Communication from the Commission to the Council, the European Parliament and the Economic and Social Committee - Supporting national strategies for safe and sustainable pensions through an integrated approach
Date: 2001-07-04
Institutions: European Commission
Subjects: health insurance, population ageing, social security, social-security benefit

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 3.7.2001
COM(2001) 362 final

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE
EUROPEAN PARLIAMENT AND THE ECONOMIC AND SOCIAL COMMITTEE

Supporting national strategies for safe and sustainable pensions through an integrated
approach

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE
EUROPEAN PARLIAMENT AND THE ECONOMIC AND SOCIAL
COMMITTEE

Supporting national strategies for safe and sustainable pensions through an
integrated approach

1.

SAFE AND SUSTAINABLE PENSIONS: A MAJOR CHALLENGE IN AN AGEING
SOCIETY

The pension systems of the Member States, through different combinations
of the three pillars (statutory social security, occupational and personal
pension schemes) currently offer an unprecedented degree of prosperity and
economic independence to older people in the European Union. However, as
the Commission pointed out in its communication of 11 October 20001, "the
prospect of population ageing and the retirement of the ‘baby boomer’
generation represents a major challenge to this historic achievement.
Population ageing will be on such a scale that, in the absence of appropriate
reforms, it risks undermining the European social model as well as economic
growth and stability in the European Union."

The old-age dependency ratio will start rising rapidly in the next decade and
double by the year 2050 compared to today. This is mainly the result of the
post-war baby-boom generation reaching retirement age, which adds to the
effects of continued low fertility rates and increases in life expectancy.
Although the ageing of the population is the result of positive evolutions in
the patterns of health care systems and thus constitutes in itself a positive
development, the rise in the number of older people will be such that the
increase in the demographic old-age dependency ratio can neither be halted
by a sudden increase in fertility nor by any realistic level of immigration.
Immigration can, however, make a significant contribution to stabilising total
population and employment figures.

The modernisation of pension systems is therefore high on the political
agenda in all Member States. National policy makers – politicians,
government officials, the social partners - remain responsible for pension
systems and have to prepare for the impact of ageing on their pension
systems while continuing the adaptation of these systems to reflect societal
change. Introducing the policies that can make pension systems future-proof
takes time. They often require a change in attitudes, lengthy consensus-
building processes and the respect of citizens’ legitimate expectations about
their own pension entitlements. This is why it is important to develop the
necessary policy strategies now, and many Member States have already
started their reform processes.

1

"The Future Evolution of Social Protection from a Long-Term Point of View: Safe and
Sustainable Pensions" COM(2000) 622 final.

2

The EU supports such efforts through action in a number of different policy
areas (see appendix 1). However, there is increasing awareness of the need to
get a complete picture of the future challenges to pension systems and the
action that needs to be taken to meet these challenges. A good understanding
of what other Member States are doing to secure the future of their pension
systems is extremely valuable for national policy makers even though
successful policy measures in one country may not be directly transferable to
another one. The Commission proposed already in its communication on "A
Concerted Strategy for Modernising Social Protection" (COM(99)347 final)
of 14 July 1999 to establish a deepened co-operation among Member States
which would focus on the issue of safe and sustainable pensions as one of
four priority issues.2

A wide debate on this issue was launched and different European Councils as
well as various Committees have looked several times at the question of safe
and sustainable pensions (see appendix 2). Most recently, the Göteborg
European Council
in June 2001 stressed the need for a comprehensive
approach in order to meet the challenges of an ageing society and endorsed
the three broad principles for securing the long-term sustainability of pension
systems:3

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to safeguard the capacity of pension systems to meet their social
aims of providing safe and adequate incomes to retired persons and
their dependants and ensuring, in combination with health and long-
term care systems, decent living conditions for all elderly persons;

to ensure the financial sustainability of pension systems, so that the
future impact of ageing does not jeopardise the long-term sustainability
of public finances or the ability to meet fundamental goals of budgetary
policy (in terms of overall tax burdens or spending priorities) and does
not lead to an unfair sharing of resources between generations;

to enhance the ability of pension systems to respond to the changing
needs of society and individuals, thereby contributing to enhanced
labour market flexibility, equal opportunities for men and women with
regard to employment and social protection and a better adaptation of
pension systems to individual needs.

