The background to the complaint

1. The European institutions operate a pension scheme which is funded by monthly contributions from its employees. Anyone who starts working for the European institutions, and has pension rights already acquired as a result of contributing to a national pension scheme, can request that these rights be transferred to the European Union pension scheme ('the EU pension scheme'). If such a request is received, a calculation is made to determine the value, in terms of "pensionable years", of the pension rights accumulated at national level. The calculation takes into account the grade of the official when he or she makes the request for a transfer.

2. Before joining the European Parliament, the complainant worked in Member State X. Whilst working in Member State X, he paid contributions into two pension funds. In 2006, he requested that the pension rights he had acquired in Member State X be transferred to the EU pension scheme. On 18 May 2006, he received the following proposal from Parliament for the transfer of his pension rights:

- his contributions to the first pension fund would correspond to four years, five months and 29 days of European Union pension rights;

- his contributions to the second pension fund would correspond to two years, eight months and three days of European Union pension rights.

On 9 November 2006, the complainant agreed to the transfer.

3. On 30 March 2007, Parliament informed the complainant that it had made a mistake in the calculation of his pension rights. In effect, it had taken into account the complainant's grade when he joined Parliament, whereas it should have taken into account the grade at the time of the request. According to Parliament's revised calculation, his contributions to the first pension fund would correspond to three years, seven months and 16 days of European Union pension rights (rather than four years, five months and 29 days) and his contributions to the second pension fund would correspond to two years, one month and 28 days of European Union pension rights (rather than two years, eight months and three days).

4. On 22 October 2008, the complainant turned to the Ombudsman.

The subject matter of the inquiry

5. The complainant alleged that:

(i) since he had already accepted the transfer of his pension rights on the basis of Parliament's proposal of 18 May 2006, Parliament was not entitled to revise a determinative factor, namely, the number of years transferred to the EU pension scheme;

(ii)Parliament breached his legitimate expectations by revising the number of years transferred to the EU pension scheme, and

(iii) he could not be held responsible for a mistake made by Parliament.

As regards the second allegation, the Ombudsman asked Parliament to indicate whether its decision of 30 March 2007, modifying its decision of 18 May 2006, complied with the case-law of the Union Courts on the revocation of administrative acts and, in particular, with Case C-90/95 P De Compte v Parliament[1].

6. The complainant claimed that the initial decision of 18 May 2006 should be maintained.

7. Article 2(8) of the Ombudsman's Statute sets out the conditions for complaints to the Ombudsman concerning work relationships between Community institutions and bodies, on the one hand, and their officials and other servants, on the other. These are first, that the complainant must have exhausted all the possibilities for the submission of internal administrative requests and complaints, in particular the procedures referred to in Article 90(1) and (2) of the Staff Regulations; and second, that the time limits for replies by the authority thus petitioned will have expired. The complainant exhausted all of Parliament's internal remedies regarding its decision about the first pension fund, but did not do so regarding the second pension fund. Parliament's opinion deals only with the first pension fund. The complainant, however, contested the decision concerning both the first and the second pension funds. Nevertheless, given that Parliament applied the same correction to the transfer from the second pension fund, the Ombudsman considers that the complainant exhausted all internal remedies regarding the second pension fund.

The inquiry

8. On 22 October 2008, the complainant addressed his concerns to the Ombudsman. On 3 December 2008, the Ombudsman opened an inquiry and forwarded the complaint to Parliament, which then sent its opinion to the Ombudsman. The opinion was forwarded to the complainant, who submitted his observations on 3 April 2009.

9. On 2 October 2009, the Ombudsman addressed a friendly solution proposal to Parliament. Parliament sent its reply to the friendly solution proposal on 21 December 2009. This reply was forwarded to the complainant, who then submitted his observations on 14 May 2010.

10. On 8 September 2010, the Ombudsman's services contacted Parliament. On 9 September 2010, Parliament completed its reply to the friendly solution proposal. On 17 September 2010, the Ombudsman sent this additional reply to the complainant and invited him to submit his observations, which he did on 28 September 2010.

The Ombudsman's analysis and conclusions

Preliminary remarks

11. After a thorough analysis of the file, the Ombudsman decided to deal with the complainant's three allegations and claim under the same heading.

