Making Europe more compatible
The ‘open method of coordination’ was launched by the European Council in Lisbon two years ago to promote convergence among European Union member states.
The idea behind the method is to use the EU as a platform for the diffusion of best practice among member states. Categorised as ‘soft’ rather than ‘hard’ law, its tools are guidelines and benchmarking rather than laws and regulation.
The method has already been applied to areas such as employment and social inclusion. However, it could be applied equally well to Europe’s occupational pensions.
This was the main message of a colloquium at the Universidade Autonoma de Lisboa in May. The colloquium was organised by the European Association of Paritarian Institutions (AEIP), which promotes the paritarian management of social protection at an EU level.
Bruno Gabellieri, secretary general of AEIP, said: “In line with the Maastricht treaty we need a certain amount of principles. These principles include allowing all people a minimum quality of life. We need to guarantee that the social system has high employment levels. We need to reform the budgetary system and make sure that these reforms do not place a pensions burden on the younger generations. We need a more transparent pension system for citizens. We also need to guarantee the systems’ compatibility. This is one of the keys of the open method of co-ordination.”
Compatibility can be achieved if countries are prepared to adopt systems that are seen to work in other countries, he said. “When we see the list of aims for the open method it may seem a difficult goal but we are convinced that studying best practice together is the best way to achieve it. We need to make each country watch what happens in other countries, because they can learn from each other’s mistakes.”
Henk Becquaert, adviser to Frank Vandenbroucke, Belgium’s minister of social security and pensions, said that the open method of co-ordination is important because it translates ideas into institutions: “The open method offers more than a mere learning process. It gives concrete shape to the European social model by means of soft cooperation and consensus-building. This goes far beyond the solemn but vague declarations at European summits.”
But he warned that the open method was not a one-size-fits-all solution to problems of European convergence. “It is not a fixed recipe that can be applied to any issue, whether this is employment, social inclusion or pensions. Open co-ordination is a kind of cookbook that contains various recipes, both light and heavy.”
Becquaert said the open method of coordination is the key to achieving sustainable social justice in Europe. “Currently there is no other way to achieve this objective, so we must take this path with all due speed.”
Armindo Silva, a representative of the EC Directorate-General for Employment and Social Affairs in Brussels, said that there was no reason why the method should not be applied to pensions. “The Commission believes that OMC should be consolidated and promoted – and extended if necessary. OMC is particularly important when the goal is long term – for example, to respond to common challenges like ageing.
“The open method of coordination should be a key instrument to facilitate mutual learning, to create the conditions for more policymaking to respond to common challenges and to create an ‘emulation’ environment where member states can show that they are doing something to respond to common challenges and that they are responding faster than others.”
Emulation at an EU level would not prevent member states developing their own pensions systems, he said. “All this should leave member states with the freedom of implementing, designing and delivering policies in domains that continue to be seen by the heads of government as domains of subsidiary, and therefore of national competence.”
Silva said that the open method should be applied to all pensions, whether basic or supplementary. “It’s not appropriate to consider that OMC is good for first pillar pensions but that second pillar pensions should be a matter for legislation. Clearly that is not what we intended with the objectives agreed at the EU summit at Laaken in December.”
He said that three of these objectives – objective 8 on pensions funds and the revision of the legal framework, objective 9 on mobility and flexibility and objective 10 on gender differences – directly concern the way pension funds operate.
“We consider that member states, in their national strategy reports, should address the reform of statutory pensions as well as second and third pillar pensions. We don’t consider the different pillars of the system being addressed by different sets of policymakers. We consider that the national strategy report should have a comprehensive view of pension systems.”
Silva said that progress on the EU pensions directive would not remove the need for progress on the open method of co-ordination. “We see progress on the directive as very important for the open method because it will bring about a more clear set of rules and certainly more convergence in the way pension funds operate in different member states.”