Opportunity to secure an EU pension is an underappreciated, but a very significant benefit of working for the European Commission, European Parliament, European Council or any of the 40+ EU agencies and several other EU institutions. The EU pension is a defined benefits/final salary scheme that guarantees you an inflation-adjusted monthly income until your death. Additionally, after you pass away your surviving spouse will continue to receive a survivor’s pension until her/his death that is a significant part of the pension you were entitled to.
While all of the information below is from public sources, it is often hard to access and understand due to “legalese” and the the sheer size of the documents. This article outlines the main facts about ‘EU pensions’ in an easy to understand manner.
How to qualify for a European Commission pension?
Anyone who works for the European Commission, European Parliament, an EU agency or another EU institution, is entitled to an EU pension after 10 years of service. You have to accumulate your 10 years before you reach either the mandatory pension age (66 years in 2021) or early-retirement age (58 years in 2021).
You can work for different EU institutions at different times in your life. All of your employment periods in EU institutions will be summed up and count towards a 10-year minimum as long as you do not withdraw the accumulated pension capital to a private pension scheme.
The pension contribution (tax) is the largest deduction of one’s salary. 9.7% is automatically deducted from your salary each month to accumulate the pension capital, and no actions need to be taken by you.
What is the mandatory European Commission pension age?
The mandatory pension age is 66, at which you qualify for a full EU pension. It is possible to work until 70 if it is exceptionally justified. After reaching 70 a person is retired automatically and there is no possibility to remain in employment of EU institutions.
How large is a pension after working for EU institutions?
There is a minimum pension for former EU officials. It cannot be less then 40% of the basic salary for a temporary agent AST 1 (step 1). In 2021 this amounts to EUR 1200.24 (salary for AST 1 EUR 3,000.59 * 10 years of service * 4%).European Commission Staff Regulations
Your pension after the 10 mandatory years of service cannot be less than the minimum pension for EU officials – see above. If you are interested in more detail, the answer depends on a number of factors:
- Length of service. For each year of employment a person is entitled to 1,80% of the final basic salary. For example, if you have worked for EU institutions for 10 years, you will be entitled to 18% of your final basic salary; 20 years will qualify you for 36%; 30 years – 48%; 40 years – 66%.
- Basic salary in last employment position. Your pension will be calculated as a percentage of the basic salary.
- Importantly, correction coefficient can but is not always applied. Correction coefficient is not applied if you retire in the country of your last employment or in your country of origin. If you move somewhere else in the EU or a third country, pensions are paid out with a correction coefficient of 100%, i.e., the Brussels salary level.
- Pensions are adjusted to the actual cost of living in the European Union and should slightly increase over time.
- The final pension amount may not exceed 70 % of the final basic salary.
If you have worked for several EU institutions, your pension will be calculated based on the last basic salary you received.
In practice, if you are an AD5 in Brussels at the end of your career with a basic salary of 4883, you would be entitled to the following amounts proportionally to the time worked for the EU:
- 10 years = EUR 4883 basic monthly salary X 1.8% X 10 years = EUR 878.94. In this case you would instead receive the European Commission’s minimum pension of EUR 1200.24.
- 20 years = EUR 1757.88
- 30 years = EUR 2636.82
- 40 years = EUR 3515.76
Of course, if you start as an AD 5, your final basic salary would actually be higher as you would advance through the steps of the pay scale. The above calculation is meant to just be an illustration of the principle.
Can I retire early? What are the consequences?
The early retirement age is 58 years (in 2021).
An early retirement pension amount is reduced 3,5% for every year before mandatory pension age of 66. Hence, if you decide to retire at 58, you will incur a 28% reduction of your pension. Unfortunately, the pension will not increase once you reach the regular retirement age.
Can the EU pension be inherited by a surviving spouse and/or dependent children?
Yes. The surviving spouse of a former EU official is entitled to 60% of the pension paid to the official. The amount that can be inherited by dependent children varies on the individual situation and the ‘orphan’s pension’ can only be precisely calculated by the Paymaster’s Office.
If you are entitled to the minimum European Commission pension of EUR 1200.24 (100%)
your surviving spouse will receive up to EUR 720.14 (up to 60% of former official’s pension) until her/his end of life.
Divorced spouses are also entitled to a survivor’s pension if they can prove that the (former) EU official was supporting them based on a court order or an officially registered settlement in force between both parties.
If you are in such a situation, please contact either the European Commission’s Paymasters Office or the HR Department of the last institution your spouse was working for in order to find out the steps to take.
Very important – unless there are proven force majeure factors, the survivors pension has to be requested within one year of the former EU official’s death. Otherwise, the spouse’s and dependents’ rights are forfeited.
