Commission Staff Working Document accompanying the Proposal for a Council Regulation adjusting, from 1 July 2011, 1 July 2012 and 1 July 2013, the rate of contribution to the pension scheme of officials and other servants of the European Union - Report on the 2012 update of the 2011 actuarial assessment of the Pension Scheme for European Officials (PSEO)
Date: 2014-07-16
Institutions: European Commission
Subjects: European official, interest, pension scheme, servant (EU), social-security contribution, transfer of pension rights













EUR-Lex - 52014SC0238 - EN











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52014SC0238

Commission Staff Working Document accompanying the Proposal for a Council Regulation adjusting, from 1 July 2011, 1 July 2012 and 1 July 2013, the rate of contribution to the pension scheme of officials and other servants of the European Union - Report on the 2012 update of the 2011 actuarial assessment of the Pension Scheme for European Officials (PSEO) /* SWD/2014/238 final */









 || EUROPEAN COMMISSION ||   
Brussels, 16/7/2014 
SWD(2014) 238 final
COMMISSION STAFF WORKING
DOCUMENT
{COM(2014)
462 final}
{SWD(2014)
237 final}
{SWD(2014)
239 final}
{SWD(2014)
240 final}
Articles 83 and
83a and Annex XII of the Staff Regulations
Report on the 2012 update of the 2011 actuarial assessment of the
Pension Scheme for European Officials (PSEO)
Reference date: 31 December 2011
REPORT
Luxembourg, 1 September 2012
TABLE
OF CONTENTS
1.       Introduction. 3
2.       Contribution rate. 4
3.       Update of the assessment
of the actuarial balance. 4
4.       Analysis of the
contribution rate change. 4
4.1.        Real Discount Rate (RDR) 5
4.2.        General Salary Growth
(GSG) 5
4.3.        Individual Salary
Progression (ISP) 5
4.4.        Invalidity table. 5
4.5.        Life table (healthy
persons) 5
4.6.        Life table (invalid
persons) 6
4.7.        Assumed retirement age. 6
4.8.        Average difference
between men and women. 6
4.9.        Probability of being
married for men and women. 6
4.10.     Loading factor for orphan’s
and divorced spouse’s pension. 6
4.11.     Methodological changes. 7
4.12.     Population change effect 7
5.       Computation system.. 7
5.1.        Variables used in the
assessment 7
5.2.        Demographic parameters. 7
5.3.        Economic parameters. 8
5.4.        Technical implementation
of Annex XII to the Staff Regulations. 8
5.5.        Independent examination. 8
APPENDIX
I - COMPUTATION.. 9
6.       Relevant figures for
calculating the contribution rate. 9
7.       Summary of main variables. 10
8.       Demographic parameters. 12
8.1.        Reference population. 12
8.2.        Assumed retirement age. 14
8.3.        Invalidity table. 15
8.4.        Life table of healthy
persons. 16
8.5.        Life table of invalids. 16
8.6.        Average age difference
between men and women. 17
8.7.        Probability of being
married for men and women. 17
9.       Economic parameters. 17
9.1.        Real Discount Rate (RDR) 17
9.2.        General Salary Growth
(GSG) 18
9.3.        Individual Salary
Progression (ISP) 19
9.3.1        Population groups. 19
9.3.2        ISP rates. 19
9.4.        Turnover 19
9.4.1        Turnover definition. 19
9.4.2        T1. Turnover due to
contract validity expiration. 20
9.4.3        T2. Turnover due to
voluntary and unexpected losses. 20
9.5.        Loading factor for
orphan’s and divorced spouse’s pension. 21
10.    Annuities. 21
11.    Impact of changes in
demographic and economic parameters in the calculation of the pension
contribution rate  22
APPENDIX
II – INDEPENDENT EXAMINATION.. 23

