Pension systems must adapt to new labour market trends, such as a rise in self-employed and precarious work, migrant workers, and those who switch jobs often, a report from the European Youth Parliament (EYP) has suggested.

The report, titled Young Visions on Retirement in Europe, was written by participants in a project by the EYP and Insurance Europe.

It described recent trends in European labour markets, whereby young people start their careers later and stay in the same workplace for shorter times, as “concerning” and suggested that they threatened the basic premises of the traditional pension system.

Consequently, the report called for national collective pension schemes for workers not covered under traditional first—and second-pillar arrangements, which should include shared contributions by workers and employers (and potentially the state).

The report added that these systems should be organised based on automatic enrollment.

In addition, to address the rising number of jobs workers may have across their careers, the report urged pension schemes to adopt user-friendly interfaces that allow workers to follow their pension accruals.

For example, it stated that pension tracking across countries should be made reliable and simple, following the format of the European Tracking Service.

More broadly, the report highlighted concerns over a lack of financial literacy across Europe and called for national efforts to create financial educational strategies to improve the overall financial knowledge of all Europeans.

It suggested that European Union (EU) member states consider adopting mandatory pension investment systems – following the models in Denmark, Sweden, Switzerland and the Netherlands – to redirect a portion of current first-pillar contributions into personal accounts.

The report also acknowledged significant disparities in retirement savings across different groups, such as the gender pensions gap, which it said currently stands at 29 per cent in the EU.

The report explained that behavioural and social factors, including risk aversion, income uncertainty, and short-term financial prioritisation, pushed women to opt out of private pensions and created a financial gap.

As a result of this, women were at a greater risk of poverty later in life than men.

To address disparities such as this one, the report argued that minimum first-pillar pensions should be gradually increased in line with multi-pillar diversification to ensure dignified living standards for any individual in retirement.

The report concluded that financial literacy for all age groups should be strongly promoted through continuing and lifelong education initiatives, with a special focus on women and young people.

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