EUROPE – The European Commission says most member states will have to make further reforms to guarantee adequate pensions in an ageing society.

The Commission’s draft communication on the sustainability of pensions in the European Union says: “Not all member states have comprehensive strategies in place that would allow them to claim that they are ready for the ageing challenge”.

Many pension systems are not “future-proofed” it says. “In other words, many pension systems are not yet ready for a society with a much larger number of older people the majority fit and healthy and capable of living very active lives; for more flexible labour markets and greater mobility; for greater equality between men and women.”

“We want pension systems to continue to fulfil their social objectives, so we have to modernise them.”

The report denied it was scare mongering, saying “we are facing a serous challenge, but not one we cannot cope with”. It does not back raising the state retirement age, but seeks to get older people to continue to work.

And it sees a link between the euro and European pension systems. In a question-and-answer fact sheet issued with the report, the Commission noted that there is a clear need to ensure that pension systems comply with the Stability and Growth Pact. “In this sense, there is a direct link between healthy pension systems and a healthy euro.”

The report will be presented to the EU’s spring summit in March 2003.

The report, which the Commission says is the first pan-EU analysis of the sustainability of European pensions provision, acknowledges that member states are “moving towards” financially sustainable pension systems”. States are ‘fully aware of the interdependence between financial sustainability and adequacy in the context of an ageing society.

But it was not so positive about the lack of measures that have been taken.

“Many member states face very high expenditure increases in their pensions systems under current policies and have yet to take measures to cope with these financial challenges without jeopardising adequacy.”

(For a summary of the report's country-by-country analysis, see separate story.)

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