The Federation of European Independent Financial Advisers

The EU Pension Scheme is what is known as a defined benefit/final salary scheme. This means that when you retire, the organisation guarantees you a monthly payment (defined benefit) until you die. When you pass away, your partner will receive a reduced monthly payment, known as a Survivor’s Pension, until they die. It is an extremely good scheme, however, you only qualify for it if you have worked at the institutions for at least ten years (not necessarily continuously).

If you are coming or have come to the end of your contract, have worked there for less than ten years, then you will be entitled to transfer out your accumulated EU Pension Rights, or what is known as a severance grant. There are two very important reasons why you should take this with you when you leave:

1. You will lose it, eventually
Let’s say that you have worked at the EU Institutions for about eight years and accumulated approximately €200,000 in EU Pension Rights. The day you leave, that accumulated money will remain there, only rising in line with inflation to keep the present value. You cannot add to it or invest it in funds that could possibly attract stronger growth. If you do leave it until your pensionable age (66 or more), in a strategy of ‘safekeeping’, then you will lose it completely. This is even more important to consider if you are not far from your pensionable age when you leave and do not have much time to protect your retirement. Therefore, it makes sense to transfer it as soon as you can, to maximise potential growth and protect your financial future.

An added benefit to this is that if you decide to return to the EU Institutions at some point, you can transfer your pension back in and (if you are there long enough), make up the ten years.

2. No death benefits
All pensions come with death benefits. This ensures that in the event of your passing, your beneficiaries, be they your spouse, children, or your extended family, will be provided with an income. In some cases, this sum can be greatly reduced, yet it will still be something. Unless you have worked for the qualifying ten years, your acquired EU Pension Rights is not a pension; it is a pot of money that you have accumulated through working at the EU Institutions. Therefore, it has no death benefits. In the event of your passing, your family will not benefit from what you have accumulated and it will be absorbed back into the EU. By transferring it out, you ensure that the full amount of what is left (you may or may not have taken an income) is passed onto your beneficiaries to provide them with an income, and that the money is not lost.

What are the next steps?
If this is something that you wish to consider, we will conduct an evaluation of your situation and the value of your pension rights at the EU. Once we have agreed and confirmed with you that transferring out is the right option, we will work with an approved provider who complies with the transfer out requirements, and who will help set up your new pension. Then, as part of our ongoing service, we will review your pension and personal circumstances every quarter to ensure that you are always updated with the latest information. Even if you move countries, our service will continue.

So, if you have come to the end of your contract at the EU Institutions, have less than 10 years of service and you don’t like losing large sums of money, wish to protect your financial future and potentially provide for your dependents/beneficiaries, then contact me either by email: emeka.ajogbe@spectrum-ifa.com or phone: +32 494 90 71 72.

​​​​​​​​The above article was kindly provided by Emeka Ajogbe from The Spectrum IFA Group​ and originally posted at: ​​​​​​​​​​​https://www.spectrum-ifa.com/pension-transfer-from-the-eu-institutions/