EXPLANATORY MEMORANDUM

Context of the proposal

110 || Grounds for and objectives of the proposal As is the case each year, under Article 3 of Annex XI to the Staff Regulations, the Council, acting on a Commission proposal based on the Eurostat report, must take a decision before the end of the year adjusting remuneration and pensions, with effect from 1 July.

120 || General context In accordance with Article 3 of Annex XI to the Staff Regulations, the adjustment to remuneration and pensions derives directly from changes in the purchasing power of salaries in national civil services (specific indicator), changes in the cost of living in Brussels (International Index), and economic parities determined by Eurostat. The specific indicator measures changes in the net remuneration, exclusive of inflation, of national civil servants in Member States’ central governments. Eurostat has calculated this indicator on the basis of information supplied by the eight Member States referred to in Article 1(4) of Annex XI. The Brussels International Index measures changes in the cost of living in Brussels for EU officials. Eurostat has drawn up this index on the basis of information provided by the Belgian authorities. The economic parities for remuneration establish the purchasing power equivalence of the remuneration paid in Brussels, as the reference city, with that paid in the other places of employment. Eurostat has calculated those parities in agreement with the national statistical bodies. The economic parities for pensions establish the purchasing power equivalence of the pension paid in Belgium, as the reference country, with that paid in the other countries of residence. Eurostat has calculated those parities in agreement with the national statistical bodies.

130 || Existing provisions in the area of the proposal A proposal is presented each year for adjusting remuneration and pensions.

Consultation of interested parties and impact assessment

|| Consultation of interested parties

211 || Methods of consultation used, main sectors covered and general profile of respondents The elements of the proposal have been discussed with the staff representatives in accordance with the appropriate procedures.

212 || Summary of replies received and the way in which they have been taken into account The proposal takes account of the opinions of the parties consulted.

|| Collection and use of expertise

229 || There was no need for external expertise.

230 || Impact assessment - The purpose of the proposal is to adjust remuneration and pensions in accordance with the legislation in force. - The legislation in force permits no alternative.

Legal elements of the proposal

305 || Summary of the proposed action In accordance with Article 1 of Annex XI to the Staff Regulations, Eurostat has drawn up a report on changes in the cost of living in Brussels, changes in the purchasing power of remuneration in national civil services, and the economic parities from which the various weightings derive. ADJUSTMENT TO REMUNERATION AND PENSIONS IN BELGIUM AND LUXEMBOURG The average change in the purchasing power of national civil servants’ remuneration in the reference period measured by the specific indicator is equal to -1.1%. The change in the cost of living in Brussels in the reference period, as measured by the Brussels International Index calculated by Eurostat is equal to 2.8%. According to Article 3(2) of Annex XI to the Staff Regulations, the amount of the adjustment is obtained by multiplying together the specific indicator and the Brussels International Index calculated by Eurostat. The proposed adjustment to remuneration and pensions in Belgium and Luxembourg is therefore 1.7%. Under Article 3(5) of Annex XI, no weighting is applicable in Belgium or Luxembourg. ADJUSTMENT TO REMUNERATION AND PENSIONS OUTSIDE BELGIUM AND LUXEMBOURG Outside Belgium and Luxembourg, the adjustment to remuneration and pensions is obtained by multiplying the adjustment in Belgium and Luxembourg by the change in weightings and in the exchange rate. The weightings applicable to remuneration, pensions and transfers of part of remuneration as set out in the Regulation have been calculated as follows: - Weightings for OFFICIALS outside Belgium and Luxembourg: Eurostat has calculated, in agreement with the national statistical bodies, the economic parities which establish the purchasing power equivalence of the remuneration paid in Brussels with that paid in the other places of employment as at 1 July. 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. - Weightings for PENSIONS outside Belgium and Luxembourg and weightings for TRANSFERS: Eurostat has calculated, in agreement with the national statistical bodies, the economic parities which establish the purchasing power equivalence of the pension paid in Belgium with that paid in the other countries of residence as at 1 July. 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. Under Article 17 of Annex VII to the Staff Regulations, these weightings are directly applicable to transfers made by officials and other servants. Under Article 20 of Annex XIII to the Staff Regulations, the weightings apply only to the part of the pension corresponding to pension rights acquired before 1 May 2004. - Date on which the weightings enter into effect: These weightings take effect on 1 July for all places except those with a high cost-of-living increase, for which the weighting enters into effect on 16 May if the increase in the cost of living is greater than 6.3%, or 1 May if it is greater than 12.6%. Changes in the cost of living outside Belgium and Luxembourg are measured by the change in the implicit indices. These indices are calculated by multiplying the Brussels International Index by the change in the economic parity. The date of entry into force of this adjustment is earlier for the places referred to in the Regulation. - Weightings for Croatia From the date of accession of Croatia to the European Union, correction coefficients referred to in Article 3(5) of Annex XI to the Staff Regulations have to be applied for EU officials and other servants in Croatia.

