ECB critical of pace of pension reform

GERMANY – The European Central Bank has criticised the “very slow” introduction of European pension reform.

“Pension reforms have been partial at most,” the ECB says. “The introduction and expansion of funded pension schemes alongside and complementary to reform of the pay-as-you-go basic pension schemes is proceeding at a very slow pace.”

“With regard to ageing populations, little headway has been made in implementing measures that contribute to the sustainability of public finances in the longer run,” the bank says in its 2002 annual report released today.

And efforts to increase the participation of older workers have been ineffective, the ECB adds. It says, “comprehensive reforms of pension and early retirement systems aimed at increasing the labour force participation of older workers have not been fostered sufficiently”.

“Overall, progress with regard to the growth-supporting role of public finances has remained limited.”

The ECB also noted the impact of European pension funds on the banking industry. “Euro area banks also face more and more competition from other financial intermediaries such as insurance companies and pension funds.”

As for the ECB’s own pension arrangements, its portfolio grew to 61.9 million euros at the end of 2002, up from 53.9 million euros a year before. Following actuarial advice, it says it made a supplementary contribution of 10.5 million euros to the scheme in 2002. Its total pension cost in the year was 27.4 million euros, up from 14.9 million euros.

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