Unit D-5 Remuneration and Pensions Luxembourg, June 2008 Document: Meeting of the Article 83 of the Staff Regulations Working Group Luxembourg 27th June 2008 at 09:30 Quételet Room BECH Building / Luxembourg Minutes of the 26.06.2007 meeting of the Art83 Working Group (Item 2 of the agenda) EN EN
LIST OF PARTICIPANTS Country delegates ABLINGIENE Aldona Statistics Lithuania LITHUANIA BOROWSKI Remigiusz Ministry of Social Policy POLAND DURANTE Carlo Economy and Finance Ministry ITALY FRANK Tanja Pension and Invalidity Insurance SLOVENIA HEHN Ludovic Représentation Permanente de la France FRANCE LORENTZ Kai Statistisches Bundesamt DEUTSCHLAND PAPPENSCHELLER Thomas Bundeskanzleramt ÖSTERREICH PUKINSKA Rita Ministry of Welfare LATVIA REILLY, John Dept. of Finance IRELAND SAVOLA Risto Ministry of Finance SUOMI/FINLAND TOMA Cristian Ministry of Labour ROMANIA WICTOR Jean-Paul Ministère de la Sécurité Sociale, IGSS Luxembourg Independent experts LEGRAND Nicolas-Michel Ernst & Young European Institutions DEPICKER Sabrina Eurocontrol ROMANIN Maurizio Eurocontrol KISIELIAUSKAS Mindaugas EC - ADMIN ZELENY, Petr EC - ADMIN VERTESSEN, Luc EC - PMO ALEXAKIS George EC - ECFIN STEIMER Patrick EC - ECFIN PARLASCA Peter EC ESTAT / C5 LEMAIRE Guy EC ESTAT / D5 MOSSAY-PIRROTTE Martine EC ESTAT / D5 GARLAND Chris EC ESTAT / D5 DE JONG, Shira EC ESTAT / D5 OLIVARES José Maria EC ESTAT / D5 ROMAN Jean-Claude EC ESTAT / D5 VIDAL Paulo CONSEIL EN 1 EN
SUMMARY OF ACTIONS Item 3 Information points Action 1: Action 2: Action 3: Eurostat will present an analysis of observed mortality rates among EU officials and, if necessary, a proposed new mortality table in the 2008 meeting of the Art83WG Eurostat will provide details of the numbers of individuals in each population category included in the pension liability calculation Eurostat will provide a copy of the methodology used in the liability calculation and an explanation of the concepts of pension liability, budget forecast and contribution rate. Eurostat, with the assistance of PMO, will provide information on the number of transfers into and out of the PSEO and the application of the transfer coefficients since their introduction in October 2004 Eurostat will supply a copy of the methodological document to delegates when finalised. Item 6 Actuarial Assessment of the PSEO : 2007 provisional results Action 4: the results presented to the WG are considered to be final since no remarks or changes were made by delegates the results will be included in Eurostat's report on the actuarial assessment of the Pension Scheme to be published by 1 st September A copy of the Eurostat report will be uploaded on CIRCA. Ernst & Young will draft a report on their assessment of Eurostat's work EN 2 EN
ITEMS Item 1 Chairman s introduction statement and adoption of the agenda The chairman welcomed the delegates, thanking them for their participation in the meeting which is a statutory obligation for Eurostat. He introduced the Eurostat team responsible for Article 83 work. He presented the agenda and informed delegates that copies of documents were sent to participants and uploaded on CIRCA. In addition, copies of documents and slides that were going to be presented were also available in the meeting room. The agenda was adopted. Item 2 Minutes of the 19.06.2006 meeting of the Art83 Working Group The minutes were adopted without changes. Item 3 Information points Four points for information were introduced: a) Mortality table: Eurostat presented the current state of the project in collaboration with JPAS to analyse observed mortality rates among European officials over two consecutive years, with a view to creating an International officials' life table in 2008. This table will be compared with the current EU-2004 life table and, depending on the results, could eventually replace it. The results of this work will be presented to the Art83WG meeting in June 2008. The project had been delayed but was progressing, and preliminary work indicated that the EU-2004 table reflected real mortality rates sufficiently accurately. Action 1: Eurostat will present an analysis of observed mortality rates among EU officials and, if necessary, a proposed new mortality table in the 2008 meeting of the Art83WG b) Liability of the PSEO: Eurostat presented the provisional calculation of the liability of the Pension Scheme for European Officials (PSEO) at the reference date of 31.12.2006. The provisional total gross liability was compared to the total at the reference date of 31.12.2005 and an explanation of the change in terms of the actuarial assumptions and the population used in the calculation was given. Questions from delegates concerned the number of persons in the various population categories used in the calculation, the difference between the amount allocated for pensions in the 2007 budget and the projected 2008 budget, and the growth in the pensions budget. Action 2: Eurostat will provide details of the numbers of individuals in each population category included in the pension liability calculation Eurostat will provide a copy of the methodology used in the liability calculation and an explanation of the concepts of pension liability, budget forecast and contribution rate c) Long Term Care Insurance: Eurostat gave an explanation of the current state of the exploratory study into a Long Term Care insurance scheme for European Officials, involving a comparison of costs between a voluntary and a mandatory scheme for a population of European officials projected from 2006 to the year 2086, based on the model EN 3 EN
