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EU countries requesting 'radical, intrusive' advice on pensions reform

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  • EU countries requesting 'radical, intrusive' advice on pensions reform

EUROPE - More than half of EU member states have requested "radical and intrusive" pension reform recommendations from the European Commission to improve public budgets, according to one of the authors of the White Paper on pensions.

Speaking at an event in London organised by the UK National Association of Pension Funds, Fritz von Nordheim, principal administrator for the social protection and inclusion division at the Directorate General for Employment, expressed his surprise at the number of member states requesting feedback.

The principle of country-specific recommendations forms part of the Commission's Europe 2020 agenda - now merged with the Growth and Stability Pact - and mirrors policies outlined in the White Paper that countries and social partners would receive financial support to investigate designs for "cost-effective" supplementary pension schemes.

"Sixteen member states have received country-specific recommendations on their pension systems - some of them are quite radical and very intrusive," von Nordheim said.

"They say, for example, you ought to raise the pensionable age and not only that, you need to link it to longevity - the ultimate revolution, the [dream] of pension planners."

He said recent trends had seen, for example, an average of 15 years in retirement become 22 years before a claimant passed away.

"We are not suggesting to reverse it," he said. "We are suggesting to lock it in - for every year you gain in life expectancy, you may have to work 10 or 11 months more."

An automatic link between retirement ages has been widely debated in a number of countries, with UK chancellor George Osborne recently announcing such plans.

Speaking at yesterday's event, pensions minister Steve Webb highlighted cooperation with other member states on common issues such as longevity as one of the positives of the EU.

"We've started moving on state pension age and are looking at what we call 'more automatic mechanisms' for raising state pension ages," he said.

"Why wouldn't we want to look at what Scandinavia has done and various more formula-based approaches?"

Von Nordheim said the reform recommendations came at a time when aspects of pension policy had been redefined as a "common concern" - as discussed in the White Paper - due to their impact on a country's expenditure.

He said there was now a "duality" in place, with meetings by the Commission's social protection committee avoiding comments on pensions reform in individual countries, as this was a sovereign affair, but that the economic policy committee being more assertive in its views.

The changes were a direct result of the sovereign debt crisis and the revised Growth and Stability pact, he added.

"We have revolutionised the club," he told delegates. "We have pushed through in no time a revolutionary piece of legislation that would not survive referendums, that would take at least 15 years to discuss but that came through in just one year, supported by all governments including the British."

Von Nordheim insisted the new rules allowed for countries that were "a bit paranoid" to avoid a "dawn raid like in Greece" by mandating that member state budgets be submitted to Brussels in advance.

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