Opinion of the Economic and Social Committee on 'Services of general interest'
Date: 1999-10-21
Institutions: European Economic and Social Committee
Subjects: collective interest, economic infrastructure, energy policy, information policy, public service, public transport

20.12.1999

EN

Official Journal of the European Communities

C 368/51

Opinion of the Economic and Social Committee on ‘Services of general interest’

(1999/C 368/17)

On 29 April 1999 the Economic and Social Committee decided, under the third paragraph of Rule 23 of
its Rules of Procedure, to draw up an opinion on ‘Services of general interest’.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for
preparing the Committee’s work on the subject, adopted its opinion on 5 October 1999. The rapporteur
was Mr Herna´ndez Bataller.

At its 369th plenary session on 20 and 21 October 1999 (meeting of 21 October), the Economic and
Social Committee adopted the following opinion by 78 votes for, one against, with three abstentions.

1.

Introduction

1.1.
interest
Clearly the concept of services of general
is understood differently across the European Union, with
perceptions varying between German-speaking, Nordic, Latin
and Anglo-Saxon countries. In fact, in some EU Member States
the very concept of the public service does not exist. There are,
however, some quite similar ideas and closely corresponding
in the
situations.
Netherlands,
‘public
utilities’ in the United Kingdom, ‘Daseinvorsorge’ in Germany,
and the ‘service public’ in France.)

‘beheer van diensten’
in Italy,

‘gestione di pubblica utilità’

(Examples include,

1.2.
A distinction is drawn between ‘services of general
interest’ which cover both commercial and non-commercial or
‘extracomercium’ activities, and ‘services of general economic
in other
interest’ which cover commercial activities alone,
words, activities performed or likely to be performed in the
marketplace and which constitute a company’s main pursuit.
This second category of services is subject to competition rules
and Article 86 of the Treaty may be applied (1). This is the case
for network services in the transport, energy and communi-
cations sectors.

Services of general interest are defined essentially by
1.3.
the purpose of the activity performed. The activity should
satisfy a ‘generalised’ (2) and ‘basic’ need among members of
the community, for a group of people linked by ties of equality
and solidarity. Member States are given considerable freedom
to assess the needs of the community so that they may define
for themselves the objectives of national policy. European
Court of Justice case law has recognised security, defence, the
protection and/or the social cohesion of the community as
examples of such needs.

(1) Judgments of the European Court of Justice: of 15.2.1993, Poucet
et Pistre (C-159 and 160/91, European Court Reports, p. 1-637);
of 27.10.1993, Lagauche e.a.
(C-46/90 and 93/91, European
Court Reports, p. 1-5267); of 19.1.1994, SAT- Fluggesellschaft
(C-364/92, European Court Reports, p. 1-143); of 18.3.1997,
Diego Cali & Figli (C-343/95, European Court Reports, p. 1-1547)
(2) Conclusions of Advocate-General Tesauro of 9 February 1993 in
judgment of 19 May 1993,

relation to the Corbeau case,
C-320/91, European Court Reports, p. 1-2533, point 19.

1.4.
Services of general interest should satisfy needs such as
education, health, communications, information, the supply
of drinking water and transport, which are crucial to safeguard-
ing the basic freedoms of individuals and improving quality of
life for everyone. These are economic and social activities
which are not usually left entirely open to market forces as
there is generally some form of regulation and monitoring
input from public authorities.

‘Market failings’ are one of the main reasons for the
1.4.1.
existence of public enterprises or the adoption of regulations
by the state. These failings, where the market does not allocate
services and goods efficiently, mean that many people on very
low incomes depend on such services if they are to consume
products which are not accessible for them solely through
commercial channels. Indeed it is one of the basic postulates
of the European social model that social cohesion is threatened
in the medium or longer term if the needs of a sizeable section
of the population are not properly satisfied.

