Nigel Farage among MEPs to benefit from EU second pension scheme

MEPs including Nigel Farage and senior Conservative, Labour and Liberal Democrats benefit from a secretive, heavily subsidised EU second pension scheme that will cost the taxpayer an extra €227.7 million (£187 million), it can be revealed.

Thirty-eight of Britain’s 73 serving MEPs are members of the European Parliament’s “Additional Voluntary Pension Scheme” meaning they could receive over £41,000 a year extra above and beyond their main EU pension.

The “actuarial deficit” of the scheme – the black hole that the taxpayer is liable for – rocketed by €72.1 million (£60 million) in 2012 and is now £187 million in the red, The Telegraph has learned.

Mr Farage is one of the MEPs known to be in the scheme, which keeps the identities of its members a closely guarded secret despite the fact that 66 per cent of its assets come from public funds.

He defended his participation in the scheme that could give him a combined pension pot worth an estimated £71,000 a year by 2019, if he remains as a British MEP after elections to the parliament on May 22.

“It is not a system that I defend but it is the system,” he told The Telegraph. “The payments should be reduced. The circumstances have changed and the payments should be cut but I don’t think they will be.”

Syed Kamall, the leader of Conservative MEPs and Glenis Willmott, who leads the European Parliamentary Labour Party, are among the scheme’s members, as well as Sir Graham Watson, the president of the EU-wide Alliance of Liberals and Democrats for Europe.

Their names are only known following the publication of leaked documents by Hans-Martin Tillack, a German investigative journalist and the Open Europe think tank.

“This scheme is one of the oddest and most objectionable creations to come out of the EU. Many MEPs who should know better have unfortunately been part of it,” said Mats Persson, the director of Open Europe. “The scheme should be closed immediately.”

British taxpayers have already contributed over £100 million to the fund. European Union court papers show that the fund will be entirely bust by 2026 at the latest, despite being closed to new entrants in 2009, with the public purse left with an additional bill of £187 million.

During the 15 years that the second fund was open for business, a participating MEP’s monthly contribution was £982 a month. This was topped up by £1,965 of public money per month.

In total there are 1,113 anonymous members of the fund, including both serving and retired MEPs.

Alyn Smith, a Scottish MEP, was approached when he was first elected in 2004 to join the scheme but refused to participate because the second pension was “way out of line with any of my principles”.

“I think we need to see complete transparency on this, who is a member, how did they pay their ‘contributions’ and how much are they receiving. Let’s see who they are and let them justify it,” the Scottish National Party MEP said.

“The idea that these people, including prominent Eurosceptics, signed up to something just because it was in the rules or the system is not an excuse.”

Asked if MEPs should renounce rights in what is a second top-up pension, Mr Farage, 50, who is often pictured with a pint of beer and cigarette in hand, joked that the stresses of leading Ukip would probably kill him before he reaches retirement age.

“From my own personal point of view, since I’ll probably be dead before I can claim the money, the least I can do is leave my family some income,” he said.

The additional payments come on top of a first pension created five years ago that is 100 per cent funded by taxpayers.

Under various schemes, MEPs with between 15 to 30 years parliamentary service who are retiring aged 63 or over this spring can expect annual pensions estimated to be between £57,000 and £82,000.

Those who have served just 10 years in office are entitled to a combined pension pot of £35,810 a year. In stark contrast, the average income of a British pensioner was £11,600 in 2012.

In statements to The Telegraph, Conservatives, Labour and Liberal Democrat MEPs ruled out a future bail out of the fund.

“If there are faults or shortfalls in the fund then this is a matter for trustees to resolve and we trust this can be done without recourse to public funds,” said a statement from the Tories.

However, the European Parliament’s lawyers, in court documents and following information requests have admitted that taxpayers are legally liable for its pension obligations.

European Court of Justice legal papers from last year admit: “The parliament will, in all probability, bear all the expenditure of the pension fund from 2026 to 2088.”

A spokesman for the EU assembly said: “Parliament has the legal obligation to maintain acquired rights and future entitlements.”