The European Parliament has made a decisive move to address the impending financial crisis facing its plush pension scheme by cutting the payouts for former

members in half. This attempt by senior lawmakers aims to avoid a costly bailout that could burden EU taxpayers with millions of euros.

Currently, over 900 individuals, including former pro-Brexit MEPs and some current EU commissioners, receive substantial monthly payments from the Parliament's additional pension pot. However, the retirement scheme, which operated for two decades before closing to new members in 2009, is on the verge of running out of funds by early 2025. This situation could leave EU taxpayers responsible for a staggering €310 million deficit.

During a closed-door meeting on Monday, the most influential EU lawmakers responsible for the institution's finances agreed to implement a 50 percent reduction in payouts to beneficiaries. They also decided to raise the eligible age from 65 to 67, freeze annual inflation-linked payment increases, and extend a one-time offer to encourage more beneficiaries to exit the scheme voluntarily.

The decision-making process took place in the Bureau, where European parliamentarians reviewed two options presented in a document prepared by Secretary General Alessandro Chiocchetti, as revealed by POLITICO. After a discussion, a majority was in favor of the chosen option, which is expected to extend the fund's lifespan until the second half of 2027 and reduce the deficit to approximately €86 million. The final decision on whether to let the scheme go bankrupt or employ taxpayer money for a bailout will be postponed until after the EU election in 2024.

The alternative option, described as less legally risky but with limited impact, only proposed a 50 percent reduction in payouts and freezing of indexation. However, the Bureau rejected this option in favor of the more comprehensive measures.

While the chosen solution carries some legal risk, it is deemed legally defensible according to Chiocchetti's document. Nevertheless, there remains a possibility that the Court of Justice of the EU could annul it, keeping the threat of legal action from beneficiaries in mind. Previous attempts by the Parliament to tighten up the scheme have already faced litigation.

Heidi Hautala, the Green Vice-President of the Parliament, expressed her belief that the fund should have been wound up years ago. She called on commissioners like top diplomat Josep Borrell to voluntarily withdraw from the scheme and emphasized that letting the fund go bankrupt should not be dismissed as an option. Opinions regarding the Parliament's liability differ, and the matter could potentially be tested in court. Hautala argued that the measures implemented now will only prolong the fund for a few more years.

Although the chosen solution is not definitive, Chiocchetti's note suggests that taking calculated legal risks to reduce the deficit will minimize negative consequences for European taxpayers.

Many MEPs present at the meeting refrained from commenting. Representatives from the center-right EPP group, Rainer Wieland, Christophe Hansen, and Anne Sander, declined to provide statements. MEP Roberts Zīle, a member of the right-wing ECR group who is part of the pension scheme, recused himself from the decision and asserted that he would not become a pensioner of this fund. Dimitrios Papadimoulis, a Greek MEP from the Left group, and Othmar Karas, the first vice president of the Parliament, also distanced themselves from decision-making on the matter.