1.4.2.
This opinion is designed to provide — after a short
summary of the Commission Communication on services of
general interest — an account of the rules currently governing
the various types of service, followed by the situation in the
wake of the Amsterdam Treaty. A key section of the opinion
asserts certain principles which the Committee believes should
underpin services of general
interest, and discusses some
general and specific aspects of these services.

2. Commission Communication of 11 September 1996

on services of general interest in Europe (3)

The Commission clarifies the existing terminology in

2.1.
the field and provides the following definitions:

— Services of general interest, this term covers market and
non-market services which the public authorities class as
being of general interest and subject to specific public
service obligations.

(3) OJ C 281, 26.9.1996, p. 3.

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— Services of general economic interest, this term refers to
market services which the Member States subject to specific
public service obligations by virtue of a general interest
criterion.

coach service can solve the problem of congestion on some of
the EU’s roads — problems created by the increase in the
number of private cars in circulation.

— Public service, this is an ambiguous term since it may refer
either to the actual body providing the service or to the
interest activity or role assigned to the body
general
concerned. Specific public service obligations may be
imposed by the public authorities on the body rendering
the service in order to facilitate or enable provision of the
service.

— Universal service (1), this concept refers to a set of general
interest requirements which should be satisfied by specific
activities throughout the Community. The object of the
resulting obligations is to make sure that everyone has
access to certain essential services of high quality at prices
they can afford.

2.2.
The communication takes the view that services of
general interest contribute to European competitiveness and
social solidarity, as well as to quality of life in the EU. In many
cases, such services even constitute genuine social rights.

2.3.
It is acknowledged that the aim of the Community is
to boost the competitiveness of the European economy in an
increasingly competitive world and to offer consumers wider
options, with better quality and lower prices, contributing at
the same time, through its policies, to strengthening the
economic and social cohesion of the Member States and to
reducing certain inequalities.

3. Regulations in the transport, energy, infrastructure

and information society sectors

3.1. With regard to transport by rail, road and inland
waterway, Council Regulation (EEC) No 1191/69 of 26 June
1969 stipulates that in order to guarantee the provision
of adequate transport services, taking into account social,
environmental and spatial planning considerations in particu-
lar, or to offer special pricing arrangements for specific
categories of passengers, Member States may enter into public
service contracts with transport undertakings. This should
ensure guaranteed regularity, capacity, routes, prices, time-
tables and continuity of service.

There are also other practical considerations which argue for
the continued existence of public service contracts. For
instance, an efficient and passenger-friendly public bus and

Previous ESC opinions on transport (2) consider that
3.1.1.
in accordance with the subsidiarity principle, it should con-
tinue to be possible for the competent local authorities to take
decisions on matters such as the type of organisation or
qualitative and quantitative requirements to be met by oper-
ators, acting in the light of local requirements.

3.1.2.
Applying the subsidiarity principle means preserving
the Community acquis and the institutional balance, without
prejudice to the principles developed by the Court of Justice
with regard to the relationship between Community and
national law. In all cases, the measures adopted need to be
consistent with the satisfactory attainment of the objective in
mind and the need for effective implementation, leaving it up
to national or local authorities to decide on the ways and
means, since it is the responsibility of these authorities to
develop the strategic planning of services of general interest.

In air

transport, Council Regulation (EEC) No
3.1.3.
2408/92 of 23 July 1992 regulates access for Community air
carriers to intra-Community routes and the public service
obligations imposed on scheduled air services, as regards
minimum frequency, timetables, types of aircraft used and
capacity (3).

3.1.4.
In maritime transport, Article 4 of Council Regu-
lation (EEC) No 3577/92 of 7 December 1992 applying the
principle of freedom to provide services to maritime transport
within Member States (maritime cabotage) allows a Member
State to conclude public service contracts or impose public
service obligations limited to requirements concerning ports
to be served, regularity, continuity, frequency, capacity to
provide the service, rates to be charged and manning of the
vessel (4).

