EESC warns about the risks of linking retirement age to life expectancy

Within the context of an open debate on the future of public pension systems in some member states, the European Economic and Social Committee has put forward its analysis of the situation and what would be some of the implications of different measures in this field. In this report, prepared at the request of the Commission, the Committee upholds that increasing the retirement age alone will not solve this problem and that success of funding pension systems largely depends on active employment policies.

In its report, the European Economic and Social Committee (EESC) underlines that a sustainable pension system for Europe can only be achieved through more and better jobs on a flexible labour market and improved productivity. Increasing retirement age alone would not solve the deficit problem in pension systems, as measures aimed at getting elderly people in the labour market and keeping them there are necessary.

The Committee recommends that solidarity-based pay-as-you-go pension schemes should provide the bulk of future retirement income as they are less vulnerable to financial and economic shocks. However, if, regardless of that, funded pension system were to become standard, the shift  towards a new system must not jeopardise the income of future pensioners. In the Committee's opinion the European Commission should therefore assess and review, if necessary, rules governing sound management of pension fund assets so as to ensure the safety of such schemes.

Active employment policies to ensure future of pension systems

Getting more workers to gain access to a job by implementing active employment policies is a key element in order to guarantee the stability of pension systems. This, in a context of constant population ageing, is an unavoidable element to ensure the future of pension systems.

Furthermore, the Committee emphasizes the need to give a solution to gender disparities in the amount of pensions, resulting from lower wages earned by women, as well as longer parental breaks and a higher risk of long term unemployment. For the Committee, sustainable funding inevitably entails finding new financial resources, other than levies on salaries.

The authors of the EESC opinion also argued in favour of revising the Stability and Growth Pact, designed to ensure budgetary discipline in member states, as well as to ensure that the outcome of reform of funding of pension systems is reflected appropriately and in a transparent manner, without being penalized in the short term due to current pressures on public finances.