Commission White Paper on Pensions

On 16 February, the European Commission published a White Paper on “adequate, safe and sustainable pensions”. It looks at the ways in which Member States and the EU can work together to tackle the major challenges for Europe’s ageing population, as well as national pension systems. It proposes measures to help EU countries ensure adequate pensions by encouraging people to stay in work longer and save more for their retirement, as well as promoting enhanced safety and cost-effectiveness of pension schemes.

Pensioners represent a significant and fast-growing share of the EU population (120 million or 24%), particularly as baby-boomers retire and the working age population begins to shrink. The economic crisis has further aggravated these developments; it has had a significant impact on public finances. The White Paper follows on from the Green Paper consultation in 2010 and has several key aims:

• The creation of better opportunities for older workers: there is a need to adapt workplace and labour market practice and make effective use of European Social Fund to bring the over-55s back to work.
• Encouraging Member States to promote longer working lives, by linking retirement age with life expectancy, restricting access to early retirement and closing the pension gap between men and women. This was also a part of the discussions at the opening conference of the European Year of Active Ageing 2012.
• Making supplementary pensions compatible with mobility and establishing a pension tracking service across the EU where citizens have access to projections of their income after retirement.

The White Paper describes the “basic purpose of pension systems is to deliver adequate retirement incomes and to allow older people to enjoy decent living standards and economic independence.” In later life, pensions are also spent on long-term care in case of dependency, adding to long-term care allowances and benefits based on social insurance or general taxation.

Frits Tjadens, co-author of the OECD study ‘Help wanted?’ is due to speak at ESN’s European Social Services Conference 2012 on long-term care funding. He comments on the link with pensions: “As age related spending – on pensions and care services – will soar over the coming years, retirement incomes will need to play an increasing role in payments for care. This will pose a dual substantial challenge for governments in shaping both sustainable public long-term care as well as retirement schemes, while protecting those in need.”

The measures promoted at European level complement national pension reforms. The issue of pensions reform is also in the context of the Europe 2020 strategy, as well as the European Year 2012 for Active Ageing and Solidarity between Generations.

You can watch a short animated video made by the Commission explaining Europe’s demographic challenges.