EUROPE – The European Council has proposed raising the retirement age for new staff at European Union institutions to 63 and raising the annual accrual rate to 1.9%.

The proposals are part of a plan to save more than one billion euros over the next 15 years.

The move comes as European economic and monetary affairs commissioner Pedro Solbes has called for more “policy action” on confronting the ageing challenge.

“The agreement on pensions fully respects the goals set out by the Commission,” the Council said. “It will guarantee that the scheme remains in actuarial balance, and ensures financial stringency.

“For new officials, the statutory pension age will be raised to 63 years and the annual accrual rate will be 1.9%. The accrual rate for existing staff will remain unchanged, and transitional arrangements will apply for the pension age.”

The proposals prompted a one-day strike by Commission employees. The BBC quoted a union official as saying the plan was a "frontal attack on every aspect of the pension conditions".

The new system is to be adopted by the end of the year, and fully implemented after enlargement in 2004. European vice president for administrative reform Neil Kinnock said: "Today's negotiated agreement is a further significant step towards the completion of the Commission's internal reform.”

Kinnock said present and future staff would benefit from a “comprehensively modernised personnel system”.

The European Parliament must now give its formal opinion on the Commission proposals.

Separately, commissioner Solbes – speaking at a meeting of finance ministers of the Group of Eight industrialised nations in Deauville in northern France – called for more action on ageing.

“In Europe we had been analysing and preparing for the implications of ageing for some time now but more policy action is needed.

“Demographics and the structure of our pension systems are putting pressure for quick and swift action.”

Solbes said the Commission would publish a Public Finance Report on Wednesday of this week that would “demonstrate that on the basis of unchanged policies half of our member states will face problems with their public finances a few years down the road”.

“We have to reform our pension systems and put our public finances firmly on a sustainable basis if we are to face successfully the ageing challenge and close the financing gap,” he said.