Brussels, 02/11/2010 (Agence Europe) - What needs to be done to ensure fair, viable long-term funding of pensions in the EU? Where must adjustments be made, the aim being inter-generational solidarity, with young people able to find jobs on the labour market and older people healthy and active? Within the various European institutions, the issues of adjustment of pensions, retirement, the operation of the labour market, the sustainability of pensions, and the role of the European Union are very much at the centre of discussions. An overview of the matter:
What the Council wants: Pension reform, at the express wish of the Belgian Presidency of the Council of Ministers with the agreement of Hungary which will take over this role in January 2011, will be on the agenda for discussion at the European Council of 16 December 2010, acting Belgian Prime Minister Yves Leterme announced after the summit on 28-29 October.
In its conclusions, the European Council “invites the Council to speed up work on how the impact of pension reform is accounted for in the implementation of the Stability and Growth Pact and report back to the European Council in December. Acknowledging the importance of systemic pension reforms, a level playing field within the SGP should be ensured”.
Recommendations from László Andor: The consultation exercise on the future of pensions opened on 7 July will run until 15 November. It will be followed by a White Paper, which will be published in 2011, Commissioner Andor said in an interview on the sidelines of the conference on the Commission's Green Paper on pensions (see EUROPE 10237). The White Paper will put forward “structural solutions and will make recommendations” on pensions systems, he pointed out noting that, on pensions, the competent bodies are the EPSCO (Employment and Social Affairs) Council and the European Parliament employment and social affairs committee. It is up to member states to take decisions in this area; the Commission is there to identify problems. The Commission's responsibility relates to coordination of social security systems and strengthening the internal market, Andor stated.
Pension adjustment: Commissioner Andor believes that investment is needed in active ageing and in opportunities for life-long learning. “The need for such adjustment is due to demographic change and the baby boom generation reaching retirement age. The adjustment must be through social dialogue with all the stakeholders,” Andor said, going on: “We have to work on the possibility of the automatic adjustment of retirement age and on what people want to do when they retire, if the reform comes about”. In this context, the importance of the European Year of Active Ageing 2012 is clear to see, but the “the major challenge will be to have healthy active older people,” Andor went on.
Retirement: The Commission does not want to set out the “ideal” retirement system. “We know that the combination of an ageing population and the consequences of the crisis presents a challenge for our pensions systems, a challenge which has to be met,” the commissioner said. “Pensions systems have to find a balance between the length of time spent working and the time spent in retirement, which, in Europe, amounts on average to a third of one's life. The time has come to increase the age at which we stop work and receive a pension,” Andor stated. “Life expectancy has increased by more than five years over the last 50, and by 2060 it will go up by a further seven years. It is only right, then, that retirement age is adjusted. Otherwise we will get to a point where Europeans have the lowest pensions and the highest contributions to pay,” he suggested, noting that “only half of Europeans are still working at age 60”. “Such a system is well organised if it maintains a strong link between contributions paid while in work and the value of the pension. This system also takes account of the situation of people who have a career break, for example to look after their family,” he said, noting in passing that member states have time credits for the unemployed and maternity and sick leave. To put a new light on things, financial incentives for employers have to be put in place, the commissioner suggests, or changes have to be brought in for working times for the over-60s.
Suggestions from the EP employment and social affairs committee and European social partners on:
1) How the labour market works: Henri Lourdelle (ETUC/European trade unions) said that “priority should be given to the quality of employment and salary”. For the employers' side, Rebekah Smith (BusinessEurope) said: “There should be jobs available and in particular for older workers”. Andreas Zimmermann (CEC/managers) argued for more “well paid and qualified” people on the labour market. Marije Cornelissen (Greens/EFA, Netherlands) asked: “How to force member states to invest more in combating age discrimination and employers to change mentality?” “The Commission should use its competencies to combat age discrimination,” replied Zimmermann. Marian Harkin (ALDE, Ireland) raised the issue of women's pensions - women earn 20% less than men, which is then reflected in pensions, said Henri Lourdelle.
2) The sustainability of pensions systems: “If pension systems are unsustainable, it will have a negative impact on the budgets of the member states,” stated Ria Oomen Riujten (EPP, Netherlands), EP rapporteur on the Commission Green Paper on Pensions. “There is a need for reform and further measures are needed from the member states to reduce public debt,” also argued Rebekah Smith. In some member states, early retirement schemes were used as a mechanism to get young people into the labour market, said Marian Harkin. To this Liliane Volozinskis from the European association of small and medium-sized companies (UEAPME) replied: “This has not led to job creation for young people”. She said that the increase in life expectancy and, consequently, the number of older people remaining in the jobs market would not help young people find employment. Most of the social partners also stressed the need to make the retirement age coincide with the pension age. This was also called for by Fréréric Daerden (S&D, Belgium).
3) The role of the EU: Carlo Parietti (Eurocadres/unions associated to the ETUC) added: “National situations in the member states on pensions are so various that it is difficult to settle a European framework. We should make provision for a method for a social dialogue instead”. “The role of the EU is crucial in this debate, the debate at the EU level enables a rational approach,” said Alejandro Cercas (S&D, Spain) and Elisabeth Morin-Chartier (EPP, France). Daerden argued for a “European approach, European cohesion”. There had to be a move towards a policy of strengthened coordination. On pensions, all the pillars are complementary but it was essential to maintain a strong public pillar, the guarantor of solidarity. Daerden said that no appropriate level of pension is set at European level. A minimum level was, however, needed so that “older people can enjoy a decent retirement”. Sergio Cofferatti (S&D, Italy) said: “The role of the public pillar must not be ignored. With an increase in retirement age and the ageing of the population, it is inevitable that the welfare state system will have to give up this role. Tax incentives are needed and that is where the EU can do a lot. Mobility of people and their rights is a fundamental citizenship issue. People have to be given the choice of continuing working or taking retirement”. (G.B./transl.rt)