EUROPE - The European Union’s economic commissioner says a “partial shift” to funding of pension systems in EU member states would contribute to their long-term sustainability – though he called for “social policy objectives” to continue.
The EU's Commissioner for Economic and Monetary Affairs Pedro Solbes made his remarks in a report on the European economy in 2002.
He said: “While a partial shift to funding of EU’s pension systems would contribute to their long-term sustainability, it must be ensured that the social policy objectives of the pension provisions continue to be achieved.
“The partial shift to funding would lead to additional savings and to a significant build up of financial assets in public and private pension funds in the EU.”
Solbes says the measures have to be coupled with reform of Europe's labour, product and capital markets. He says the EU has modelled simulations which suggest that a “significantly higher proportion” of the extra pension fund assets would be invested in the EU due to the “improved domestic growth environment” that would fresult from reform.
The report says that if no policy action is taken, then demographic changes over the next 50 years could see the EU’s potential growth falling from the current underlying rate of 2%-2.5% to around 1.25%. And the EU’s current 18% share of world production is expected to fall to 10% in 2050.