WRITTEN QUESTION E-0764/00

by Bart Staes (Verts/ALE) to the Commission

(13 March 2000)

Subject: Report by the European Round Table of Industrialists on state pensions

A working party of the European Round Table of Industrialists chaired by Carlo De Benedetti has recently submitted to Commission President Romano Prodi its conclusions on the financing of state pensions in the European Union. The members of the working party say that state pensions act as a brake on economic growth in Europe. They advocate the system of private pension schemes as an alternative.

Can the Commission answer the following:

1. Who are the authors of the report of the European Round Table of Industrialists on the financing of state pensions in the fifteen Member States of the European Union?

2. Who are the members of the European Round Table of Industrialists?

3. What are the final conclusions of the European Round Table of Industrialists on the financing of state pensions in the fifteen Member States of the European Union (please quote verbatim)?

4. Does the Commission endorse the final conclusions of the European Round Table of Industrialists on the financing of state pensions in the fifteen Member States of the European Union?

(a) If so, is the Commission of the opinion that the existing state pensions in the fifteen Member States of the EU will eventually have to be replaced, either wholly or in part, by private pension schemes?

(b) If not, does the Commission advocate maintaining the state pensions which currently exist in the fifteen EU Member States?

Answer given by Mrs Diamantopoulou on behalf of the Commission

(17 April 2000)

1. and 2. The Commission is not responsible for the report mentioned by the Honourable Member. Answers should therefore be obtained directly from the European round table of industrialists.

3. The report is available from the European round table's web site (www.ert.be).

4. The design and structure of pension systems are the prerogative of Member States. The Commission set out its views on pension design and pension reform in its communication Towards a Europe for all ages of 21 May 1999(1). Here it was emphasised that the most effective way to counter the threat of ageing to the sustainability of pension systems is to reverse the trend towards early retirement and to raise the employment rate for all of working age. The crucial changes will be those that enable and motivate workers to work longer and to opt for a later and more gradual exit from labour markets, since this will lead to a reduction in pension costs, extra revenue and larger productive input to growth. That pension schemes are employment friendly is more important than whether they are pre-funded or pay-as-you-go.

It is possible that funded provision for old age will become more important, but pay-as-you-go pension schemes can be expected to continue providing the largest share in the total income of pensioners in most Member States. Furthermore, it cannot be assumed that funded pension schemes will remain unaffected by demographic change, although the impact of such change on asset prices and returns is more difficult to predict than the impact on the financial equilibrium of pay-as-you-go systems.

This being said, the Commission believes that actions can be taken at Community level in order to enhance the efficiency of funded pension schemes. Several concrete proposals were made in its communication Towards a single market for supplementary pensions Results of the consultations on the Green Paper on supplementary pensions in the single market(2) of 11 May 1999 including liberalisation of investment and management rules in order to take advantage of Community-wide capital markets, possibility for pension funds to manage pension plans on a cross-border basis, and transferability of supplementary pension rights. As a first step, the Commission plans to adopt by mid-2000 a proposal for a directive on pension funds. This proposal will establish strict prudential standards in order to protect the rights of future pensioners and contain investment rules allowing pension funds to optimise the performance and security of their investments. It will also aim at the mutual recognition of national prudential systems so as to facilitate cross-border affiliation.

In its communication A concerted strategy for modernising social protection(3) of 14 July 1999, the Commission stressed the need to make pensions safe and pension systems sustainable. This was endorsed by the Council on 17 December 1999 when it called for a group of high-level officials to be set up for the implementation of the action proposed in the communication. The group has now been established on an interim basis and pensions are one of the initial issues it has decided to focus on. The Commission has adopted a proposal for a Council decision which would formalise the group(4). The Lisbon special European Council of 23-24 March 2000 has given the group the task of exploring the long term sustainability of pension schemes.

(1) COM(1999) 221 final.

(2) COM(1999) 134 final.

(3) COM(1999) 347 final.

(4) COM(2000) 134 final.