A. Allegations that Parliament was not entitled to revise the number of years transferred to the EU pension scheme, and related claim

Arguments presented to the Ombudsman

12. The complainant stated that he accepted the transfer of his pension rights to the EU pension scheme on the basis of Parliament's proposal of 18 May 2006. On 9 November 2006, he accepted and signed the decision regarding the transfer. He argued that the decision could not be changed and that it was unacceptable for Parliament to alter a factor which was determinative for him when he made the decision. According to the complainant, the difference between the initial proposal and the revised one resulted in a loss of rights for him, namely, a reduction in the number of pensionable years and months transferred to the EU pension scheme. In precise terms, that loss amounted to one year, four months and 18 days.

13. The complainant argued that he had examined Parliament's initial proposal and agreed to it in good faith, and that Parliament had breached his legitimate expectations by subsequently revising the number of years transferred to the EU pension scheme. According to him, Parliament's decision of 18 May 2006 was based on the old Staff Regulations, while its revised decision is based on the new Staff Regulations. In his view, he cannot be held responsible for not noticing that Parliament's qualified staff may have mistaken the provisions of the old Staff Regulations for those of the new Staff Regulations. Moreover, he considered that he cannot be held responsible for a mistake made by Parliament. The complainant claimed that the initial decision of 18 May 2006 should be maintained.

14. Parliament explained that, in accordance with Article 11(2) of Annex VIII to the Staff Regulations, the determination of the number of pensionable years to be credited had to take into account the basic salary and the grade at the date of the application for the transfer. This rule was correctly stated in the calculation form sent to the complainant on 8 May 2006. At the time of his application for the transfer, the complainant's grade was A, for which he received a basic monthly salary of EUR B. The determination of the number of pensionable years was, however, erroneously based on his entry grade, which was grade C, for which the basic monthly salary was EUR D. This incorrect data appeared on the calculation form under the headings 'grade at the date of application' and 'monthly basic salary at the date of application' respectively. The decision of 18 May 2006 was thus inconsistent with Article 11(2) of Annex VIII, and needed to be withdrawn.

15. Parliament acknowledged that, according to established case-law of the Union courts, the withdrawal of a favourable administrative act is generally subject to very strict conditions[2]. The conditions for revocation apply only where the addressee of the administrative act acts in good faith and has legitimate expectations regarding the legality of the act[3]. The addressee must be able to rely upon the apparent legality of the decision. In the present case, the one-page calculation, dated 18 May 2006, contained two indications which did not correspond to the complainant's situation. The facts concerned neither the technical nor the legal aspects of the calculation, which meant that the error was easily discernible, even for a person unfamiliar with the EU pension scheme. Furthermore, these facts related to the personal situation of the complainant. Therefore, the complainant should have realised that the calculations were based on wrong data and that the act was possibly tainted by illegality.

16. In Parliament's view, the nature of the error was so obvious that the addressee would have realised that the decision was clearly illegal. The complainant was not, therefore, entitled to any legitimate expectations as to the legality of the revoked decision, and could not invoke good faith in his favour.

17. Parliament noted that, in Case C-90/95, the Court of Justice set aside the judgment of the Court of First Instance by holding that legitimate expectations, once acquired, may not subsequently be undermined. However, in the present case, given that there was an obvious error, the calculation form did not, at any time, give the complainant grounds for any legitimate expectations.

18. Parliament admitted that the complainant could not be held responsible for a mistake committed by its services. However, the duty of loyalty, which, in accordance with Article 11(1) of the Conditions of Employment of Other Servants of the European Communities and Article 11(1) of the Staff Regulations, the complainant owes to Parliament implies that an official must always conduct himself in a manner that ensures that the relationship of trust between himself and his institution is maintained[4]. The duty of loyalty would have required the complainant, when he received the calculation form containing information that was obviously incorrect, to contact the Pension Service and check whether the decision was correct and valid. This would have avoided the creation of any unlawful situation.

19. In his observations, the complainant disagreed with what he considers to be Parliament's statement that he acted in bad faith. He stated that, when he received Parliament's proposal of 18 May 2006, he did, in fact, contact the responsible Parliament's service because he did not understand how 17 years of pension contributions in Member State X could be the equivalent to approximately seven years of contributions in the EU pension scheme. Parliament's service checked the calculation and confirmed it. He again contacted the relevant service to ask if he could challenge the calculation, but was told that it was not possible. After considering the consequences of refusing the transfer, and given the pension-fund crisis in Member State X, the complainant accepted the transfer. He added that Parliament made the same mistake twice, namely, for both the first and the second pension fund, and that, while it had taken over a year for it to notice its mistake, it expected him to discover it immediately. Parliament's repeated errors led him to be presented with a 'fait accompli'. The complainant stated that if he had known that his transferable pension would amount, in total, to five years, nine months and 14 days, he would never have agreed to the transfer.

