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Decision of the European Ombudsman in case 1873/2018/LM on how the European Commission handled a request from an EU civil servant to transfer national pension rights into the EU pension scheme

The case concerned the transfer of national pension rights into the pension scheme for EU staff members. In 2009, the European Commission put thousands of applications on hold because it believed it needed to update the rules governing the pension scheme. The complainant argued that the resulting delay in handling her application was in breach of the principles of good administration.

While the Ombudsman identified administrative shortcomings in terms of delays and inadequate information to the complainant, the inquiry showed that the Commission is now in compliance with principles of good administration. To avoid similar problems in future, the Ombudsman suggested to the Commission that it improve the procedure by introducing a deadline for determining the admissibility of requests to transfer pension rights or explain why it is not feasible or reasonable to do so. The Ombudsman also invited the Commission to take contact with the complainant on the matter of ex gratia compensation.

On this basis, the Ombudsman closed the case.

Background to the complaint

1. The complainant is a staff member of an EU Agency. She worked in Spain before joining the EU institutions. In May 2010, the complainant asked for her pension rights under the Spanish pension scheme to be transferred into the pension scheme for EU staff members (a so-called “transfer in” request). The European Commission, which deals with transfer requests from staff from EU agencies, sent an acknowledgement of receipt of her request in June 2010.

2. In September 2012, the complainant asked for an update on the status of her request. The Commission replied that it had not yet dealt with it because: “all the applications received after 31.12.2008 have been frozen till the introduction of the new Implementing rules in April 2011[1]. During this period we have received more than 11.000 new applications and we started dealing with the prior ones (people near the pension) and then gradually all the other files will be dealt with”. In December 2012, the Commission informed the complainant that her request was admissible and that it would ask the Spanish pension authority to calculate the amount of pension rights to be transferred. In April 2013, the Commission sent the complainant the calculation provided by the Spanish pension scheme. However, the Spanish scheme subsequently informed the Commission that the calculation was incorrect and sent a new calculation in November 2013. The Commission forwarded the new calculation to the complainant in January 2017. The complainant accepted the calculation. The Commission proceeded with the transfer and deducted from the pension rights an amount corresponding to the capital appreciation at the rate of 3,1%.[2]

3. The complainant submitted an administrative complaint[3] to the Commission, arguing that she had lost money because the Commission had deducted interest for the entire period it had taken the Commission to handle her application. In her view, this was not fair because the Commission had delayed the procedure without justification. According to the complainant, the Commission started to handle her file with a delay of 2 years and 7 months (period 1) and sent the complainant the correct calculation from the Spanish pension scheme with a delay of 3 years and 1 month (period 2).

4. The Commission reviewed the calculation and decided not to deduct any interest for period 2. However, it upheld its decision as concerns period 1.

5. In April 2018, the complainant made a new administrative complaint to the Commission, contending that the Commission should not deduct interest for period 1. The Commission rejected the complaint. Dissatisfied with the Commission’s reply, the complainant turned to the Ombudsman in November 2018.

The inquiry

6. The Ombudsman opened an inquiry into how the Commission had dealt with the complainant’s application for transfer of pension rights into the EU pension scheme. The complainant considers that the Commission was wrong to deduct interest for period 1 (that is, from the submission of her application on 31 May 2010 to when it declared her application to be admissible on 6 December 2012).

7. In the course of the inquiry, the Ombudsman received the reply of the Commission on the complaint and, subsequently, the comments of the complainant in response to the Commission's reply. The Ombudsman’s inquiry team also met with the relevant Commission departments and inspected the Commission’s file on the case. While the matter is complex, the Ombudsman’s inquiry has taken longer than it should have and the Ombudsman’s Office has apologised to the complainant for this delay.

Arguments presented to the Ombudsman

The complainant’s arguments

8. The complainant considered that the applicable rules do not explicitly allow the Commission to deduct interest during the period before it starts to handle an application[4]. The complainant considered that the Commission had failed to give reasons, as well as the legal basis, for its decision to put applications on hold.

9. The complainant argued that, by putting her application on hold for almost three years, the Commission had acted contrary to the principles of good administration. Every person has the right to have his or her affairs handled within a reasonable time by the EU institutions and citizens are entitled to expect a high level of transparency, efficiency, swift execution and responsiveness from the EU administration. The complainant argued that, as the Commission had failed in these respects, it should pay her compensation.

