AGE, the European Older People’s Platform, welcomes the objectives underlying the EU’s Open Method of Coordination on pensions, which is based on the principle of subsidiarity. We hope that this European exercise will help to lay the foundations to ensure adequate pensions for all those who reach retirement age in the present and future Member States in the decades to come. In the Madrid International Plan of Action on Ageing and the Regional Implementation Strategy agreed at Berlin in September 2002, the Member States committed themselves to building a society for all ages and developing solidarity between generations.
Intergenerational solidarity is, among other things, the implicit contract by which people of working age support the cost of pensions and care for older people, in the expectation that they themselves will receive similar support in old age. Intergenerational solidarity also stands for older people’s sense of responsibility for younger generations, their well-being and living conditions. Older and retired people have contributed to society, and to financing social security systems, throughout their working lives. In later life they continue to contribute, providing care for dependeants, doing voluntary work and passing on their experience. Many of them also maintain paid employment.
Increased life expectancy and improved health for older people have been among the proudest achievements of recent social and economic development in Europe. Larger numbers of active, healthy older people represent a growing resource for the future as well as an increase in human fulfilment. At the same time, widespread poverty and social exclusion persist among older people in most EU Member States and in the candidate countries. Adequate pensions are still not universally available across the EU. Pension systems must be improved, not simply maintained, far less weakened.
In 2001 AGE adopted a comprehensive statement “Adequate Pensions for all in 21st-Century Europe”. One of its key principles was that older people and their organisations must have a voice in overall pensions policies and in the management of pension schemes. Building on that statement and in the light of the National Strategy Reports, AGE’s members have identified five key points that we believe are vital for the future of European pensions provision. We call for these to be the basis for a positive and active development of the Open Method of Coordination, while recognising that each country has a specific national system within which changes can be made. No matter which “model” an EU country wishes to choose, AGE strongly believes that all pension systems must:
1. Ensure that older people who have reached statutory pension age have the right to a decent level of pension, giving them a fair share of society’s economic well-being, not just preventing outright poverty. Their pension income level must allow them to participate actively in public, social and cultural life, to be active consumers, and to cover the costs of (risks of) health problems, etc. To ensure this, a country needs a secure, universal, fully adequate 1st pillar pension, whether or not 2nd and 3rd pillar systems are further developed. In some countries the need for pensioners to claim means tested benefits in order to achieve a subsistence income indicates that state pensions are inadequate and urgently need to be raised. Furthermore, any trend to weaken general provisions and replace them with means-tested arrangements must be strongly resisted.
2. Guarantee that 1st pillar pensions are indexed so as to ensure that pensioners keep up with progress in society’s prosperity. The best method is indexation to average earnings. Price indexation is not enough, as it will leave pensioners lagging behind society’s economic wellbeing over time.
3. Ensure that individuals are able to obtain a high income replacement rate at retirement. This implies ensuring access to pension and saving schemes that do not place all the risk on the individual. It requires an environment in which pensions are secure and pension schemes are transparent and subject to effective governance and regulation. The regulatory framework must allow workers to transfer their occupational and private pension entitlements between Member States as well as within them, avoiding problems such as double taxation.
4. Give equal pension rights to women, eliminate gender discrimination in pension systems and in the labour market, and ensure that time spent caring for children, the elderly, etc. gives pension entitlements under the first pillar system, and that pensions rights are individualised.
5. Allow and encourage older people to continue working for longer, outlaw age discrimination, promote lifelong learning, training, etc., and allow for gradual retirement. AGE welcomes the target enshrined in the Lisbon Strategy of increasing the EU-wide employment rate for older workers (55-64) to 50%, and calls for a wide range of enabling measures to make this a reality.
Michael Teit Nielsen
