It is crucial to consider how nationally constructed ideas and local institutions frame and shape the different logics behind existing underlying pension concepts, the Actuarial Association of Europe (AAE) has said.

In its latest analysis, which looked at the complex demographic, economic, and
institutional challenges facing European social security systems, argued that understanding the various pension concepts will enable associations to understand better why different countries opt for different types of reforms.

In addition to this, it said that it would enable groups like the AAE to contribute more effectively to social dialogue in raising public awareness about pensions.

The paper acknowledged that there are a wide variety of definitions for a pension concept, warning that the "traiditional three-stage life model of education, employment and retirement, belongs to the past amid increasing life expectancy.

And the new multi-stage life with different milestones and turning points that creates numerous sequencing possibilities, and is often shaped by individual preferences and circumstances.

"Under this reality the challenge for the individuals, due to the growing unsustainability of state pensions, is to rely not only on the state, but also on themselves to finance their pensions," the AAE stated.

When considering the best route forward, the report suggested that, from an actuarial perspective, fairness and adequacy should be considered alongside sustainability and intergenerational risk-sharing.

"A system that is sustainable is not necessarily fair, and a system that provides adequate pensions is not necessarily sustainable—regardless of whether it is pay-as-you-go or funded scheme," the group clarified.

In addition to this, it argued that pension tracking systems are no longer a "nice to have", but a "need to have", arguing that effective tracking, monitoring, and evaluation of pension scheme implementation are essential to maintaining pension promises.

These practices, according to the AAE, support evidence-based policymaking and prepare governments for regular scheme reviews with the help of actuaries and other expert advisers.

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