The present communication responds to the need for clear and integrated
strategies to cope with the challenges of an ageing society for pension
systems. Such strategies should not only focus on pension schemes
belonging to the first pillar as the two other pillars will have an important
role to play in achieving the overall objectives of pension systems.4

2

3

4

The four objectives are: to make work pay and to provide secure income; to make pensions
safe and pension systems sustainable; to promote social inclusion; and to ensure high quality
and sustainable health care.
These principles are based on the report by the Social Protection Committee on Adequate and
Sustainable Pensions (June 2001).
In this communication, ‘pension system’ refers to the complete set of arrangements for the
provision of pensions (‘pension schemes’). As benefits in the event of invalidity and

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The appropriate approach at EU-level is to combine the existing policy
processes that are relevant for the future of pension systems with the open
method of co-ordination in a way that does not change the respective
responsibilities of policy makers at European and national level. The aim is
to offer an integrated framework for the exchange of information on national
strategies for securing adequate and sustainable pension provision in the long
run.

The open method of co-ordination involves setting common objectives,
translating these objectives into national policy strategies and, finally, as part
of a mutual learning process, periodic monitoring on the basis inter alia of
commonly agreed and defined indicators. This method has a number of
advantages:

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The common objectives will help Member States focus on necessary
reforms and make pensions policy more transparent, thus allowing
citizens to adapt to foreseeable changes.

They should also contribute to a consensus on necessary reforms,
thereby strengthening public confidence in the future of pension
systems.

The exchange of experience, based on good practice and innovative
approaches, will foster mutual learning and widen the range of policy
options under consideration in each Member State.

Finally, commonly agreed indicators will help to measure progress, in
relation to the situation of other Member States and to the common
objectives.

2.

COMMON OBJECTIVES FOR FUTURE PENSION PROVISION

Taking into account the key challenges identified above, as well as the ten
principles proposed in the communication of October 2000, the Commission
proposes the following set of common objectives for supporting integrated
national strategies for securing the future of pension systems.

2.1.

Adequacy of pensions

Pension systems should effectively prevent poverty and social exclusion
among older people by providing a decent standard of living in retirement
irrespective of a person’s ability to acquire own pension entitlements and
allow older people to share in the economic well-being of their country and
to participate actively in public, social and cultural life. They should also,
additional
through the combination of
opportunities for each individual to acquire pension entitlements which allow

their different pillars, offer

survivors’ pensions are usually provided through pension schemes and contribute significantly
to the social protection of older people,
they are included in the scope of the present
communication.

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them to maintain the standard of living of their choice after retirement or in
the event of permanent
the provision of
pensions through different pension schemes and pillars is such as to
contribute in a consistent and complementary manner to the goals of
preventing poverty and allowing people to maintain, within reasonable
limits, their living standards in old age.

incapacity. This requires that

Objectives:

• Ensure that all older people enjoy a decent living standard, share in the
economic well-being of their country and are able to participate actively
in public, social and cultural life.

• Provide access for all individuals to appropriate pension arrangements
necessary to maintain the living standard of their choice after retirement
due to old age or invalidity and that of their dependants in the event of
death.

2.2.

Financial sustainability of public and private pension schemes

Adequate pension provision is only possible if the necessary financing is
available. This will be increasingly difficult in the context of an ageing
society. In the absence of reforms, ageing implies that fewer people in work
have to support a larger number of people in retirement. This constitutes the
challenge of ageing to the financial sustainability of pension systems.
Therefore raising employment participation or increasing total employment
through immigration is important for ensuring the financial sustainability of
pension systems in the long term. Member States should pursue their efforts
undertaken in the framework of
strategy,
increasing employment rates by the year 2010 to 70 % overall, to more than
60 % for women and to 50 % for people aged 55-64.

the European employment

As part of such efforts, pension systems and their interaction with the tax-
benefit system should be reviewed with regard to the incentives they offer for
high labour force participation, in particular of women and older workers.
The use of early retirement schemes should be limited, and longer labour
market participation should not be penalised. Gradual
transitions from
to retirement should be made possible by allowing the
employment
simultaneous receipt of pensions and income from work and by making
statutory retirement ages more flexible.

