EU governments warned on ‘pensions disaster’

In its first-ever report on the pension system in the EU published on 17 December, the Commission proposed to draw more people, particularly women, into work and to introduce flexible employment schemes to prevent a “pensions disaster”.

Over the next decade, the "baby-boomers" of the 1950s and 1960s will reach retirement age. Meanwhile, due to low birth rates and longer life expectancy, the number of working-age people for each person aged 65+ will drop from four today to just two by 2050. According to the report, the result will be an increase in the EU governments' pensions-related expenditure by about a third to over 13 per cent of GDP by the middle of this century.

To address the problem, the report said the EU Member States should increase the number of people in employment, encourage people to work longer and keep public finances in order. The national governments have sole responsibility for their pension systems, as there is no EU-wide legislation on the issue. Increasing the statutory retirement age may not be necessary, the report said, since currently only few people stay on in the labour market until the official retirement age.

Average retirement ages vary in the EU. Generally, the statutory retirement age is 65 years, but in France it is only 60. The report does not cover the candidate states. However, the Commission plans to establish cooperation with them prior to the Union's enlargement.

The report will now be forwarded to the Council, and will then be presented to the March 2003 EU summit in Brussels.

 

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