310 || Legal basis The Staff Regulations, and in particular Annex XI thereto, constitute the legal basis. The legality of Council Decision (2011/866/EU) of 19 December 2011 concerning the Commission’s proposal for a Council Regulation adjusting with the effect from 1 July 2011 the remuneration and pension of the officials and other servants of the European Union and the correction coefficients applied thereto is contested by the European Commission and the European Parliament, and is subject to an action for annulment before the Court of Justice. Moreover, the Commission has submitted an action for failure to act on the 2011 annual adjustment. However, due to the fact that according to established case-law Union legal acts enjoy the presumption of legality as long as they are not declared void by the Court of Justice, the Commission used the 2010 annual adjustment as a basis for the 2012 annual adjustment. Should the Court of Justice uphold the Commission’s action, the proposed Regulation will have to be subsequently revised in accordance with Article 266 of the Treaty on the Functioning of the European Union. Exception clause The Commission assessed the most recent social and economic data and concluded that there had been neither serious nor sudden deterioration in the economic and social situation in the European Union after the presentation of the Report of 31 August 2012 (COM (2012) 476) that would justify any change to the conclusions of that Report. Therefore, the legal criteria of Article 10 of Annex XI of the Staff Regulations have not been met, and the Commission considers that it is not appropriate to submit a proposal under Article 10 of Annex XI to the Staff Regulations.

329 || Subsidiarity principle The proposal concerns an area that falls within the exclusive competence of the Union. The principle of subsidiarity does not therefore apply.

|| Proportionality principle The proposal is consistent with the principle of proportionality for the following reasons:

331 || - Annex XI to the Staff Regulations provides for a Council Regulation.

332 || - The financial burden results directly from the application of the adjustment method provided for in the Staff Regulations.

|| Choice of instruments

341 || Proposed instrument: Regulation.

342 || Other instruments would be inappropriate for the following reasons: - Annex XI to the Staff Regulations provides for a Council Regulation.

Budgetary implications

401 || The impact of the adjustment to remuneration and pensions on administrative expenditure and on revenue is detailed in the financial statement annexed hereto.

2012/0350 (NLE)

Proposal for a

COUNCIL REGULATION

adjusting with the effect from 1 July 2012 the remuneration and pension of the officials and other servants of the European Union and the correction coefficients applied thereto

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to the Protocol on the Privileges and Immunities of the European Union, and in particular Article 12 thereof,

Having regard to the Staff Regulations of Officials and the Conditions of Employment of Other Servants of the European Union laid down by Regulation (EEC, Euratom, ECSC) No 259/68, and in particular Articles 63, 64, 65 and 82 of the Staff Regulations and Annexes VII, XI and XIII thereto, and Articles 20 (first paragraph), 64, 92 and 132 of the Conditions of Employment of Other Servants,

Having regard to the proposal from the European Commission,

Whereas:

(1) In order to guarantee that the purchasing power of Union officials and other servants develops in parallel with that of national civil servants in the Member States, the remuneration and pensions of officials and other servants of the European Union should be adjusted under the 2012 annual review;

(2) Correction coefficients should be introduced for Croatia that would be applicable from the date of accession of Croatia to the European Union,

HAS ADOPTED THIS REGULATION:

Article 1

With effect from 1 July 2012, the date ‘1 July 2010’ in the second paragraph of Article 63 of the Staff Regulations shall be replaced by ‘1 July 2012’.

