EN Official Journal of the European Union CE 84/596

(2004/C 84 E/0671)

WRITTEN QUESTION E-0473/04

by Cristiana Muscardini (UEN) to the Commission

(23 February 2004)

Subject: Pension adjustment

Pension reform is now on the agenda in all the Member States for various reasons. Does the Commission not think that the time has come to standardise pension reform on the basis of a common Community model? Although the historical, social and economic reasons for the introduction of the present pension systems vary, there is one principle which should be safeguarded in all countries, that of pension adjustment. The Italian Constitutional Court has already ruled (173/1986) that the minimum subsistence amount insured is not merely the amount that satisfies vital basic needs but also needs commensurate with the standard of living achieved by the worker concerned in terms of income and position. This approach has also been advocated on several occasions at Community level, supported by the view that pension adjustment solely on the basis of the percentage increase in the cost of living is not sufficient to maintain pension purchasing power and that pensions should therefore also be linked to earnings and, in other words, to salary and wage rises.

Pending the opening of a debate on a single European pension system, does the Commission not consider that it could usefully address a communication to Member States to ensure that the principle of pension adjustment is safeguarded, so as to avoid any further loss of pension purchasing power?

Answer given by Mr Dimas on behalf of the Commission

(22 March 2004)

One of the common objectives underlying the open method of coordination with regard to pensions calls on Member States to ‘provide access for all individuals to appropriate pension arrangements, public and/or private, which allow them to earn pension entitlements enabling them to maintain, to a reasonable degree, their living standard after retirement’. These objectives are not legally binding, and national pension systems may differ considerably in their approach. However, the result should be to guarantee retired people a standard of living that is not too different from that of the active population.

As life expectancy is increasing and people on average can look forward to a longer retirement, the indexing of current pensions becomes an important factor in determining pensioners' standard of living. Most statutory pensions schemes provide for price indexing, while in some Member States indexing is at least partly based on wages (1). Benefits payable under supplementary schemes are generally either fixed in nominal terms or price-indexed.

The Commission has no plans for a communication to Member States calling on them to change their pensions indexing systems. Any such action could be interpreted as a move towards the harmonisation of legislation, which is explicitly ruled out by Article 137(2) of the EC Treaty. Furthermore, the question of adequacy must be considered in a wider context, taking account of all the common objectives (including those relating to financial sustainability) as well as other benefits that are important from the point of view of older people's quality of life. In this connection it may be legitimate for a Member State to decide to limit price indexing of pensions, which may make it possible either to offer higher pensions immediately after retirement or to finance other benefits for older people. The needs of retired people do in fact change with age, and older pensioners may have more need for benefits in kind (health care and long-term nursing care) than cash benefits.

(1) For more details see website ‘Missoc — Social protection in the Member States and the European Economic Area’ (http://europa.eu.int/comm/employment_social/missoc/index_en.html).