Experts: ‘EU pension proposal will hit women much harder than men’


A European Commission roadmap for reforming EU pensions to be presented later this month has received a broad welcome, though some experts warned that the proposals fail to take sufficient account of gender issues and "would hit women much harder than men".

Given that the financial and economic crisis has "aggravated and amplified" the impact of Europe's ticking demographic timebomb, experts consider the 'Green Paper' on pension reform being prepared by the European Commission to be an encouraging step towards an in-depth debate to align systems under pressure by crunched public finances.

While national governments will have the final say on pensions, the EU sees its role as relevant in the context of the portability of pensions. Commission President José Manuel Barroso has also made it clear that he sees pension reform as an important part of his new 'Europe 2020' strategy for sustainable growth (EURACTIV 24/02/10).

'We will all need to work longer'

Anne-Sophie Parent, director of AGE, an NGO working for senior citizens' interests, told EURACTIV that the green paper's "broad approach" struck the right tone, "hinting" at solutions that will inevitably entail a less comfortable situation for the next generation of EU retirees.

"We will all need to work longer" is the Commission's bottom line, she noted, praising how the document links better retirement ages to gains in life expectancy and establishes a closer link between contributions and pension benefits.

Adequacy risks – the proportion of an employee's net wage at retirement that remains in their annual pension – are going to increase for many workers, the paper argues. The Commission cautions that some EU countries have not reformed enough and urgently need to review their "pension promise".

Mooted solutions include a gradual transition to part-time work, an increase in the number of years of pension contributions, improved access to training and education, and improved access to the more flexible open labour markets of the future.

The EU's internal market could prove useful in providing additional sources of retirement income, such as reverse mortgages, and the paper notes that funded pension schemes – hit hard by the financial crisis – must be made more secure by reducing the risk of investments in pension funds.

Women hit hardest?

Despite specifically claiming that reforms are needed to secure the future retirement of both men and women, Anne-Sophie Parent argues that the proposals "are going to hit women much more than men" and that the result will be a much higher risk of poverty among older women. "We don't agree with the Commission that adequacy and sustainability are two sides of the same coin," she said.

"While we understand that if a pension system is unsustainable it will prove to be inadequate in the long run," the opposite is not true, she noted, adding that "it is a great pity that the green paper does not include a specific section on the gender dimension, despite the fact that the EU is supposed to mainstream gender issues in all its work".

As outlined in the green paper, European Commission President José Manuel Barroso highlighted in his political guidelines for the current Commission that "millions of Europeans are wholly dependent on pensions".

He went on to note that "the crisis has shown the importance of the European approach to pension systems. It has demonstrated the interdependence of the various pension pillars within each Member State and the importance of common EU approaches on solvency and social adequacy. It has also underlined that pension funds are an important part of the financial system”.

“We need to ensure that pensions do the job intended of providing the maximum support to current and future pensioners, including for vulnerable groups," he concluded.

Anne-Sophie Parent, director at AGE Platform Europe, a European network of around 150 organisations of and for people aged 50+, told EURACTIV that she welcomed the "broad approach that the Commission has decided to take for this consultation".

She noted that the green paper raises "fundamental and difficult questions and, of course, through the examples that they propose, the Commission is hinting at solutions they would find suitable such as redressing the imbalance between time spent at work and in retirement (i.e. we will all need to work longer), linking better retirement ages to gains in life expectancy and establishing a closer link between contributions and pension benefits".

She also noted that while the paper respects the full competence of member states to decide on these matters, it nonetheless seeks to explore some areas where there are European competences, for example removing obstacles to cross-border mobility and improving the solvency of pension funds across the EU, something AGE was calling for even before the crisis.

However, she argued that one important issue which is not addressed properly is the impact that the proposed reforms will have on women's pensions rights and income in old age. "All the proposed measures are going to hit women much more than men and the result will be a much higher risk of poverty among older women. We don't agree with the Commission that 'adequacy and sustainability are two sides of the same coin,'" she said.

"While we understand that 'if a pension system is unsustainable it will prove to be inadequate in the long run,' the opposite is not true," Parent continued. 

"It is a great pity that the green paper does not include a specific section on the gender dimension despite the fact that the EU is supposed to mainstream gender issues in all its work. If the Commission is not asking member states to address the gender discrimination that women face in access to an adequate old age income, AGE will and we will highlight that strongly in our response," she concluded.

European Disability Forum policy officer Ask Andersen told EURACTIV that the green paper could have gone further in addressing persons with disabilities.

He argued that "persons with disabilities need to have access to pensions on equal terms with everybody else. The reality is that many persons with disabilities are discriminated against when applying for membership of a labour market related pension scheme. This can be because their employer receives part of the salary from public sources or the like. But the person is working and is giving 100% like other workers, so the person should, of course, have access to the same type of pension scheme as his or her colleagues".

He went on to note that another problem is "people with disabilities who do not have access to the labour market or work in a sheltered workshop. Many of these people do not have any possibilities for pension savings at all. This means that they will most likely face even more severe poverty later in life".

"These problems are increasing with cut-downs in public pension schemes and the more prevalent role of labour market related pension schemes and private pensions, exactly because these are the pillars of the pension system that persons with disabilities have limited access to," he concluded.

Tine Radinja, president of the European Youth Forum, told EURACTIV that "as the green paper rightly outlines, people nowadays tend to start their working lives later, thus contributing with additional challenges to the demographic ageing and sustainability of pension systems".

"Currently the school-to-work transitions in Europe are very slow. Losing this potential will have long-term negative effects, whereas effective investment in youth will be crucial for a successful recovery in the mid - and long term," she added.

She went on to note that "the current young generation has the highest potential to contribute to a lasting recovery from the current crisis. It is the best educated generation ever, familiar with new technologies, more mobile and open to new opportunities. The EU should not run the risk of a losing this valuable asset and allow posing continued threats to the sustainability of pension systems across Europe".

Thus, the Commission's 75% employment target "should specifically address the younger age groups in order to increase an effective use of human capital and facilitate their access to labour market once they have acquired the necessary skills and qualifications," she argued.

"Another urgent issue is the precariousness of jobs. 40% of young people are on temporary contracts which is making their social contributions fragmented and low, thus posing a threat both to the individual and the system as a whole," concluded the EYF president, calling for the full inclusion of youth organisations in the debate and policymaking process regarding demographic change.

The question of how to reform Europe's generous pension systems grows in importance as Europe's population continues to age.

According to the European Commission, "as the number of pensioners in Europe rises, and the relative number of people of working age declines, further reforms are needed if adequate pensions are to remain sustainable".

As reported by EURACTIV (27/08/08), from 2015 onwards, deaths are projected to outnumber births in the EU so that, by 2060, one in three Europeans will be aged over 65, putting a huge burden on the economy and public finances.

While pension reform is still ultimately decided at member state level, the EU - through the open method of coordination – aims to support, monitor and assess the impact and implementation of national reforms to:

  • Develop adequate retirement pensions, and;
  • ensure long-term sustainability of pension systems

The European Commission has also proposed legislation that would enable workers to take their supplementary pension rights with them if they move within the EU (EURACTIV 16/07/07).

  • 23 June 2010: Commission to publish Green Paper on Pension Reform.

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