1.      
Introduction

Article 83a and Annex XII of the Staff
Regulations set out rules to guarantee the equilibrium of the PSEO (Pension
Scheme of European Officials). 
Annex XII lays down
rules for implementing Article 83a of the Staff Regulations. In particular, it
stipulates that: 
§ 
Eurostat is the authority responsible for the
technical implementation of the Annex (see Article 13(1)), 
§ 
Eurostat will be assisted by one or more
qualified independent experts in carrying out the actuarial assessments (see
Article 13(2)), 
§ 
each year on 1 September, Eurostat is to submit
a report on the assessment and updating referred to in Article 1 of the Annex
(see Article 13(3)), 
§ 
any questions of methodology raised by the
implementation of the Annex shall be dealt with by Eurostat in cooperation with
national experts from the relevant departments of the Member States and the
qualified independent expert or experts (see Article 13(4)). 
Eurostat has drawn
up the present report in accordance with the above legal requirements. The
second five-yearly actuarial assessment of the pension scheme of the European
civil service was carried out in 2008. This report sets out the results of the
2012 update of this 2011 actuarial assessment, based on the population of
European officials as at 31 December 2011. 
The 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-3 Secretariat
BECH – A2/003
L-2920 Luxembourg
Tel.: (352) 4301-34821

2.       Contribution rate

The 2012 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 9.9% of
the basic salary (or invalidity or termination of service allowance). This
actuarial assessment has been made in accordance with the agreed methodology.
It was discussed by the Article 83 Working Group at the 29 June 2012
meeting and has been reviewed and approved by independent actuarial
consultants. 
The 9.9% calculated
contribution rate is one third of the ratio between the total of the service
cost (1 132 million Euros) and the total of annual basic salaries (3 808
million Euros) (see Appendix I, Tables I and II). This rate is 1.1 percentage
points lower than the one calculated in 2011 (11%) but not implemented. This
change is analysed in point 4. 

3.       Update of the assessment of the actuarial balance

The PSEO was
assessed on the basis of the computation method set out in Chapter 2 of Annex
XII of the Staff Regulations[1]. 
The following
elements have been considered in the 2012 assessment: 
–     
the population of contributing members at
31.12.2011,
–     
the update of the Real Discount Rate (RDR) (2.8%
in 2011 and 2.6% in 2012),
–     
the update of the General Salary Growth Rate
(GSG) (0,3% in 2011 and -0.2% in 2012),
–     
the update of the Individual Salary Progression
rates (ISP),
–     
the update of the Invalidity Table.
More details about
these updates are given in Appendix I. 

4.       Analysis of the contribution rate change

Changes to the
pension contribution rate result from the combined effect of changes in the
population structure and in actuarial assumptions. 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 2, the official’s pension contribution rate calculated this year (9.9%)
is lower than the one calculated in 2011 (11.0%). This decrease (-1.1
percentage points) is mainly explained by the combined effect of the population
evolution and actuarial assumptions update, the most important of which being the
decreases of the GSG (0.3% in 2011 to -0.2% in 2012) and of the RDR (2.8% in
2011 to 2.6% in 2012). 
Changes in
actuarial assumptions and their impact on the contribution rate were presented
in detail at the 29 June 2011 meeting of the Article 83 Working Group (see
document 20120629 Art83_06). Further details are given in Appendix I.

4.1.       Real Discount Rate (RDR)

The RDR (2.6%) used
in 2012 calculation is lower than the one used in 2011 assessment (2.8%). The
observed effect was a 0.5% increase of the calculated pension contribution rate.


4.2.       General Salary Growth (GSG)

The GSG (-0.2%)
used in 2012 calculation is lower than the one used for the 2011 assessment
(0.3%). Consequently a -1.4% lowering effect was observed on the calculated pension
contribution rate. 

4.3.       Individual Salary Progression (ISP)

ISP rates have been
updated to take account of the observed promotion rates from 2005 to 2011 in
accordance with methodology agreed at the June 2006 Art83 WG meeting. This
update is further explained in Appendix I.
The ISP update has
no material impact on the pension contribution rate.

4.4.       Invalidity table

The invalidity table
was updated with the most recently observed invalidity rates (2011). The new
invalidity table (2011 EU Invalidity table) is thus an average of 5 years
invalidity rates (2007 – 2011). The use of this updated table had no material
impact on the pension contribution rate (see further explanation in appendix I,
point 8.3). 