Objectives:

• In the context of

the Employment Strategy, achieve a high level of
employment so that the ratio between the active and the retired remains as
favourable as possible.

• Ensure that pension systems, and in particular early retirement and
invalidity schemes, and their interaction with tax-benefit systems, offer
effective incentives for the participation of older workers; that workers
are not encouraged to take up early retirement and are not penalised for

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staying in the labour market beyond the standard retirement age; and that
pension systems facilitate the option of gradual retirement.

A significant proportion of total pensions expenditure is funded through
public budgets. This is subject to the requirements of the Stability and
Growth Pact. Sound management of public finances and the reduction of
public debt will ease the constraints on public finances and help face the
budgetary impact of ageing populations.5 Reforms of pension systems, as
well as progress in raising employment, should keep public spending on
pensions as a percentage of GDP at reasonable levels compatible with the
goal of sustainable public finances. An additional element could be to have
recourse to dedicated funds. Several Member States have started setting up
special pension reserve funds or are planning to do so.

Objective:

• In the context of sustainability of public finances as well as of the need to
cope with the budgetary impact of ageing populations, ensure that public
spending on pensions is maintained at a level in terms of percent of GDP
that is compatible with the Growth and Stability Pact. This may include
setting up dedicated reserve funds,
if considered appropriate by the
authorities.

Higher employment rates and sound public finances can make a major
contribution towards absorbing the budgetary impact of ageing. However, in
many Member States this will not be sufficient in view of rising old-age
dependency ratios. In these cases, measures are required to ensure an
equitable distribution of this financial
impact both within and between
generations. Such measures may include adjustments in the level of pensions
paid to the retired, and of contributions and taxes mainly levied on the active
population. Member States should ensure intergenerational fairness, avoiding
the two extremes of overburdening the active generation, on the one hand,
and reducing pension levels below an adequate level, on the other. Particular
attention should be paid to avoiding reductions of the lowest pensions
(intragenerational fairness).

Objective:

• Strike a fair balance between the active and the retired through
appropriate adjustments to the levels of contributions and taxes and of
pension benefits.

5

In this context, the importance of tax policies should be noted. In its communication of 11
October 2000 on safe and sustainable pensions (COM(2000) 622 final) the Commission
pointed out that "[o]n the revenue side, a continued ability of governments to collect taxes and
contributions is crucial. This may be affected by tax evasion, by cross-border differentials or
by a higher mobility of tax bases and hence the possibility for economic activities to move to
countries where the best balance between taxes/contributions and public services can be
found." See also the Commission communication of 23 May 2001 on “Tax policy in the
European Union – Priorities for the years ahead”, COM(2001) 260 final.

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the opportunities of

Pension systems need to rely on the contribution of second and third pillar
schemes to achieve their social objectives. This contribution of private
pension schemes to the incomes of retired people may need to be increased
to the extent that Member States try to contain the burden of rising pensions
expenditure on public finances. An appropriate regulatory framework at
Member State and EU level is needed, allowing them to take full advantage
of
the Single Market and the Euro. Financial
sustainability is also an issue for these private schemes which may be
affected by the impact of demographic ageing on capital markets. The
European Union and the Member States, by creating a good regulatory
framework, and the social partners, through sound management of pension
schemes, should take the necessary measures to safeguard the ability of
private pension schemes to provide the pension benefits to which scheme
members are entitled.

Objective:

• Ensure,

through appropriate regulatory frameworks at national and
that private funded
European level and through sound management,
pension schemes will continue to provide, with increased efficiency and
affordability, the pensions to which scheme members are entitled.

2.3.

Modernisation of pension systems in response to changing needs of
society and individuals

Pension systems need to evolve to reflect changes in society and the labour
market. Many pension scheme rules are based on out-dated assumptions
about family and employment patterns, about the roles of men and women in
households and on the labour market and on generalisations about people's
preferences with regard to retirement. Furthermore, their incentive structures
tend to reflect past labour market patterns and have not taken into account
changes in life expectancy at retirement. As a result pension systems fail to
cater well for
increasing numbers of people. Out-dated
assumptions are in particular reflected in different survivors' benefits for men
and women and different pensionable ages. Pension systems should be
modernised to take account of changes in society and to make sure that they
cater well for the needs of a more mobile and flexible workforce and of less
stable families.

the needs of

Objectives:

• Ensure that pension systems are compatible with the requirements of
flexibility and security on the labour market, that labour market mobility
within Member States and across borders and non-standard employment
forms do not result in undue losses of pension entitlements and that self-
employment is not discouraged by pension systems.

