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Ex-lawmakers take EU parliament to court over pension cuts

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Hundreds of former members of the European parliament are suing the institution over its drastic cuts to a generous supplementary pension scheme.

They claim the halving of benefits breaches a commitment to pay in full when the scheme was set up in 1994, according to court filings and plaintiffs who spoke to the Financial Times. The voluntary fund is used by almost 900 former and current members or dependants, including Brexiter Nigel Farage and Marine Le Pen, France’s far-right leader.

In a bid to plug a €310mn deficit to the scheme caused by disappointing investments, inflation and the longevity of its members, the parliament last year raised the retirement age from 65 to 67 and ended the automatic increase in benefits linked to inflation. It took those measures to avoid having to use taxpayers’ money to fill the gap. As a consequence, the average pension received from that fund has been halved.

Now more than 400 pension scheme members have brought a class action to the European Court of Justice. All but one — Spanish Socialist Enrique Barón Crespo — have been granted anonymity, though some agreed to speak to the FT.

One member said his €1,700 monthly pension was all he had to live on after paying for health insurance.

Andrew Duff, 75, a British former Liberal Democrat MP, said his monthly income from the scheme had fallen from just over €3,600 to €1,800. He has another national pension from his 15 years in the European parliament. “Of course I am not destitute but it is income I was promised,” he said. The money enables him to travel to Brussels as part of his continued contribution to EU policy debates.

Barón Crespo’s case has five arguments. Chief among them is that the cut breaches the “principle of parliamentary independence” and is disproportionate. The European parliament “consistently gave the applicant precise, unconditional and consistent assurances that the acquired pension rights would be respected and that it would assume its legal responsibility after exhaustion of the fund”, the argument says.

Sir Graham Watson, 67, a former president of the liberal ALDE party, has also joined the action. He said MEPs agreed to drop national pay and conditions in return for the new pension scheme. “It was part of the deal. It is a point of principle. I paid a lot of money into it.”

“They are prioritising the staff who have far better pensions over the former members,” Watson said.

The parliament defeated legal challenges in 2014 and 2022 brought by MEPs against changes to the fund’s rules. However, Stephen Hughes, the former MEP who chairs the pension fund, told the FT it was the first time that those already drawing pensions had sued.

He said the fund had €30mn in assets and was paying out €21mn a year before the cut. Parliament had contributed to the deficit by stopping contributions when the fund closed to new members in 2009, he added.

“I’ve received a number of emails and letters from people in severe hardship,” he said.

More than 20 members who have yet to receive pensions are bringing a separate case.

The scheme provides beneficiaries with a pension pot worth about €375,000 per person on average with monthly payments between €2,000-€7,000. Josep Borrell, the EU’s foreign policy chief, and UK Northern Ireland secretary Chris Heaton-Harris are members, though they are not suing.  

Farage and Le Pen did not respond to requests to comment. 

Parliament calculates that the latest moves should reduce the current deficit to €86mn. The scheme has payment obligations to more than 900 members until at least 2074. Only around 20 current MEPs are beneficiaries,

The parliament said it had “taken note of the cases introduced” against its decisions, which it said were aimed at putting the voluntary fund “on a more sustainable path”. 

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