Europe’s low birth rates and ageing
population make it imperative for EU member states to overhaul their pension
systems, the European Commission says.
A Commission report advocates
automatic adjustments to the retirement age as life expectancy increases. Some
EU states have adopted such a mechanism.
“The current situation is
simply not sustainable,” said EU Employment Commissioner Laszlo Andor.
France, Greece, Spain and the UK
have plans to raise the retirement age.
But the changes, brought in as
governments seek to slash chronic budget deficits, have angered many workers.
Thousands have protested in the streets.
There are currently four people of
working age for each person over 65 in the EU, but by 2060 the ratio will be
just two for each pensioner unless pension systems are overhauled, the
The Commission – responsible for
drafting EU laws – accepts that the governments of the 27 EU member states
retain control over national pension systems.
But the EU “green paper”
on pensions is aimed at launching a debate involving all stakeholders so that
European pension systems are harmonised better. It is inviting contributions to
the debate until 15 November.
“The choice we face is poorer
pensioners, higher pension contributions or more people working more and
longer,” Mr Andor said.
The report says “the steep
rise in old-age dependency ratios could be largely avoided if people would work
Less than 50 per cent of adult
Europeans are still in work by the age of 60, yet member states had pledged in
2002 to push back the retirement age by five years, it says.
The Commission also complains that
there are “considerable barriers to cross-border activity” in the
area of pensions. Discriminatory tax rules are among the obstacles that many
pensioners face when they move to another EU country, it says.