4.5.       Life table (healthy persons)

According to the
Staff Regulations the life table may be updated only on the occasion of the
five-yearly actuarial assessment[2]. The current ICSLT (International civil servants life table) was
updated on the occasion of the 2008 actuarial assessment and this table, 2008
ICSLT, must be used at least until the next five-yearly assessment in 2013. 
The life table used
in the 2012 calculation is thus identical to that used in the 2011 calculation
and there is no impact on the calculated contribution rate due to a change in
the table. 

4.6.       Life table (invalid persons)

It is normal
actuarial practice to consider life expectancy of invalids as slightly shorter
than that of healthy persons (e.g. EuroControl applies the mortality rate
corresponding to a healthy person 3 years older than an invalid’s age).
Eurostat has applied this actuarial practice since the 2008 pension assessment.

Since the life
table used in the 2012 calculation is identical to the one used in the previous
calculation, no impact on the calculated pension contribution rate due to a
change in the table was observed. 

4.7.       Assumed retirement age

Assumed retirement
ages by staff category groups were first estimated for the 2004 pension
assessment, and were presented at the June 2004 meeting of the Article 83
Working Group. As provided for in paragraph 3 of Article 83(a) of the Staff
Regulations these assumed retirement ages were checked in 2008, on the occasion
of the second five-yearly actuarial assessment, and no change was proposed for
the following five-year period. 
The assumed
retirement ages are therefore identical to those used since 2004; no impact on
the calculated contribution rate due to a change in assumed retirement age was
observed. 

4.8.       Average difference between men and women

The average age
difference between married men and women (3 years) that has been applied since
2004 in actuarial calculations was checked in 2008, and found to be supported
by observation. The test showed that on average married men are 3.01 years
older than their partners and married women 3.18 years younger than their
partners. 
Since the average
difference in age is unchanged, no impact on the calculated pension
contribution rate due to a change in this age difference was observed. 

4.9.      
Probability of being married for men and women

The probabilities
of being married for officials and ex-officials aged more than 59 were
reassessed in 2008 and updated probabilities were presented at the June 2008
meeting of the Article 83 Working Group. No change was proposed at the 29 June
2012 meeting of the Article 83 Working Group. 
Since the
probability of being married is unchanged, no impact on the calculated pension contribution
rate from a change in probabilities of being married for men and women was observed.


4.10.   Loading factor for orphan’s and divorced spouse’s pension

Current actuarial
practice is to add 10% to a payable reversion pension to allow for the pension
payable to orphans after the death of the surviving spouse (or of the official
if there is no surviving spouse) and any pension payable to divorced spouses.
Eurostat estimates that the impact of this factor on the contribution rate is
minor and does not consider an update to this assumption necessary at the
present time. 
Since the loading
factor for pensions payable to orphans and divorced spouses is unchanged, no
impact on the calculated pension contribution rate due to a change in the
loading factor was observed. 

4.11.  
Methodological changes

No methodological
changes have been implemented in the occasion of the 2011 pension assessment,
thus no impact on the pension contribution rate was observed.

4.12.   Population change effect

The yearly
population change has had a material impact (-0.2%) on the pension contribution
rate calculated this year. 

5.       Computation system
5.1.       Variables used in the assessment

In general, two
kinds of variables are used in the actuarial calculation: 
Parameters: These are values mainly linked to the application of the Staff
Regulations. These values change according to certain conditions related to the
individual situation of each official (e.g. the annual accrual rate is 1.9% for
staff recruited from 01.05.2004 and 2% for those recruited before this date).
These values can be clearly established. 
Actuarial
assumptions: These are values that are not known
and cannot be established exactly, such as the invalidity table, the ISP table,
the probability of being married at the retirement date, the loading factor for
orphans and divorced spouses. The values of these actuarial assumptions are estimated
in accordance with general actuarial practices. They were discussed with
national experts from the Member States at the annual meetings of the Article
83 Working Group, and reviewed by independent actuarial consultants. 
A summary of the
main variables used (parameters and actuarial assumptions) is given in Appendix
I, Tables III and IV. 