10. When acknowledging receipt of her request, the Commission should have informed her that her application would be put on hold until the adoption of the new General Implementing Provisions. This information would have enabled her to decide, in full knowledge of the facts, whether to transfer her national pension rights to the EU pension scheme.

The Commission’s arguments

11. In accordance with the applicable rules (see footnote 2 above), the Commission deducted interest at a rate of 3,1%, because the Spanish pension authority could not provide the value of the pension rights on the date on which the application to the Commission was registered. Under Spanish law, the Spanish authorities had to provide the value of the pension rights on the date on which the Commission contacts them. The Commission cannot interfere with the way in which national authorities calculate pension rights and their capital appreciation under national law.

12. In line with the Staff Regulations, the Commission deducted interest from the date of registration of the request. However, in the complainant’s case, the Commission decided not to deduct any interest for the second period that her file was on hold (between the receipt and forwarding of the new calculation from the Spanish pension authorities).

13. The Commission stated that it had to update the General Implementing Provisions in 2009 due to the entry into force of a Regulation adjusting the rate of contribution to the EU pension scheme[5]. When staff learned about the upcoming revision of the 2004 General Implementing Provisions, a large number of them made transfer in requests in 2010, as they thought that the old and more favourable rates would apply until the entry into force of the new General Implementing Provisions. However, the Commission eventually had to apply the new General Implementing Provisions retroactively to all requests submitted as of 1 January 2009. The EU courts have confirmed the validity of this approach.

14. For the reasons set out above, the Commission unexpectedly received more than 10 000 new transfer in applications over a relatively short period. It thus decided to put most of the applications on hold and to prioritise the most urgent ones, such as those submitted by applicants close to retirement. It has taken the Commission several years to deal with the backlog of applications.

15. The Commission published information on its intranet about how it dealt with the exceptionally high number of applications that it had received. It also sent individual replies to applicants who asked for an update on their files. The Commission could not inform all applicants through automated messages because, at the time, it still had a paper file system for dealing with transfer in applications. The Commission later developed an IT application, which allows it to deal with transfer in files much quicker.

The complainant’s comments

16. The complainant argued that the Commission deducted interest of a total amount[6] that is three times the amount of the capital appreciation applied by the Spanish authorities[7]. By doing so, the Commission has essentially reduced her pension rights. The deduction has thus resulted in an unjust enrichment of the Commission, as set out in the Tuerck case[8].

17. The complainant also said that the Commission took insufficient measures to deal with the backlog of applications, as it did not adopt mitigating measures to address the economic damage that the delays in dealing with applications might have caused to applicants.

18. The complainant contended that the decision to put applications on hold contributed to creating a big backlog of applications. It was problematic that the Commission initially informed staff that the 2004 General Implementing Provisions would apply until the new General Implementing Provisions entered into force but later decided that the new General Implementing Provisions would apply retroactively. The handling of her file reflected this confusion, because the acknowledgement of receipt of her request referred to the 2004 General Implementing Provisions.

19. The complainant said that, as she is not a Commission staff member, she did not have any reason to consult the Commission’s intranet regularly. The acknowledgement of receipt of her transfer request did not indicate that she should do so.

The Ombudsman's assessment

20. There are three issues before the Ombudsman. The first one is whether the Commission correctly applied the rules governing transfer in of pension rights. The second and third issues are whether the Commission acted in a timely way and kept the complainant informed in accordance with the principles of good administration.

21. The first issue is a matter of legal interpretation. Both the complainant and the Commission have advanced convincing arguments in support of their respective views. The subject matter is complex and although there is case law on the provisions at issue, doubts remain in relation to the application of certain legal provisions. It is not entirely clear whether and under which conditions the rules in force allow the Commission to make an appropriation of a portion of national pension rights in cases where it deducts interest for a higher amount than the capital appreciation applied by the national authorities.

22. In these circumstances, the Ombudsman is not best placed to take a view on what is the better interpretation of the provisions at issue. Questions of interpretation of EU law must find their authoritative answer at the Court of Justice. Thus, as concerns the Commission’s understanding of the relevant provisions, the Ombudsman finds no grounds for inquiring further.

