Rachel Oliver reports from the European Parliamentary conference in Brussels
The Economic and Social Committee inBrussels proved to be an ironic setting for a European Parliamentary conference on European pensions which demonstrated, if anything, that a uniform approach to welfare reform is still but a pipedream.
The conference, entitled 'Pension schemes: Features and challenges of the European social model' not only served to show the continued insular nature of the EU's member states but also reaffirmed the strength of the present stalemate.
DGXV Commissioner Mario Monti seized the opportunity to press member states to take another look at their current systems. Even though many member states have undertaken reforms, more are needed," he said, and added pointedly, "Such a trend left unchecked could put unbearable pressure on the system. It is not feasible to chop and change pension systems too often.We must look ahead far in life if we want to have sustainable systems." Monti then made a call to Europe's finance ministers that "tough political decisions" had to be made and questioned the political motives behind resisting effective pension reform in their countries.
However he renounced the responsibility of the EU to enforce any decisions onto its members. "It is upto member states to decide on the structure of member states pensions," he said but added that the EU can assist in the process by giving more freedom of investment and ensuring the mobility of workers, though again several countries were hampering this progress and until the "overprotectionist" rules were dropped, the EU's hands were pretty much tied.
Rules in member states prevent pension funds being invested freely, he said. "Only if these funds are invested productively will pensions grow in line with the real economy and meet the aspiration of future pensioners."
The taxation issue was raised as another area which cannot be resolved until certain member states "back down". "The taxation policy group has started work on a better coordination which won't be too difficult seeing as there is none at the moment," he commented dryly.
Harald Ettl, member of the European Parliament openly criticized the current voting procedures of the EU in reference to the UK's veto threat on tax harmonisation. "We should move away from unanimity."
Rudolf Dederer of the Association of German Public Pension Institutes spoke out in support of Ettl's former statement on individual country cases by saying: "We need to bear in mind the particular conditions that have caused a country's system to develop to the state it is in today." In particular he noted that early retirement has helped the labour market in Germany, while other states continue to advocate extended working years past the traditional retirement age and to also break the habit of hiring younger workers. He also put Germany's point of view across on the funded issue: "A shift from a PAYG to funded system is associated with serious costs and the generation to pay for this will find it very hard to deal with." He essentially disagreed with a change to a funded structure for the reason that one generation would have to pay twice, noting that to put this in force in Germany was at the very least "politically impossible", and seemingly ignored the fact that demographic pressures, an over reliance on the current PAYG structure will pretty have the same outcome.
Gerard Athias chairman of AFER Europe summed up the current stalemate situation Europe's decision makers have found themselves in. "We are in a period of hesitation at the moment and have been for some time."
But he added: "We are seeing a curious fact of saying that what we had had for the past 30 years which has been working perfectly well, we will fiscalise," he said adding, "I don't think we should go down too complex a route as we tend to - we would probably need to pick up a couple of simple, non-authoritarian ideas.""