already used in the European Patent Office. The study will be finished and presented to DG ADMIN in September 2007. d) Transfers of pension rights into/out of the PSEO: Eurostat has prepared a draft methodological document explaining how the published coefficients used for converting pension rights into capital and vice versa when transferring rights into or out of the PSEO, together with the adjustments necessary to align the coefficients with the provisions of Annex XIII of the Staff Regulations (Transitional Measures) and for transfers made before the new Staff Regulations came into force (01.05.04). Eurostat offered to make the draft document available to interested delegates. In answer to a delegate's question, DG PMO replied that a substantial number of transfers take place each year. Eurostat was requested to supply the number of transfers requested in the last couple of years. Action 3: Eurostat, with the assistance of PMO, will provide information on the number of transfers into and out of the PSEO and the application of the transfer coefficients since their introduction in October 2004 Eurostat will supply a copy of the methodological document to delegates when finalised Item 4 Actuarial assessment of the PSEO: 2006 Eurostat Report This final report was published the 1st of September 2006 and a copy was uploaded onto CIRCA. Eurostat's presentation was intended to give the opportunity to participants to ask questions and comment on the final 2006 results, which had been calculated after the 2006 Art83 WG meeting had requested an update of the Individual Salary Progression (ISP) table.the final calculated contribution rate was 10.4% (provisional calculation 10.7%) The report was submitted to the Council in November 2006. Item 5 Actuarial assumptions Eurostat gave a detailed presentation of the assumptions used for the 2007 actuarial assessment of the PSEO (see Item 6). After a summary of all the actuarial assumptions used in the calculation, details were given of the changes to some assumptions for which an annual update may be necessary or is required. a) Discount rate Concerning the discount rate (RDR), Eurostat informed delegates that the "Euro zero-coupon government bound curve with a maturity of 21 year", whose publication was now the responsibility of the European Central Bank, was not available from August 2005 to December 2006; the nominal rate was estimated by Eurostat (5.6%) using same procedure as for the 2006 actuarial assessment. Consequently, the RDR used in calculation is 3.4% against 3.6% used in 2006. b) General Salary Growth The General Salary Growth (GSG) was updated in the standard way according to Annex XII of the Staff Regulations and, at 0.5%, was 0.2% higher than the 2006 value. EN 4 EN
c) Individual Salary Progression The Individual Salary Progression (ISP) table had been updated according to the request made at the 2006 Art83WG meeting. The new table (2007 ISP v1 table) provides ISP rates for each category of the population, each grade and step and the number of years to retirement. Changes in promotion rates and the population structure and a summary version of this complex table were presented by Eurostat to the meeting. d) Invalidity table Following the request made at the 2006 Art83WG meeting, Eurostat had analysed the number invalids by age to see if the invalidity table used in previous calculations was in need of updating. (Unlike the mortality table, the invalidity table is not subject to a statutory period of validity). The analysis showed that the table used in the past overestimated the actual number of invalids above the age of 49, and a new 2007 EU-invalidity table had been created and used in the 2007 actuarial assessment. Item 6 Actuarial Assessment of the PSEO : 2007 provisional results Eurostat presented details and results of the provisional calculated contribution rate for 2007 (10.3%), which was 0.1% lower than the final 2006 calculated contribution rate (10.4%). The small difference was due to the combined effects of the changes in General Salary Growth, Real Discount Rate, ISP rates, the invalidity table and population (see Item 5 above). Eurostat also informed delegates that according to Annex XII of the Staff Regulations, the current applied contribution pension rate of 10.25% should be maintained since the newly calculated rate was less than 0.25 percentage points bigger than the currently applied rate. Eurostat informed the meeting that the provisional calculation had been checked by Ernst & Young and that a final calculation could be prepared before the 1 st September to take account of any remarks by delegates. There were no comments or proposed changes from delegates on this item. Action 4: the results presented to the WG are considered to be final since no remarks or changes were made by delegates the results will be included in Eurostat's report on the actuarial assessment of the Pension Scheme to be published by 1 st September A copy of the Eurostat report will be uploaded on CIRCA. Ernst & Young will draft a report on their assessment of Eurostat's work. Item 7 Miscellaneous There were no miscellaneous items EN 5 EN