The complaint to the European Commission

1. The complainant is a former staff member of an EU agency, where he worked as a temporary agent[1] from April 2009 to March 2017 (that is, for eight years).

2. In June 2017, the complainant requested the EU agency to pay him a severance grant[2], that is, compensation for the contributions he had made to the pension scheme for EU civil servants. Together with this request, the complainant submitted a certificate from a private pension fund to which he had also paid contributions during his employment with the EU agency. In light of these contributions, the complainant was of the view that, under the relevant rule in the Staff Regulations, he was entitled to choose between being paid a severance grant and transferring his pension rights from the EU pension scheme to a national or private pension scheme. 

3. The EU agency forwarded the complainant’s request to the European Commission’s Office for Administration and Payment of Individual Entitlements (PMO), which manages the pension rights of all staff members of the EU civil service.

4. The Commission rejected the complainant’s request to be paid a severance grant. The complainant then made an administrative complaint[3] against this decision, pointing out that - besides having contributed to a private pension fund during the relevant period - he was still affiliated to his national pension system.

The European Commission’s response to the complainant

5. In July 2018, the Commission rejected the complainant’s administrative complaint as unfounded and maintained its view that the complainant is not entitled to receive a severance grant.

6. The Commission explained that the provision on severance grants in the Staff Regulations aims, in summary, at making sure that the persons concerned will have a right to a regular future pension income, thereby avoiding a situation in which they have insufficient income following their retirement.

7. Former EU civil servants can thus choose to be paid a severance grant (instead of transferring the pension rights into a national or private pension scheme) only if “since taking up their duties, [they] have, in order to establish or maintain pension rights, paid into a national pension scheme, a private insurance scheme or pension fund of their choice which satisfies the following conditions: (i) the capital will not be repaid; (ii) a monthly income will be paid from age 60 at the earliest and age 66 at the latest; (iii) provisions are included for reversion or survivor’s pensions; (iv) transfer to another insurance company or other fund will be authorised only if such fund fulfils the conditions laid down in points (i), (ii) and (iii) [4]]”[5].

8. The Commission argued that the complainant’s contributions to his private pension fund were too low in value “to establish or maintain pension rights”, as required by the Staff Regulations. The Commission stated that “payments made into a private pension scheme or a private insurance scheme (...) have to be consistent with the global amount of pension contributions that the [staff member] is expected to pay into a primary pension scheme or which [the staff member] has actually paid into the pension scheme [for EU civil servants] over the same period (...)”. Furthermore, “[t]he future revenue guaranteed by this payment has to be consistent with the one ensured through the transfer of pension rights acquired under the [pension scheme for EU civil servants].” The Commission concluded that the amount that the complainant had contributed to his private pension fund, EUR 6 800.00[6], “does not provide a coverage which is at least comparable to the [pension scheme for EU civil servants]”, the value of which was EUR 35 455.17. The fact that, during the eight years he worked for the EU civil service, the complainant had continuously been affiliated to his national pension system did not change the Commission’s analysis of the matter. The complainant had not contributed to the national pension system during that period, and the mere affiliation to his national pension system did not meet the requirements set out in the applicable provision of the Staff Regulations^[7].

9. Dissatisfied with the outcome of his administrative complaint, the complainant turned to the Ombudsman in July 2018, arguing that the Commission was wrong to consider that he did not have a right to be paid a severance grant. The complainant is of the view that the Commission is misapplying the Staff Regulations by reading into it a requirement that does not exist. He argued that his private pension fund fulfilled all the conditions listed in the relevant provision of the Staff Regulations ^[8] (points (i) to (iv) in paragraph 7 above), which, in his view, are exhaustive, and that he would therefore “be entitled” to receive a severance grant. He thus considers that the Commission’s refusal to pay him a severance grant violates the Staff Regulations.

10. The complainant also explained that he had based important financial decisions on the belief that he would be allowed to choose, at the end of his contract with the EU civil service, to either receive a severance grant or to transfer his pension rights to a national or private pension scheme.

