On February 16, 2012, the European Commission followed up on the consultation launched by the 2010 Green Paper, presenting a White Paper entitled “An Agenda for Adequate, Safe and Sustainable Pensions.”

László Andor, European Commissioner Employment, social affairs and inclusion

Population aging in Europe threatens sustainability of pension systems, a situation further exacerbated by the economic and financial crisis. In this context, the European Commission intends to put forth a certain number of recommendations aiming to ensure long-term durability for these systems.

The White Paper thus emphasizes the urgency of such reforms in response to on-going trends: life expectancy at birth is expected to increase by 7.9 years for men and 6.5 years for women between 2010 and 2060, and every year there are two million more people over the age of 60 in Europe.

The European Commission acknowledges that important reforms have already been implemented in several Member States to guarantee sustainability of these systems. It nonetheless highlights the considerable gap in public retirement spending (from 6% of GDP in Ireland to 15% in Italy) and the need to undertake further reforms “in many cases.”

Balancing time spent in work and in retirement and developing private supplementary schemes

The Commission’s first major recommendation deals with the need for a balance between time spent in work and time spent in retirement. The White Paper first suggests raising the retirement age (ideally to 67), to take account of the increase in life expectancy. It also advocates limiting access to early retirement. The Commission furthermore considers longer working lives a necessity, encouraging work health and safety, access to life-long learning and flexible employment opportunities adapted to older workers. Finally, the White Paper recommends reducing inequalities between men and women, particularly by reconciling work, private and family life.

The other major recommendation of this White Paper concerns development of private complementary pension savings, which the Commission believes must play a greater role in ensuring that future pensions are adequate. The economic and financial crisis shed light on the vulnerability of funded pension schemes. Acknowledging this fact, the Commission emphasizes the need to “review the regulatory framework and scheme design to improve the safety of private pensions.” The directive on Institutions for Occupational Retirement Provision (IORP) will thus be revised to facilitate IORPs’ cross-border activities and modernize their supervision. To ensure that European citizens working in another Member State retain their complementary pension rights, the Commission intends to renew work on a portability directive. It also plans to promote the creation and networking of pension tracking services to improve consumer information.

The Commission thus intends to use this document as the foundation for a productive discussion with Member States, the European Parliament and of course social partners.

PDF of the White Paper:

An Agenda for Adequate, Safe and Sustainable Pensions.