JUDGMENT OF THE EUROPEAN UNION CIVIL SERVICE TRIBUNAL

(Third Chamber)

5 February 2016

Svend Leon Clausen

and

Niels Kristoffersen

v

European Parliament

‛Civil service — Retired officials — Retirement pensions — Article 64 of the Staff Regulations — Weightings — Annual update of weightings — Article 65(2) of the Staff Regulations — Interim update — Articles 3, 4 and 8 of Annex XI to the Staff Regulations — Sensitivity threshold — Change in the cost of living — Article 65(4) of the Staff Regulations — Legislature deciding against any update in 2013 or 2014 — Scope — Regulation No 1416/2013 — Over-estimation of the weighting for Denmark — Reduction of the weighting through the interim update mechanism — Misuse of powers’

Application:

under Article 270 TFEU, applicable to the EAEC Treaty pursuant to Article 106a thereof, in which Mr Clausen and Mr Kristoffersen seek annulment of the decisions of the appointing authority of the European Parliament, contained in their respective pension statements for June 2014, reducing the amount of their respective retirement pensions by the application, from 1 January 2014, of the weighting of 126.3% laid down for retired officials resident in Denmark.

Held:

The action is dismissed. Mr Clausen and Mr Kristoffersen are to bear their own costs and are ordered to pay the costs incurred by the European Parliament.

Summary

It cannot validly be claimed that the adoption by the Commission of a decision on the interim update of the weightings applicable to officials’ remuneration and pensions as a result of the entry into force of Regulation No 1023/2013 amending the Staff Regulations of Officials of the European Union and the Conditions of Employment of Other Servants of the European Union lacks any legal basis. In providing that, where remuneration is updated in accordance with Article 65(1) of the Staff Regulations, as amended by Regulation No 1023/2013, the same update is to be applied to pensions, Article 82(2) of the amended Staff Regulations clearly concerns only the updating of the nominal amount of the pensions paid to retired staff, which are to be updated to the same extent as the remuneration of officials. In order to ensure this parallel adjustment decided by the legislature, the provision thus makes reference to the update mechanism for remuneration laid down by the amended Staff Regulations, in this instance in Article 65(1). However, the fact that Article 82(2) of the amended Staff Regulations says nothing about the possibility of applying the update mechanism, annual and/or interim, to the weightings which are partly or wholly applicable to certain pensions does not in any way lead to the conclusion that that provision precludes the adoption of interim updates of the weightings. It is Article 65(2) of the amended Staff Regulations (with the same normative scope as Article 82(2) thereof) which expressly provides not only for the intermediate update of remuneration, but also for the interim update of the weightings laid down in Article 64 of the amended Staff Regulations for remuneration and applicable, in certain cases, to pensions under Article 20 of Annex XIII to the amended Staff Regulations, in this instance in derogation from the second subparagraph of Article 82(1) of the amended Staff Regulations. As for the mechanism for carrying out interim updates, although Article 65(2) of the amended Staff Regulations refers in general terms to the interim update of the weightings in the event of a substantial change in the cost of living, Article 3(5), third subparagraph, and (6) of Annex XI to the amended Staff Regulations concern the update of weightings which are partly or wholly applied to pensions. Those provisions provide in particular for the weightings to apply from their effective date until the date of entry into force of the next annual update, whereas Article 8 of Annex XI to the amended Staff Regulations, which appears in Chapter 3 of that Annex on intermediate updates of remuneration and pensions, and is referred to by the third subparagraph of Article 3(5) of that Annex, provides for the possibility that the effective date might be before 1 January, which necessarily implies that the Union legislature intended it to be possible to use the interim update mechanism to the full for the weightings applied to pensions. Moreover, Chapter 2 of Annex XI to the amended Staff Regulations is specifically dedicated to intermediate updates of remuneration and pensions (Article 65(2) of the amended Staff Regulations). In accordance with Article 65(2) of the amended Staff Regulations, which expressly refers to weightings, Chapter 2 applies mutatis mutandis to the interim update of weightings. (see paras 34-39)

While it is clear from the wording of Article 65(4) of the Staff Regulations, as amended by Regulation No 1023/2013 amending the Staff Regulations of Officials of the European Union and the Conditions of Employment of Other Servants of the European Union, that the legislature decided that there should be no update under paragraphs 1 and 2 of that article in 2013 and 2014, that does not, however, prevent the Commission from being able to adopt a decision on the interim update, for those years, of the weightings applicable to the remuneration and pensions of officials under Article 65(2) of the amended Staff Regulations. While Article 65(1) of the amended Staff Regulations concerns the annual update of the nominal amounts of the remuneration and of various pecuniary benefits, Article 65(2), on the other hand, concerns the ‘intermediate’ update, in the event of a substantial change in the cost of living, not just of the nominal amounts of the remuneration and pecuniary benefits referred to in paragraph 1, but also of the weightings referred to in Article 64 of the amended Staff Regulations, which are applied to pensions only in connection with rights acquired prior to 1 May 2004. Furthermore, every provision of EU law must be interpreted by reference to the purpose and general scheme of the rules of which it forms a part and on the basis of the real intention and aim of its author. In that regard, the reference in Article 65(4) of the amended Staff Regulations to the updates provided for in Article 65(1) and (2) must be understood as relating only to updates of the nominal amounts of remuneration, pensions and benefits, excluding the interim update of weightings under Article 65(2) of the amended Staff Regulations and their annual update under Article 64 of the amended Staff Regulations. (see paras 50-52, 60) See: Judgments of 12 November 1969 in Stauder, 29/69, EU:C:1969:57, para. 3; 7 July 1988 in Moksel Import und Export, 55/87, EU:C:1988:377, para. 15, and 29 April 2004 in Plato Plastik Robert Frank, C‑341/01, EU:C:2004:254, para. 64 and the case-law cited therein