5.2.       Demographic parameters

The reference
population is made up of contributing members of the PSEO including: 
§ 
active officials, 
§ 
members whose pension contribution is optional
(e.g. officials who have taken leave on personal grounds or parental leave), 
§ 
invalids who receive an invalidity allowance
under Article 78 of the Staff Regulations, 
§ 
Beneficiaries of an allowance for termination of
service. 
56 239 contributing members were recorded at 31.12.2011, which represents
a net increase of 1 354 participants compared to the previous year (at 31.12.2010,
54 885 were used in the 2011 actuarial assessment). 
The contributing
members increase is the net effect of the increase due to the new contributing
members (+2 839) and the decrease linked to members who left the scheme of
became pensioners (-1 485). 
A breakdown of the
reference population by Institution or Agency is included in Appendix I, Table
VII and a pyramid of ages in Figure I. 

5.3.       Economic parameters

In accordance with
Articles 10 and 11 of Annex XII to the Staff Regulations, the Real Discount
Rate (RDR) and the General Salary Growth (GSG) are calculated in the 2012
update as the average of the corresponding rates for the 12 preceding years
(for more information see Appendix I to this report, points 9.1 and 9.2
and Tables XII and XIII). 

5.4.       Technical implementation of Annex XII to the Staff Regulations

Technical questions
raised by the implementation of Annex XII are dealt with by Eurostat in
cooperation with national experts from the relevant departments of the Member
States participating in the Working Group on Article 83 of the Staff
Regulations. 
Eurostat also
exchanges relevant information on actuarial issues with international
organisations such as the JPAS (Joint Pensions Administrative Section of the
Coordinated Organisations), EPO (European Patent Office) and EuroControl. 

5.5.       Independent examination

In accordance with
Annex XII, Article 13, of the Staff Regulations, Eurostat was assisted by a
qualified independent expert with regard to the methodological implementation
and the definition and calculation of the corresponding actuarial assumptions. 
The independent
expert then conducted an actuarial examination of the contribution rate
calculated by Eurostat. This examination consisted in confirming the relevance
and reliability of the actuarial processes and assumptions used in accordance
with the methodology described in Annex XII to the Staff Regulations. 
For the aspects not
described explicitly in Annex XII, the independent expert checked their
compliance with generally accepted actuarial practices. Concerning actuarial
assumptions, the independent expert carried out investigations to ensure that
the underlying data provided by Eurostat were used correctly. 
A summary of the
assessment by the independent expert is included in Appendix II to this report.

APPENDIX I -
COMPUTATION

6.       Relevant figures for calculating the contribution rate

Table I.           Breakdown
of the contribution rate
 
Table II.          Service cost and total
amount of annual basic salaries
 

7.       Summary of main variables

The following
tables show the values of the main parameters (see Table III) and actuarial
assumptions (see Table IV). Please note that the tables only present an
overview of the main variables and are not exhaustive. Please refer to the
Staff Regulations and their annexes for precise and complete information.
 
Table III.        Parameters used in the
actuarial assessment 
Table IV.         Actuarial assumptions 
Some of the
assumptions have changed compared to the 2011 actuarial assessment. The
following table summarises these changes: 
Table V.         Changes in actuarial assumptions

8.       Demographic parameters
8.1.       Reference population

Annex XII, Article
1 of the Staff Regulations stipulates that the actuarial assessment shall be
carried out in each year n, on the basis of the population of active
members of the PSEO at 31 December of the previous year (n-1). Moreover,
Article 9 of Annex XII provides that the population of participants in the
scheme is to be collected annually by the Commission using information received
from the different institutions and agencies whose staff are members of the
scheme. 
In accordance with
these rules, the reference population is taken to be the staff at 31 December
2011 of the 51 institutions and agencies (same number recorded at 31 December
2010) whose officials are members of the PSEO. 
Table VI.        Institutions and Agencies in the PSEO 
As approved by the
Article 83 Working Group at its meeting of 7 June 2004, the term “active
members of the PSEO” is considered in the wide sense to be synonymous with
“contributing members of the PSEO”. Consequently, the reference population
includes not only officials in “active employment” but also officials in one of
the other administrative statuses set out in Article 35 of the Staff
Regulations, plus invalids who receive an invalidity allowance and
beneficiaries of an allowance for termination of service. 
Personnel data were
collected from the NAP[3],
from Sysper2[4]
and directly from institutions and agencies, and imported into the Eurostat
database. The data were checked to ensure a high level of quality. The
actuarial assessment is based on the output from the Eurostat database at the reference
date. 
Table VII.       Reference population by
institution or agency 
Figure I.          Reference population by
age 