• Review pension systems with a view to eliminating discrimination based
on sex while addressing the sources of gender-related inequalities in
pension entitlements (e.g. career breaks for family reasons, actuarial
factors).

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One important element of the reform of pension systems should be to make
them more transparent and predictable. Sufficient
the
likely future development of pension systems and about individuals’ own
entitlements is crucial for maintaining confidence in pension systems and
enabling individuals to make any necessary changes to their life plans
accordingly. Such information should cover factors affecting these systems
(demography, social and economic change) as well as envisaged policy
responses.

information about

• Make pension systems more transparent, predictable, and adaptable to
changing circumstances. Provide
reliable and easy-to-understand
information on the long-term perspectives of pension systems including
assessments of the impact of demographic, social and economic change
and the impact of envisaged policy measures on the performance of
pension systems, notably with regard to the likely evolution of benefit
levels and contribution rates. Improve the methodological basis for
efficient monitoring of pension reforms and policies.

3.

DEVELOPING INDICATORS FOR UNDERPINNING THE OPEN METHOD OF CO-
ORDINATION

indicators which should aim at

Progress towards the objectives presented above should be measured using
appropriate
providing comparable
information on the major economic,
financial and demographic trends
affecting the long-term sustainability of pensions, as well as on the progress
of pensions reform and its likely impact, while allowing for the large
diversity of national pension systems. Work is already in progress in the
indicators subgroup of the Social Protection Committee which has started to
discuss this matter in order to elaborate a list of commonly agreed indicators
that could underpin the EU-level co-operation process on safe and
sustainable pensions. The Economic Policy Committee has already published
some interim projections for the public pensions expenditure for the period
2000 to 2050.6 These budgetary projections of
future expenditure on
pensions could be a central indicator in the open method of co-ordination.
Consideration should be given to repeating such projection exercises every
two or three years, to take on board the latest information.

The Commission will pursue its work on appropriate indicators in co-
operation with the relevant policy Committees (Social Protection Committee,
Economic Policy Committee, Employment Committee). A large variety of
indicators will be needed: performance indicators (drawn from statistical data
sets developed by Eurostat or international organisations) as well as policy
indicators (mostly drawn from administrative or institutional information);
retrospective indicators as well as projections. Given the difficulty of
requiring common assumptions about underlying socio-economic trends or
the future impact of policy changes, greater co-operation among Member

6

Economic Policy Committee: “Progress Report to the Ecofin Council on the Impact of Ageing
Populations on Public Pension Systems”, EPC/ECFIN/581/00-Rev.1, November 2000.

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States may be needed going beyond what is normally associated with the
choice of indicators.

The list of commonly agreed indicators should make it possible to measure
trends and policy developments addressing the triple challenge identified in
section 1: adequacy, financial sustainability, and adaptability to change. The
aim of such work should be to submit a first list of commonly agreed and
defined indicators in time for the Barcelona Spring Summit.

4.

A COMPREHENSIVE AND INTEGRATED APPROACH TO THE REFORM OF
PENSIONS SYSTEMS

The future of pension systems depends on policies in different areas
including employment, public finances and social protection. This calls for
an integrated approach and close co-ordination among policy makers in these
different areas.

4.1.

Ensuring social and financial
mutually reinforcing policies

sustainability of pensions

through

The challenge of securing pensions sustainability is vital for the overall
socio-economic development of the EU and should be seen as a central
element of the Lisbon Strategy aimed at sustainable economic growth, full
employment and greater social cohesion. The reforms of pension systems are
a central element of a strategy for modernising social protection with a view
to creating an active welfare society, as well as for ensuring a high level of
social cohesion. They also play a key role in ensuring fiscal consolidation,
quality and sustainability of public finances. Furthermore, pension systems
determine the living standards of a large proportion of the population and
have large implications for the functioning of the whole economy and in
particular labour and capital markets. As a result, comprehensive and
integrated policy strategies are required that cut across many policy areas,
immigration,
social protection,
including for
organisation of work and industrial relations, public finance, prudential
regulation, life-long learning, equal opportunities and social inclusion.