The automatic update mechanism for remuneration and pensions provided for in Article 65(1) of the version of the Staff Regulations resulting from the entry into force of Regulation No 1023/2013 amending the Staff Regulations of Officials of the European Union and the Conditions of Employment of Other Servants of the European Union, which replaced the mechanism for adjusting remuneration and pensions by Council regulations, provided for by the version of the Staff Regulations applicable from 1 May 2004 to 31 December 2013, is designed to ensure a certain parallelism between, on the one hand, changes in the purchasing power of officials and other staff of the European Union, and by extension that of its retired staff, and, on the other, that of members of the national civil services. There is, however, a clear distinction between that aim of parallelism and the principle within the European civil service itself that there should be equivalence of purchasing power between officials of the Union, resulting in particular from the provisions of Article 64 of the Staff Regulations as amended by Regulation No 1023/2013, a principle which also applies to retired staff in receipt of a pension, some or all of whose rights were acquired prior to 1 May 2004. That principle, which is based on the considerable difference identified between the economic situations of the various Member States and certain third countries as places of employment or, in the case of retired staff, of residence, implies that the pecuniary rights of EU officials and other staff and of some retired staff should, where their professional and family situations are equivalent, provide them with the same purchasing power regardless of their place of employment or residence. The principle, based on the principle of equal treatment, is implemented by applying to the nominal amount of remuneration, or of some or all of certain pensions, the weighting expressing the ratio between the cost of living in Brussels (Belgium) and Luxembourg (Luxembourg), the reference cities, and the cost of living in the place of employment or residence. (see paras 56-58) See: Judgment of 25 September 2002 in Ajour and Others v Commission, T‑201/00 and T‑384/00, EU:T:2002:224, para. 45 Judgment of 21 March 2013 in van der Aat and Others v Commission, F‑111/11, EU:F:2013:42, para. 42

The aim of the mechanism for the interim update of weightings provided for in Article 65(2) of the version of the Staff Regulations resulting from the entry into force of Regulation No 1023/2013 amending the Staff Regulations of Officials of the European Union and the Conditions of Employment of Other Servants of the European Union is to fix and apply to the remuneration and pensions of officials and some retired staff coefficients which best reflect, economically and over time, the actual cost of living in their places of employment or residence. Thus, where it is implemented, the mechanism ceases to apply the weighting resulting from the annual update on 1 July of the previous year and replaces it with a new weighting with an effective date on the following 1 January, as a general rule, in order to minimise the decrease or, as the case may be, increase in purchasing power for the officials and retired staff concerned who are employed or resident in the place concerned during the first half of the year, instead of waiting for the next annual update effective on the following 1 July. Given that it would be expensive and difficult to provide for monthly updates of the weightings in order to reflect monthly changes in the cost of living in each of the Member States or third countries of employment or residence, the legislature defined a sensitivity threshold beyond which Eurostat and the Commission must consider whether the applicable weighting resulting from the previous annual update still reflects the economic reality, and if this is not the case, they must fix a new weighting by means of an interim update. In the light of the calculation factors provided for by the Staff Regulations as amended by Regulation No 1023/2013, in particular the forecast of the change in purchasing power, it should be noted, however, that a finding that the percentage change in the cost of living exceeds the sensitivity threshold does not necessarily lead to the same percentage change to the amount of the remuneration or pensions or to the rate of the weighting. That means that, where a change in the cost of living since the previous annual update is below the sensitivity threshold, the amended Staff Regulations do not make it an obligation to update the remuneration and pensions or the weightings fixed on the previous 1 July in the annual update, even if, in their daily lives, the officials and retired staff concerned may temporarily — until the annual update on the following 1 July — suffer a reduction in purchasing power, or on the contrary benefit from an increase in purchasing power, compared with other officials and retired staff employed or resident in the other Member States. Thus, the legislature laid down a tolerance limit in terms of the potential decrease or increase in purchasing power of officials and retired staff resulting from the difference between, on the one hand, the weighting resulting from the annual update applicable since the previous 1 July and, on the other hand, the weighting likely to reflect the change in actual economic data since the previous annual update. It is true that if the sensitivity threshold under Article 6(2)(b) of Annex XI to the amended Staff Regulations is exceeded, an interim update of the weightings is mandatory, and, in that regard, the data taken into account must be the actual data recorded by Eurostat. However, first of all, the purpose of a sensitivity threshold is that an interim update should be carried out only where it is likely to lead to the fixing of an appreciably different weighting from that fixed in the annual update. In other words, the legislature did not make it a requirement that the weighting resulting from the previous annual update should be reviewed on an interim basis where the changes in the cost of living are small and likely to entail only a minor change to the weighting. Secondly, the implementation of Article 6(2)(b) of Annex XI to the amended Staff Regulations by means of a comparison of actual data necessarily presupposes that the data on which the annual update adopted with effect from 1 July of the previous calendar year was based genuinely reflected the actual cost of living on that date. (see paras 77-82)