23. As concerns the second issue, the principles of good administration imply that when the legislature has not set specific time limits, the administration must deal with matters within a reasonable time. What is a ‘reasonable time’ depends on the circumstances of each case. Factors to be considered include the complexity of the case, its importance for the party involved, the various procedural steps followed by the administration and the context of the case.[9] Each procedural step should be taken within a reasonable period following the previous step.[10] Moreover, if the duration of an administrative procedure exceeds what is a reasonable time, it is for the administration to prove the existence of special circumstances such as to justify the delay.[11]

24. The case at hand was pending with the Commission for a total of 5 years and 8 months (period 1 and period 2). As the Commission has recognised that the delay corresponding to period 2 was unjustified, the case before the Ombudsman concerns only period 1 (2 years and 7 months). That period ran from the lodging of the complainant’s request to the Commission’s decision on the admissibility of the request. The length of the period was not caused by the complexity of the request, as determining admissibility normally takes weeks, perhaps months (as indicated on the Commission intranet), but certainly not years. Nor was the length of time caused by the context of the request; the request did not have to be evaluated together with other requests. It is clear that a delay in dealing with the request could have a significant negative impact on the complainant and ultimately had such a negative impact. The Commission has not argued that the time taken to deal with the request is related to the specifics of the request. Against this background, the time that the Commission took to declare the request admissible must, at first sight, be deemed to be excessive.

25. The question is now whether the Commission has shown specific, external circumstances that could justify the time taken.

26. The Commission referred to the entry into force of Council Regulation 1324/2008 in December 2008 as the reason for updating the relevant implementing provisions concerning transfer of pension rights. Until the adoption of the new implementing provisions, the Commission suspended its processing of the requests lodged, for two and a half years. During this time, more than 10 000 requests were received, as staff had reason to believe that the new implementing provisions would be less favourable to staff than the previous implementing provisions.

27. It is worth noting that Regulation 1324/2008 was adopted by the Council upon a proposal from the Commission made in November 2008 (with only minor changes made to the Commission’s proposal). The Commission held that the Regulation entailed the need for new implementing provisions. [12] If there was any need to alter the implementing provisions because of that Regulation, it is fair to assume that the Commission should have known this in the autumn of 2008 and should have taken the appropriate action. However, the Commission did not adopt the new implementing provisions until April 2011.[13] In addition, the Commission informed its staff in December 2010 that requests already lodged would be dealt with under the old implementing provisions[14] - which calls into question why the Commission had to suspend its processing of requests already lodged in order to deal with them under the new implementing provisions.[15]

28. The Ombudsman is not convinced that the above circumstances are such as to justify the Commission’s delay in dealing with the complainant’s request. The circumstances appear to a large extent to have been of the Commission’s own making, in particular the fact that it (i) did not foresee what it considered to be the implications of Regulation 1324/2008, (ii) did not adopt the new implementing provisions in due time, (iii) did not communicate adequately with staff, and (iv) decided itself to suspend the processing of requests.

29. As the Commission has now taken steps to overcome the problems of the past and the length of time the procedures now take appears to be reasonable, the Ombudsman’s view is that there is no reason to pursue the matter further. However, as the passing of time has an impact on the amount of money that the Commission is required to deduct from the transferred pension rights[16], the Commission should consider introducing a clear deadline for determining the admissibility of requests. The Ombudsman will make a suggestion for improvement in this regard.

30. Regarding the third issue, it is good administrative practice for an administration to inform a citizen when it expects to take a decision in a pending case concerning him/her. The Commission did not do so in this case. It published updates about the suspended processing of applications on its intranet page but did not inform the complainant that she should regularly consult this page for updates.

31. It appears that the Commission has now started to give the relevant information in the acknowledgements of receipt that it sends in reply to transfer applications. Therefore, no further inquiries are justified on this aspect of the case.

32. The Ombudsman appreciates that these improvements are of little consolation to the complainant, who is of the view that she is entitled to compensation. While the Ombudsman has set out clearly the administrative shortcomings in this case, in terms of delays and inadequate information, it is not her role to determine whether the Commission has incurred a legal liability to pay compensation. However, bearing in mind the complainant’s material loss and the shortcomings identified, the Commission could consider paying ex gratia compensation[17] or explaining why it does not believe this to be appropriate in this case. The Ombudsman invites the Commission to take contact with the complainant to follow up on this matter.

