£85bn EU pensions bill for 50,000 bureaucrats retiring on 70% of salary

Published on Tuesday 21 September 2010 17:11

EUROPEAN Union taxpayers will have to fork out £85 billion over the next 50 years in order to pay for the hefty pensions of Brussels civil servants, a study carried out for the European Commission revealed yesterday.

• Derek Brownlee:"Pensions reform is needed in Europe as well as in the UK"

A 20-page report compiled by Eurostat, the EU statisticians, revealed the true cost of the pensions for retired bureaucrats over the next half century.

The publication of the report comes at a time when the commission is backing a 3 per cent pay rise for public servants. Its findings were met with concern at home and abroad, with politicians and opinion formers expressing concern about the size of the pension pots.

Around 50,000 people are employed as bureaucrats at the EU - in Brussels, Strasbourg and other administrative centres.

Eurostat says that pension cost are running at the moment at 850 million a year but will double in 20 years and by 2046 will be around 2.12 billion annually.

The number of pensioners on the EU payroll, according to Eurostat, will rise in ten years from 17,471 at present to 25,432, and by 2046 will be nearly 39,000.

Almost all qualify for a pension equalling 70 per cent of their pay packet upon retirement - at a time when such generous schemes for ordinary workers are imploding across the continent.

Additionally, many EU officials go into retirement early, meaning they will draw their benefits for longer than average.

Yesterday Derek Brownlee, the Conservative finance spokesman, said: "Public-sector pensions need to be fair to taxpayers as well as to workers. It is difficult to see how many existing schemes can be maintained without higher contributions from workers, or reduced benefits, or both. Scottish taxpayers who are worried about their own pensions will struggle to understand why they are paying such large sums for EU officials. Clearly pensions reform is needed in Europe as well as in the UK."

In Germany, the pensions were described by the news-paper Bild as an extravagance that was like "a gigantic avalanche" bearing down on taxpayers.

The highest pensions go to general directors, of whom there are 100 in the EU. Because the EU changed the rules governing itself in 2004, it means that no financial penalties are incurred by the early retirees. Before 2004, people opting for early retirement before their 63rd birthday were liable to a 3.5 per cent penalty for each year that they left their posts early.

Such a provision was scrapped six years ago and the results are plain to see; between 2004 and 2009 the 3,846 EU-crats who went into retirement included 387 early retirees, the majority of whom were aged 56.

"This deduction-free early pension has shown itself as an effective instrument in reducing the age of the personnel working for the EU," the report said.The price of the pensions come on top of proposed pay rises for 35,000 public servants contained in the budget report of the Commission for 2011. It has to be approved by EU appointed judges at a court in Strasbourg - judges who would themselves qualify for the pay rise if they green light it.

The highest-paid civil servants in Europe also have the highest perks - trips to their homeland, for example, cost the European taxpayer about 40 million each year.

Carl-Ludwig Thuiele, deputy head of the FDP party in Germany's coalition government, said: "EU officials are big earners compared to their German colleagues. It is not doable, if - despite the economic crisis - they are now insisting on this pay rise. It is high time to examine automatic increases of EU salaries."