3.1.5.
Safety is an important aspect of Community trans-
port policy. Transparency, quality and worker protection are
interlinked, and it is in the public interest to strike a balance
between rural and urban areas, for which public resources
must be used.

In the case of services of general
interest, any limitation
imposed with respect to competition must be necessary and
proportionate to the objectives pursued. The public authorities
should assess the restriction on competition necessary to
enable enterprises to offer public services, taking into account
the economic conditions under which these enterprises oper-
ate, the costs they must bear and the legislation with which
they must comply.

(1) The universal service in the telecommunications sector is defined
by Article 2(1) (g) of Directive 97/33 as ‘a defined minimum set
of services of specified quality which is available to all users
independent of their geographical location and, in the light of
specific national conditions, at an affordable price’.

(2) OJ C 138, 18.5.1999, p. 7.
(3) OJ L 240, 24.8.1992, p. 8.
(4) OJ L 364, 12.12.1992, p. 7.

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3.2. With regard to the energy markets,
liberalised in
Directive 96/92/EC on electricity and Directive 98/30/EC on
gas,
the markets are opening up, and rules have been
introduced for access to the network, separate accounting, the
calculation of tariffs, the supply obligation and the possibility
of imposing public service obligations.

3.2.1.
The electricity directive establishes a mechanism
enabling Member States to take into account public policy
considerations without,
in the normal course of events,
restricting the liberalisation process. Member States may
establish five categories of public service obligations, namely
environmental protection, safety, regularity, quality of supply
and pricing policy, and adopt the measures necessary to
comply with these obligations.

3.2.2.
The gas directive stipulates that Member States may
impose public service obligations on natural gas undertakings,
provided that such obligations are justified by the general
economic interest. The obligations must fall into five specific
categories, namely security of supply, regularity, quality, price
of supply and environmental protection.

3.3.
In the field of telecommunications, Directive 97/33/EC
of 30 June 1997 (1).
imposes the obligation to provide a
universal service, and the licensing directives adopted in
1997 (2). and Directive 98/10/EC on voice telephony make it
possible to impose public service obligations on operators in
order to meet a clearly-define series of ‘essential require-
ments’ (3).

Common rules have also been introduced for
3.4.
developing the postal sector and improving the quality of its
service, with the gradual and measures opening of markets to
competition. The basis of the measure proposed is to safeguard
the universal postal service in the long term. The universal
postal service means providing high-quality service country-
wide, with regular guaranteed deliveries at prices everyone can
afford. This involves the collection, transport, sorting and
delivery of letters, as well as printed matter, catalogues and
parcels within certain weight and price limits.

3.5.
Exclusive or special rights must be awarded to under-
takings through tendering procedures based on objective,
non-discriminatory and transparent criteria and the awarding
of tenders should mostly be limited in time.

(1) OJ L 199, 26.7.1997, p. 32
(2) OJ L 117, 7.5.1997, p. 15
(3) Essential requirements: economic or non-economic reasons which
may cause a Member State to impose conditions on the provision
of services.

4. The situation following the Amsterdam Treaty

The Community’s objectives include promoting har-
4.1.
monious and balanced economic development throughout the
Community, sustainable and non-inflationary growth that is
respectful of the environment, a high degree of convergence
of economic performance, enhancing the standard of living
and the quality of life, competitiveness, and achieving econom-
ic and social cohesion and solidarity among Member States.

4.1.1.
These aims will be served by the establishment of a
common market and of an economic and monetary union and
by the implementation of
the policies and joint actions
provided for in the Treaty, including arrangements for ensuring
that competition within the internal market will not be
distorted.

4.2.
Article 86(1) of the Treaty establishing the European
Community (ex Article 90) states that in the case of public
undertakings and undertakings to which Member States grant
special or exclusive rights (4), Member States will neither enact
nor maintain in force any measure contrary to the rules
contained in the Treaty, in particular to those rules provided
for in Article 12 (discrimination) and Articles 81 to 89
(practices restricting competition and state aids). Other Treaty
provisions are generally invoked in conjunction with Article
86, such as Article 28 (free movement of goods), Article
49 (freedom to provide services) and Article 43 (right of
establishment).

