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Through this letter I would like to invite you to respond to the call by the Staff Association, organizing a manifestation on the occasion of a Finance Committee meeting on Wednesday, 25 August in defense of the science budgets in Europe. Our participation in large numbers together with the active staff will demonstrate our capacity to get mobilized and gather.
I profit from the occasion of this letter to reply to your many questions concerning the situation of our Pension Fund. I can give you some information available to me at present.
The Management has prepared a series of proposals with the goal to restore progressively full funding of the Pension Fund during the 30 years to come. Management started the consultation phase with Staff Association in order to finalize a proposal to Finance Committee for approval by Council in December. Nothing has been decided yet, but among the measures under discussion, there are obviously some concerning us directly, which might result in an important reduction of our current pension levels.
Keep in mind in this context, that any measure reducing the level of our pensions affects our purchasing power in a definite manner for live, whereas the Member-States always reserve their right to come back on past engagements, as we will see. With this in mind, staff and pensioners, who have obviously not such a liberty of action, and dependent on the financial resources of the Fund, need to be particularly vigilant.
A first measure envisaged might consist in limiting the adjustment of pensions to a value equal or below the Geneva cost of living index minus 1 point of percent. A second measure envisaged might consist in suppressing pension adjustments for a few years, what ever will be the value of the calculated cost of living index. We know that this value is at present of order 0.6% for this year.
Our purchasing power had been moderately protected since 2006 against the accumulative effects of such decisions, thanks to a special mechanism, accepted by the Member States. This mechanism was twofold. On the one hand it provided a guarantee for an automatic indexation based on the Geneva cost of living index diminished by a reduction factor, which was calculated in an actuarial manner taking into account the balance of the Fund; on the other hand it limited to 8% maximum the total loss of purchasing power of pensions accumulated over many years. Today, however, this double protection might be put in question.
A third measure envisaged might consist in effect to increase this upper limit by moving it definitively from 8% to 10%.
But a further measure possibly considered could add to the increase of sacrifices for the pensioners. This measure might consist in excluding losses during the period of freeze when calculating accumulative losses of purchasing power. This could potentially lead to a total loss of purchasing power of up to 12%(?)
Remember that this measure would correspond to a definitive loss of over one and a half months of pension per year or equivalent to over 4 years of contribution to the Fund during the active live!
The limit of “ accumulated non-indexation “ of 8%, which we had accepted four years ago, corresponds in fact to the contribution of pensioners to re-establish the balance of the Fund. Can we accept, four years later, that this contribution might be increased by 50%? Will there be a limit to putting into question previous engagements? One could doubt it, when considering that the President of the Administrative Council of the Pension Fund already mentioned a limit of 16%!
The other measures would concern new contributions of the Organization, the Member States, and the active members of the Fund. Future members of the Fund might in addition see their benefits modified in a drastic manner.
To participate in eliminating the deficit of the Fund, for which, as we recall, the employment policy of the Organization was largely responsible, the Management proposes that the Organization and the Member States provide an additional annual contribution of order 60 MCHF during the coming 30 years. This is very positive and encouraging, but will this engagement over such a long period be more credible than the one of limiting the purchasing power loss to 8% for pensioners, which might be put in question and not be respected for more than 4 years?
We cannot accept that Member States consider questioning their engagements, to their liking, while we are forced to respect ours. We cannot accept to be requested periodically to contribute more and more to restore the balance of the Fund. We cannot accept a reduction of our purchasing power to an unreasonable level. At first, we expect that the Member States guarantee in a non-revisable manner the additional contributions required to assure full balance of the Pension Fund in 30 years.
Meanwhile, waiting for more information and getting mobilized to express our refusal of any unfair measures, we would like to invite you to respond to the call by the Staff Association and to participate in the manifestation for the defense of science budgets.
GAC – EPA President Horst Wenninger
Rendez-vous Wednesday 25 August
from 10h30 to 12h00
Parking Main Building