Conclusion

Based on the inquiry, the Ombudsman closes this case with the following conclusion:

No further inquiries are justified.

The complainant and the European Commission will be informed of this decision.

Suggestion for improvement

The Commission should introduce a deadline for determining the admissibility of requests for transfer in of pension rights or explain why it is not feasible or reasonable to do so.

 

Emily O'Reilly

European Ombudsman

Strasbourg, 18/06/2020

 

[1] The General Implementing Provisions (GIP), available at https://ec.europa.eu/trans\parency/regdoc/rep/3/2017/EN/C-2017-6760-F1-EN-MAIN-PART-1.PDF

[2] According to Article 7 of the General Implementing Provisions and Article 8, 11(2) and (3) of Annex VIII to the Staff Regulations, Regulation 31 (EEC), 11 (EAEC) laying down the Staff Regulations of Officials and the Conditions of Employment of Other Servants of the European Economic Community and the European Atomic Energy Community, OJ 1962 L 45, page 1385, available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A01962R0031-20140501

[3] Under Article 90(2) of the Staff Regulations.

[4] Article 11(2) of Annex VIII of the Staff Regulations and the General Implementing Provisions.

[5] Council Regulation (EC, Euratom) No. 1324/2008 of 18 December 2008 adjusting, from 1 July 2008, the rate of contribution to the pension scheme of officials and other servants of the European Communities, available at https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32008R1324&qid=1574696316047&from=EN

[6] EUR 15.295,66.

[7] EUR 5.354,89.

[8] See case judgment of 5 December 2017 in Sabine Tuerck v Commission, T-728/16, paragraph 32, available at http://curia.europa.eu/juris/document/document.jsf;jsessionid=9ea7d2dc30dd5d5510855f6841ac8633e06f13fd2bc9.e34KaxiLc3qMb40Rch0SaxyNbNj0?text=&docid=197425&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=812597

[9] See for instance judgment of the Court of Justice of 17 December 1998, Baustahlgewebe v Commission, case C-185/95 P, paragraph 29, available at http://curia.europa.eu/juris/showPdf.jsf;jsessionid=8F1C0778C9B8C96192ACB213E890C455?text=&docid=43779&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=4441718 and the Ombudsman’s decision in case 484/2015/DR, paragraph 28, available at https://www.ombudsman.europa.eu/en/decision/en/90382.

[10] See for instance judgment of the Court of Justice of 2 June 1994, De Compte v Parliament, case C-326/91 P, paragraph 21, available at http://curia.europa.eu/juris/showPdf.jsf?text=&docid=98282&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=4442402.

[11] See for instance judgment of the Court of Justice of 5 May 1983, Ditterich v Commission, case 207/81, paragraph 26, available at http://curia.europa.eu/juris/showPdf.jsf?text=&docid=91654&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=4443230

[12] While the Commission believed that the Regulation entailed the need for new implementing provisions, case law has shown that this belief was not valid but that a revision of the General Implementing Provisions was warranted for different reasons. See judgement of the General Court of 13 October 2015, European Commission v Marco Verile and Anduela Gjergji, case T-104/14 P, paragraphs 147, available at: http://curia.europa.eu/juris/document/document.jsf;jsessionid=2B64EFD701467FC14C54B7EC1EA19824?text=&docid=169662&pageIndex=0&doclang=en&mode=lst&dir=&occ=first&part=1&cid=5109101

and judgement of the Civil Service Tribunal of 11 December 2013, Teughels v Commission, F-117/11, paragraph 100, available at http://curia.europa.eu/juris/document/document.jsf?text=&docid=145483&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=5111161

[14] See case Verile paragraph 161.

[15] The Commission subsequently withdrew that information and told staff that requests lodged after Regulation 1324/2008 entered into force would be dealt with under the new implementing provisions that would have retroactive effect.

[16] Judgement of the General Court of 7 June 2018, Bernd Winkler v. European Commission, T-369/17, paragraph 37, available at http://curia.europa.eu/juris/document/document.jsf?text=&docid=202631&pageIndex=0&doclang=FR&mode=lst&dir=&occ=first&part=1&cid=5166573

[17] Such compensation should not be seen as damages in the strict legal sense, but as a means of acknowledging the shortcomings that have been identified.