4.2.1.
Article 86(2) states that undertakings entrusted with
the operation of services of general economic interest or
having the character of a revenue-producing monopoly will be
subject to the rules contained in the Treaty, in particular to the
rules on competition, insofar as the application of such rules
does not obstruct the performance, in law or in fact, of the
particular tasks assigned to them. The development of trade
must not be affected to such an extent as would be contrary to
the interests of the Community. Moreover, Article 86(3) states
that
the
the Commission will ensure the application of
provisions of the article and will, where appropriate, address
appropriate directives or decisions to Member States.

(4) These terms are to be understood as follows:

— exclusive rights:

rights guaranteed by a Member State
restricting the provision of certain services to a single
undertaking through legal, regulatory or administrative pro-
visions, granting the undertaking the exclusive right to provide
a service or perform an activity in a specific geographical area.
— special rights: rights awarded by a Member State to a
limited number of undertakings through legal, regulatory or
administrative provisions which, in a specific geographical
area:
— grant exclusive authorisation — without using objective,
proportional or non-discriminatory criteria — to two or
more undertakings, to provide a service or perform an
activity,

— designate (without using the above criteria) several com-
peting undertakings to provide a service or perform an
activity,

— award the undertaking(s) (without using the above criteria)
legal or regulatory advantages which substantially affect
other undertakings’ ability to provide the same service or
perform the same activity in the same geographical area
under practically identical conditions.

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4.3.
Article 16 of the EC Treaty — added by the Treaty of
Amsterdam — incorporates a specific reference to services
of general economic interest. The article highlights their
importance as a ‘shared value’ of the EU and their role in
promoting social and territorial cohesion. This precept should
be judged as an effort to strike a balance between competition
rules and the need to provide public services while complying
with the provisions of Article 86.

5.2.
The Committee considers that these guidelines will be
very useful for the provision of these services and presents this
preliminary list for public debate.

5.3.
As a citizens’ right, services of general economic
interest should operate according to the following guidelines:

4.4.
Furthermore, a protocol on the system of public
broadcasting has been incorporated, emphasising the specific
the system in relation to social and cultural
nature of
requirements. Specifically, it enables Member States to finance
television channels ‘insofar as such funding is granted to
broadcasting organisations for the fulfilment of the public
service remit as conferred, defined and organised by each
Member State, and insofar as such funding does not affect
trading conditions and competition in the Community to an
extent which would be contrary to the common interest’. The
protocol aims to strike a balance between the enforcement of
competition rules and the need to guarantee a public television
broadcasting service.

There has also been a declaration on German public
4.5.
credit institutions acknowledging that Community compe-
tition rules may take into account services of general economic
interest provided by public credit institutions in Germany and
the facilities granted to them to compensate for the costs
connected with such services.

4.6.
The Cologne European Council held on 3 and 4 June
1999 (1) takes the view that, at the present stage of develop-
ment of the European Union, the fundamental rights applicable
at Union level should be consolidated and highlighted in a
charter which would contain: the fundamental rights and
freedoms as well as basic procedural rights guaranteed by the
European Convention for the Protection of Human Rights and
Fundamental Freedoms and derived from the constitutional
traditions common to the Member States, as general principles
of Community law. The Charter should also include the
fundamental rights that pertain only to the Union’s citizens. In
drawing up such a Charter account should furthermore be
taken of economic and social rights.

5. Guidelines which services of general economic inter-

est should adhere to

5.1.
Drawing on various publications and communications
concerning resolutions issued by the Council, Commission
and European Parliament and on other sources, as well as
some ideas of its own, the Committee has prepared a list of
guidelines which general interest services should respect.