The Ombudsman's preliminary assessment leading to a friendly solution proposal

20. The complainant requested the transfer of his pension rights from Member State X in 2006. Article 11(2) of Annex VIII to the Staff Regulations applicable at that time read as follows:

"An official who enters the service of the Communities after:

- leaving the service of a government administration or of a national or international organisation; or

- pursuing an activity in an employed or self-employed capacity;

shall be entitled … to have paid to the Communities the capital value, updated to the date of the actual transfer, of pension rights acquired by virtue of such service or activities.

In such case, the institution in which the official serves shall, taking into account the official's basic salary, age and exchange rate at the date of application for a transfer, determine by means of general implementing provisions the number of years of pensionable service with which he shall be credited under the [EU] pension scheme in respect of the former period of service, on the basis of the capital transferred, after deducting an amount representing capital appreciation between the date of the application for a transfer and the actual date of the transfer." (emphasis added)

21. After examining Parliament's decision of 18 May 2006, and its calculation, the Ombudsman noted that the decision is based on a grade of C and a salary of EUR D. He understood that these data correspond to the complainant's grade and salary at the time he became a temporary agent. However, the complainant's grade at the date he applied for the transfer of pension rights was A and his salary was EUR B. Given that, in accordance with the Staff Regulations, the calculation should take into account the salary at the date of application for a transfer, the Ombudsman agreed with Parliament that its initial decision did not comply with the relevant rules.

22. According to the case-law on the recovery of undue payments (Article 85 of the Staff Regulations[5]), which applies by analogy to the present case, there are conditions which must be met for an official to retain an undue payment. The Court of First Instance has stated[6] that, in order for a sum paid without justification to be recovered, evidence must be produced to show that:

(i) the recipient was actually aware that there was no due reason for the payment; or

(ii) the overpayment was patently such that he could not have been unaware of it.

23. In this regard, the phrase "patently such" means that undue payments must be recovered by the administration "where the error is one which does not escape the notice of an official exercising ordinary care."[7] In sum, the complainant could only be allowed to retain the additional remuneration, which would have resulted from the error in the calculation of his pension rights, if, despite exercising ordinary care, he could not have been aware that the additional pension rights were unduly awarded to him.

24. It is evident that, at the time he made the request, the complainant was aware that his grade was A and not C, as was incorrectly noted on the documentation sent to him by Parliament.

25. While it is reasonable to assume that the complainant would not be aware of precisely how the transfer of pension rights is calculated, it is clear that the complainant was aware that, at the time he made his request for the transfer of pension rights, his grade was one of the factors which would be taken into account when calculating the value of his transferred pension rights. It is reasonable to expect that an official would understand that the data contained in documents relating to the proposed transfer of pension rights constitute factors which will be taken into account when the value of transferred pension rights is calculated. The grade of an official at the time he makes a request for a transfer is one of the items set out in the documents which the complainant received.

26. While it may be true that the complainant may not have been aware of precisely how, and to what extent, this obvious error by Parliament regarding his grade would have impacted on the calculation of his pension rights, it is still beyond doubt that the complainant was in a position to identify that there was an error in the data which Parliament was using. In this respect, the Ombudsman noted that, according to the case-law of the Union Courts, in order for an official to be deemed to be capable of identifying an error, it is not necessary for that official to be able to determine the precise extent of the error made by the institution[8]. In sum, it is not necessary to show that the official was able to determine the precise extent of the error committed by the Administration. It suffices that he or she should have reasonable doubts as to the soundness of the payments[9].

27. The Ombudsman noted that, according to the established case-law of the Union courts[10], in cases where there are doubts about the soundness of a payment made to him or her, the interested party must approach the administration in order to allow it to make all the necessary verifications. The Ombudsman noted that the complainant twice asked Parliament to check whether a mistake had been made in its decision of 12 May 2006. However, there is no indication that, when he contacted Parliament regarding the transfer of his pension rights, he informed it of the error relating to his grade. When he contacted Parliament about the calculation of his pension rights, he sought only to express his view that the calculation underestimated his pension rights. The complainant's dealings with Parliament, therefore, concerning the transfer of his pension rights did not entitle him to a legitimate expectation that there was no error in the calculation of those rights.

28. The Ombudsman also noted that the Court of First Instance has stated that the fact that the administration does not notice an irregular payment when checking or rechecking an official's file does not, in itself, give rise to any legitimate expectations on the part of the person concerned. Rather, it merely shows that the administrative error was repeated[11].

29. The Ombudsman concluded that there was no basis for the complainant to be awarded the pension rights as calculated in Parliament's initial decision of 18 May 2006.

