COMMISSION STAFF WORKING DOCUMENT Addendum to the 1st September 2010 Eurostat report on the pension contribution rate of the Pension Scheme for European Officials (PSEO)  concerning implementation of the judgement of the Court of Justice of the European Union of the 24 November – Case C-40/10  Reference date: 31 December 2009  COM(2010)798 final
Date: 2010-12-13
Institutions: European Commission
Subjects: European official, pay, servant (EU), social-security benefit

EN 

EN 

   EN 

 
 
EUROPEAN COMMISSION 

Brussels, 13.12.2010 
SEC(2010) 1607 final 

COMMISSION STAFF WORKING DOCUMENT 

Addendum to the 1st September 2010 Eurostat report on the pension contribution rate 
of the Pension Scheme for European Officials (PSEO) 

concerning 
implementation of the judgement of the Court of Justice of the European Union of the 
24 November – Case C-40/10 

Reference date: 31 December 2009 

COM(2010)798 final 

EN 

   EN 

 
 
 
  
 
 
 
TABLE OF CONTENTS 

Commission staff working document Addendum to the 1st September 2010 Eurostat report on the 
pension contribution rate of the Pension Scheme for European Officials (PSEO) concerning 
implementation of the judgement of the Court of Justice of the European Union of the 24 
November – Case C-40/10 Reference date: 31 December 2009Error! Bookmark not defined. 

1. 

2. 

3. 

3.1. 

3.2. 

Introduction.................................................................................................................. 3 

Contribution rate .......................................................................................................... 3 

Analysis of the contribution rate change...................................................................... 4 

Change in actuarial assumptions.................................................................................. 5 

General Salary Growth (GSG) ..................................................................................... 6 

EN 

2 

   EN 

 
1. 

INTRODUCTION 

In order to comply with the judgement of the Court of Justice of the European Union of the 24 
November  2010  (Case  C-40/10),  the  Council  adopted  the  Commission  Proposal  on  the  2009 
salary and pension adjustment (COM (2009) 629). This Regulation adjusts, with the retroactive 
effect  from  1  July  2009,  the  remuneration  and  pensions  of  EU  officials  and  other  servants  by 
3.7% and replaces the Council Regulation (EU, Euratom) No 1296/2009 of 23 December 2009 
adjusting them by 1.85%. Therefore, the 2009 global Specific Indicator (SI) value has increased. 
Since this indicator is a component of the General Salary Growth (GSG), a parameter used in the 
calculation of the 2010 pension contribution rate, this parameter also needs to be updated. 

Eurostat has drawn up the present Addendum to the 1st September 2010 Eurostat report to set out 
the  impact  of  the  modified  GSG  on  the  results  of  the  2010  update  of  the  2008  actuarial 
assessment, based on the population of European officials as at 31 December 2009. 

This  addendum  to  the  Eurostat  report  provides  the  information  needed  by  the  Commission  to 
propose, if necessary, changes to the staff contribution rate in order to ensure the balance of the 
scheme. 

For any further information concerning this report, please contact Eurostat in Luxembourg: 

Eurostat, Unit C-6 Secretariat 
BECH – A2/018 
L-2920 Luxembourg 
Tel.: (352) 4301-34191 

2. 

CONTRIBUTION RATE 

As a result of the modified GSG parameter the calculated pension contribution rate for 
2010 is 11.6% instead of the 11.0% indicated in Eurostat's September 2010 report. 

The change is exclusively the consequence of implementation of the judgement of the 
Court of Justice of the European Union of the 24 November – Case C-40/10.  

The modified 2010 actuarial assessment of the Pension Scheme for European Officials 
(PSEO)  indicates  that,  in  order  to  guarantee  the  equilibrium  of  the  scheme,  the 
contribution rate necessary to finance one third of the benefits payable would be 11.6% 
of  the  basic  salary  (or  invalidity  or  termination  of  service  allowance).  This  actuarial 
assessment has been made in accordance with the agreed methodology. 

The  calculated  contribution  rate  indicated  above  (11.6%)  is  one  third  of  the  ratio 
between the total of the service cost (1 246 million Euros) and the total of annual basic 
salaries  (3  574  million  Euros).  This  rate  is  higher  (+0.3%)  than  the  one  calculated  in 
2009 (11.3%). This change is analysed in point 3. 

EN 

3 

   EN 

 
Tables I and II from the 1st September Eurostat report have been updated as follows:  

Table I. 

Breakdown of the contribution rate 

Service cost

Total contribution rate 
(3/3)

Staff contribution rate 
(1/3)

Service cost for retirement

Service cost for invalidity

Service cost for death

Total service cost

31.9%

1.9%

1.1%

34.9%

10.6%

0.6%

0.4%

11.6%

Table II. 

Service cost and total amount of annual basic salaries 

Service cost

Total (EUR million)

%

- Service cost for retirement

- Service cost for invalidity

- Service cost for death

Total service cost

Total annual basic salaries and 
invalidity and termination 
allowances

1 141

 66

 39

1 246

3 574

91.6%

5.3%

3.1%

100.0%

100.0%

3. 

ANALYSIS OF THE CONTRIBUTION RATE CHANGE 

Changes to the pension contribution rate result from the combined effect of changes in 
the population structure, in actuarial assumptions and in the methodology. The separate 
impact  of  these  changes  in  the  officials'  contribution  rate  change  is  not  easy  to 
determine due to their interdependency, although analysis of the actuarial assumptions 
allows  a  better  understanding  of  the  changes  in  contribution  rate  and  its  sensitivity  to 
the various actuarial assumptions. 