8.2.       Assumed retirement age

As stipulated in
Article 4 of Annex XII to the Staff Regulations, it is assumed that all
retirements will occur at a fixed average age (r). The average
retirement age may be different according to the group of staff. 
Table VIII.      Assumed retirement age and
  Barcelona incentive by age group of officials
Please note that
pension incentives (called Barcelona incentive since 2004) are based on
acquired pension rights in groups 1 and 2 above (Old Staff Regulations), while
they are based on the last basic salary for groups 3 to 5 (New Staff
Regulations).
The assumed retirement ages detailed in the two
right columns in the table VIII were estimated on the occasion of the 2004
pension assessment and were presented at the June 2004 meeting of the Article
83 Working Group. These assumed retirement ages have been used in pension
assessments since 2004.

8.3.      
Invalidity table 

A first invalidity table (2004-EU Invalidity
table) was used in the 2004 assessment. According to decision taken at the
Art83 Working Group at its 26th June 2007 meeting, this table must
be updated each year to take account of the evolution of beneficiaries of an invalidity
allowance (the new category of population according to the new Staff
Regulation in force from the 1st May 2004). 
A moving average of 5 years of invalidity
observation is used: the number of invalids recorded in 2006 (108) has been
replaced by the number recorded in 2011 (96) in the moving 5 years average of
invalidity observations. Thus the total of invalids in this 5-year period
decreased from 483 to 471 invalids.
The following table
shows the number of invalids from 2007 to 2010. 
Table IX. Invalids by year
The decrease in the
number of invalids, in conjunction with the increase of the active population
makes the probability of becoming an invalid lower than in the past. 
The 2007 to 2011
invalidity observations have been used to update the invalidity table by sex (EU-2011
Invalidity table). The following table, which is an extract from the unisex
version of the table, is only for presentation purposes: the complete table by
sex is used in computations. 
Table X. EU-2011 Invalidity Table (Extract) 

8.4.       Life table of healthy persons

The life table used
for the calculation was updated in 2008 (2008 ISCLT table) on the occasion of
the five-yearly assessment of the actuarial balance of the pension scheme. The
methodology used to set up this life table was presented to the Article 83
Working Group at the 27 June 2008 meeting (document 20080627
Art83_05, available from Eurostat). The 2008 ISCLT life table must be used at
least until the next five-yearly assessment in 2013. 
Consequently, the
2008 ICSLT has been used in the 2012 pension assessment. 
The following table
is an extract from this table: 
Table XI.         2008 ICSLT

8.5.       Life table of invalids

It is normal
actuarial practice to consider life expectancy of invalids as slightly shorter
than that of healthy persons (e.g. EuroControl applies the mortality rate
corresponding to a healthy person 3 years older than an invalid’s age). This
approach cannot be confirmed in the case of European civil servants as the
number of invalids is too small. Eurostat has applied this actuarial practice
since the 2008 pension assessment. 
The use of this
approach makes hardly any change in the contribution because the probability of
an active staff member becoming invalid is very small. 
The implementation
of this approach in the 2012 pension assessment had a negligible impact, close
to 0 percentage points, on the pension contribution rate. 

8.6.       Average age difference between men and women 

The average age
difference between married men and women (3 years) that has been applied from
2004 in actuarial calculations should be used in future assessments. The result
of a test based on population from 2004 to 2007 confirmed this actuarial
assumption. The test showed that on average married men are 3.01 years older
than their partners and married women 3.18 years younger than their partners. 

8.7.       Probability of being married for men and women

In 2008 Eurostat
analysed the recent population of officials and ex-officials older than 59
years and calculated the probability of them being married. The probabilities
found for men and women are: 0.84 for men (0.8 to one decimal place) and 0.38
for women (0.4 to one decimal place).
These updated
probabilities have been used in yearly pension assessments since 2008. 