employment,

example:

Dealing with such a challenge requires an approach that is inspired by the
concept of the “triangle” of mutually reinforcing policies – employment,
social protection, and economic and budgetary policy, as outlined in the
European Social Agenda adopted at the Nice summit of December 2000.
Social protection policy must seek to ensure an adequate level of income for
future pensioners, while supporting the goal of an active welfare society and
without creating undue burdens for future generations or destabilising public
finance which might jeopardise macroeconomic stability. Structural reforms
of labour markets, including effective work incentives in social protection
and pension systems, should promote the goal of full employment, so as to
improve the long term perspectives for pension systems, regardless of the
schemes under which they are funded. These reforms should support a
sustained economic growth, which, in turn, should facilitate reforms and help
to reconcile social and financial objectives. Only a strong positive interaction

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between these three policy areas can guarantee the future ability of pension
systems to fulfil their basic social goals.

It is therefore vital that progress be made towards meeting the common
objectives of pension reforms. The assessment of such progress within the
existing processes and within the framework of the open method of co-
ordination should feed into the overall policy co-ordination process, and the
results of this work should be integrated into the Broad Economic Policy
Guidelines. Integrated national strategies would rationalise the processes of
producing the required information and ensure their consistency.

4.2.

Ensuring co-ordination between relevant actors in the process

It
is necessary to ensure that different policies affecting the long-term
sustainability of pensions – employment, social and economic – are coherent,
complementary and integrated. The open method of co-ordination to be
applied to ensuring the sustainability of pension systems must recognise the
distribution of policy responsibilities and the distinct contributions that come
from various policy making processes. This is true both at national and at
European level.

Member States should be required to set out their strategies for ensuring the
sustainability of adequate pension provision and modernising their pension
systems in integrated national strategy reports. These should explain the
combination of policy measures through which the common objectives are to
be achieved. It will be for the Member States to decide which set of policies
is most appropriate.

The Commission will analyse the national reports with regard to meeting the
common objectives, assess the strategies presented therein and identify good
practice and innovative approaches. On the basis of a Commission
communication, regular joint reports by the Commission and the Council
will be prepared and updated as necessary. The various relevant Committees
are expected to work jointly on this basis. Clearly, it will also be essential
that the European Parliament gives its opinion on this Commission initiative
concerning the open method of co-ordination applied to adequate and
sustainable pensions and remains fully involved in future work in this area.

5.

OUTLOOK: A PLAN OF WORK FOR THE COMING YEARS

The Commission invites the Council to endorse the objectives and working
methods proposed in the present communication for the area of pension
reforms. In accordance with the conclusions of the Göteborg European
Council, a progress report setting out the objectives and working methods in
the area of pensions, should be presented to the European Council at its
meeting in Laeken in December 2001, in preparation for the Spring 2002
European Council. It would be desirable that solid progress on the common
objectives and working methods be made in time for the European Council
meeting in Laeken.

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This would make it possible to start the preparation of the national strategy
reports to be presented by the Member States by July 2002. In their
preparation, national governments should ensure close co-ordination between
all relevant departments, and adequate participation of the social partners and
other stakeholders. The reports should contain a strategic statement and focus
on reforms undertaken, or envisaged, to meet the common objectives. They
should be supported by commonly agreed indicators, and, where appropriate,
national targets could be usefully included.

Drawing on the information provided in the national strategy reports on the
sustainability of pensions, the Commission would present a report assessing
the national strategies and identifying good practice and innovative
approaches, as a contribution to a joint report to be agreed jointly by the
Commission and the Council. The timing of this joint report should allow for
its conclusions to be included in the synthesis report to be discussed at the
Spring European Council in 2003 in accordance with the Lisbon process

The first national strategy reports to be prepared in 2002 should be updated
as appropriate in subsequent years, highlighting new developments in
national strategies and progress made in implementing them. In 2005 a major
review should be carried out on the basis of the latest available data and
following a dialogue with all relevant actors.

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APPENDIX

1.

