The debate on the reform of pensions and the creation of systems that are “adequate, sustainable and safe” has now moved from the European Commission and into the European Parliament. This institution is now developing its follow-on to the Commission’s Green Paper that set out a series of questions in July. But Parliament’s challenges appear to be formidable.
What lawmakers face in drafting their initiative report is a reconciliation of diametrically opposed positions from interest groups that have changed little over the years.
On one side, Europe’s national pension structures are far too complex to stand any chance of harmonisation. The alternative argument is that failure to move cohesively could lead to catastrophe - a possible descent into mass poverty in old age. Furthermore, it could contribute to Europe’s comparative economic decline.
One issue that could frustrate compromise concerns portability of pensions. Here, Ria Oomen-Ruijten, a Dutch MEP, has for years pushed in favour of protecting employees who cross frontiers. However, pension and employer federations and, notably, the German government, are adamantly opposed. German MEP Thomas Mann finds legislation to support a few “job hoppers” to be too costly.
Background to the role of Parliament is the increase in its status brought about by the Lisbon Treaty, which came into force last December. In the case of pensions, its report is due for clearance in plenary session in February and is set to be followed by a White Paper from the Commission, and later by revisions or a legislative proposal. These will go back to Parliament for amendments. Eventually, under the ordinary legislative procedure, the package will pass to the Council of the EU, bringing together national government ministers.
Despite potential obstacles to consensus, Parliament is making a vigorous start with its programme. By late summer it had got going with decisions on the roles of different committees, appointed official rapporteurs for each committee, plus ‘shadow’ rapporteurs from other political parties. It has specified topics to be tackled, allocated these topics to appropriate committees and devised a timetable.
The lead committee, the employment committee (EMPL), is working with the economic and monetary affairs committee (ECON), which ranks as an associate committee. According to the office of Belgian MEP Frédéric Dearden, other committees due to feed in their opinions are the women’s rights and Gender equality (FEMM), and the internal market and consumer protection committee (IMCO).
Tasks lined up for EMPL include drawing up advice to the member states on now to bring their pensions systems to a satisfactory state and how to define what kind of revenue should be devoted to the sector. It is also looking into recommendations as to how member states should proceed along the thorny path of raising retirement ages. One option here is whether and how to draw up advice on arriving at a balance between time at work and time in retirement.
Another task concerns reconciliation of pension policy with the Europe 2020 programme. This is the plan to boost general economic growth, bearing in mind the failure of its predecessor, the Lisbon Agenda. The committee will also look at issues of capital adequacy, a code of good conduct to apply across the EU, and other an codes covering the rating of types of investments.
ECON is to draw up a framework on reconciling pressures on public finance and the needs of existing retirees. Also on its list are reinforcement of legislation in cases of insolvency, and rules on transparency. It is working with the EMPL on the contentious issue of mobility, rights to a pension, and other matters. ECON is to come up with opinion on any revisions to legislation on funded pension schemes.
MEPs involved in reacting to the Commission’s Green Paper include:
• Pervenche Berès, France, S&D (socialist), president EMPL;
• Sharon Bowles, UK, ALDE (liberal), chair ECON, helped successful passage of controversial hedge funds directive;
• George Sabin Cutaş, Romania, S&D, rapporteur, ECON;
• Frédéric Daerden, Belgium, S&D, shadow rapporteur for S&D in EMPL;
• Marian Harkin, Ireland, ALDE.