9.       Economic parameters
9.1.       Real Discount Rate (RDR)

Annex XII, Article
10 of the Staff Regulations provides that: 
1. The interest
rates to be taken into consideration for the actuarial calculations shall be
based on the observed average annual interest rates on the long-term public
debt of Member States as published by the Commission. An appropriate consumer
price index shall be used to calculate the corresponding interest rate net of
inflation as needed for the actuarial calculations. 
2. The effective
annual rate to be taken into consideration for the actuarial calculations shall
be the average of the real average interest rates for the 12 years preceding
the current year. 
Consequently, real
discount rates (RDR) from 2000 until 2011 have to be used in the 2012
assessment of the PSEO. 
Nominal discount
rate (NDR): 4.9%. This is the average of 2000
to 2011 nominal rates of euro area zero-coupon (government bonds) yield with a
maturity of 21 years, 21 years being the duration of the scheme and the rate in
2011 as produced by the ECB being 4.9%. 
Inflation rate
(IR): 2.3%. This is the average of 2000 to
2011 of an appropriate consumer price index, the EU HICP in 2011 being 3.1%.
Real discount
rate (RDR): 2.6% (2.8% in the assessment at
31.12.2010). It is the average of 2000 to 2011 real discount rates, the
latest being calculated as "100*(100+NDR)/(100+IR)-100)".
Table XII. Real Discount Rate (RDR) 

9.2.       General Salary Growth (GSG)

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. 
As the net SI
applied in 2011 is -3.5%, the 12-year moving geometric average from 2000 to 2011
(GSG) is -0.2% (a value of 0.3% was used in the 2011 assessment). 
Table XIII.     General Salary Growth 
The decrease of the GSG
(-0.2% used in this assessment instead of 0.3% used in the assessment at
31.12.2010) makes the contribution rate decrease by -1.4% if other assumptions
remained stable.

9.3.      
Individual Salary Progression (ISP)
9.3.1            
Population groups

The Individual
Salary Progression (ISP) refers to the salary increase due to the career
advancement of EU officials, i.e. promotions and seniority steps. 
The ISP has a
significant impact on the contribution rate, though less than that of the RDR
and GSG. 
With the
introduction of the new Staff Regulations on 1.5.2004, the career progression
of EU officials has been completely reviewed. Annex XIII of these Staff
Regulations includes transitional measures which made the determination of this
assumption quite complicated. 
The active population is divided into five homogeneous
groups according to their status.

9.3.2            
ISP rates

The following table shows ISP rates used in the
2010 and 2011 assessments: 
Table XIV.
Average ISP rates by group of population 
ISP rates in the
table above are the average of ISP rates weighted by the population in each
group. These average rates are calculated for publication purposes only, the
detailed rates by grade and years to retire being used in computation at
individual level. 
ISP of officials changed slightly in comparison
with these used in the assessment at 31.12.2010. This change has no material
impact on the pension contribution rate.

9.4.       Turnover
9.4.1            
Turnover definition

Active members of the PSEO (officials, temporary
staff, contract staff and parliamentary assistants) will definitely stop
activity one day for several reasons and eventually leave the pension scheme.
To facilitate computation, turnover has been
divided in two types:
§  
Turnover due to end of contract validity (T1),
§  
Turnover due to voluntary and unexpected
losses (T2). This mainly concerns resignation before the end of a
contract, dismissal for incompetence and disappearance.
Losses due to other unexpected reasons
(invalidity and death) and voluntary decisions (mainly secondment, retirement,
non active status according to Article 41 of SR, leave on personal grounds,
leave for military service, parental or family leave) are excluded from the
definition of turnover (these causes of leaving are already computed in another
way).

9.4.2            
T1. Turnover due to contract validity expiration 

Two assumptions have been used:
§  
The ratio of indefinite contracts to
fixed-length contracts. 
§  
Average duration of contracts in years. 
The following table shows the rates of both
assumptions above by contract type, these rates being based on observations: 
Table XV. T1
rates by contract types 
 

9.4.3            
T2. Turnover due to voluntary and unexpected
losses 

The number of active staff who left
institutions due to resignation, dismissal for incompetence and disappearance
in the year N has been compared to the active population in the year N-1 to obtain
the yearly T2 by contract type. The rate to be used in the actuarial
calculation has been computed as the average of the losses in the last six
years (2006 to 2011) compared to active staff in 2005 to 2010.
Table XVI. T2
rates by contract types 
 
The change of turnover rates T1 and T2 this
year has no significant impact (-0.1% ) on the pension contribution rate.

