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European Commission

Check Against Delivery

László ANDOR

European Commissioner responsible for Employment, Social Affairs and Inclusion

Taking stock and looking ahead two years after the White Paper on pensions

Conference "The future of pensions in Europe"

Brussels, 26 March 2014

Ladies and gentlemen,

Good morning and welcome to this conference, where we will address the topic of pensions in Europe by taking stock and looking ahead two years after the Commission's White Paper.

To get the White Paper fully in focus, I would like to start by looking back to the beginnings of this 2nd Barroso Commission and trace the interactions between unfolding events and Commission initiatives.

When the financial and economic crises of late 2008 developed into a sovereign debt crisis, Member States felt not only the short-term challenges to their pension arrangements from the economic situation. They also started to perceive the impact of the beginnings of the medium-to-longer-term challenges of population ageing.

Thus Member States were forced to take a closer look at their pension schemes’ capacity to handle risk, weather market volatility and absorb economic shocks.

Given the combination of these serious challenges to pension provision, the Commission saw a major need to deepen its guidance and support to Member States.

As a result, the Commissioners for economic and financial affairs, for the internal market and services and for employment and social affairs set their departments to work together in this area.

In our Green Paper we asked whether stakeholders agreed that there was now a case for updating the EU's role and applying a holistic approach to pension provision that covered all pillars and addressed sustainability, safety and adequacy together.

The answer was a resounding Yes from most respondents, while emphasising that pension provision should remain a Member State competence.

Yet, by the time we were ready to issue the White Paper, the fiscal implications of pensions had been upgraded to a 'common concern' across the Member States. The momentum had come for the EU to offer far more direct and detailed guidance on pension reform.

The big game changer came in early 2011 when the European Semester governance process was put in place as the annual pivot for the Europe 2020 Strategy and as the new framework for structural policy coordination in the EU.

Fiscal, employment and social policy concerns meant that the European Council was to issue recommendations on pensions to 16 Member States.

When we were finalising the White Paper, the Europe 2020 instrument of peer pressure had become a useful way for encouraging the Member States to reform their pension schemes and introduce measures to enable people to work longer.

Pension reforms in the Member States

A raft of pension reforms has followed over the last four years. Changes introduced have brought major improvements in the medium-to-long-term sustainability of pension provision. While lowering replacement rates, many reforms have at the same time widened coverage and strengthened poverty protection.

23 countries are raising the pensionable age and six have decided to link it to life expectancy.

In most Member States, access to early retirement is being restricted or phased out and important steps are being taken to make a longer working life possible.

Importantly, in most Member States employment rates of older workers and effective exit ages have continued to grow or held up well despite the crisis.

Measures are under way to guarantee gender equality in the pensionable age in all but two member countries, and one of them is on the verge of passing legislation to that end.

As the 2012 Ageing Report noted, thanks to reforms in the 2009-to-2012 period, the expected increase in EU public pension expenditure up to 2060 has been reduced from 2.5% of GDP to only 1.5%. Since then it has been reduced even more.

Looking ahead – the future of pensions in Europe

Ladies and gentlemen,

The White Paper sought to present a comprehensive and positive vision for the future of pensions in Europe. It explained how adequate and sustainable pensions can be possible even in a less favourable demographic context and demonstrated how challenges are surmountable when the right policies are put in place.

There are at least three reasons why I believe that we have a realistic chance of preserving our public pay-as-you-go pensions and of complementing them with cost-effective supplementary schemes.

Firstly, Europeans deeply treasure the income security in old age provided by public pension policies.

Secondly, Member State policymakers have a new reform-minded attitude and greater realisation that pension and labour market reform must go hand in hand.

Thirdly, there is the policy-adjustment potential of the EU’s closer policy coordination, now that:

  • pension developments in Member States are monitored on a continuous basis and peer-reviewed for their economic, fiscal, employment and social effects;

  • annual country-specific recommendations are issued, where needed, to ensure that pensions are sustainable and adequate;

  • public pension systems’ capacity to stand up to population change in the longer term is tested every third year in the Ageing and the Pension Adequacy Reports.

Conclusion and outline of the Conference

In line with the holistic approach of the White Paper to pension provision three Commissioners are here today to discuss progress and remaining issues in their areas of competence with key stakeholders.

I will primarily speak on our initiatives aimed at achieving a better balance between time spent in work and retirement,

while Commissioner Barnier will cover our efforts to boost the contribution of complementary retirement savings to safe and adequate pensions and long term financing through better regulation,

and Vice-President Rehn will explain how our new rules of economic policy coordination promote reforms that maintain the sustainability of our public pension schemes.

Finally, Michel Servoz, Director General of DG Employment will close today's conference by highlighting some of the key issues in pensions which the next Commission will have to grapple with.

I thank you for your attention and look forward to a fruitful discussion with you.

Introduction of panel discussion "Towards a better balance between time spent in work and retirement"

Ladies and gentlemen,

I am pleased to introduce this panel discussion on better balancing time in work and in retirement by reviewing how far we have progressed with the initiatives in the White Paper for which I and my services have been responsible.


