Brussels, 10/02/2012 (Agence Europe) - In the White Paper on the future of pensions in Europe, to be published by the European Commission on Thursday 16 February, there are no recommendations about establishing compulsory private retirement schemes or about the abolition of specific regimes, as applied for so-called “uniform” services, a European diplomatic source states. The Commission sees there are many challenges facing governments in order to be able to finance the systems in question, especially in a context of weak economic growth and with regard to the demographic situation. Recommendations proposed in the White Paper can be summarised by the need to generally extend the number of years spent in an active occupation before becoming eligible for retirement, and the need to save more.
After having launched the Green Paper on the prospect of adequate, viable and safe pension schemes in Europe in July 2011, the Commission received around 1,600 responses on which it was able to develop the ensuing White Paper, which includes a series of recommendations about measures considered adequate for reforming retirement schemes in order to attempt to ensure their long-term viability.
Although pension schemes are part of member state prerogatives, the difficulty of reconciling social acquis, especially when it comes to the legal age for taking retirement, with budgetary and demographic imperatives makes this question a challenge for many European governments. Furthermore, pension funding is implicitly linked to the different strategies of the EU on employment and growth, which come together in the Horizon 2020 programme.
The demographic challenge in the context of retirement schemes can mainly be seen by two indicators. Persons aged 65 or over today make up 16% of the population, which is set to double by 2060. Over the same period, the baby-boom generation will gradually reach retirement age, thus bringing the ratio of professionally active people - those who finance pensions - to persons aged over 65 years down from 4: 1 to 2: 1.
The White Paper on the future of pensions in Europe will thus essentially contain recommendations about improving the efficiency of current systems and will encourage member states to clarify rules for the functioning of the 2nd and 3rd complementary pensions pillars. Two main objectives are identified by the Commission - striking a balance in public finance and increasing participation by persons of working age.
To achieve these targets, three types of reform have been suggested. The Commission's report announces the publication of a White Paper, which says that the most effective answer would be to let more people work longer before they retire, which fits in well with longer life-expectancy. The idea of increasing the official retirement age is clearly put forward, although the Commission is not expected to say exactly what the retirement age should be. Member states are recommended in the White Paper to encourage private pension schemes, without making them compulsory. Thirdly, the Commission will recommend that governments make more frequent use of sources of cash like the European Social Fund for 2014-2020 to promote active ageing.
The Commission's work is based on research on a specific, but quite wide, subject area, which should help member states adjust to their own demographic and economic situation. The White Paper will include a list of recommendations for each member state about how they can adjust their existing pension system.
The funding of pension systems is identified as a key challenge for the future, and the general idea is to promote active ageing so that people do not need or make use of pensions as early in life as at present, which should ease the strain on state finances and solve wider problems than simply the cash question. According to recent polls by Eurobarometer and research by Eurostat (see EUROPE 10531), although the official retirement age is around 65 on average in the EU, the actual age when people retire was only 61.5 in 2009. The problem of early retirement runs through the White Paper, which recommends incentives to encourage people to take out private pensions and raising awareness about exactly how much people can be expected to be entitled to when they retire. (JK/transl.fl)