The evolution of European pension schemes in the spotlight of Liege
In the framework of the Belgian Presidency, a major conference was organized in Liege on various social themes and particularly pensions, in collaboration with Mrs. Laurette Onkelinx, Deputy-Prime Minister for Social Affairs.In this context, the Minister of Pensions, Michel Daerden, organized a ministerial conference on Tuesday, 7 September, on how various European pension systems and their financing have been adjusted at a time when the proportion of senior citizens is growing.
On this occasion, several European ministers presented their pension schemes in their countries. The European ministers also discussed their respective points of view and their vision of the European Green Paper on Pensions. A broad consultation of European citizens is now being done on the subject.
"With this kind of common thinktank particularly, we will be able to better define a European framework in the near future to help the 27 Member States of the European Union guarantee a financially and socially sustainable pension system that is adequate for all citizens. It should allow every pensioner to lead a dignified life, today and tomorrow, without too great a change in living standards as compared to working age. This European framework could take the form of a Commission White Paper further to the Green Paper that was published on 7 July, suitably called "Towards adequate, viable and secure pension schemes in Europe", Mr. Daerden indicated.
"In the various discussions" he continued, "it clearly appeared that the principle of subsidiarity is a keyword in the pension field at European level. It seems logical to allow each country, given its individual characteristics, to treat certain issues" Mr. Daerden continued, "but we should recognize that for others questions, like the situation of cross-border workers, transferability of supplementary pension rights, rules concerning prudential supervision and solvency of professional retirement institutions, exchanges of information, statistics etc., a supra-national approach would be helpful."
The objective of this one-day conference on European Pensions was also to enrich the work of the Social Protection Committee (SPC) and the Economic Policy Committee (CPE), and to contribute to reflections in civil society which, as Minister Daerden has mentioned repeatedly, will hopefully lead to the drafting of a White Paper on European pensions.
From this standpoint, Michel Daerden feels that it is essential to continue the discussion jointly in ECOFIN (The European Union Economic and Financial Affairs Council) and in EPSCO (the European Union Employment, Social Policy, Health and Consumers Affairs Council).
It seems that the participants in the conference in Liege support their European Commission when it affirms that the solution for sustainability and durability of our pension systems depends on an integrated social-economic approach, including economic, social and financial policy measures. This is also mentioned in the Europe 2020 Strategy for intelligent, sustainable and inclusive growth. Some of these measures are:
- Increasing the employment rate, better quality jobs and a positive trend for unemployment and participation of older workers (rate of employment of people over 55)
- Achieving the target of reducing poverty within the EU by 20 million people by 2020
- Strengthening the security and the internal market for financial products (e.g. self-funded retirement)
- Facilitating mobility of workers and citizens (transferability of self-funded pensions)
- Ensuring long-term viability of public finances (and consequently pensions)
Finally, at the closing European press conference on Wednesday, 8 September – also attended. by Laurette Onkelinx, Belgian Deputy-Prime Minister for Social Affairs, and Laszlo Andor, European Commissioner for Employment Social Affairs and Inclusion – the Belgian Minister of Pensions, Michel Daerden concluded with a few more personal considerations:
"First of all, once again I want to reassure my fellow Belgian citizens:
- pensions will be paid, even more certainly since public finances will be healthier
Do you think it is conceivable that one day a democratic country like Belgium could neglect nearly a third of its population? Pensions will be paid as all the other missions of the State (justice, security, health care, civil service, ...) will be financed.
Beyond that, my objective is not to leave anyone behind:
- for the poorest and most vulnerable, it is crucial for them to have resources that protect them from poverty by means of the "Guaranteed Income for the Elderly" (GRAPA). The amount of this minimum income must follow the evolution of the poverty threshold.
(This is the case today: the poverty threshold is at € 899 and the GRAPA at € 916 for a person living alone).
- for workers who have worked a full career, whether they are self-employed or employees, the amount of pension should be at least € 1150 net (or € 1250 gross amount)
- my dream: to manage to have our fellow citizens reach the welfare level, corresponding to about € 1500 (or € 2000 gross income).
We need to continue to reinforce and prolong the first pillar!
3. How can this be done?
- first and foremost, a balanced budget must be recovered.
- economic recovery must be supported, and we must create economic growth.
One fewer person on unemployment means one more worker (again a €1500 per month).
- An increase in the rate of employment in the age group from 55 to 65 should be encouraged with incentives, without modifying the legal pension age.
According to the most recent report of the Committee on Aging, if we manage to increase the rate of activity by three years, half the battle has been won.
But work hardness must be taken into account (National Labour Council)
Adjustments must be made for the end of the career.
The current early pension system must be reviewed.
Shouldn't the minimum pension age be linked to an expectancy?
- Each pension scheme has specific characteristics, but:
On one hand, I am in favour of the harmonizing minimum pensions for self-employed workers and those of employees.
With the same efforts and solidarity between workers, as those that exist between employees, we need to reach the same level of social protection – this is the case today for healthcare, and it should be the case tomorrow for pensions.
On the other hand, I don't think that the major principles of the pension scheme in the public sector should be changed. Moreover, I would like to see contractual public employees reach the same status as civil servants by means of the creation of the second pillar for them.
- The Fund for Aging (that today has an allocation of roughly €17 billion) should be reviewed, adjusted, and new allocations should be made in the current context of public finances.
The "pensions" and "health care" reserve funds should be pooled.
A mandatory item covering forecasts on the cost of aging should be stipulated.
- I recommend generalizing the second pillar.
Some sectors already benefit from this like the steel, building and food industries,... there are sectors where this does not yet exist like for temporary workers, the non-profit sector and contractual employees in the public sector. I already have a project for the contractual public employees. The fall of the government and current affairs are postponing its conclusion.
- Finally, I recommend a structural link of pensions to the evolution of welfare.
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As concerns authorized work, I am not opposed to a broad rise in ceilings under certain conditions.."
- For more information, visit the conference's website
