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important info for esa staff close to retirement
With the growth of ares (some 780 members as of January 2012) and indeed the branch activities in Belgium, France, Germany, Italy, the Netherlands and the United Kingdom, it is fitting that guides are made available to ares Members to provide ‘local’ information to former ESA staff retiring and going to live in one or other of these countries.
The first Members’ Guide was produced within the ares.nl branch, thanks to the work of Bob Harris in 2006 and, in some part, this has formed the basis for the succeeding guides. All the guides will be maintained on this website and be provided in hard copy to new retirees. The guides should, of course, be kept up to date and any feedback from members should be sent to the local ares branch.
Note: for those retiring in one of the countries in which there is an ares branch, a special booklet has been written. These booklets are provided as a guide to help you start your new life as a “retiree”. It is intended to give you and your family an overview of the most important issues you will face, not all of which are simple or obvious, although most are. Clearly, individual circumstances vary and the regulatory environment changes with time. There is no way in which such booklets can ever be comprehensive or remain correct for a long period. Therefore, electronic versions of these booklets are available on this web site which will be maintained so as to reflect always the latest updates. Those booklets available today can be consulted by clicking the respective link on the navigation pane on the left (active are: the ares.nl, ares.d and the ares.be members' guide)
prepare for first pension payment
For those of you who will retire soon, be aware that the Agency will request you to provide some documents. In the past the requests to provide certain documents came rather late. Fortunately, thanks to an ares intervention this has changed and normally will reach you now well in advance of the date you retire. However, please note that failing to supply those documents in time results in a delay of the first pension payment. With pensions paid, contrary to salary, at the end of the month you could easily be 2½ month without payment! As your editor went through this painful experience, it is recommended to read the following carefully.
First of all, the wellbeing of the pensioners is managed in a centralised way i.e. from ESA's Paris Office (administration of reimboursement of medical expenses has been delegated to "van Breda" as from 01.01.2000).
The address of our Paris office is:
Human Resources Dept.-PENSIONS
8-10 rue Mario Nikis
F-75738 Paris Cedex 15
Fax.: +33 1 53697659
This is certainly not the optimum way for most pensioners. It is to be expected that the majority of staff members retire in the country where they served last. Consequently, it would be much easier to have to deal with the Personnel Department of the last duty station. Fortunately, we have now ares offices, at least in those countries where most pensioners are living (France, Germany, the Netherlands, Italy and the United Kingdom). In most cases, the local ares representatives can give you the required advice, and if not, put you in contact with the responsible officer of the nearest personnel department. Should you be too remote, just drop us an
and we will solve your problem, to the best we can, through correspondence.
Irrespective of the procedure in force one has to supply certain documents, some of which are not so easy to obtain within the given time limit. These documents are:
- copy of birth certificate for yourself and your spouse;
- evidence of nationality of your spouse and yourself;
- information concerning medical cover;
Although, Staff Rules 22.1/7 and 22.1/10, still apply, the Agency has to be informed about benefits you may obtain under another scheme. The Staff Rules clearly define that: quote, ...... "in case you are entitled to similar benefits from another source, the said benefits shall be deducted from those payable under these rules", unquote. This implies that the Agency will reimbourse medical expenses to staff members, former staff members and their entitled dependants only in so far benefits cannot be obtained under another scheme. Consequently, if with effect from (your date of retirement) you wish to avail yourself of the medical cover for pensioners as provided for in Staff instr. 22.1/1/9 (iii) and if you have entitled rights to cover in a national or another scheme, you must first join such a scheme.
- confirmation of your address of residence;
- indication of Bank references, and
- information and evidence in the event that Article 22 (rights of a former non-married spouse) could apply.
Early members have had some problems obtaining documents listed under a (the Embassy is normally slow in processing such requests; the only alternative is to go to the responsable administration of the country of which you are a national) and f (requested document some twenty years old and not readily available).
The lesson learned: prepare yourself in advance and obtain those documents, said to be required by the International Service for Remunerations and Pensions (ISRP), whenever it is convenient, but not later than one month prior to retirement.
If you opted for the Pension Scheme you will no longer receive a monthly payslip directly from ESA. The payment of pensions is administered at the level of the Coordinated Organisations by its "international Service for Remunerations and Pensions" (ISRP), based at the OECD in Paris. Your payslip will in future come from the ISRP. Pensions and associated allowances however continue to be paid by ESA. Allowances such as the Education Allowance are still administered by ESA, but now through ESA Headquarters. The ISRP (www.scap-jpas.org) website is well worth a visit and includes a section dedicated to ESA.
The greatest changes of course are that your pension is now subject to income tax and that it is paid at the end of the month. In order to soften the blow, your gross pension is increased to partially offset the tax:
|Tax Adjustment for Pensions|
The tax adjustment is specified in Article 42 of the Pension Scheme Rules.
