A Green Paper, due to be published on 7 July, will start a public consultation on pension reform across Europe that will last until mid-November. The Commission will then follow up with a policy paper setting out its ideas more clearly.
But the Green Paper already reveals a lot about EU plans to achieve "adequate and sustainable" pensions in the long run.
"A key to supporting adequacy and sustainability is ensuring that the time spent in retirement does not continue to increase compared to time spent working," reads a draft of the Green Paper, to be finalised in coming days.
Indeed, according to Commission figures, Europeans currently spend about a third of their adult life in retirement. Only 50% of people in Europe are still employed when they turn 60. The ratio between workers and retired people is constantly decreasing and is expected to fall further as life expectancy continues to improve.
If this trend continues, "a painful combination of lower benefits and higher contributions would be inevitable," the paper stresses.
Automatic adjustment mechanisms
To avert the worst-case scenarios, the Commission identifies "automatic adjustment mechanisms" as the solution for adapting retirement age to changing conditions.
Although less democratic, automatic adjustment mechanisms avoid the debates and demonstrations that usually accompany any government proposals to increase retirement ages, the Commission believes.
"The basic idea behind them is to transfer decision-making from the political arena to the realm of the law," reads a report from the Council of Ministers, which represents governments of the EU's 27 member states.
"A number of member states have demonstrated that the sustainability of pension systems can be greatly strengthened by introducing an automatic adjustment that increases the pensionable age in line with future gains in life expectancy. This practice represents a promising policy option," reads the draft Green Paper.
Although the document already acknowledges the importance of automatic mechanisms, the Commission wants to make this point even clearer.
In the first meeting of the ad-hoc commissioners' group on pensions, which took place on 17 June, Economic Affairs Commissioner Olli Rehn suggested "a slight strengthening of the text on automatic adjustment mechanisms," according to minutes of the meeting obtained by EurActiv.
The chair of the group, Social Affairs Commissioner László Andor, has accepted this suggestion and the definitive text is likely to be more assertive on the need for such mechanisms.
Member states' moves
Many EU countries have already introduced periodic adjustment mechanisms to review national pension systems on the basis of a number of different factors.
In France, Italy, Denmark, Germany, Portugal and others, automatic adjustment mechanisms are linked to life expectancy: the longer their populations live, the longer their working lives.
In Hungary, Portugal, Sweden and others, the retirement age changes automatically in relation to economic growth. In the Netherlands, Germany and Sweden, pensions are also linked to the overall balance of the system, calculated on the basis of labour market indicators and the financial sustainability of public pension funds.
Germany is also applying an automatic adjustment mechanism related to contribution rates. The lower they are, the later people can retire.
Publication window
The Green Paper was due to be published "as soon as possible" after the meeting of the ad-hoc commissioners' group on 17 June (EurActiv 09/06/10). Internal Market Commissioner Michel Barnier argued in favour of quick publication "to ensure the debate took place based on facts and not speculation," according to the minutes of the meeting.
Nevertheless, publication was postponed from the original date of 30 June to the following week in order to prevent a clash with a hotly-anticipated document on European economic governance, which is on the agenda of the Commission's meeting today (30 June).
Europe's drive to clear up its public finances and reform its pension systems will be in the background of the Presidents' debate at this year's European Business Summit (30 June-1 July).
