05/04/2011
By Matt Ritchie
The European Federation for Retirement Provision (EFRP) has labelled the Euro Plus Pact a missed opportunity to align the Stability and Growth Pact to longer time horizons.
The Euro Plus Pact is a plan in which the member states of the EU make commitments to a list of political reforms intended to improve fiscal strength, while the Stability and Growth Pact is an agreement among the 17 members of the EU that take part in the Eurozone, to facilitate and maintain the stability of the Economic and Monetary Union.
At a meeting of the EFRP’s Central and Eastern European Countries (CEEC) Forum in London, the group agreed that the Euro Plus Pact takes a “very short-term view”.
In a statement, the EFRP said the pact’s focus on the deficit ceiling of 3% of GDP and the gross debt limit of 60% of GDP had already led Hungary and Poland to reverse pension reforms establishing a mandatory funded pillar, “and there is a possibility that other countries may follow suit”.
EFRP CEEC forum chairman Csaba Nagy said the Stability and Growth Pact should take into account the introduction – as well as the reversal - of funded pension systems on a permanent basis.
“Europe cannot afford to encourage shortsighted policies that threaten the adequacy and sustainability of future retirement income,” Nagy said.
The EFRP said the Commission’s original proposal to the European Council allowed funded pension systems to be considered when assessing compliance with the deficit and debt criterion of the Stability and Growth Pact, but only for a transitional period of five years.
The Economic and Financial Affairs (ECOFIN) council of 15 March reached a general approach on the economic governance package, which considers multi-pillar pension systems on a permanent basis but just their set-up and implementation and not their reversal.
“Hence, member states will continue to have an incentive to claw back pension assets from universally mandatory systems,” the EFRP said.
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