Speech - Confronting the key challenges of a rapidly changing pension landscape in the EU
European Commission - SPEECH/13/992 28/11/2013
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European Commissioner responsible for Employment, Social Affairs and Inclusion
Confronting the key challenges of a rapidly changing pension landscape in the EU
Launch of the OECD publication "Pensions at a Glance 2013" / Brussels
28 November 2013
Ladies and gentlemen,
Let me begin by expressing my appreciation of the strong and on-going co-operation between the European Commission and OECD in the field of pensions.
As part of this co-operation, we have supported the OECD research which has gone into the preparation of Pensions at a Glance. In turn further developments of these analyses will feed into our work on the Pension Adequacy Report.
In the last 4 years the European Commission has given more attention to pension issues than ever before. With almost a quarter of Europeans getting their main income from pensions these are core pillars of social Europe.
Ensuring that pensions adapt well to population ageing and to the pressures from the economic crisis is therefore a key concern.
In the Annual Growth Survey 2014, the Commission underlined the need to strengthen the efficiency and sustainability of social protection systems, notably pension, while enhancing their effectiveness and adequacy in meeting social needs and ensuring social safety nets. This echoes the messages of the Social Investment Package, which I presented earlier this year.
It also echoes some of the concerns which drove our work when in February 2012 the Commission launched the White Paper on Pensions. The implementation of actions announced is now well underway, and on several important activities we are working closely with the OECD.
In the White Paper we highlighted that in order to ensure adequate and sustainable pensions, Europeans will need to both work longer and save more for their retirement, notably through complementary pensions. I am now pleased to see these messages reiterated in the findings of Pensions at a Glance, which Director Scarpetta will present shortly.
Let me now briefly turn to the follow-up work on some of the key initiatives in the White Paper.
The Ageing Report 2012, prepared by the services of Vice-President Rehn together with the Economic Policy Committee showed that the cost of ageing is more moderate and manageable for countries which have taken timely steps to reform their pension systems.
At the same time, the first Pensions Adequacy Report published by the Social Protection Committee and my services in 2012, highlighted that unless people work longer to earn extra pension entitlements, improvements in sustainability will come at the expense of adequacy. Therefore, longer working life will be the key to future pension adequacy.
We have just begun work on the 2015 edition of the Report. The findings of Pensions at a Glance will be a valuable asset as we look for ways to maintain pension adequacy against a background of ageing populations.
In the framework of the 2011, 2012 and 2013 European Semesters, 17 Member States have received country-specific recommendations on pensions. Most recommendations focus on ensuring longer working lives by closing early exit routes and raising the pensionable ages. This must be accompanied by workplace and labour market measures that enable women and men to work longer. Some Member States were also called upon to further support the development of supplementary pensions.
We have also made decisive progress on the Directive on supplementary pension rights. To improve the pension rights of mobile workers, the proposal specifies that occupational pension rights must be granted no later than after three years of employment.
The proposal also puts forward rigid standards to ensure that the pension rights earned by outgoing workers continue to be preserved (e.g. indexed against inflation) when they move to another Member State. Inter-institutional negotiations between the European Parliament, Council and Commission came to a positive conclusion two days ago. I am therefore confident that, subject to a final agreement, the Directive can be adopted before the 2014 European elections.
I would also draw your attention to the work the services of Commissioner Borg have carried out on consumer information and protection standards for third pillar retirement products. The findings of a wide stakeholder consultation will be published shortly and feed into the wider work on a genuine internal market for private pensions, on which the services of Commissioner Barnier are leading.
As undertaken in the White Paper, a task force with the participation of the Commission, OECD and representatives of Member States and stakeholders is working on a code of good practise for occupational schemes. We plan to conclude this work in the summer of 2014.
We have commissioned a study from the OECD on how taxation and other public policy tools can best incentivise complementary retirement savings.
Earlier this year, the Commission published a study on the Gender Gap in Pensions, prepared by the European Network of Experts on Gender Equality (ENEGE). The study shows that gender differences in pensions in the EU are much wider than the gender pay gap, and holistic policies comprising labour market and pension measures are needed to reduce the gap.
While we have made fairly good progress on our commitments, we can ill afford complacency.
In spring 2014, a major conference here in Brussels, organised by the Commission with major stakeholders, will take stock of the implementation of the White Paper and reflect on lessons learned and challenges still ahead.
Our policy work needs to keep up with the rapidly changing pension landscape in the EU.
While establishing a better balance between contributions and entitlements is the first step of pension reform achieving a sustainable balance between years in work and years in retirement is the ultimate goal.
This obviously brings major new challenges to our labour markets. Unless there are sufficient employment opportunities and we enable people to work longer, major bridging problems will emerge.
For funded schemes we are looking for better ways of balancing risk, safety and affordability concerns while improving their shock absorption capacity. But in a low interest environment this is by no means easy.
The roll-back of the ill-designed funded pension schemes in some Member States pressures return to public pay-as-you-go schemes. Therefore we need to find ways to promote more cost-effective and resilient forms of complementary retirement savings instruments in these countries.
On all these issues we are cooperating with the OECD, and by pooling our resources we are developing a better analytical overview and policy toolbox to tackle the challenges to pension adequacy.
I welcome this opportunity to present the latest results from the OECD pension research to a Brussels-based audience and look forward to continuing our cooperation.