9.5.      
Loading factor for orphan’s and divorced
spouse’s pension 

Current actuarial
practice is to add 10% to a payable reversion pension to allow for the pension
payable to orphans after the death of the surviving spouse (or of the official
if there is no surviving spouse) and any pension payable to divorced spouses.
Eurostat estimates that the impact of this factor on the contribution rate is minor
and the same assumption has been used in the 2011 actuarial assessment. 

10.  Annuities

Articles 6 to 8 of
Annex XII to the Staff Regulations refer to the annuities used in the
calculation. The values of these annuities according to age are presented
below.  These were calculated by sex and then aggregated by weighted averages
only for presentation in this report. 
The table below was
calculated using: 
§ 
the Real Discount Rate (RDR) from Table XII, 
§ 
the General Salary Growth (GSG) from Table XIII, 
§ 
an assumed retirement age (r) equal to 64
years of age for officials younger than 35 on the reference date (31.12.2003)
and equal to 63 years of age for the others, 
Table XVII.    Some annuities in accordance
with Articles 6 to 8 of Annex XII
to the Staff Regulations 

11. 
Impact of changes in demographic and economic
parameters in the calculation of the pension contribution rate

The yearly change in the calculated
contribution rate is explained by the combined effect of changes in population,
methodology, assumptions and other variables used. The calculated change: -1.1%
(9.9% obtained in the present assessment against 11% in the assessment at
31.12.2010) is mainly explained by the decreases of the GSG and of the RDR. 
The following table summarises the impact of
these changes.
Table XVIII. Explanation of the change in calculated
pension contribution rates
at 31.12.2010 and 31.12.2011 
APPENDIX
II – INDEPENDENT EXAMINATION 
An independent
expert conducted an actuarial examination of the contribution rate calculated
by Eurostat. This examination confirmed the relevance and reliability of the
actuarial processes and assumptions used in accordance with the methodology
described in Annex XII to the Staff Regulations. For the elements not described
explicitly in this Annex, the independent expert checked their compliance with
generally accepted actuarial practices. Regarding the actuarial assumptions,
the independent expert carried out tests to ensure that the underlying data
provided by Eurostat were used correctly. 
The independent
expert report concluded that: 
"… as an
independent expert, has conducted an actuarial examination of the 2012 update
of the actuarial assessment of the pension scheme referred to in Article 83a
(3) of the new Staff Regulations for which Eurostat endorsed the technical
responsibility towards the Commission according to the Annex XII “Rules for
implementing Article 83a of the Staff Regulations”. This examination consisted
in confirming the relevance and the reliability of the actuarial processes and
assumptions used in accordance with the methodology described in Annex XII to
evaluate the contribution rate of officials.
For the aspects
explicitly mentioned in Annex XII, we did not detect any elements likely to
cast doubt that the calculations determined by Eurostat are not compliant with
the rules of Annex XII
For the aspects
not described explicitly in Annex XII, we have checked their compliance with
the generally accepted actuarial practices and we did not detect any
significant difference with the methodology and the assumptions we would have
chosen ourselves to perform the calculations. 
… has no reason
to doubt that the official’s contribution rate (9.9%) calculated by Eurostat is
a sufficiently accurate estimate of the reality of the Pension Scheme of the
European Officials (PSEO)".
The complete
independent expert report on the actuarial examination of the contribution rate
is available from Eurostat. 
[1]  The methodology is further explained in a separate document
available at Eurostat
[2]               Article 9(2) of Annex XII to
the Staff Regulations.
[3]     The NAP (New Application for Pay) application is a centralised
database that has been created to produce the monthly salary and pension forms
for all institutions and agencies. This database contains a large part of the
personnel data, particularly amounts paid and pension contributions.
[4]     Sysper2 is the IT system to manage personal data of the
Commission staff. It is also used by PMO (Pay Master Office) to manage pensions
and transfers of pension rights of the staff of EU institutions and agencies