INDICATIVE OVERVIEW OF MAIN EU ACTIVITIES IN THE AREA OF PENSIONS

There are a number of policy goals, mostly linked to the Internal Market and the Single
Currency, that require action at the level of the European Union. The open method of co-
ordination applied to pension reforms seeks to co-ordinate the action of national policy
makers, but would not alter in any way the distribution of responsibilities between the EU
and the Member States or between government and the social partners.

FREE MOVEMENT OF PEOPLE: PORTABILITY OF PENSION RIGHTS (ART. 42 OF THE

TREATY ESTABLISHING THE EUROPEAN COMMUNITY)

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Regulation 1408/71 on the co-ordination of social security schemes. Covers
mainly statutory schemes, but occupational schemes can be included in the scope
(e.g. French AGIRC and ARRCO, Swiss mandatory pension funds).

Directive 98/49/EC of 29 June 1998 on safeguarding the supplementary pension
rights of employed and self-employed persons moving within the Community
ensures equal treatment of migrant workers and national job changers regarding
their occupational pension rights.

The Pensions Forum, comprising representatives from the social partners,
national administrations and pension providers, meets twice a year to discuss
obstacles to mobility and possibilities for overcoming them.

FREEDOM OF ESTABLISHMENT (ART. 43) AND FREEDOM TO PROVIDE SERVICES (ART.49)

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Three Council directives (79/267/EEC of 5 March 1979 relating to the taking up
and pursuit of the business of direct life assurance; 90/619/EEC of 8 November
1990 relating to direct life assurance, laying down provisions to facilitate the
effective exercise of freedom to provide services and amending Directive
79/267/EEC; 92/96/EEC of 10 November 1992 relating to direct life assurance
and amending Directives 79/267/EEC and 90/619/EEC) establish a single market
for life insurance.

The proposal for a Directive on the activities of institutions for occupational
retirement provision (COM(2000) 507 final of 11 October 2000) aims at
establishing minimum prudential standards, defining the role and responsibilities
of supervisory authorities, proposing a qualitative approach to investment rules,
according to which investment portfolio management should comply with
principles (diversification, security, quality) and not uniform quantitative
requirements. The proposal is also designed to allow cross-border management
of occupational pension schemes - an institution in one Members State would be
able to manage company pension schemes in other Member States.

The Commission Communication on the elimination of tax obstacles to the
cross-border provision of occupational pensions (COM(2001) 214 final of 19

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April 2001) proposes a comprehensive strategy to address the tax obstacles that
currently can act as a major disincentive to individuals wishing to contribute to
pension schemes outside their home Member State and pension institutions that
wish to provide pensions across borders.

FREE MOVEMENT OF CAPITAL (ART. 56)

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Article 56 of the Treaty prohibits restrictions on the free movement of capital.
The proposal for a proposal for a Directive on the activities of institutions for
occupational retirement provision seeks facilitate the free movement of capital by
abolishing uniform quantitative investment requirements.

CO-ORDINATION OF ECONOMIC POLICIES (ART. 99)

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The economic and budgetary implications of ageing populations are examined as
part of the multilateral surveillance procedure. The 2001 Broad Economic Policy
Guidelines, adopted at the European Council of Gothenburg in June 2001 state
“Member States need to develop comprehensive strategies for addressing the
economic and budgetary challenges posed by ageing populations. Strategy
measures might include reform of pension and health care systems, and care for
the elderly, increasing the effective retirement age, stimulating higher labour
supply participation, especially for older workers, setting-up and increasing
public pension fund reserves and possibly encouraging the expansion of
supplementary privately-funded pension schemes (pillars 2 and 3). These
strategies should be presented in conjunction with stability and convergence
programmes and be examined in the context of multilateral surveillance, taking
due account of the subsidiarity principle”. The work on economic and budgetary
aspects of ageing populations is being supported by the Economic Policy
Committee.

ACHIEVE A HIGH LEVEL OF EMPLOYMENT THROUGH A COORDINATED STRATEGY (ART.

125)

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The Guidelines adopted as part of the European Employment Strategy are aimed
at raising employment rates in general and of women and older workers in
particular. The success of this strategy will be crucial for the sustainability of
adequate pension provision.

