MEPs' PENSIONS
 
The European Parliament (Pay and Pensions) Act 1979 gives the Leader of the House order-making powers (exercised by statutory instrument) to provide for pensions for Members of the European Parliament. This responsibility was originally conferred on the Home Secretary, but it was transferred to the Lord Leader at the end of 1995, and the Leader in 2003.
 
The policy since 1979 has been to provide pension benefits for MEPs which closely mirror those for Westminster Members, with the exception of one or two minor differences to take account of MEPs with dual mandates.  There are, however, some important differences in how the two schemes operate in practice. In particular:
• the MEPs' scheme is unfunded, with pensions paid from the Consolidated Fund; and
• instead of Trustees, the scheme is administered by Managers appointed by the Leader. The Civil Service Pensions Division provides the Secretariat assisting the Managers in the day-to-day administration of the scheme.  The Leader may appoint up to 7 UK MEPs as managers to administer the scheme.

The European Parliament has also set up voluntary pension arrangements, partly financed by MEPs and partly financed from the Parliament's share of the Community budget.

Statute for MEPs
 
At present, MEPs are remunerated by member states, typically at the same level as Members of the national parliament. However, in July 2005 the European Parliament approved a Statute which will introduce a common set of terms and conditions for MEPs from all Member States from the first day of the European Parliament parliamentary term beginning in 2009.
 
The new common pension arrangements will have a pension age of 63, with pension benefits of 3.5% of final salary for each year of service up to a maximum of 70% of final salary.  No contribution will be paid by the Member - the entire cost will be met by European Parliament.

MEPs re-elected in 2009 may choose to continue with their national terms and conditions (including pension provision) for the entire duration of their membership of the European Parliament rather than moving to the common arrangements.  For those who do not so opt and for new MEPs, Member States may adopt terms and conditions other than the common arrangements for up to two parliamentary terms from 2009.  These temporary terms must be at least as good as the arrangements for members of their respective national parliaments (on pensions, the UK MEPs' scheme would satisfy this condition).  All departures from the common arrangements from 2009 will be funded by the Member State in question rather than the European Parliament.

Existing MEPs who choose to move to the common arrangements and all new MEPs will not be able to accrue rights under the voluntary scheme set up by the European Parliament.