Article 2

With effect from 1 July 2012, the table of basic monthly salaries in Article 66 of the Staff Regulations applicable for the purposes of calculating remuneration and pensions shall be replaced by the following:

Article 3

With effect from 1 July 2012, the correction coefficients applicable to the remuneration of officials and other servants under Article 64 of the Staff Regulations shall be as indicated in column 2 of the following table.

With effect from 1 January 2013, the correction coefficients applicable under Article 17(3) of Annex VII to the Staff Regulations to transfers by officials and other servants shall be as indicated in column 3 of the following table.

With effect from 1 July 2012, the correction coefficients applicable to pensions under Article 20(1) of Annex XIII to the Staff Regulations shall be as indicated in column 4 of the following table.

With effect from 16 May 2012, the correction coefficients applicable to pensions under Article 20(1) of Annex XIII to the Staff Regulations shall be as indicated in column 5 of the following table. The effective date for the annual adjustment for those Member States shall be 16 May 2012.

From the date of accession of Croatia to the European Union, the correction coefficients applicable to remuneration, transfers and pensions shall be as indicated in the following table.

Article 4

With effect from 1 July 2012, the amount of the parental leave allowance referred to in the second and third paragraphs of Article 42a of the Staff Regulations shall be EUR 927.23, and shall be EUR 1236.30 for single parents.

Article 5

With effect from 1 July 2012, the basic amount of the household allowance referred to in Article 1(1) of Annex VII to the Staff Regulations shall be EUR 173.42.

With effect from 1 July 2012, the amount of the dependent child allowance referred to in Article 2(1) of Annex VII to the Staff Regulations shall be EUR 378.94.

With effect from 1 July 2012, the amount of the education allowance referred to in Article 3(1) of Annex VII to the Staff Regulations shall be EUR 257.11.

With effect from 1 July 2012, the amount of the education allowance referred to in Article 3(2) of Annex VII to the Staff Regulations shall be EUR 92.57.

With effect from 1 July 2012, the minimum amount of the expatriation allowance referred to in Article 69 of the Staff Regulations and in the second subparagraph of Article 4(1) of Annex VII thereto shall be EUR 513.98.

With effect from 1 July 2012, the expatriation allowance referred to in Article 134 of the Conditions of Employment of Other Servants shall be EUR 369.49.

Article 6

With effect from 1 January 2013, the kilometric allowance referred to in Article 8(2) of Annex VII to the Staff Regulations shall be adjusted as follows:

EUR 0 for every km from 0 to 200 km

EUR 0.3854 for every km from 201 to 1 000 km

EUR 0.6423 for every km from 1 001 to 2 000 km

EUR 0.3854 for every km from 2 001 to 3 000 km

EUR 0.1283 for every km from 3 001 to 4 000 km

EUR 0.0619 for every km from 4 001 to 10 000 km

EUR 0 for every km over 10 000 km.

To the above kilometric allowance a flat-rate supplement shall be added, amounting to:

– EUR 192.70 if the distance by train between the place of employment and the place of origin is between 725 km and 1 450 km;

– EUR 385.37 if the distance by train between the place of employment and the place of origin is greater than 1 450 km.

Article 7

With effect from 1 July 2012, the daily subsistence allowance referred to in Article 10(1) of Annex VII to the Staff Regulations shall be:

– EUR 39.84 for an official who is entitled to the household allowance;

– EUR 32.12 for an official who is not entitled to the household allowance.

Article 8

With effect from 1 July 2012, the lower limit for the installation allowance referred to in Article 24(3) of the Conditions of Employment of Other Servants shall be:

– EUR 1133.94 for a servant who is entitled to the household allowance;

– EUR 674.24 for a servant who is not entitled to the household allowance.