PROMOTE HIGH STANDARDS REGARDING WORKERS' RIGHTS (ART. 137)

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Directives 80/987/EEC of 20 October 1980 (on the approximation of the laws of
the Member States relating to the protection of employees in the event of the
insolvency of their employer) and 2001/23/EC of 12 March 2001 (on the
approximation of the laws of the Member States relating to the safeguarding of
employees' rights in the event of transfers of undertakings, businesses or parts of
require Member States to take the necessary
undertakings or businesses)
measures to protect workers' supplementary pension rights.

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ACHIEVE A HIGH LEVEL OF SOCIAL PROTECTION BY ENCOURAGING COOPERATION
BETWEEN MEMBER STATES AND FACILITATING THE COORDINATION OF THEIR
ACTION (ART. 140)

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–

The Commission communication of 14 July 1999 on "A Concerted Strategy for
Modernising Social Protection" (COM(99)347 final) proposes a more structured
form of co-operation, notably regarding the objective of safe and sustainable
pensions.

The Stockholm European Council Proposal requested that "[w]here appropriate,
the potential of the open method of co-ordination should be used to the full,
particularly in the field of pensions, taking due account of the principle of
subsidiarity."

PROMOTE THE EQUAL TREATMENT OF MEN AND WOMEN (ART. 141)

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–

Directive 79/7/EEC of 19 December 1978 on the progressive implementation of
the principle of equal treatment for men and women in matters of social security
allows discriminations regarding the retirement age and survivors' pensions, but
calls for them to be phased out.

Article 141 requires equal treatment with regard to occupational schemes which
are regarded as pay. This is reflected in Directive 86/378/EEC of 24 July 1986 on
the implementation of the principle of equal treatment for men and women in
occupational social security schemes amended by Council Directive 96/97/EC of
20 December 1996.

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2.

KEY DOCUMENTS AND DECLARATIONS AT EU LEVEL RELATING TO THE FUTURE
OF PENSION SYSTEMS

14 July 1999: Commission communication on "A Concerted Strategy for Modernising
Social Protection" (COM(99)347 final).

24 March 2000: The Lisbon European Council in March 2000 requests "a study on the
future evolution of social protection from a long-term point of view, giving particular
attention to the sustainability of pension systems" and a report on the contribution of
public finances to growth and employment, which, inter alia, considered the sustainability
of public finances in the light of ageing populations.

11 October 2000: Commission communication on "The Future Evolution of Social
Protection from a Long-Term Point of View: Safe and Sustainable Pensions"
(COM(2000) 622 final).

7 November 2000: the Council (ECOFIN) took note of the Economic Policy Committee
Report on the “Impact of ageing populations on public pension systems”.

21 December 2000: Commission Communication on "The contribution of public finances
to growth and employment: quality and sustainability", COM(2000)846.

12 March 2001: Joint report of the Commission and the (ECOFIN) Council to the
European Council on "The contribution of public finances to growth and employment:
improving quality and sustainability", (6997/01).

24 March 2001: Stockholm European Council stressed that "[t]he coming decade offers
an opportunity to address the demographic challenge by raising employment rates,
reducing public debt and adapting social protection systems, including pension systems."
(§ 7 of the conclusions) Recommended that, "[w]here appropriate, the potential of the
open method of co-ordination should be used to the full, particularly in the field of
pensions, taking due account of the principle of subsidiarity"(§ 32).

26 April 2001: European Parliament adopts Report on the Commission communication on
"The Future Evolution of Social Protection from a Long-Term Point of View: Safe and
Sustainable Pensions" (A5-0147/2001).

11 June 2001: The Council (Employment and Social Policy) adopts the Social Protection
Committee's report on "Adequate and Sustainable Pensions" and transmits it
to the
European Council.

16 June 2001 Göteborg European Council stresses that "[a] comprehensive approach is
needed to meet the challenges of an ageing society" and endorsed "the three broad
principles for securing the long-term sustainability of pension systems as identified by the
Council: safeguarding the capacity of systems to meet their social objectives, maintaining
their financial sustainability and meeting changing societal needs."

15

4.