(1) Conclusions: points 44 and 45 and Annex IV.

Equality: all citizens are entitled to equal access to
5.3.1.
services of general
interest. The term equality is to be
understood not as an obligation of uniformity, rather as
prevention of any unjustified discrimination based on social
or personal status in relation to service provision.

5.3.2.
Universality:
should be universally provided.

for services supplied, basic services

5.3.3.
Reliability: the provision of services of general inter-
est should be continuous, regular and uninterrupted. Irregular
operation or suspension of services will be restricted to specific
cases laid down in the regulation governing the sector.

5.3.4.
Participation: users should participate actively in the
development of services of general interest. The purpose of
such participation is to protect citizens’ rights with regard to
the adequate provision of services and to promote the
cooperation of the service-providers.

5.3.5.
Transparency: service-providers will ensure that users
receive full information on the service provision, especially on
the public service obligations and tariffs.

5.3.5.1.
To this end, service-providers will inform the users
of the financial and technical arrangements for the provision
of services and of any changes affecting the service, publishing
the texts containing the relevant regulation.

5.3.6.
Simplification of procedures: as far as possible ser-
vice-providers will simplify the procedures to be followed by
users and will supply the appropriate explanations.

5.3.6.1. Moreover, where possible they will use standard
forms, striving to simplify and explain the methods of
subscribing to and paying for the services.

5.3.6.2.
In all cases, service-providers will introduce internal
procedures for addressing complaints made by users. These
procedures will be accessible, easy to understand and
implement, ultimately ensuring that the service-providers take
account of the complaints made by users and consumers’
associations, and will facilitate the right to bring a complaint
before the regulator and, generally speaking, access to the legal
system (2).

(2) These procedures should be based on the principles laid down in
the Commission recommendation on the principles applicable to
the bodies responsible for out-of-court settlement of consumer
disputes (COM(1998) 198 final of 30 March 1998), and, as far as
possible, will encourage the use of the European claims form for
consumers.

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5.3.7.
Profitability and efficiency: services of general econ-
omic interest will be supplied efficiently and profitably.
Providers will adopt the measures necessary to achieve these
objectives.

5.3.8.
Quality of services: service-providers will identify the
factors influencing the quality of services and, on this basis,
publish quality and quantity standards which they will pledge
to observe.

Compliance with these standards will not be nego-
5.3.8.1.
tiable. Exceptions to these standards will only be granted if it
is advantageous to users and will be monitored by users in
periodic meetings.

5.3.9.
Adequate provision of services: services of general
economic interest will be adapted to changes in the needs of
the community and to technical and economic progress.

5.3.10.
Evaluation of results: the arrangements for provid-
ing public services will be periodically reviewed by the
service-provider. To do so, service-providers will collect infor-
mation on, inter alia, user-satisfaction.

Cooperation between service-providers: even if the
5.3.11.
service is provided in a competitive environment, service-
providers will strive to cooperate to ensure compliance with
these principles.

5.3.12.
Affordable price: the conditions for access to these
services should be at a price citizens can afford. The guiding
principle should be ‘reasonable cost’.

operate on the basis of principles and conditions which enable
them to fulfil their missions. To this end the Committee
considers that a balance should be struck between the profita-
bility of operators in the marketplace and the obligations
ensuing from social,
labour, market economy, safety and
environmental criteria and from the basic objectives of sus-
tainable development.

6.2.1.
On the other hand — in the road transport sector
for instance — when operators provide a service of general
interest certain aspects should be guaranteed by the authorities,
including a description of the objective pursued by the service,
financial compensation, incentives, a description of exclusivity
rights, duration and geographical scope, and the facilities made
available by the various parties.

6.3.
The Committee takes the view that services of general
economic interest occupy a place in the shared values of the
Union. They encourage a balanced European integration policy
by facilitating a better political and legal framework for people
and businesses.