The adjustment shall equal 50 per cent of the amount by which the recipient’s pension would theoretically need to be increased, were the balance remaining after deduction of the amount of national income tax or taxes on the total to correspond to the amount of the pension calculated in accordance with these Rules.
In calculating the adjustment, only the ESA Pension and allowances are taken into account. No account is taken of other factors, including other income of the pensioner, his spouse or dependents.
Each month, 90 per cent of the estimated tax adjustment is paid as an advance. The final balance is calculated and paid at the end of the tax year.
Please be aware that if you get pensioned closer to the end of the year, the tax compensation payment will be based on the pension actually paid during that year, equally spread over the full year. This means that the basis for the monthly tax compensation is then:
monthly amount of pension, multiplied by the number of months the pension is paid, divided by twelve.
If the outcome of this calculation happens to be less then the minimum monthly taxable income in your country of residence, no tax compensation will be paid at all during that year. However, in most countries, your salary and pension received during that year will be added together to determine the tax rate to be paid on the pension. You could end as a big loser! Optimum solution: start your retirement on January 1.
For the first year or two, pensioners living in the Netherlands may be able to use accumulated negative income from previous years to reduce their tax bill. After this the tax bill may become substantial.
In some countries, the tax bill will only become payable, as a lump sum, after the end of the tax year in question, so it is advisable to make provision for this beforehand. It is however possible to request that you pay the following year’s tax bill in installments, based on the current situation and an estimate of any changes anticipated. The account is balanced at the end of the tax year.
Once you retire, your income tax situation can change from being perfectly straightforward to being quite complicated. You run the risk of missing out on worthwhile allowances. We advise you to make use of a good tax adviser (ares can make suggestions), at least for the first year or two, preferably one with experience of the applicable tax law in relation to international organisations. Again, for those of you living in the Netherlands, the Tax office in Rijswijk, which deals with ESA pensioners also usually provides free advice in April.
Contrary to the salary, the pension is paid at the end of the month.
Pension Scheme, Rules and Instructions
Section 3 "Payment of Benefits"
Article 37 Mode of Payment
" Subject to the provisions of Article 11 and unless otherwise provided under these Rules, pensions, family allowances and provisions for tax adjustments shall be paid monthly in arrears."
This means you have to live two weeks longer on your last salary payment!
salary scale selection
Normally, your pension is paid according to the salary scale in force at your last duty station. However, you have the possibility to change that when you fulfil one of the requirements quoted below. We believe it is important to read this text carefully as, once the decision is taken, it is irrevocable.
Extract from the Pension Scheme, Rules and Instructions:
Article 33 Basis of Calculation
- Pensions provided for in the Rules shall be calculated by reference to the salary defined in Article 3 and to the scales applicable to the country of the staff member's last posting.
- However, if the former staff member settles subsequently:
- in a Member country of one of the Co-ordinated Organisations of which he is a national, or
- in a Member country of one of the Co-ordinated Organisations of which his spouse is a national; or
- in a country where he has served at least five years in one of the Organisations listed in Article 1,
he may opt for the scale applicable to that country. The option shall apply to only one of the countries referred to in this paragraph, and shall be irrevocable except where paragraph 3 below is applicable.
The above referenced paragraph 3 says:
- On the death of his spouse, a former staff member who settles in the country of which he is a national, or of which such deceased spouse was a national, may opt for the scale applicable in that country.
- The same option shall be open to the surviving spouse or former spouse of a former staff member and to orphans who have lost both parents.
For most European countries you need a residence permit from the day you retire, at least if you are not a national of that country. This is not obvious living in an "united Europe".
In some countries e.g. the Netherlands, a residence permit is not required but advisable to have for reasons explained in the members' guide for that country. For Germany, it is an absolute must. You will e.g. not be able to buy a car without having such a document registered in your name. Please check with your local ares committee what the requirements are for the country of your residence.
In certain countries tax benefits can be experienced. We all know by now, that your pension will be treated as tax free income when you retire to e.g. Austria.
However, there are other member state countries that offer certain advantages e.g. Germany and the UK. Although the arrangements in these countries cannot at all compete with those applicable in Austria, it is worth looking into the tax rules applicable to the ESA pensions in these countries.
It is suggested that, once becoming an ares member, you contact the ares representative of the country in which you would like to retire for further guidance. It has to be noted that ares is bound by German law regarding the advice it can give in this area. However, we have experienced that we could help already many of our members in advising them where the relevant information can be found.
interfaces to local authorities
When working for ESA, the Personnel department provides the interface to the local authorities.
When you retire the story is different. Providing you have become a members of ares, we have the possibility to take care of many of those things the Personnel Department used to handle for you. We do that either through the Personnel Department, for which points of contacts have been defined in ADMIN and ares, or directly depending on what the problem is.