Does my EU pension capital accrue interest while I’m waiting for my pension age?
Yes. The accumulated pension amount accrues compound interest at a rate of 2.9% per year (in 2021).
What if I leave an EU job before I accumulate 10 years of service?
For most people the best strategy is to leave your pension capital with the European Commission Paymaster’s office as it accrues a 2.9% per annum in interest. You can accumulate your 10 years in EU institutions over an unlimited number of instances of working for EU institutions until the mandatory retirement age of 66.
Some institutions strongly encourage the “transfer out” of the accumulated EU pension capital claiming that it might be “very hard” to do it at a later date. However, there is no particular difference in the amount of work for you whether you decide to move your EU pension capital to a third tier pension management fund right after leaving an EU institution or much later. The only caveat – you pension capital left with the EU Paymasters Office will be completely lost if you happen to die before reaching your pension age. And, of course, don’t forget about your pension capital once your retirement age comes and you have not accumulated the necessary 10 years to qualify for an EU pension.
If you decide that you never again want to work for the EU, you can “transfer out” your pension capital to any of the European Commission-approved pension management schemes in all EU member states. The funds will only become available to you once you reach the age of 60.
Reasons to “transfer out” your accumulated EU pension capital:
* You do not plan to ever again work for EU institutions
* You are certain that you will be able to invest your EU pension capital in an investment vehicle that returns substantially more than 2.9% per annum
* You are worried that you might die before retirement age (chronic disease, family health history, dangerous hobby, etc.)
Once you “transfer out” but again start working for a EU institution, you will be able to transfer in your accumulated pension capital, but not the accumulated ‘pension years’ to qualify you for an EU pension. So – choose carefully.
Not only an EU pension, but also health insurance for you and your spouse
After an EU official becomes entitled to an EU pension, the person and his/her spouse and any dependents also become entitled to the JSIS – the European Commission healthcare insurance scheme. It reimburses between 80-85% of most healthcare costs. If you have what are considered serious illnesses you can obtain a 100% reimbursement. This should be a major appeal for people in retirement.
If there are any dependents, the retiree is also entitled to the relevant allowances such as the household allowance and dependent child allowance.
Where to get consultations and help regarding European Commission pensions?
Former employees of EU institutions are usually advised to contact the HR department of the last institution they were employed by.
It is also possible to get in touch with Office for the Administration and Payment of Individual Entitlements also know as the Paymasters Office (PMO), contacts here. If you have questions about JSIS, the European Commission health insurance scheme, including coverage of funeral expenses, you can find the relevant Paymasters Office contacts here.
AIACE – International Association of Former Staff of the European Union
When you retire from an EU institution, consider becoming a member of AIACE. For the 40€ annual fee (differs by location of national units) you can get a number of benefits:
- Access to a helpdesk (consultations on key retiree issues). Virtual and in-person consultations in Brussels
- Legal assistance at a reduced fee
- Special complimentary insurance availability to complement risks not covered by the JSIS (currently offered by Cigna)
- Accident coverage
- Coverage of the difference in all medical costs and those reimbursed by the JSIS
- A monthly Cigna consultation
- Quarterly VOX bulletin sent to all of the retired staff. National bulletins sent to members of country chapters
- Yammer chat
- Voluntary work opportunities and possibility to received help from other volunteers; social contacts and events
Main facts about AIACE:
- AIACE has special Partnership Agreements with the European Commission, the European Parliament, the European Court of Justice, the European Social and Economic Committee, the Committee of the Regions, the Court of Auditors, and the Council. All the above institutions recognize AIACE as the representative of their retired staff
- Founded June 1969, AIACE has over 12000 members out of a total approximately 23500 retired staff
- 15 national branches (20 retirees can form a national branch)
- AIACE lobbies on behalf of retired EU officials and defends their rights at the European Commission and other EU institutions. AIACE is even an official member of a number of working groups that affected the interests of former EU administrative agents and contract agents
AIACE contact details:
- Website: www.aiace-europa.eu/
- Address: N105 00/23, 105 Avenue des Nerviens 00/036, Brussels, 1040, Belgium
- Telelphone: (Belgium): 02.2952960
- Email: firstname.lastname@example.org
Do you still have questions regarding EU pensions?
As usual, if there is an unanswered question or you have spotted a mistake, please write a comments and me and the EUE community will do our best to help and update the article.
This article is based on the European Commission Staff Regulations and other publicly available information such as EU institutions’ vacancy announcements. As the EU legal documents and even information on the various websites are hard to understand, this post is one from a series of articles that try to make information about employment in the European Commission and other EU institutions more accessible.