EU says Sweden, Denmark face 2nd-pillar GDP hit
EUROPE – Sweden and Denmark are facing a “downward adjustment” of around 1% of GDP – billions of euros - following a Eurostat decision two years ago on defined contribution state pensions, the European Commission says.
The countries are currently in a transition period until spring 2007 to implement a decision by the EU statistical office in March 2004 on the classification of second-pillar funded schemes, the Commission said. The remarks came its assessments of the countries’ euro convergence programme.
The Commission said the implementation of the decision – which ruled that government-run DC schemes could not be classified as social security schemes – would reduce both countries gross domestic product by around 1% each year.
Sweden’s projected 2006 GDP is €296bn while Denmark’s GDP is €145bn. One percent of that total works out at some €4.4bn.
In 2004 Eurostat said its decision clarified uncertainty about the impact of DC schemes on countries’ deficit and debt.
A spokesman told IPE at the time that Sweden and Denmark were likely to be most affected.
The agency said: “Eurostat has decided that if a government unit is responsible for the management of a defined contributions funded scheme, for which there does not exist any government guarantee for the risk of defaulting payments covering the majority of the participants, the scheme cannot be treated in national accounts as a social security scheme.”
Denmark has said the reclassification of ATP would imply a downward adjustment of the general government budget balance of around DKK 13-15bn per year in 2002-2006.
Yesterday it emerged that 15 EU states have yet to fully notify the Commission about the transposition of the directive on occupational pension funds into national legislation.