheme for MEPs has claimed the reforms are “unacceptable” since they alter existing benefit terms.

In May 2009 over 60 MEPs started legal action after the European Parliament increased the retirement age from 60 to 63, and abolished early retirement and lump sum payments after the pension deficit quadrupled from €30m in 2007 to €120m in 2008. (See earlier IPE articles: MEPs launch legal challenge over reforms and MEP pension decision will apply to all members)

However, following reports that the MEPs are using the court action to protect their pension entitlements, Roger Helmer, the Conservative MEP for the East Midlands, highlighted that at age 66 he is not caught by the reforms that were implemented last year.

Instead he argued that the legal challenge had been initiated on the basis that the European Parliament “should stick to the rules (within its existing budget) and not assume powers to change them retrospectively”.

Helmer added: “We recognise that in hard times, it may be necessary to make pension adjustments, and to increase the pension age, and we have no problem with that. But the general convention is that future accrual rates or terms may be adjusted, but that existing accrued benefits must be honoured.”

Instead he argued the Parliament had breached this convention, because “while we ourselves have not been disadvantaged, other colleagues who left the parliament in 2009 at the age of 60 or less, in the confident expectation of the pension to which they had contributed, found themselves quite unjustly facing a three-year wait for their pensions. This is unacceptable.”

Although the court case was filed with the European Court of Justice last year, it is believed a hearing on the issue will not be set until the end of 2010 or perhaps even early 2011. And in the meantime it is understood that the funding position of the pension fund has improved following the recent rally in stock markets in the second half of 2009.

Helmer noted: “The parliament’s attempt to break the rules of the scheme was a panic reaction to the stock market crisis of 2009.  Much of the shortfall in fund value, which prompted the move has been eliminated by subsequent rises in share prices.”

The board of directors of the ASBL pension fund agreed at a meeting in May 2009 to support the legal challenge over the issue of protecting members’ “vested rights and legitimate expectations”.

Richard Balfe, chairman of the MEP pension fund, said: “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.”

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com
 

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