Taxpayers will not be asked to top up pensions for MEPs, the European parliament disclosed on Wednesday.

The assembly sought to head off a pre-election controversy by insisting it would cover a €120m ($156m, £108m) hole in a members-only pension fund by cutting benefits and raising the retirement age from 60 to 63.

Participants will also no longer be permitted to begin drawing on their pensions in reduced amounts at age 50, or to take lump sum payments amounting to 25 per cent or more.

“In this manner the fund’s liquidity will be maintained and taxpayers will not be asked to cover the fund’s actuarial deficit,” the parliament said, noting the fund could operate in its current form well into the 2020s.

The fund is a generous second pension for many MEPs, who also receive pensions from national governments. Critics have seized on it to revive complaints about the institution’s perks at a time when millions of Europeans are losing their jobs. MEPs acknowledged the difficulty of sidestepping the controversy while ensuring the fund complied with its obligations to current and previous members.

“It’s one of those situations where you’re damned if you do and damned if you don’t,” said Graham Watson, head of the Liberal group in the parliament.

The pension scheme is expected to be phased out after new regulations take effect in July that will substantially reduce the numbers eligible to participate.

Get alerts on Pensions industry when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Comments have not been enabled for this article.

Follow the topics in this article