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AK Europe: The Future of Pensions in Europe

Together with ÖGB, DGB and the Friedrich-Ebert Foundation, AK EUROPE organised an evening event on 9 October 2018 to debate the current pension reports “Ageing Report” and “Pension Adequacy Report” by the European Commission. Over 80 people attended a lively expert discussion on the sustainability and adequacy of European Pension systems.

Renate Tenbusch, Head of the Brussels Office of the Friedrich-Ebert-Foundation, opened the evening with some remarks on the demographic development in Germany and the various solutions, shown by experts. She talked about an improved reconciliation of family and working life to increase the birth rate and to prevent any further aging of society as well as about the fairer assignment of pensions to their recipients. However, many of the solution approaches, such as extending the working period or the targeted integration of immigrants in the labour market, would also be socially explosive.

Afterwards, Josef Wöss, AK Vienna presented the most important research results of the “2018 Ageing Report” by the GD ECFIN and the “Pension Adequacy Report” by the GD Employment. Whilst the age group 65+ would have hugely increased by 2070, the spending on pensions relatively to GDP would not keep up but stay far behind the level. According to Commission data, average spending by the EU-27 would have even shrunk by 2070. Large differences exist between pension recipients themselves (“gender pension gap”). According to Commission data, in Austria this gap is even 3.4 % wider than the European average. However, at the same time, the danger of old-age poverty in Austria is significantly lower. One solution to these problems may be an active labour market policy, which increases employment rates, thereby adding more contributors to the pension system. For young people aged 20 today, who enter the labour market, at 78.4 % the replacement ratio in Austria is very high, thereby also higher than in many other EU Member States, which rely on private pension programmes.

Ana Carla Pereira, Head of Social Protection Unit, EU Commission, referred to calculations, which did not assume a huge increase of Europe-wide employment figures. All pension reforms had to conform to the Stability and Growth Pact. That is why she was concerned about developments in Poland, where, after the retirement age had been increased, it was lowered again. However, one could observe in all Member States an effort to increase the retirement age. Pereira referred to calculations by the Commission, which might have the effect that people in Italy and Greece could only retire at 70.

Bernd Achitz, Secretary General of ÖGB, categorically ruled out such a development. He had been hearing the same arguments for raising the retirement age for 25 years. However, these were only always presented in absolute figures, never relative to GDP, because this would paint a significantly more dramatic picture than necessary. Like Josef Wöss, he insisted on an active employment policy. It would be unfair, to exclude people from social wealth in old age, as they contributed through their work their entire life.

In contrast, Rebekah Smith, Deputy Director for Social Affairs, BusinessEurope, strongly supported a pension system, which bears in mind all three pillars (public, occupational, private). Apart from that, extending the period in work had to be simplified on several levels. Vocational and further training for older people had to be properly developed to enable mobility within and between companies, if, for example the ability to work changes with age.

Ingo Schäfer, Head of Pension Division of DGB, was against schematic mathematical formulas, which were used to postpone the retirement age. Nobody – he pointed out – would know what the labour market would look like in a few years. More positive experiences had been made with countries that changed their retirement age according to requirement. The focus should always be on people and not on bare figures.

Further information:

Presentation: Josef Wöss - The Future of Pensions

AK EUROPE: One of many pillars? Discussion on private pensions in the European Parliament

AK Pension Tips

The 2018 Ageing Report

Pension Adequacy Report 2018

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Photo: Julie de Bellaing
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