It also places importance on their role in promoting
6.4.
the EU’s economic and territorial cohesion. In particular, land
management and spatial planning will have to be taken into
account in future; moreover, the ‘networks’ should not only
follow economic dictates, but also take other social consider-
ations into account.

6.5.
The Committee would like these services defined and
delivered according to the principles of subsidiarity and
proportionality.

6.6. With regard to the public broadcasting system, the
Committee takes the view that:

5.3.13.
Environmental protection: the definition and oper-
ation of services of general economic interest should take
account of environmental protection requirements as a key
component of social and territorial cohesion.

6.6.1.
when defining the public broadcasting service;

cultural considerations should be taken into account

6. General comments

The Committee takes the view that a balance should
6.1.
be struck between competition law and services of general
interest
in the transport, energy and telecommunications
sectors, especially as Article 86 (ex Article 90) is worded
‘negatively’, in that it allows non-application of Treaty rules
when their application would obstruct the provision of the
services of general interest assigned to these sectors.

However, the new Article 16 imposes a ‘positive’
6.2.
obligation on the Community and the Member States, each
within their respective powers, to take care that such services

6.6.2.
the public service role of the broadcasting sector
involves specific requirements in terms of programming and
other obligations which the operators, irrespective of their
public or private ownership, should not have to bear alone;

the public service role of broadcasting is linked to
6.6.3.
promoting the democratic, social and cultural needs of each
society and minority groups, and the need to preserve
pluralism in the media, guarantee high-quality content, safe-
guard linguistic and cultural diversity, and protect minors;

6.6.4.
the funding of public service broadcasting should
take into account the principles of proportionality and trans-
parency, and should not affect market conditions or free
competition in the Community to the detriment of
the
common interest;

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6.6.5.
when an operator also engages in purely commercial
activities, i.e. over and above its public service duties, there
should be separate accounting to ensure that public funds are
not channelled into commercial activities.

6.7.

Information society

6.7.1.
All aspects of the so-called ‘information society’ are
capable of revolutionising the relationship between businesses
and consumers, as well as the very nature of consumption.

6.7.2.
The Committee considers that services of general
economic interest should be made to play a crucial role in
the information society, and since the establishment of the
information society should not generate further
social
exclusion, the concept of universal service and its adaptability
to technological innovations should play a prime role.

6.7.3.
society (1):

The Committee considers

that

the information

— may serve as an instrument of regional policy;

— should encourage the development of a network of IT

centres;

— facilitates the integration into the mainstream of European
society of people at risk of exclusion (the disabled,
inhabitants of isolated or particularly remote regions);

— means that the European Union must develop a cultural
identity which, while respecting the wealth of national and
regional variations, will serve to underpin the information
society in philosophical and ideological terms;

— by seizing the opportunities offered by the licensing
system, and while maintaining balanced tariffs, encourages
lower charges for accessing and using the Internet, at the
same time ensuring security and privacy for users.

6.8. Transport and energy networks

6.8.1. While it is a fact that universal service in the transport
and energy sectors need not necessarily be on the same scale
as other economic services of general interest, the Committee
considers that liberalisation so far has not taken adequate
account of the crucial components of economic, social and
territorial cohesion, as up to now the criteria of economic
efficiency have taken precedence.

6.8.2.
The Committee takes the view that measures adopted
in the future should consider not only economic criteria but

(1) ‘Oulu declaration’ of 7.9.1999.

also those based on the need to maintain employment, quality
of service and the level of satisfaction among users, given that
the ultimate aim should be to attain and strengthen social
well-being. Thus, for instance, environmentally-friendly energy
production, from combined power plants, should be taken
into account so as to avoid what is happening in Germany
where this form of energy is at a disadvantage because it is not
competitive compared with energy obtained under less safe
conditions.

7. Conclusions

Services of general economic interest will play a crucial
7.1.
role in promoting economic and social cohesion and territorial
solidarity, establishing ‘shared values’ which the EU should
preserve and encourage.

