Opinion No 5/2002 of the Court of Auditors of the European Communities on an amended proposal for a Council Regulation introducing special measures to terminate the service of officials of the Commission of the European Communities as part of the reform of the Commission
Date: 2002-07-17
Institutions: European Court of Auditors
Subjects: early retirement, equal treatment, institutional reform, pension scheme, recruitment, regulations for civil servants, termination of employment

1.10.2002

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(Information)

COURT OF AUDITORS

OPINION No 5/2002

of the Court of Auditors of the European Communities on an amended proposal for a Council
Regulation introducing special measures to terminate the service of officials of the Commission of
the European Communities as part of the reform of the Commission

(2002/C 236/01)

EXPLANATORY MEMORANDUM

On 20 March 2002 the Commission presented an amended pro-
posal for a Council Regulation introducing special measures to
terminate the service of officials of the Commission of the Euro-
pean Communities as part of the reform of the Commission (1).

2. The original proposal, on which the Court issued its opinion
No 3/2001 (2), provided for a termination-of-service allowance to
be granted to 600 officials who had reached the age of 50 and
had completed at least 10 years’ service. According to the amended
proposal, the termination-of-service scheme relates to 600 offi-
cials who have reached the age of 55 and have completed at least
15 years’ service.

In a letter received at the Court on 11 April 2002 the Council
requested the Court’s opinion on this amended proposal.

3. The amended proposal provides for a lower average level of
the termination-of-service allowance (62,5 % of the basic salary,
instead of 65 %).

The purpose of the amended proposal is to authorise a termination-
of-service scheme for 600 Commission officials, with 200 depart-
ing every year from 2002 to 2004, in order to take account of the
need to renew professional skills.

The Court has examined the amended proposal and issued the
present opinion, based on the following reasons:

1.
In its explanatory memorandum the Commission states that
the termination-of-service scheme for 600 Commission officials
would make it possible for 273 new officials to be recruited with
a neutral impact on the budget, as the cost of the recruitment
would be balanced by the savings generated by the scheme.
According to the explanatory memorandum, the figure of
600 members of staff has been established on the basis of an
analysis of the specialised profiles and skills required in the Com-
mission. No indication about the nature of such profiles and skills
is given, nor is the figure (600) further explained.

4. The annual savings and costs set out in the financial statement
annexed to the amended proposal summarise for both ‘depar-
tures’ and ‘arrivals’ the main salary costs and revenue charged to
the budget each year. The differences with respect to the original
proposal are due to the forecast of higher savings and the conse-
quent possibility of recruiting a larger number of new officials
(273, compared with 258 in the original proposal).

5. The Commission’s calculation has been made using the same
methods as for the original proposal. In its previous opinion the
Court has considered that the calculation could have been more
sophisticated, but that the way in which the direct budgetary
impact is presented is essentially reasonable. Nevertheless, the
increase in future pension costs due to the appointment of the
new officials seems not to have been taken into consideration. As

(1) COM(2002) 136 final of 20 March 2002.

(2) OJ C 162, 5.6.2001.

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the Court has noted in its previous opinion, ‘this implies the long-
run full cost (but not the immediate cash cost) of the newly
recruited officials would be some 25 % higher than shown in the
Commissions calculation.’

10. The scheme would fail to meet its objectives if it were also
applied to well performing officials attracted by the financial con-
ditions offered. The Court takes note of the fact that no appropri-
ate and clear selection criteria are established.

6. The budgetary savings will be achieved by not filling 327
posts out of the 600 made free through the early retirements and
by recruiting, for the remaining posts, officials in lower career
brackets and remuneration grades. The proposal does not explain
which budgetary mechanisms will be used to ensure that the sav-
ings will be safeguarded in the long term.

7. The proposed termination-of-service scheme (in fact, an early
retirement scheme) appears to conflict with the employment
policy objective, proposed by the Commission and adopted by
the Council (1), of increasing the employment rate of older work-
ers (aged 55 to 64). At its meeting of 15 and 16 March 2002 in
Barcelona, the European Council confirmed this objective and
recommended increasing opportunities for older workers to
remain in the labour market, for instance, through flexible and
gradual retirement formulas.