30. The present case was not, however, identical to the aforementioned cases, which gave rise to the case-law relating to the recovery of undue payments. In those cases, the sole consequence of the administrative error was that officials or agents received money to which they were not entitled. In all such cases where Article 85 of the Staff Regulations applied, the sole consequence was the recovery of the sum paid. By recovering the monies unduly paid, the administration re-established the legal situation which would have existed in the absence of the initial administrative error. In the present case, Parliament's error gave rise to two consequences: (i) Parliament awarded extra pension rights to the complainant; and (ii) on the basis of Parliament's calculation, the complainant was induced to transfer his pension rights from Member State X into the EU pension scheme. In sum, the complainant renounced his right to remain within the pension scheme from Member State X because of Parliament's erroneous offer. The Ombudsman considered that, while the complainant should not benefit from Parliament's mistake and be allowed to keep the additional pension rights resulting from the erroneous calculation of such rights contained in Parliament's initial decision, neither should he suffer as a result of Parliament's erroneous calculation of the number of transferable years to the EU pension scheme.

31. It is probable that Parliament's error influenced the complainant when making his decision to leave the pension scheme of Member State X. The Ombudsman pointed out in this regard that, according to the case-law of the Union courts, "the 'right' mentioned in Article 11 (2) of Annex VIII to the Staff Regulations is intended to confer upon officials a right which they may freely exercise."[12] In order for a right to be deemed to be "freely exercised", the person exercising the right must be given the necessary accurate information required to exercise that right. The Ombudsman thus provisionally concluded that Parliament's error limited the complainant's freedom to exercise this right, and that this may constitute an instance of maladministration by Parliament.

32. In light of the above, the Ombudsman made a proposal for a friendly solution below, in accordance with Article 3(5) of the Statute of the European Ombudsman. In order to correct the potential instance of maladministration, Parliament could re-establish the legal situation which would have existed in the absence of the initial administrative error. It could thus place the complainant in the position that he would have been in, if no error had been made. On the basis of the amended proposal set out in Parliament's corrected decision concerning his pension rights, the complainant could be given the option of transferring his pension rights from Member State X to the EU pension scheme, or returning his pension rights from Member State X to the pension schemes of that Member State. If Parliament is unable to make such an offer to the complainant at this time, it could make an ex-gratia payment to him as compensation for potential losses he might have suffered as a result of accepting to transfer his pension rights to the EU pension scheme, based on wrong assumptions caused by Parliament's error.

The arguments presented to the Ombudsman after his friendly solution proposal

33. Parliament accepted the first proposal for a friendly solution, that is, to grant the complainant the right to choose whether to maintain the transfer of pension rights which were transferred from the pension schemes of Member State X to the EU pension scheme, or return the pension rights to the pension schemes of Member State X.

34. Parliament noted, however, that it could not guarantee that the pension fund of Member State X will accept such a "retransfer", since the latter will depend entirely on the attitude of the pension fund concerned, and the applicable national legislation.

35. Parliament therefore requested its competent service to contact the complainant in order to ascertain whether he wishes Parliament to examine if the pension funds of Member State X would be willing to accept a retransfer of the pension rights to Member State X, or whether he prefers to maintain them in the EU pension scheme.

36. In his observations on Parliament's reply, the complainant considered that he had no option but to accept the situation as it is. According to him, it is no longer possible to return the funds to the pension schemes of Member State X and, in any case, it would be legally dubious. The complainant indicated that Parliament's competent service never contacted him. He concluded by saying that an error was committed for which nobody accepted responsibility. He stated that all members of staff should be advised thoroughly to check any administrative acts which concern them.

37. After reviewing the complainant's observations, the Ombudsman's services contacted Parliament to check whether it had in fact contacted the complainant. Subsequently, Parliament wrote to the complainant, inviting him either to confirm his decision to transfer his pension rights of Member State X to the EU pension scheme, or to inform it of his wish to transfer his pension rights back to Member State X. Parliament specified that returning the complainant's pension rights to Member State X would require the agreement of the pension funds of Member State X.

38. In his further observations, the complainant indicated that he was obliged to confirm his initial decision to transfer his pension rights of Member State X to the EU pension system because Parliament was not in a position to say whether it would be possible to transfer his pension rights of Member State X back to the pension funds in that Member State. The complainant deplored the fact that Parliament had failed to investigate whether his pension rights of Member State X could be returned to Member State X.

