Member states warned about pension systems
The European Commission is aiming at a reform of the pension system in order to avoid poverty among the elderly population of the EU and the overburdening of future generations. A draft report on the current situation and recommendations was presented Tuesday during the parliamentary plenary session by social affairs Commissioner, Anna Diamantopoulou.
The Commission, together with the Council of Ministers, conducted an analysis in the 15 member states and found a substantial number of weaknesses in the national systems. Brussels is therefore suggesting what should be improved at national level so that adequate and sustainable pensions for elderly people can be guaranteed and so that member states can avoid social and financial disasters in the future.
No hit parade
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Commissioner Diamantopoulou drew attention to the fact that the evaluation is nevertheless not a "hit parade" or "beauty contest" of member-state pension systems, but a means of achieving common EU goals.
The draft report will be presented to the heads of state and government during the EU Brussels Summit in March 2003. The initiative will include future member states and candidate countries in 2004 where special analysis and recommendations will be made for them.
Raise the age of retirement in the EU by five years
Faced with the challenge of an ageing population, member states agreed in 2001 on 11 common objectives designed to secure the future of the pension. These include adequacy, durability and adaptability. The adaptability can be fulfilled if the Barcelona 2002 Summit decision to raise the age of retirement in the EU by five years is implemented.
Also, for the adequacy, the Commission stresses the gender equality issue and takes into consideration the problems of old women. Women live longer than men and they therefore represent 60% of those over 65 years. They also often have lower individual pension entitlements than men and are more exposed to poverty. Brussels is suggesting, for example, increasing labour market participation and closing the earning gap between women and men.
Adequacy also refers to preventing social exclusion, enabling people to maintain living standards and extending working lives.
Future generations
The main aim of the reform is to ensure adequate incomes for older people in the future without jeopardising sound public finances and without overburdening the future generation. Member states are therefore asked to implement better or improved management of pension funds.
The Swedish model
One of the best social models in Europe, although still imperfect, is the Swedish model that shows that 5 per cent are at risk of poverty as opposed to 11 per cent at EU level. Also, 90% of the employers in Sweden are covered by collective agreements for pensions schemes. The contributions are typically between 2 and 5% of the wages.
Ms Diamantopoulou stated that this is no doubt an example that could be followed by other member states. The model has already been adopted by two future member states, Poland and Lithuania.