Article 9

With effect from 1 July 2012, for the unemployment allowance referred to in the second subparagraph of Article 28a(3) of the Conditions of Employment of Other Servants, the lower limit shall be EUR 1359.92, the upper limit shall be EUR 2719.85 and the standard allowance shall be EUR 1236.30.

Article 10

With effect from 1 July 2012, the table of basic monthly salaries in Article 93 of the Conditions of Employment of Other Servants shall be replaced by the following:

Article 11

With effect from 1 July 2012, the lower limit for the installation allowance referred to in Article 94 of the Conditions of Employment of Other Servants shall be:

– EUR 852.92 for a servant who is entitled to the household allowance;

– EUR 505.67 for a servant who is not entitled to the household allowance.

Article 12

With effect from 1 July 2012, for the unemployment allowance referred to in the second subparagraph of Article 96(3) of the Conditions of Employment of Other Servants, the lower limit shall be EUR 1019.95, the upper limit shall be EUR 2039.88 and the standard allowance shall be EUR 927.23.

With effect from 1 July 2012, for the unemployment allowance referred to in Article 136 of the Conditions of Employment of Other Servants, the lower limit shall be EUR 897.33 and the upper limit shall be EUR 2111.36.

Article 13

With effect from 1 July 2012, the allowances for shiftwork laid down in the first subparagraph of Article 1(1) of Council Regulation (ECSC, EEC, Euratom) No 300/76[1] shall be EUR 388.67, EUR 586.65, EUR 641.41 and EUR 874.46.

Article 14

With effect from 1 July 2012, the amounts referred to in Article 4 of Council Regulation (EEC, Euratom, ECSC) No 260/68[2] shall be subject to a coefficient of 5.610551.

Article 15

With effect from 1 July 2012, the table in Article 8(2) of Annex XIII to the Staff Regulations shall be replaced by the following:

Article 16

With effect from 1 July 2012, for the application of Article 18(1) of Annex XIII to the Staff Regulations, the amount of the fixed allowance mentioned in the former Article 4a of Annex VII to the Staff Regulations in force before 1 May 2004 shall be:

- EUR 134.08 per month for officials in Grade C4 or C5;

- EUR 205.58 per month for officials in Grade C1, C2 or C3.

Article 17

With effect from 1 July 2012, the scale for basic monthly salaries in Article 133 of the Conditions of Employment of Other Servants shall be replaced by the following:

Article 18

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

For the Council

The President

LEGISLATIVE FINANCIAL STATEMENT FOR PROPOSALS

1. FRAMEWORK OF THE PROPOSAL/INITIATIVE

1.1. Title of the proposal/initiative

Proposal for a Council Regulation adjusting with effect from 1 July 2012 the remuneration and pensions of officials and other servants of the European Union and the correction coefficients applied thereto

1.2. Policy area(s) concerned in the ABM/ABB structure[3]

All areas and activities are potentially concerned.

1.3. Grounds for the proposal/initiative

1.3.1. Requirement(s) to be met in the short or long term

To ensure that the purchasing power of EU civil servants’ remuneration and pensions develops in parallel with the changes in the purchasing power of civil servants of central government in the Member States, as referred to in Annex XI to the Staff Regulations

1.4. Duration and financial impact

ý Proposal/initiative of unlimited duration

– Implementation with a start-up period from 1 July 2012,

– followed by full-scale operation.

1.5. Management mode(s) envisaged[4]

ý Centralised direct management by the Commission: PMO

2. ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE

2.1. Heading(s) of the multiannual financial framework and expenditure budget line(s) affected

· The proposal has a financial impact on all budgetary lines related to staff expenditure in all Institutions and Agencies.

In order of multiannual financial framework headings and budget lines.