The European Ombudsman's findings

11. As correctly pointed out by the Commission (and supported by EU case-law^[9]), a severance grant is not paid automatically at the end of employment, but only under certain conditions set out in the Staff Regulations. These conditions are set out in a provision in the chapter on pensions. The provision on severance grants applicable specifically to temporary agents (which refers to the provision above) is set out in the chapter on social security benefits. As such, it is clear that the aim of this provision is to ensure that former staff members have proper social security contributions to cover their retirement. It is not intended to serve as a lump sum ‘severance payment’ on leaving employment, as in the common understanding of the term. 

12. It is worth noting, in this context, that the provision in the Staff Regulations giving the (conditional) right to a severance grant explicitly sets out that this is done “[b]y way of derogation”[10] from the main rule that staff members leaving the EU civil service are entitled to transfer their pension rights acquired under the EU scheme into another pension scheme. In order to be eligible for a severance grant, the person concerned has to have not only paid into a pension scheme fulfilling the criteria listed above in paragraph 7, these payments must have been made “in order to establish or maintain pension rights”. It is reasonable to consider that the purpose of this condition is to ensure that, upon reaching retirement, the person who is paid a severance grant will not have accrued significantly lower pension entitlements during the period in which they were employed by the EU civil service than they had accrued under the EU pension scheme.

13. On the basis of the above, it is reasonable for the Commission to consider that the provision in question aims to ensure that EU civil servants are not left without sufficient income during retirement. As such, the payments made to another pension scheme “in order to establish or maintain pension rights” should be of a certain value. The Commission’s position that the payments made must be comparable (but not equivalent) to the amounts contributed to the EU pension scheme, or to the amounts that the person would have been expected to pay to a primary pension scheme, is a reasonable interpretation of the Staff Regulations. In this context, and without taking a position as to what would constitute a comparable amount, it was reasonable for the Commission to consider that the contributions paid by the complainant to the private pension fund did not fulfil this condition.

14. Accordingly, the Commission was also correct to consider that the mere fact that the complainant had continued to be affiliated to his national pension system, without having continued to pay into the system during the period concerned, does not entitle him to a severance grant.

15. Based on the above, the complainant cannot be considered to have a legitimate expectation to be paid the severance grant. While it is unfortunate that he has made decisions based on his interpretation, the way he has understood the relevant provision does not correspond to how this provision is applied. In case of doubt, the complainant could have contacted the PMO or the EU agency’s human resources department to get clarifications about the options that would, in the future, be available to him. Moreover, the Commission provides comprehensive information on pension rights, for example on its Intranet and its website, which is publicly available[11].

16. Based on the information provided by the complainant, the Ombudsman finds no maladministration in this case.^[12]

 

Tina Nilsson

Head of Inquiries - Unit 4

Strasbourg, 17/10/2018

 

[1] Temporary agents are staff members that are recruited for specialised or temporary tasks. According to Article 39 of the Conditions of Employment of Other Servants of the European Union (“CEOS”), the relevant EU rules on pension rights apply to them by analogy, see Regulation No 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 (“Staff Regulations”), OJ 1962 P 45, p. 1385, consolidated version available at: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A01962R0031-20140501.

[2] Under Article 12(2) of Annex VIII to the Staff Regulations.

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

[4] Article 12(1)(b) of Annex VIII to the Staff Regulations.

[5] Article 12(2) of Annex VIII to the Staff Regulations.

[6] This amount also includes contributions that the complainant had made before starting his position as a temporary agent in the EU administration.

[7] Article 12(2) of Annex VIII to the Staff Regulations.

[8] Article 12(1)(b) of Annex VIII to the Staff Regulations

[9] See judgment of the Civil Service Tribunal (Third Chamber) of 2 March 2016, FX v European Commission, F-59/15, ECLI:EU:F:2016:27, paras 29 to 33.

[10] Emphasis added.

[11] See http://ec.europa.eu/pmo/endofcontract_en.htm#A2.

[12] This complaint has been dealt with under delegated case handling, in accordance with Article 11 of the Decision of the European Ombudsman adopting Implementing Provisions.