First of all we have sought to deepen popular understanding of how we can adapt our lives and societies to population ageing and why the rebalancing of working and retirement years needs to be part of that.

The European Year for Active Ageing and Solidarity between Generations 2012 has helped greatly in promoting a more positive view of ageing. It has mobilised a wide range of stakeholders at European, national, regional and local level. It also lead to a raft of EU reports and publications highlighting good practices of Active Ageing and gave us instruments for monitoring progress such as the Active Ageing Index.

Guidance for Member States

The European Year also resulted in guidance for Member States as in December 2012, the Council adopted the Guiding Principles for Active Ageing and Solidarity between Generations which the Commission had helped develop. In its February 2013 Communication on Social Investment, the Commission has urged Member States to use the Guiding Principles as a checklist on what needs to be done to promote active ageing.

However, the most powerful guidance to Member States has been given in the framework of the European Semester. In 2012 and 2013 17 and 15 Member States respectively received country-specific recommendations on pensions.

In particular, recommendations have focused on the need to raise the effective retirement age by restricting early retirement, raising the pensionable age and linking it to life expectancy. Importantly the recommendations have also highlighted the need to underpin such reforms with changes in work place and labour market practices, thus improving the ability of women and men to work longer. Some Member States were also called upon to promote supplementary pension schemes and improve their cost-effectiveness. But so far this part of our pension agenda has received much less attention in the European Semester. This may be some food for thought for today's discussions.

The Commission has also been stepping up its support for policy coordination and joint work on enabling and encouraging older workers, women in particular, to stay longer on the labour market.

Working conditions and health and safety at work will need to be adapted to an ageing workforce. Next month we will be presenting a new strategic framework on safety and health at work. And on 28 April we will organise here in Brussels a major conference on working conditions.

This autumn we will be promoting joint work between the SPC and EMCO on delivering on longer working lives, including gender specific dimensions and possibly the development of end-of-career labour markets across the Member States. We will involve the OECD in this work.

Financial Support

In order to better help Member States with their pension and labour market reforms, we have ensured that the promotion of active ageing measures became a priority in the framework for European Social Fund spending in 2014-2020. We are encouraging Member States to make use of the ESF to effectively support the pension and employment reforms identified in the country-specific recommendations.

Furthermore, through calls for proposals we are offering support to Member States to boost their capacities for pension modelling and reform preparation.

Legislation improving cross border pension safety

I and my services have been responsible for a number of initiatives aimed at promoting the contribution to pension adequacy from complementary pensions.

After intensive negotiations the European Parliament and Council have found an agreement last November on the so-called portability directive, initially proposed by the Commission in 2005.

The Directive, foreseen to be adopted in April, will improve the pension rights of mobile workers. Occupational pension rights must be granted no later than after three years of employment relationship. And the Directive ensures that the pension rights earned by outgoing workers continue to be preserved when they move to another Member State.

Promoting complementary retirement savings

As part of our efforts to raise the quality of occupational schemes we are presently working with Member States, social partners and the pension industry to develop a code of good practice for occupational pension schemes. We are also getting expert support for this from the OECD. The results of this work will be presented at our Pensions Forum in October 2014.

To help Member States raise the cost-effectiveness of public support for complementary retirement savings we have just started work with the OECD to draw on the best international knowledge on tax-expenditure and direct support for private schemes. This work will feed into our preparations for the European Semester.

Under the lead of Commissioner Borg we have also begun work to raise the quality of 3rd pillar private pensions. Last year we published a consultative document on consumer protection in third-pillar retirement products. The results of the stakeholder consultation will be taken into account in a broader initiative aimed at developing a genuine, consumer-friendly Single Market for personal pension schemes.

Transparency and information for retirement planning

Reliable information about pensions and transparent schemes arrangements are crucial for people's retirement planning.

In collaboration with the Social Protection Committee and the Spanish government a peer review on pension information has been organised and we are supporting a feasibility study on cross border tracking of occupational pension rights. Results will be available within a year.

Monitoring progress on rebalancing work and retirement

As promised we have deepened our monitoring of progress in pension reform and retirement practices.

In May 2012 the Social Protection Committee presented the first Pension Adequacy Report developed with the Commission. As a complement to the sustainability focus of the Ageing Report developed by the Economic Policy Committee and services of Vice-President Rehn, it shows that most reforms will result in lower public pensions in the future. But it also highlights how adequacy can be restored through a mix of working longer and saving more for one’s retirement through supplementary pensions. The next Pension Adequacy Report is scheduled for 2015 with preparatory work having started last year.

We have also taken a closer look at gender aspects of pension adequacy through a study on the Gender Gap in Pensions. The need to address the factors behind gender differences in pension outcomes was also mentioned in our 2014 Annual Growth Survey, which kicks off the European semester.

Final remarks to start the panel discussion

Ladies and gentlemen,

We have worked hard over the past two years to implement the White Paper's actions aimed at a better balance between time spent in work and retirement, but we are definitely not there yet.

Today's discussion will hopefully help us to identify the further steps that will need to be taken to ensure adequate, sustainable and safe pensions for present and future generations.

Thank you for your attention.

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