14/12/2010
By Matt Ritchie
The European Commission has published a new report analysing pension systems in the European Union, assessing reforms in light of the prevailing demographic challenges, ‘aggravated’ by the effects of the economic downturn.
The analysis looked into the results of the last decade of reforms, the impacts of the crisis, and considered long term perspectives beyond the crisis.
It finds that sustainability and adequacy concerns for all types of pensions have been aggravated by the effects of the financial downturn, and developments in the economy have highlighted the need to review the degree of financial market exposure and the design of risk sharing in funded pensions.
Variation between pension systems and policies across different EU member states presents a challenge to policy makers in accounting for the different associated risks, and striking a good balance between sustainability and adequacy concerns, the report says.
“It is of utmost importance that pension systems are designed such that long-term fiscal sustainability is not put at risk, while providing adequate benefits.
“Pension policy needs to ensure that retirement incomes are adequate now and in the future. Measures need to be put in place to ensure that pensions together with other sources of income, and taking account of the country-specific situation, replace a reasonable part of pre-retirement income and avoid poverty in old age,” the report says.
It concludes that several procedures contributing to adequate and fiscally sustainable pensions have been put in place, including the Europe 2020 strategy, the Open Method of Coordination on Social Protection and Social Inclusion, and the Stability and Growth Pact.
Access the report here
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