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EPC/SPC Joint Report on Pensions Aurelio Fernández – SPC Chair

EPC/SPC Joint Report on Pensions Aurelio Fernández – SPC Chair. “Assuring adequate pensions and social benefits for all European Citizens” Liège, 7-8 September. EPC/SPC Interin Joint Report on Pensions (General Objectives ).

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EPC/SPC Joint Report on Pensions Aurelio Fernández – SPC Chair

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  1. EPC/SPC Joint Report on PensionsAurelio Fernández – SPC Chair “Assuring adequate pensions and social benefits for all European Citizens” Liège, 7-8 September

  2. EPC/SPC InterinJointReportonPensions (General Objectives) - Bettercoordination of theworkonpensions at europeanlevel: - Ageingimplicationsforlong-termsustainibility of publicfinances (AWG) - OMC workonpensions (adequacy, sustainibility, modernisation of social protectionsystems -SPC) • Apply a holisticapproachtopensionpolicies: • Shared similar fundamental challengesbutalso considerable diferences. • Assessprogress of pensionsreforms and currentstrategies. • Developanupdate agenda toassureadequate and sustainablepensions in EU MemberStates.

  3. EPC/SPC InterinJointReportonPensions (General Objectives II) • Adequacy and sustainability two faces of the same coin. • Member States need to strike and adequate balance between adequacy and sustainibility. • This aim will benefit from: -Better coordinated work at EU level. - Better measurement and stronger data

  4. Achievements of reforms and adequacy • “Reforms have brought important progress, notably in sustainability for public pensions schemes, and to various degrees also in some aspects of adequacy and minimum income provisions for older people in particular.” • With many reforms the challenge increasingly turns to achieving adequate replacement levels while ensuring sustainability: - Extending working lives - Strengthened link between contributions and benefits - Development of supplementary pensions schemes

  5. Concerns about adequacy There are signs that ongoing reforms might bear considerable risks in terms of adequacy “As changes in pensions systems tend to make benefits more contingent on developments in labour and financial market, important risks relate to employment rates not increasing enough or capital market not delivering as expected.”

  6. Adequacyconcernsforalltypes of pensionschemeshavebeenaggravatedbythe crisis. • Pensions maybe affected by unemployment periods and lower contributions. • Accumulation of pension rights by younger generations maybe also affected by later entrance to the labour market. • Acute public budget problems in a few member states have produce adjustment in public pensions payments. • The crisis has strongly reduced the market value of pension fund assets.Present crisis show that differences in design, regulation and investment strategy in funded schemes matters. • Interaction between public and private pillars need to be addressed when monitoring adequacy

  7. Importance of monitoringcloselyadequacyimplications of thesedevelopments - Replacementrates. - Risk of povertyamongpensioners. - Impact of reformsonmen and women - Careerbrakes and pensionrights - Howreformsaffectcareers and expectations of workers of differentsocioeconomiclevels. - Pensionsrights and atypicalforms of work. - Balance of risksharingtoensuresafe and appropiatereturnsfromthefinancialmarkets

  8. EPSCO requeststo SPC EPSCO Conclusions 7 of June 2010 - Tofollowcloselytheevolution of minimumpension and minimumincomeprovisions (mp/mips) for OP in MemberStates. - To examine theinterrelationbetweenthematuring of social securityreforms and mp/mips. - Toaddresstheissue of adequacy of the total pensionpackage (public/private) componentswhiletakingintoaccounttheneedtosecurelong-termsustainability. - Toanalyse and identifygoodpractices in thearticulation of mp/mipsfor OP withotherrelatedpolicies ( Healthpromotion, accesstoservices, active ageingstrategies, etc).

  9. EPSCO invitations to the European Commission EPSCO Conclusions 7 of June 2010 • To consider how to enhanced cooperation on concepts, measurement and data related to pensions systems. • To pursue further work at EU level aimed at the use of pensions administrative data and modelling tecniques in pension systems analysis and assessments of reforms

  10. Assuringpensionsadequacy and sustainabilitywilldependalsoonotherrelatedpolicies • Onlyaround 40% of people at theage of 60 remain in employment. • Increasingeffectiveretirementages, a keypolicyobjective. • Adjustments in agemanagement in work places willbefurtherneccesary • Financial incentives toremain active. • Policiestotackleage- discrimination, promotelife-longlearning, flexible retirementepathways and healthyjobsopportunitiesforolderworkers, needtofind a place in therecoverystrategies

  11. EPC-SPC future collaboration • Something neccessary for a coherent and for a holystic approach to pensions at EU level • For a better implementation of the EU2020 strategy. • OMC work on pensions adequacy remains essential.

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