WRITTEN QUESTION E-3852/00

by Paulo Casaca (PSE) to the Commission

(8 December 2000)

Subject: Early retirement

It has been reported in the press that, at the Ecofin meeting of 8 November, the conclusions of an interim report drawn up by the Economic Policy Committee ('EPC progress report on the impact of ageing populations on public pensions systems', Ecofin 303, 12791/00) were noted and endorsed. One of those conclusions is that, throughout the European Union, the retirement age will have to be raised and early-retirement schemes will have to be restricted if pension schemes are to be sustainable.

This statement had enormous public impact, especially since most of the European (and in particular the Portuguese) press described it as coming from the European Union.

On 22 November I received a Communication(1) which contains a proposal for a Council regulation on early-retirement schemes within the Commission.

To my horror, the purpose of the proposal for a regulation is not to restrict Commission officials' existing access to early-retirement schemes but, rather, to promote an early-retirement scheme for 600 officials.

In view of the above, would the Commission answer the following questions?

(a) At the Ecofin meeting, did the Commission express any disagreement with the report?

(b) Is it true that the Commission was not represented on the working party which approved the report?

(c) Does the Commission not consider that contradictory statements and proposals such as these undermine the credibility of the European Institutions?

(1) SEC(2000) 2025 final.

Answer given by Mr Solbes Mira on behalf of the Commission

(2 March 2001)

The need to limit generalised access to early retirement as a means to mitigate the economic and budgetary impact of ageing populations has been recognised for some time. It forms part of the Broad Economic Policy Guidelines and is also recommended in the report of the High Level Working Party on Social Protection to the Nice European Council on safe and sustainable pensions elaborated by a working group of the Economic Policy Committee. The latter report concludes that to raise employment rates to the targets agreed by the Lisbon European Council, it will be necessary to increase employment rates amongst older workers and raise effective retirement ages. To this end, limiting generalised access to early retirement schemes will need to be combined with reforms of pension systems so that there are positive incentives for older workers to stay in the labour force.

The Commission, together with the Member States and the European Central Bank (ECB), appoints members to the Economic Policy Committee (EPC). Members are senior officials of those institutions possessing outstanding competence in the field of economic and structural policies, and according to the Statutes of the EPC, they are to be guided by the general interest of the Community. The Commission members of the EPC are senior officials from the Directorate General for Economic and Financial Affairs.

In assessing whether there is an adequate justification for the early retirement scheme proposed by the Commission, it is necessary to underline that the Commission's proposal is a one-off measure to facilitate a major structural reform of the institution, not a permanent early retirement scheme. Reforms of this nature are extremely difficult in any company or institution, and past reforms in national civil services and many private enterprises have demonstrated that early retirement is one means to facilitate major structural change. Moreover, the Commission has committed itself to bringing about these changes while respecting budgetary neutrality.

Secondly, it is important to note that early retirement rarely occurs in the Commission. On average, less than 10 officials have opted for early retirement in recent years (compared with 300 retirements in 2000). Even though officials can retire at the age of 60, the average retirement age is approximately 63.

The main reason for this is that the present pension scheme of the Commission already gives positive incentives for officials to stay on longer than the normal pension age of 60. The maximum pension possible is 70 % of the last basic salary depending on the duration of professional activity. While the annual pension increase before the age of 60 is 2 %, the pension rights reached at the age of 60 are increased by 5 % per annum from 60 to 65. In addition, there are a number of other structural features that discourage early retirement.

Thirdly, one of the objectives of the above-mentioned guidelines, i.e. to combine an early retirement scheme with the reform of the pension system, is fulfilled since the Commission has committed itself in the White Paper Reforming the Commission(1) of 1 March 2000 to a review of the present pension regime.

Thus there is no discrepancy between the general conclusion of the EPC report on the need to limit generalised access to early retirement schemes and the specific Commission proposal for the early retirement of 600 officials.

(1) COM(2000) 2000 final.