Heading of multiannual financial framework || Budget line || Type of expenditure || Contribution

Number [Description………………………...……….] || DA/NDA ([5]) || from EFTA[6] countries || from candidate countries[7] || from third countries || within the meaning of Article 18(1)(aa) of the Financial Regulation

|| XX.01.01.01 and Chapter 11, Chapter 42 Expenditure Relating to Parliamentary Assistants || DNA || NO || NO || NO || NO

2.1. Estimated impact on expenditure

2.1.1. Summary of estimated impact on expenditure

EUR million (to 3 decimal places)

Heading of multiannual financial framework: || 5 || " Administrative expenditure " XX.01.01.01 and Chapter 11, Chapter 42 Expenditure Relating to Parliamentary Assistants

EUR million (to 3 decimal places)

|| || || Year 2012 || Year 2013 || Year 2014 || Year 2015 || Subsequent years || TOTAL

DG: <…….> ||

 Human resources || || || || || || || ||

 Other administrative expenditure || || || || || || || ||

TOTAL DG <…….> || Appropriations || || || || || || || ||

TOTAL appropriations under HEADING 5 of the multiannual financial framework || (Total commitments = Total payments) || 50.2 || 100.4 || 100.4 || 100.4 || 100.4 || 100.4 || 100.4 || Not available

EUR million (to 3 decimal places)

|| || || Year 2012 || Year 2013 || Year 2014 || Year 2015 || Subsequent years || TOTAL

TOTAL appropriations under HEADINGS 1 to 5 of the multiannual financial framework || Commitments || 50.2 || 100.4 || 100.4 || 100.4 || 100.4 || 100.4 || 100.4 || Not available

Payments || 50.2 || 100.4 || 100.4 || 100.4 || 100.4 || 100.4 || 100.4 || Not available

2.1.1. Estimated impact on operational appropriations

– ý The proposal/initiative does not require the use of operational appropriations

2.1.2. Estimated impact on appropriations of an administrative nature

2.1.2.1. Summary

– ¨ The proposal/initiative does not require the use of administrative appropriations

– ¨ The proposal/initiative requires the use of administrative appropriations, as explained below:

2.1.2.2. Estimated requirements of human resources

– ý The proposal/initiative does not require the use of human resources

2.1.3. Compatibility with the current multiannual financial framework

– ý Proposal/initiative is compatible the current multiannual financial framework.

2.1.4. Third-party contributions

– The proposal/initiative does not provide for co-financing by third parties

2.2. Estimated impact on revenue

– ¨ Proposal/initiative has no financial impact on revenue.

– ý Proposal/initiative has the following financial impact:

– ¨ on own resources

– ý on miscellaneous revenue

EUR million (to 3 decimal places)

Budget revenue line: || Appropriations available for the ongoing budget exercise || Impact of the proposal/initiative

Year 2012 || Year 2013 || Year 2014 || Year 2015 || Subsequent years

Article 410 Pension contribution || 477.0 || 4.1 || 8.1 || 8.1 || 8.1 || 8.1 || 8.1 || 8.1

Article 400 Tax || 633.1 || 5.4 || 10.8 || 10.8 || 10.8 || 10.8 || 10.8 || 10.8

Article 410 Special levy || 65.5 || 0.6 || || || || || ||

Specify the method for calculating the impact on revenue.

The impact on revenue is calculated on the basis of the budgeted figures for 2012.

[1] Council Regulation (ECSC, EEC, Euratom) No 300/76 of 9 February 1976 determining the categories of officials entitled to allowances for shiftwork, and the rates and conditions thereof (OJ L 38, 13.2.1976, p. 1). Regulation as supplemented by Regulation (Euratom, ECSC, EEC) No 1307/87 (OJ L 124, 13.5.1987, p. 6).

[2] Regulation (EEC, Euratom, ECSC) No 260/68 of the Council of 29 February 1968 laying down the conditions and procedure for applying the tax for the benefit of the European Communities (OJ L 56, 4.3.1968, p. 8).

[3] ABM: Activity-Based Management – ABB: Activity-Based Budgeting.

[4] Details of management modes and references to the Financial Regulation may be found on the BudgWeb site: http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html

[5] DA= Differentiated appropriations / DNA= Non-Differentiated Appropriations

[6] EFTA: European Free Trade Association.

[7] Candidate countries and, where applicable, potential candidate countries from the Western Balkans.