An Agenda for adequate, safe and sustainable pensions
The proportion of over-60s in the EU is growing by about two million people annually. Higher life expectancy, combined with the changeover of the baby boom generation from work to retirement, will have far-reaching economic and budgetary consequences in the EU, as forecast by the European Commission in its White Paper published on 16 February.
Under the heading “An agenda for Adequate, Safe and Sustainable Pensions”, the Commission presented a series of proposals for further action by Member States and by the EU in the field of provision for old age. The White Paper, issued during the European Year for Active Ageing and Solidarity between Generations, is based on the results of the broad-based Green Paper consultation in 2010.
Responsibility for the design of pension and retirement systems basically lies with the Member States, and this should not be affected by the White Paper. Rather, the Commission intends to adapt the policy instruments of the EU with a view to offering better support to pension and retirement reform efforts at national level. Due to demographic changes, and partly reinforced by the current crisis, Member States are faced with the challenge of setting up financially viable pension and retirement systems for the future which will offer older people a decent retirement income, and hence enable a dignified standard of living and financial independence.
Increasing the pensionable/retirement age
For long-term viability of the systems, the Commission attaches central importance to linking pension or retirement age to rising life expectancy. In addition, it calls for a fundamental abolition of early retirement. It identifies health as a crucial factor in prolonging working life. Cost-effective health care systems (also a responsibility of the Member States) are important, along with investment in health care and the promotion of healthy and active ageing. Further measures to promote safety and health at work, access to lifelong learning, as well as adaptation of workplaces to the needs of older workers and the expansion of opportunities for flexible working arrangements, are also significant. In many occupations, especially those which are physically very strenuous, an individual worker will not be able to work until retirement in the specific position for which he/she was originally recruited. Creating the above-mentioned conditions, particularly in small and medium-sized enterprises, will call for a great deal of creativity and innovation! The Commission also wants to eliminate the existing pension or retirement gap between men and women. A mix of pension/retirement and employment policies should help. In particular, a better balance between work and private life should make it easier to bring up children. It is a welcome development that the Commission recognises the importance of reconciling work and family life, and thus also recognises the importance of synchronised free time!
Looking at the sources for providing retirement income, the Commission intends to maintain a multi-pillar model, i.e. a mixture of State (first pillar), workplace (second pillar) and private pension (third pillar) schemes, and thus supplementary pensions. By contrast, in its Resolution of February 2011, the European Parliament was still advocating the strengthening of State funding of retirement/pensions (No. 18). But not everyone has the good fortune to benefit from a company pension scheme or to have a certain amount of his/her salary per month left over to invest in a private pension. Therefore, calculation of the State pension should also be done in future in such a way that it will provide an adequate and decent livelihood.
As for occupational pension plans, the Commission intends to amend the Directive on the activities and supervision of institutions for occupational retirement provision (IORPs) in 2012. Among other things, the cross-border activities of the providers are to be facilitated and unified framework conditions based on Solvency II are to be created. The latter proposal is already receiving sharp criticism, including from Germany. The application of capital regulations to occupational pensions would also lead to significant cost increases for the providers, which many consider would mark the end of occupational pensions which are paid voluntarily in Germany.
Translated from the original text in German