Impact of the time elapsed on the calculation of the period of pensionable service. The application of the standard interest rate by the Commission may result in unlawful enrichment to the detriment of the staff


On 15 May 2019 the Court confirmed the judgment of the General Court of 5 December 2017 in the case of Tuerck v Commission (C-132/18 P) which clarified important aspects of the transfer IN of pension rights acquired before entering the service of the European Union.

R&D follows closely the developments of the case law in the field of pension rights. This case, successfully defended by our lawyers, Mr Orlandi and Mr Martin, was among the many which were discussed during the conference on pension rights R&D organised in March 2019 (link).

The facts

The applicant requested the transfer of the capital value of pension rights she had acquired prior to entering the service of the European Union. Five years later, the German authority informed the PMO that the amount of transferable capital corresponding to her acquired pension rights was EUR 141 652.07.

PMO made an offer to the applicant, assessing the additional pensionable years under the EU pension scheme at 3 years, 8 months and 29 days. She accepted.

The German authority transferred an updated capital sum of EUR 146 714.33. The PMO deducted simple interest from that capital sum, at 3.1% per year, in respect of the period between the date of the application for a transfer and the date of the actual transfer, which is to say that it deducted an amount of EUR 20 666.28 representing capital appreciation between those dates. The PMO therefore took the view that the amount representing the pension rights previously acquired by the applicant was EUR 126 048.05, and reduced the additional years to 3 years and 4 months.

The judgment

On 5 December 2017 the General Court annulled the contested decision, holding that under the Staff Regulations the PMO is not required to ‘update’ the transferred capital in all cases by applying the standard interest rate.

In particular, Article 11, paragraph 2 of Annex VIII of the Staff Regulations and Article 7(1) of the GIP do not allow the Commission to make a calculation of the additional pensionable years on the basis of an amount lower than that which was available at the time of the registration of the transfer request and which was communicated to the PMO by the national authority.

According to the Court, to permit the Commission to make a deduction, to the advantage of the Union budget, from the capital representing the pension rights acquired by the applicant as at the date of registration of the application for a transfer, would lead to an unjustified appropriation by that institution of a portion of the national pension rights converted into a cash sum for the purposes of the transfer, which rights belong to the official under the case-law, and hence, to an unlawful enrichment of the Union.

On 15 May 2019 the Court fully upheld the judgment of the General Court, holding that a situation of unjust enrichment would arise if the actual amount of the appreciation of the pension rights acquired by a given official is lower than the amount resulting from the application of the standard interest rate of 3.1% intended by the Commission.

It confirmed that it is only where the competent national or international body is unable to supply the value of the pension rights as at the date of registration of the application that simple interest at the rate of 3.1% can be deducted from the updated capital actually transferred to the Commission.