The Bureau of the European Parliament has met to resolve the issue of the luxury pension system that is burdening EU coffers. The system was closed in 2009, but there are more than 900 beneficiaries who earn between 2,000 and 7,000 euros per month. However, the money will soon run out.
The European Parliament is cutting pensions in half. We are not talking about all checks, but about checks payable to more than 900 people registered in rthe previous retirement system compared to the current. The system, which was born in 1990, was outlawed in 2009, preventing new enrollments and launching a different pension model. However, the pension payments accumulated over the past 20 years or so risk weighing heavily on Europe’s coffers.
Because pensions will cost EU taxpayers 310 million euros
Without a solution, the money for “luxury” pensions will run out in 2025 and there will be a gap to fill in order to continue with these funds. 310 million euros. In fact, about 55 million euros are currently available, while the expected payments require 363. The reason is that the system, on paper, should continue payments until 2074. In this case, Parliament, to make up for the lack of funds, will have to resort to the EU budget funded by the taxpayers of the European Union.
As reported by Politico, high-level representatives in Parliament met yesterday to outline a solution. Among those who receive this pension – as we mentioned, more than 900 people – there are also many former MEPs who have sided with Britain’s exit from the European Union, and some who currently hold the position of EU Commissioner and therefore already receive an exorbitant salary from the EU. There is, for example, the EU’s High Representative for Foreign Affairs Josep Borrell.
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How can the system change
Beneficiaries receive a monthly allowance ranging from about €2,000 to nearly €7,000. The main interventions will be 50% reduction of payments to beneficiaries, raising the retirement age from 65 to 67 and abolishing the indexation of benefits, which will no longer grow with inflation. In addition, an attempt will be made to invite retirees to accept a one-off – very large – offer to leave the pension system permanently.
With these interventions, the earmarked fund must be sufficient to disburse pensions until mid-2027, and the gap to be paid after it is exhausted must decrease from 310 million to 86 million euros. In this way, a decision about what to do – dismantle the pension system or fund it with new taxpayers’ money – will not have to be made until after the 2024 European elections. They can sue, as has happened in the past. Greens deputy speaker Heidi Utala said the fund should have been “shut down years ago” and letting it fail “shouldn’t be out of the question, the matter could be looked at in court”.
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