Author: ABDULLOEVA Mahbuba Co-author: KUMAR Sunil Editor: THAKKAR Sumeet
LA Provident Fund – Let’s make sure it works better for our Local Agents!
The LA Provident Fund (LAPF) is a social security scheme extended to Local Agents serving in EU Delegations and ensures some support and security at the time of retirement. The LAPF is a complementary scheme and aims to add on to the national pension system (the primary scheme) where this exists. In many developing countries, the primary scheme either does not exist or is highly inadequate. Hence, LAs rely heavily on the LAPF as a form of social protection.
The world has seen so many changes, especially over the past few years. The consequences of the global economic and financial crisis, the pandemic, the world’s peace challenge, climate change, man-made conflicts and natural disasters – these and many other factors have caused great insecurity for all. LA colleagues around the world have experienced and still face financial insecurity, even when they have a steady job with an EU institution.
Considering the current financial crisis that has created a liquidity crisis for many, we at USHU feel, there is a need to introduce changes to the scheme to better adapt to the current overall situation for LAs and their dependents.
· USHU request the creation of a “Partial LAPF Withdrawal Option” (for unexpected and urgent personal needs such as high punctual expenses, higher education fees, additional medical costs, family events, accidents etc). USHU believes LAs must be allowed to withdraw up to 50% of the total contribution to the LAPF after a minimum period of contribution.
Indeed this partial withdrawal option is already available in certain EU DEL where the state manages the primary provident fund. After a certain number of years, LAs are allowed to withdraw part of the funds from their provident fund account for their urgent personal needs. In the private sector, where funds are privately managed by the employer/Trust Fund, there is also a provision of withdrawal for personal needs.
The Joint decision C(2019/5685) provides for increased contribution to the LAPF at an annual rate of maximum 0.5% by both the employer and the employee, provided there is an agreement to this increase by at least 75% of the staff. However, in spite of meeting the requirements set out in the Joint Decision, the Administration has taken a unilateral decision to apply the increase only if 100% of the LA staff agree to this, which is a nigh on impossible to achieve!
· USHU reiterates its request to the Administration to respect its own rules: Where there is agreement by the majority to increase their PF contribution at an annual rate 0.5%, the administration should give a favourable decision and implement the increase with immediate effect to these staff members. We have already seen that the LA Medical can have two different schemes applicable for Local Agents in Delegations, so this is clearly also workable.
Problematic Returns on the LA Provident Fund
Local Agents have been discussing at length about the zero or even negative interest rates and losses of the provident fund.
Some colleagues request to retrieve the Provident fund and have it managed locally.
· USHU supports those Delegation staff that wish the LAPF to be transferred to a national scheme, where they could get better returns for their investment. For those who wish their provident fund to be collected and managed by HQ, there would be no change.
· USHU also reiterates its request to involve the elected staff representatives of the Commission and the EEAS in the LAPF investment monitoring and decisions.
USHU urges the Administration to look at these concerns of Local Agents and guarantee them the opportunity to utilise the LAPF for their benefit now and in the most effective way!
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