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MEMO/12/111

Brussels, February 16th 2012

Commissioner László Andor's speaking points on the White Paper on Pensions

Why is the pension issue so important?

Today Europeans are living longer than before which is a positive achievement. And by 2020, the number of people aged over 60 will grow by around 20 million. The problem we face is that the EU's working population will start shrinking from next year on, with around 6 million less of working-age by 2020.

Getting our pension systems to work properly is a major priority for the European Union.

Pensions are often the biggest chunk of public spending, costing on average 10% of EU GDP. Without sound public finances, we cannot have financially sustainable pension systems.

And pension systems are the main income source for around one quarter of the EU's population. If countries fail to deliver adequate pensions, millions will face poverty in old age.

What is the EU's role?

Designing and managing pension systems is the responsibility of the Member States, but there is an important EU dimension too.

That is why we launched a public consultation – the Green Paper - on how the EU could best support Member States in ensuring citizens have adequate, safe and sustainable pensions now and for the long term.

Pensions are also a major focus of our efforts under the Europe 2020 Strategy. This is why the Commission stressed the need for pension reform in its recent Annual Growth Surveys, and why we have addressed specific recommendations on pensions to a majority of Member States.

Today's White Paper builds on this work and the responses to the Green Paper consultation. It sets out how the EU and the Member States can work together to tackle the major challenges that confront our pension systems.

The key challenge is ageing, which will have a major impact on pensions systems where fewer active people will be supporting an increasing number of older people.

In the face of an ageing population, we need to maximise employment rates across all working age people – younger and older groups alike – both for the sake of the economy as a whole and for the sustainability of pension systems.

So one of the key messages of the White Paper – and this is in line with the Annual Growth Surveys – is that we need to achieve a better balance between time spent in employment and time spent in retirement.

We must ensure that the expected future gains in life expectancy will also add more working years to our life course, rather than just lengthening the retirement phase. Many Member States have already taken this on board.

What are the main proposals of the White Paper?

The White Paper aims to support reforms that create more opportunities for people who are able, to stay longer in the labour market and to improve the employability of older workers. Raising the pensionable age alone is not enough.

But let me stress that the White Paper calls on Member States to take into account the fact that the ability to work – and to find employment – differs widely between individuals, and that life expectancy and health status at age 60 or age 65 tends to be lower for manual workers who started working at a young age.

It also calls on Member States to make the most of the European Social Fund to promote active ageing. And it envisages cooperation with the social partners on the issue of mandatory retirement ages.

These measures complement the recommendations made in the Europe 2020 process where Member States that fail to get their pension systems in order will come under serious pressure.

Supplementary pension schemes

Many reforms already adopted will mean lower annual pensions in the future so as to offset longer retirements and fewer workers. So apart from earning higher pension entitlements by working longer, many people may want to save more for their retirement in supplementary schemes.

The White Paper lists measures to promote access to such schemes.

It also has a strong focus on enhancing the efficiency and safety of supplementary pensions. My colleague, Michel Barnier, will take forward the review of the 2003 directive on institutions for occupational retirement provision.

We will also look at how well occupational pension rights are protected when an employer becomes insolvent and the information given to consumers.

Finally, we will also resume legislative work on ensuring that professional mobility does not prevent people from acquiring and preserving supplementary pension entitlements.

To conclude, I'd like to stress that this White Paper should be seen as a common framework for reforms.

Its goal is clear: to ensure that people will have enough to live on when they reach retirement, even in a much older society. We know that this is possible. The White Paper sets out the how it can be done.


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