Retirement and pension advice for British expats

European Commission Pension Scheme – 10 year rule and transfer options

//  by 

There is a pension scheme available for those working for the various EU entities, including:

  • European Commission
  • European Council
  • European Parliament
  • EEAS
  • European Court of Justice
  • Frontex

It is a Defined Benefit scheme. This means that when you retire, you are guaranteed an income, based on your length of service, until you die.

In addition, if you pass away before your partner, they will receive a reduced monthly payment, known as a Survivor’s Pension, until they die.

This is an extremely attractive scheme to be involved in, as when you retire, irrespective of how investment markets perform in the interim, you will receive up to a maximum of 70% of your final basic salary, for the rest of your life.

The ten year rule

The issue is that the European Commission Pension Scheme is not just given to anyone who works there; you have to qualify for it and in order to qualify, you must work there for at least ten years.

The good thing is that this does not have to be consecutive. You can leave and return.

If you leave employment before the ten years, instead of an entitlement to a pension income in retirement, you will entitled to a cash equivalent pension ‘pot’ which you will then need to transfer elsewhere.

The value of this ‘pot’ is based on the number of years that you worked there and the pay rate that you were on.

Transferring out of the European Commission Pension Scheme

You cannot simply take the ‘pot’ as cash. It needs to be transferred to another pension scheme which must be approved by the EC.

In order to be approved, the new scheme must fulfill the following criteria:

  1. The capital will not be repaid;
  2. A monthly income will be paid from age 60 at the earliest and age 66 at the latest;
  3. Provisions are included for reversion or survivors’ pensions.

The EC have a list of pension providers who fulfill these criteria and to whom you are permitted to transfer your pension rights. 

Benefits of transferring your EC Pension away

Moving your EC pension when you leave allows you the opportunity to invest the money into funds that are aligned with your life goals and that match your attitude to risk.

It also allows you to make provisions for your partner or family as they can be nominated as beneficiaries, meaning that they would receive the proceeds of your pension fund on your death.

Caveat

There may be circumstances where it is not appropriate for you to transfer your ‘pot’ when you leave. As always, it will depend on your specific circumstances.

Discuss

Contact me directly to discuss your EC Pension Scheme options