THE ROLE OF EUROPEAN INSTITUTIONS AND POLICY COMMITTEES RELATED TO THE FUTURE OF PENSION SYSTEMS

European Commission

- proposes objectives for co-ordinating the reforms of national
pension systems
- monitors national employment strategies
- monitors national pension reform processes
- proposes Broad Economic Policy Guidelines and
recommends recommendations
- proposes Employment Guidelines and recommends
recommendations
- drafts reports assessing national strategies on employment
and pensions and identifying good practice
- works with advisory committees on specific aspects
- liaises with European Social Partners and relevant NGOs

Social Dialogue
Committee
- role of the social
partners in pension
reform processes

Equal Opportunities
Advisory Committee
- gender issues in
pension systems and
reforms

European Pensions Forum
- access to occupational pension schemes
- portability of occupational pension rights

ECOFIN

Broad Economic Policy
Guidelines

Council
Employment and Social Policy (ESP)

Employment process and open method of co-ordination
applied to social protection and social integration

Economic Policy
Committee (EPC)

Social Protection
Committee (SPC)

- assists the Commission in
examining the economic and
budgetary implications of
pensions systems as part of
the multilateral surveillance
process (article 99)

- assists the Commission in
the assessment of national
pension strategies and their
compatibility with the goals
of adequacy of pensions and
adaptation to a changing
society

Employment Committee
(EMCO)

- assists the Commission in
the assessment of progress
under the European
Employment strategy and in
particular the evolution of
employment rates

European Parliament

- adopts opinions (own
initiative and in response to
proposals by the
Commission)
-contributes to discussions in
the Council
- exchanges views with
policy committees

European Council
- gives general political guidelines and assesses progress at Spring meetings

16

5.

TIMELINE: NEXT STEPS

1
0
0
2

2
0
0
2

3 J u ly

7 J u ly

O c to b e r

N o v e m b e r

D e c e m b e r

J a n u a ry /
F e b ru a r y

M a rc h

J u ly

3
0
0
2

N o v e m b e r

F e b ru a ry /
M a rc h

M a y

M e m b e r S ta t e s

C o m m is s io n

C o u n c il

E u ro p e a n P a r lia m e n t

E u ro p e a n C o u n c il

A d o p ts C o m m u n ic a tio n

N a tio n a l im p le m e n ta tio n
re p o r ts o n th e B ro a d
E c o n o m ic P o lic y
G u id e lin e s a n d o n
b u d g e ta r y s tra te g ie s f o r
a g e in g

O p in io n o n th e o b je c tiv e s
a n d th e o p e n m e th o d o f
c o o r d in a tio n

In f o rm a l C o u n c il: F irs t
d is c u s s io n o n
C o m m u n ic a tio n

A g re e m e n t o n th e o p e n
m e t h o d o f c o o rd in a tio n
a n d c o m m o n o b je c tiv e s

A g re e m e n t o n o p e n
m e t h o d o f c o o rd in a tio n
a n d o b je c tiv e s fo r
p e n s io n re f o rm

L a e k e n E u ro p e a n
C o u n c il: E n d o r s e m e n t o f
th e o p e n m e th o d o f
c o o r d in a tio n a n d
o b je c t iv e s f o r p e n s io n
re f o r m

A n a lys is o f p u b lic fin a n c e
im p lic a tio n s o f p e n s io n
r e f o rm s f o r S p rin g
R e p o r t; R e p o r t o n
im p le m e n ta tio n o f B r o a d
E c o n o m ic P o lic y
G u id e lin e s

R e p o r t c o v e rin g c o m m o n
in d ic a to r s , fle x ib le
r e tire m e n t a n d n e w d a ta
o n fin a n c ia l s u s ta in a b ility

O p in io n o n in d ic a to rs

A g re e m e n t o n th e
in d ic a to r s

B a r c e lo n a E u r o p e a n
C o u n c il: E n d o r s e m e n t o f
th e in d ic a to rs

F irs t n a tio n a l s tr a te g y
re p o r ts (to b e u p -d a te d
a n n u a lly )

A n a lys is o f n a tio n a l
s tra te g y r e p o rts

J o in t R e p o rt

J o in t R e p o r t

17

2 0 0 3 S p rin g E u ro p e a n
C o u n c il: D is c u s s io n o f
jo in t re p o rt o n p e n s io n
re f o r m s tra te g ie

O p in io n o n th e J o in t
R e p o r t