7.2.
The Committee takes the view that promoting eco-
nomic and social cohesion in the provision of services of
general economic interest means that people should always
have access to such services or benefits irrespective of their
social situation or place of residence, since the objective of
these services is to attain and preserve social and territorial
cohesion.

7.3. With regard to the service-users, the aim should be to
guarantee the right balance between liberalisation — which
requires more competition — and appropriate measures based
on the guidelines already described (affordability, quality of
service, transparency of information, etc.).

7.4.
At all events, there is a need to ensure that the
economic and legal interests of consumers, who through their
associations form part of ‘civil society’, are taken into account
in a more consistent and sustained fashion across the spectrum
of EU policies.

Account must also be taken of the situation of the operators
who help to provide these general interest services, specifically
the economic conditions under which they operate, the costs
that enterprises must bear and the legislation with which they
must comply.

The Committee considers that

in a competitive
7.4.1.
system all the participants should contribute proportionally to
the cost of the universal service.

7.5.
The Committee considers that every citizen has the
right to equal access to the provision of services of general
economic interest, the purpose of which is to boost the general
well-being. At all events, to maintain the European social
model a balance should be found between services of general
interest and the rules of the single market, free competition
especially.

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7.6.
The Committee therefore urges the Council, the Euro-
pean Parliament and Commission to include the citizens’ right
to equal access to the provision of these services in the Charter
of Fundamental Rights which the Cologne European Council
agreed to draw up.

7.7.
The Committee urges the Council, the European Parlia-
ment and the Commission to ensure, as far as possible, that
these services continue to be provided after the conclusion of
the next round of WTO negotiations.

Brussels, 21 October 1999.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI

Opinion of the Economic and Social Committee on the ‘Communication from the Commission
— Towards a Single Market for Supplementary Pensions — Results of the consultations on the
Green Paper on supplementary pensions in the Single Market’

(1999/C 368/18)

On 18 May 1999 the Commission decided to consult the Economic and Social Committee, under Article
262 of the Treaty establishing the European Community, on the above-mentioned communication.

The Section for the Single Market, Production and Consumption, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 7 October 1999. The rapporteur was
Mr Byrne.

At its 367th plenary session (meeting of 21 October 1999) the Economic and Social Committee adopted
the following opinion by 89 votes to five, with five abstentions.

1.

Introduction

1.1.
Pension benefits are a key component of Member
States’ welfare protection systems. Expenditure by state pen-
sion schemes account for nearly half of all welfare spending,
currently ranging between 9 % and 15 % of GDP and likely to
rise quite steeply due to demographic factors.

Retirement schemes are based on a combination of

1.2.
3 pillars:

— the first pillar consisting of state social security schemes

— the second pillar consisting of occupational schemes, and

— the third pillar consisting of personal pension plans.

The second and third pillars are generally known as sup-
plementary pension schemes.

ensure that the barriers to the development of supplementary
schemes are removed in line with Single Market requirements.

At present, the value of assets held by pillar 2 schemes

1.3.
amount to 23 % of EU GDP and those of pillar 3 to 35 %.

1.4.
The Commission’s Communication is a follow up to
the consultations which took place on the Green Paper on
Supplementary Pensions in the Single Market (1)
issued in
June 1997 on which the Committee’s opinion was dated
10 December 1997 (2).

2. The Commission Communication

2.1.
The Commission restates briefly the main points of the
Green Paper and in particular the demographic pressures
which suggest that the ratio of the number of persons of
working age to pensioners will reduce from the present 4:1 to
2:1 by 2040 in an overall EU context (3).

1.2.1. While the extent of the reliance on each pillar is
entirely a matter for Member States, the Commission wishes to

(1) COM(97) 283 of 10.6.1997.
(2) OJ C 73, 9.3.1998, p. 114.
(3) The Committee is currently preparing an opinion on the ‘Demo-

graphic Situation and Trends in the EU’.