COMMUNICATION FROM THE COMMISSION on remuneration and pensions

(presented by the Commission pursuant to Article 283 of the Treaty establishing the European Community)

COMMUNICATION FROM THE COMMISSION

on remuneration and pensions

1. Introduction

On 1 March 2000 the Commission adopted the White Paper on the reform of the Commission, one of the pillars of which consists of developing and maximising the potential of the Commission's human resources. In the White Paper the Commission considers a number of amendments to the Staff Regulations.

A formal proposal from the Commission to the Council setting out the amendments needed to implement the reform is scheduled for December 2001, a date which, since it is dictated by the need to comply with internal concertation procedures and statutory interinstitutional consultation procedures, cannot be brought forward.

There are two issues which need to be addressed concomitantly: the method used for the annual adjustment of remuneration, and the pensions scheme.

*Remuneration: the current method for the annual adjustment of salaries and pensions of staff of the EU institutions and the application of the temporary contribution expire on 30 June 2001. If the Community institutions are not to find themselves without an approved method at that date, the Commission will have to put forward a proposal for a new system at some time in 2000.

*Pensions: Article 83 of the Staff Regulations requires the pensions scheme to achieve an actuarial balance. It also identifies the changes which have to be introduced if this is not the case. An actuarial study of the pensions scheme was conducted recently. The Commission is currently carrying out an in-depth analysis and it will on these bases draw up proposals on how best to ensure the long-term actuarial balance of the system.

The Institutions would thus face the prospect of conducting two separate sets of negotiations, each of which would imply amendments to the Staff Regulations: one, dealing with the "method" and pensions, from mid-2000 onwards, and one covering the reform, from December 2001.

While there is no legal obligation to deal with the two issues jointly, they do affect spending on personnel. Moreover certain reform measures are likely to affect the structure of individual remuneration packages. Conducting two separate sets of negotiations would mean having to take decisions on remunerations and pensions without knowing what the full consequences of the reform would be.

The best approach for all those taking part, i.e. the Community institutions and their staff, would therefore be to conduct a single set of negotiations covering both remuneration and pensions and the reform from December 2001.

To achieve this, it will be necessary to extend by a specific period the validity of the current system of remuneration and pensions.

2. Proposed approach

The approach proposed by the Commission is as follows:

2.1. Firstly to extend by two years the "1991 method agreement", which covers the current system of remuneration and pensions.

The annexed draft proposal thus extends the period of validity of the two components of the agreement which would otherwise expire on 30 June 2001 (method for adjusting remuneration and temporary contribution).

2.2. Secondly, the Commission will, by December 2001, present to the Council a comprehensive proposal for a revision of the Staff Regulations which would cover the reform, the new method and the measures designed to ensure the long-term actuarial balance of the pensions scheme.

*Reform

As an institution with an international staff corps, the Commission considers that the practice of granting allowances, including the expatriation allowance, to its staff is still valid and indeed necessary. It will review the various provisions in the Staff Regulations on staff remuneration, with a view to implementing the various elements of the administrative reform, in particular:

-simplifying the rules for implementing and administering the system, and

-updating the technical aspects of the system to take account of changes in society.

*New method

*The Commission is of the opinion that the new method must continue to be guided by the two basic principles of parallelism and equality of purchasing power, with the aim of:

-adjusting remuneration in line with changes in the purchasing power of national civil servants brought about by developments on national labour markets and in the economic, budgetary and social policy of the Member States;

-ensuring equality of purchasing power between Community officials at the various places of employment by taking account of their family situation and the cost of living in their place of employment;

-securing satisfactory agreement in a way that durably removes the potential for conflict arising from annual negotiations.

*Pensions

The Commission will put forward the necessary proposals in order :

-to take into account the actuarial balance of the pensions scheme. It will propose an objective procedure for calculating, on a regular basis, the contributions necessary to guarantee the long-term actuarial balance of the scheme.

-to implement complementary measures designed to introduce greater transparency and ensure the smoother operation of the system. The possible impact of these measures will be taken into account to establish the actuarial balance of the scheme.

-In addition it will study the feasibility and potential benefits and disadvantages of a pension fund.

*Timetable: Consultative document: November 2000; launching of the interinstitutional consultations via the Staff Regulations Committee: spring of 2001.