8. According to the fifth recital of the preamble to the proposed
regulation ‘the skills of some officials, particularly old members
of staff, are deemed not to be in line with the duties to be per-
formed’. This is the reason why they should benefit from an early
retirement scheme. Out of the targeted group of 600 members of
staff, 312 are deemed to be senior officials in grade A3 (Head of
Division) and grades A5/A4 (Principal Administrator, Head of
Unit). This shows that an improvement of the staff management
policy is needed.

9. Considering the salary level of A5 to A3 officials an allow-
ance corresponding to 62,5 % of the basic salary would probably
allow, in certain cases, a fairly good living standard. Furthermore,
a beneficiary of a termination-of-service allowance will be free to
take up a new occupation to make up for the loss of a part of the
basic salary. This could make the termination-of-service allow-
ance attractive to well performing staff.

(1) Council Decision of 18 February 2002 on guidelines for Member
States’ employment policies for the year 2002 (2002/177/EC) and
Council Recommendation of 18 February 2002 on the implementa-
tion of Member States’ employment policies (2002/178/EC), both
published in OJ L 60, 1.3.2002.

11. The implementation of the scheme should ensure that staff
who are able to update their skills are fairly treated.

12.
In connection with considerations on flexible retirement Mr
Jan O. Karlsson, the former President of the Court, noted in a let-
ter of 10 September 2001 to Mr Neil Kinnock, Vice-President of
the Commission, that it would be appropriate to establish a fair
and transparent pension system that gives sufficient impetus for
early retirement. It was considered that the present system for
retirement was inflexible and penalised those who wished to leave
service before the age of 60 years. In the same letter it was also
stated that ‘indeed “dégagement” is not only costly but also unfair
because financial compensations are given regardless of the num-
ber of years service. Such a system should only be used as a last
recourse (e.g. in the case of important reorganisations of the insti-
tutions) and the use of more economical and fairer systems such
as an attractive early retirement (i.e. with no reduction coefficient)
on the initiative of the organisation should also be considered’.

13. Aware of the need of having an adequate monitoring system
of human resources to ensure a necessary and regular renewal of
staff, the Court notes that the proposal included in the draft staff
regulations’ reform (2) to make termination-of-service conditions
easier after 55 years of age would fit better in requirements of
flexibility and sound financial management at a lower budgetary
cost (3). The implementation of the abovementioned scheme is
likely to reduce in the future the use of early retirement proce-
dures.

THE COURT OF AUDITORS OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Commu-
nity, and in particular Article 283 thereof,

Having regard to the amended Commission proposal of 20 March
2002 (4),

Having regard to the Council’s request for an opinion on this
amended proposal, received at the Court on 11 April 2002,

(2) Document COM(2002) 213 final.
(3) This possibility that the Court has advocated all along the discussions
about the administrative reform plan is foreseen only ‘in the interest
of service, based on objective criteria and transparent procedures’. It
does not contain any ‘handshake premium’, but only aims at reduc-
ing, even in some cases, at suppressing weightings foreseen in the
Staff Regulations.

(4) COM(2002) 136 final of 20 March 2002.

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HAS ADOPTED THE FOLLOWING OPINION:

4. The Court takes note of the fact that no appropriate and clear
selection criteria are established.

1. As the Court has already noted in its opinion No 3/2001, the
increase in future pension costs due to the appointment of the
new officials seems not to have been taken into consideration.

2. The proposal should define which budgetary mechanisms will
be used to ensure that the savings will actually be safeguarded in
the long term.

5. The implementation of the scheme should ensure that staff
who are able to update their skills are fairly treated.

3. The preamble to the proposed regulation should explain the
coherence of the scheme with the European employment policy
objective of increasing the employment rate of older workers
through flexible and gradual retirement formulas.

6. The Court is of the opinion that an early retirement system
such as the one proposed should only be a one-off solution. In
the future the focus should be on improvement of staff develop-
ment policy.

This opinion was adopted by the Court of Auditors in Luxembourg at its meeting of 17 and 18 July 2002.

For the Court of Auditors

Juan Manuel FABRA VALLÉS

President