Documents considered by the Committee on 4 December 2013 - European Scrutiny Committee Contents


22 Remuneration and pension adjustments for EU staff in 2013

(a)

(35500)

15820/13

+ ADD 1

COM(13) 770

(b)

(35508)

15885/13

+ ADD 1

COM(13) 771

(c)

(35509)

15890/13

COM(13) 772


Draft Council Regulation adjusting, from 1 July 2013, the rate of contribution to the pension scheme of officials and other servants of the European Union


Draft Council Regulation adjusting with effect from 1 July 2013 the correction coefficients applied to the remuneration and pensions of officials and other servants of the European Union


Draft Council Regulation laying down the weightings applicable from 1 July 2013 to the remuneration of officials, temporary staff and contract staff of the European Union serving in third countries

Legal base(a) Article 83a of the Staff Regulations and Annex XII thereto

(b) Articles 63 and 64 of the Staff Regulations and Annex XIII thereto, and Articles 20 (first paragraph), 64, 92 and 132 of the Conditions of Employment of Other Servants

(c) Article 13(1) of Annex X to the Staff Regulations

Document originated (a) and (b) 7 November 2013;

(c) 8 November 2013

Deposited in Parliament (a) 11 November 2013;

(b) and (c) 12 November 2013

DepartmentHM Treasury
Basis of consideration EM of 22 November 2013
Previous Committee Report None
Discussion in Council December 2013
Committee's assessment Politically important
Committee's decision Cleared; further information requested

The documents

22.1 This Report covers three proposals relating to EU staff pay and pensions.

PENSION ADJUSTMENT PROPOSAL — DOCUMENT (A)

22.2 This is the Commission proposal for the adjustment of the rate of contribution by EU officials to their pension scheme, backdated to apply from 1 July 2013. The proposal explains how the adjustment figure is calculated and the data used. The proposal has been actuarially assessed and its purpose is to maintain the actuarial balance of the pension scheme.

22.3 The Commission concludes that the rate of contribution required to maintain actuarial balance of the pension scheme is 10.3% of basic salary. Therefore it is proposing that the rate of contribution be adjusted to 10.3%, backdated to take effect from 1 July 2013. This would be a change from the current pension contribution rate of 11.6%.

22.4 If adopted, this proposal will reduce EU Budget revenue by €19.3 million (£16.4 million) over the six months from 1 July 2013 until the end of the calendar year. It would decrease revenue in 2014 by €49.8 million (£42.3 million); a loss which would then occur annually until 2019, subject to future revisions.

CORRECTION COEFFICIENTS APPLIED TO EU OFFICIALS — DOCUMENT (B)

22.5 This is the Commission proposal for the adjustment of correction coefficients applied to the remuneration of active officials working outside Belgium and Luxembourg, to apply following 1 July 2013. The document reports on its proposal for the adjustment of correction coefficients applied to the pensions of former staff living outside Belgium and Luxembourg, to apply following 1 July 2013. The document explains how the adjustment figure is calculated and on the basis of what data.

22.6 Due to the suspension of the application of certain provisions in Article 65 of the Staff Regulations in 2013 and 2014, this Commission proposal does not include the annual adjustment to remuneration and pensions, but is limited to the adjustment of the correction coefficients and updating the reference date for the exchange rates.

22.7 The data used is taken from changes in the purchasing power of salaries in national civil services, changes in the cost of living in Belgium, and economic parities determined by Eurostat.

22.8 The weightings applicable to the remuneration of officials and other servants employed in the Member States other than Belgium and Luxembourg are determined by the ratios between these economic parities and the exchange rates applicable as at 1 July.

22.9 The weightings calculated for the pensions of individuals living outside Belgium and Luxembourg in the various countries are determined by the ratios between these economic parities and the exchange rates applicable as at 1 July.

22.10 The report includes a table demonstrating the correction coefficients applicable to the remuneration of officials and pensions for duty station locations outside of Brussels (active staff) and places of residence outside Belgium (pensioners).

22.11 The Commission estimates the proposal will result in a €6.4 million (£5.4 million) increase to expenditure over the six months from 1 July 2013 until the end of the calendar year. The estimated financial impact in 2014 will be an increase in expenditure of €12.7 million (£10.8 million) which will occur annually thereafter, subject to future revisions.

WEIGHTINGS APPLIED TO EU OFFICIALS IN THIRD COUNTRIES — DOCUMENT (C)

22.12 In this document the Commission reports on its proposal for updated weightings, applicable from July 2013, to the remuneration of officials of the EU serving in "third countries" outside the EU.

22.13 EU staff based in Brussels have their salaries paid in Euros and set according to price indices for Brussels. However for those staff living and working outside the EU, the Commission has a provision to weight salaries in order to maintain equivalent purchasing power for those in third countries.

22.14 The weightings are calculated by dividing the economic parity by the exchange rate of the relevant country. The report explains how the adjustment figure is calculated and on the basis of what data in further detail.

22.15 The proposal will result in a €680,000 reduction in expenditure over the six months from 1 July until the end of the calendar year. The estimated financial impact in 2014 will be a reduction of €1.35 million reduction in expenditure which will occur annually thereafter, subject to future revisions.

The Government's view

22.16 In an Explanatory Memorandum dated 22 November 2013, the Economic Secretary at HM Treasury (Nicky Morgan) says that there must be very substantial reductions in administration spending across the EU institutions; any suggestion of waste in the budget damages the standing of the institutions and of the EU as a whole.

22.17 In line with this and the approach that the UK has taken in EU Staff Regulations reforms, the UK will be voting against pension adjustment and correction coefficient proposals.

22.18 The Government can support the proposal on weightings for EU officials in third countries as this will result in a decrease in EU budget expenditure.

22.19 The Commission released these proposals on 7 and 8 November. On 11 November the Presidency put forward the proposals for written procedure, beginning 14 November and ending 21 November. The Government voted against this approach emphasising the insufficient time which would be allowed for national parliaments to scrutinise the proposals; however the approach was adopted by QMV.

Conclusion

22.20 We take note of the Government's intended approach to voting on these three proposals in the Council, which we strongly support. Despite the speed with which the Commission seeks to have them adopted, which we regret, we see no reason to retain them under scrutiny in the light of the Government's approach. In so doing, we are aware that there is unlikely to be a blocking minority to prevent the first two proposals from being adopted.

22.21 We note, however, that in relation to document (b) the Minister says that, due to the suspension of the application of certain provisions in Article 65 of the Staff Regulations in 2013 and 2014, this proposal does not include the annual adjustment to remuneration and pensions, but is limited to the adjustment of the correction coefficients and updating the reference date for the exchange rates. We ask the Minister to explain this further. In so doing, we ask him for his assessment of the impact of the Court of Justice's judgment on 19 November on the 2011 annual adjustment for remuneration and pensions,[62] which found in favour of the Council, whom the UK and several other Member States supported. We will be interested to know what impact he estimates the judgment will have on the EU Budget.


62   C63/12, C-66/12, and C-196/12. Back


 
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Prepared 11 December 2013