The Ombudsman's assessment after his friendly solution proposal

39. The Ombudsman would first like to repeat that there was no legal basis for the decision to award the complainant the pension rights as calculated in Parliament's initial decision of 18 May 2006. This was so because that decision did not comply with the relevant rules. In addition, the Ombudsman notes that the complainant had no legitimate expectation to the excess pension rights which arose as a result of that initial calculation.

40. The Ombudsman welcomes the fact that Parliament accepted his first proposal for a friendly solution. By its letter dated 9 September 2010, it gave the complainant the option of transferring his pension rights of Member State X to the EU pension scheme, or returning his pension rights to the pension schemes of Member State X. He further notes that the complainant has confirmed his decision to transfer his pension rights of Member State X to the EU pension system.

41. However, this solution does not seem to satisfy the complainant, who considers that he is "obliged" to confirm his initial decision. The Ombudsman does not agree with the complainant's statement that he was "obliged" to confirm his initial decision to transfer his pension rights to the EU pension system. If the complainant really wishes his pension rights to be returned to Member State X, there is nothing to prevent him from requesting Parliament to take the necessary steps to attempt to carry out such an operation. The only conclusion that can be drawn from the complainant's reticence to take such a step is that, in fact, he does not wish his pension rights to be transferred back to the system of Member State X. It would therefore appear that, when he confirmed his initial decision to transfer his pension rights to the EU pension scheme, he did not do so under duress, but rather after having duly considered the option of returning his pension rights to the pension schemes of Member State X.

42. The Ombudsman also agrees that it would be difficult for Parliament to ask the pension authorities of Member State X to agree to the transfer of the complainant's pension rights unless the complainant first agreed that he would actually accept such a transfer.

43. In light of the above, the Ombudsman considers that no further inquiry is justified.

B. Conclusions

On the basis of his inquiry into this complaint, the Ombudsman closes it with the following conclusion:

No further inquiry is justified.

The complainant and Parliament will be informed of this decision.

 

P. Nikiforos Diamandouros

Done in Strasbourg on 18 April 2011

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[1] Case C-90/95 P De Compte v Parliament [1997] ECR I-1999.

[2] Case T-416/04 Kountouli v Council [2006] ECR-SC I-A-2-181 and II-A-2-897, paragraph 149; Case C-90/95 P De Compte v Parliament, cited above, paragraphs 35-40; Case 54/77 Herpels v Commission [1978] ECR 585.

[3] Case C-90/95 P De Compte v Parliament, cited above, paragraph 35; Case T-416/04 Kountouli v Council, cited above, paragraph 161; in the context of state aids Case C-158/06 Stichting ROM-projecten/staatssecretaris van Economische Zaken [2007] ECR I-5103.

[4] Case T-273/94 N v Commission [1997] ECR-SC IA-97 and II-289, paragraph 129.

[5] Article 85 of the Staff Regulations states that "[a]ny sum overpaid shall be recovered if the recipient was aware that there was no due reason for the payment or if the fact of the overpayment was patently such that he could not have been unaware of it."

[6] Case T-205/01 Ronsse v Commission [2002] ECR-SC II-1065. Paragraph 45 states in French: "Pour qu'une somme versée sans justification puisse être répétée, la preuve doit être administrée que le bénéficiaire avait une connaissance effective du caractère irrégulier du paiement ou que l'irrégularité du versement était si évidente que le bénéficiaire ne pouvait manquer d'en avoir connaissance."

[7] Case 310/87 Stempels v Commission [1989] ECR 43; see also Case T-156/96 Jensen v Commission [1998] ECR-SC I-A-411 and II-1173, paragraph 63.

[8] Case T-348/00 Barth v Commission [2001] ECR-SC II-557, paragraphs 27, 29-30, 33-36.

[9] Case T-122/95 Chabert v Commission [1996] ECR-SC I-A-19 and II-63, paragraphs 35-36; Case T-14/03 Di Marzio v Commission [2004] ECR-SC I-A-43 and II-167, paragraph 90. Indeed, in the Ombudsman's view, the very reason for sending an interested party documentation which sets out the factors which will be taken into account when carrying a calculation of pension rights is to allow the interested party the possibility of correcting any possible errors in such data.

[10] Case T-156/96 Jensen v Commission [1998] ECR-SC I-A -411and II-1173, paragraph 63.

[11] Case T-324/04 F v Commission [2007], not yet published, paragraphs 156, 164-166, 170. See also Case T-180/02 and T-113/03 Gouvras v Commission [2004] ECR-SC I-A-225 and II-987, paragraphs 112-114.

[12] Case 137/80 Commission of the European Communities v Kingdom of Belgium [1980] ECR 2393, paragraph 13.