EU member states must avoid ‘no policy change’ scenario on pensions
Written by Theo Andrew
Changing demographics and current labour market trends mean that a “no policy change” scenario is not an option for European pensions, and member states should not resist evolution, it has been said.
Speaking at the Pensions Europe conference, The Future of Work and Pensions, last week, 7 June 2018, European Commission head of unit for modernisation of social protection systems, Ana Carla Pereira, said that economic and demographic trends, labour market changes and a shrinking workforce meant that EU governments will require further reforms to their systems.
Pereira, who was presenting the main findings of the 2018 Pension Adequacy Report, suggested that it would be up to member states as to how they would improve their coverage, and whether that would possibly be mandatory through an auto-enrolment system.
Pereira said: “At the political level, the most important initiative is the European pillar of social rights that has been endorsed by the ministers.
Where we have committed to introduce a number of rights … one of them relates to pensions, so that everybody has access to an adequate pension.”
The report found that there are around 17.3m people aged over 65 at risk of poverty or social exclusion, while the pensions gender pay gap is around 37.2 per cent for pensioners aged 65-79.
“We have put in place a number of initiatives that are more targeted. Last year … the proposal for a work and life balance where we aim to support women. We are calling on member states to ensure access to pensions and employment benefits.
“There are things happening on our side but of course, most of it relies on the member states”, Pereira said.
Despite this, Member of the European Parliament Sophie in ’t Veld felt that many people didn’t have a lot of confidence in the way the second pillar was being built and highlights the big difference between member states.
Veld said: “There is the issue of solidarity, solidarity between generations, solidarity between men and women and those who have a good income and those who have a more precarious life.
“I am from the Netherlands and … on the whole we have a very good pension system, but evolution has shown that strength doesn’t lie in remaining the same, strength lies in adapting to new circumstances, he who adapts to new circumstances will survive.
"I am concerned around the huge resistance to change, right now there is a big debate in the Netherlands about change and you see that vested interests are blocking any kind of change.
“The government hope to implement changes that would lead to a more personalised system … to better reflect the new reality, but the social partners in particular just say no, we want everything to stay as it is … In order for everything to stay as it is, everything needs to change."
Furthermore, Veld questioned “blind assumption” the pillar of social rights would be fair, highlighting one country in particular, striking to hold onto a pension age of 52.
She added: “So how is that solidarity? I am very much in favour of role that trade unions can play and from the start they have been good for change, but they are sometimes an agent for stagnation, if you are talking about people in precarious jobs who need to save every penny, where as there are other people who retire at a very early age.”