CM(2008)185 17 December 20081
1049 Meeting, 18 February 2009
11 Administration and Logistics
11.3 New Pension Scheme “NPS” (Appendix V bis to the Staff Regulations) – Correction of an anomaly in Article 11 – Leaving allowance
Draft resolution amending Article 11 of the New Pension Scheme (NPS) (Appendix V bis to the Staff Regulations)
Item to be considered by the GR-PBA at its meeting on 3 February 2009
1. The Secretary General presents a technical opinion by the Pensions Administrative Committee of the Co-ordinated Organisations (PACCO) of 1 April 2008 concerning amendments to the New Pension Scheme “NPS” (Appendix V bis to the Staff Regulations).2
“During its latest meetings the PACCO has considered the specific case of staff members affiliated to the NPS who have requested inward transfer of pension rights accrued earlier under a pension scheme in accordance with Article 12 of the NPS.
The Committee found that owing to the methodological inconsistency between Article 12, which relies on actuarial parameters, and Article 11, in which the calculation has different foundations, the amount of leaving allowance paid to these staff members where applicable can vary considerably according to the staff member’s age at the time of his/her request for inward transfer of previous rights.
In this context, and pursuant to Article 43 of the NPS, the PACCO has delivered a technical opinion on the principles that should guide an amendment of Article 11 of the NPS.
The first of these principles concerns the clarification to be made to the actual letter thereof, namely that leaving allowance is calculated solely on reckonable years of service under Article 6, paragraph 1 i), in other words those linked with the discharge of duties in the organisation.
The second principle is to provide for refund of the entitlements initially transferred to a staff member in receipt of a leaving allowance. Two possibilities were raised: refund to the staff member the amount corresponding to an inward transfer of previous rights, actualised at a rate used for certain other (internal) provisions of the scheme, ie 4%; or pay the staff member an actuarial equivalent calculated on the basis of the reckonable years of service at the time of the inward transfer and, in order to preserve overall coherence, according to the provisions governing an outward transfer, defined in Article 12. A consensus among the organisations applying the NPS was reached in favour of the latter solution, which has the advantage of neutrality both for the Organisation and for the staff member.
Owing to the contentious risks, the PACCO recommends limiting the application of this amendment to the case of staff not yet having requested inward transfer of previous rights at the date when it was approved.
Furthermore, the PACCO observes that the current wording of Article 11 of the NPS is incompatible with a procedure of compulsory refund of the sums initially transferred, as is the case for example in the agreement with the UK Principal Civil Service Pension Scheme. In order to provide for such cases, it therefore suggests adding a clause on refund to the previous employer of the sums initially transferred.
It should be noted that, should this amendment be approved by the relevant body of your organisation – after the applicable statutory consultations have been carried out as appropriate – this alteration would entail the re-numbering of Article 11.2/1 on compulsory refund of the leaving allowance.”
2. Further to this technical opinion, it is proposed to amend Article 11 of the NPS in order to obviate a methodological inconsistency with Article 12 of the NPS. The following amendments to Article 11 would be necessary 11 of the NPS:
Article 11 – Leaving allowance
1. A staff member whose service ceases otherwise than by reason of death or invalidity and who is not entitled to a retirement pension nor to the benefit of the provisions of Article 12, paragraph 2, shall be entitled on leaving to payment of an amount equal to 2.25 times his rate of contribution as applied to his last annual salary, multiplied by the number of reckonable years of service credited within the meaning of Article 6, paragraph 1.
2. The reckonable years of service credited in accordance with Article 12, paragraph 1 shall not be taken into account for the calculation of the leaving allowance but shall give rise to the payment of an actuarial equivalent calculated in accordance with Article 12, paragraph 2, unless the amounts initially transferred are refunded to the pension scheme concerned.
2. A staff member who is re-appointed by the Organisation after having received a leaving allowance must pay it back if the period during which he was not employed by the Organisation, in whatever capacity, is less than 12 months.
3. It is proposed that the new paragraph 2 of Article 11 of the NPS apply to staff members who have not requested an inward transfer of previous rights at the date on which this Resolution came into force.
Article 12 – Inward and outward transfer of pension rights
1. A staff member who enters the service of the Organisation after leaving the service of a government administration or national organisation, or international organisation not listed in Article 1, paragraph 4, or a firm, may arrange for payment to the Organisation in accordance with the provisions laid down by Instruction, of any amounts corresponding to the retirement pension rights accrued under the pension scheme to which he was previously affiliated in so far as that scheme allows such a transfer.
In such cases, the Organisation shall determine, by reference to the provisions laid down by Instruction, the number of years of reckonable service with which he shall be credited under the present scheme.
2. A staff member who leaves the service of the Organisation to enter the service of a government administration or national organisation, or international organisation, not listed in Article 1, paragraph 4, which has entered into an agreement with the Organisation, shall be entitled to transfer to the pension fund of that administration or organisation:
- either the actuarial equivalent of his retirement pension rights accrued under these Rules, such equivalent being calculated in accordance with the provisions laid down by Instruction;
- or, in the absence of such rights, the amounts provided under Article 11.
Note 1 This document has been classified restricted at the date of issue; it will be declassified in accordance with Resolution Res(2001)6 on access to Council of Europe documents..
Note 2 The technical opinion was submitted in French. It has been translated into English by the English Translation Department of the Council of Europe.