As  indicated  in  point  1,  the  official’s  pension  contribution  rate  calculated  this  year 
(11.6%)  is  higher  than  the  one  calculated  in  2009  (11.3%).  This  increase  (+0.3 
percentage points) is mainly explained by 

improvements in the methodology, notably in the incorporation of staff turnover (-0.2% 
percentage points), 

the update of the invalidity table (-0.1 percentage points), 

the increase of the General Salary Growth (GSG) (+0.6 percentage points) and 

the fact the Real Discount Rate (RDR) has, exceptionally this year, remained stable. It 
should be remembered that past increases of the contribution rate in the period 2004 – 
2009,  from  9.75%  to  11.3%  (current  applied  rate)  are  mainly  due  to  the  progressive 
yearly decrease of the RDR from 3.9% (rate used in the 2004 assessment) to 2.8% (rate 
used in the 2009 assessment). 

EN 

4 

   EN 

 
 
 
3.1. 

Change in actuarial assumptions 

The  General  Salary  Growth  (GSG)  is  the  only  assumption  that  has  been  updated  as  a 
consequence  of  the  implementation  of  the  judgement  of  the  Court  of  Justice  of  the 
European Union of the 24 November – Case C-40/10. 

Tables IV and V from the 1st September Eurostat report have been updated as follows: 

.Table IV. 

Actuarial assumptions  

Actuarial assumption

Average age difference between married men and 
women

Probability of being married for men

Probability of being married for women

Value

3 years

84%

38%

Marital status

status at evaluation date

Coefficient for orphan's and divorced spouse's pension

Annex VIII coefficient (correction coefficient)

Assumed retirement age

Real discount rate (RDR)

General salary growth (GSG)

10%

0.0%

63 to 64

2.8%

0.5%

General pension revaluation (GPR)

0.5% (equal to the GSG)

Individual salary progression (ISP)

Mortality table (healthy people)

Mortality table (Invalids)

2009 ISP table

2008 ICSLT

Mortality rate corresponding to a person 3 
years older than healthy person

Invalidity table

2009 EU Invalidity table

Table V.  Changes in actuarial assumptions 

Assumption

Assessment

Real Discount Rate (RDR) (1)

General Salary Growth (GSG) (1)

ISP-1. Individual Salary Progression of Officials, 
recruited before 01.05.2004 (2)

ISP-2. Individual Salary Progression  of 
Officials, recruited from 01.05.2004 onwards (2)

ISP-3. Individual Salary Progression of 
Temporary Agents (3)

ISP-4. Individual Salary Progression of Contract 
Agents (3)

ISP-5. Individual Salary Progression of 
Parliamentary Assistants (4)

2009

2.8%

0.3%

1.5%

1.9%

0.4%

0.2%

n/a

2010

2.8%

0.5%

1.5%

2.1%

1.6%

1.0%

0.0%

Life

Invalidity

2008 ICSLT

2008 ICSLT

2008 EU Invalidity 
table

2009 EU Invalidity 
table

(1) Average of 12 years preceding the year of the assessment
(2) Average of individual rates weighted by population as at 31.12.2009
(3) 2009 estimated rate takes account of turnover. In 2010 assessment turnover is considered 
      separately in calculation
(4) New category of personnel included in the 2010 assessment by the first time

EN 

5 

   EN 

 
 
 
3.2. 

General Salary Growth (GSG) 

The GSG (0.5%) used in the updated 2010 calculation is higher than the one used in the 
2009 assessment (0.3%). The effect on the contribution rate for pension is an increase of 
+0.6 percentage points. 

The  GSG  (0.5%)  presented  in  this  addendum  is  higher  than  this  used  in  the  Eurostat 
report of the 1st September 2010, due exclusively to the implementation of provisions of 
the judgement of the Court of Justice of the European Communities of the 24 November 
– Case C-40/10. 

As  for  the  discount  rate,  Annex  XII  contains  specific  rules  for  calculating  General 
Salary  Growth.  Article  11  stipulates  on  the  one  hand  that  the  annual  change  in  salary 
scales to be used for the actuarial calculations must be based on the specific indicator 
(SI) and on the other hand that the effective annual rate is the average of the net SIs for 
the 12 years preceding the current year.  

The  2009  net  SI  used  in  the  moving  average  to  calculate  the  GSG  as  detailed  in  the 
Eurostat report of the 1st September 2010 (0.9%) has been replaced by 2.8%, which is 
the  2009  change  in  purchasing  power  of  national  officials  as  detailed  in  the  2009 
proposal of the Commission for adjusting remunerations of officials. 

As the net SI applied in 2009 is now 2.8%, the 12-year moving geometric average from 
1998 to 2009 (GSG) becomes 0.5%. 

Table XIV from the 1st September Eurostat report has been updated as follows: 

Table XIV.  General Salary Growth  

Year

1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
GSG (Aver. 1997 - 2008)
GSG (Aver. 1998 - 2009)

SI

0.7
0.5
1.8
-0.1
0.6
1.7
1.1
-1.2
0.0
0.2
0.0
-1.3
2.8
0.3
0.5

EN 

6 

   EN