COMMISSION STAFF WORKING DOCUMENT Executive summary of the Impact Assessment
Date: 2012-02-16
Institutions: European Commission
Subjects: early retirement, population ageing, private insurance, retired person, retirement conditions, supplementary pension

EUROPEAN COMMISSION 

Brussels, 16.2.2012  
SWD(2012) 8 final 

COMMISSION STAFF WORKING DOCUMENT 

Executive summary of the Impact Assessment 

Accompanying the document 

WHITE PAPER 

An Agenda for Adequate, Safe and Sustainable Pensions 

{COM(2012) 55 final} 
{SWD(2012) 7 final} 

 
 
 
 
  
 
 
COMMISSION STAFF WORKING DOCUMENT 

Executive summary of the Impact Assessment 

Accompanying the document 

WHITE PAPER 

An Agenda for Adequate, Safe and Sustainable Pensions 

2

 
 
 
EXECUTIVE SUMMARY 

1.  Procedural background: 

In 2009 against the background of accelerating demographic ageing, the economic crisis and a 
decade  which  had  seen  major  changes  in  pension  systems  in  many  Member  States,  the 
European Commission saw a need to open a debate on how the EU level pensions framework 
could  best  be  updated  to  support  Member  States  in  ensuring  their  citizens  enjoy  adequate, 
sustainable and safe pension systems both now and in the future.  

Hence in his political guidelines for this Commission of September 2009, President Barroso 
said “We need to ensure that pensions do the job intended of providing maximum support to 
current and future pensioners, including for vulnerable groups.”  Subsequently Commissioner 
Andor  was  tasked  by  the  President  to  “…work  with  other  Commissioners  to  develop 
proposals to secure Europe’s pension systems." 

The European Commission undertook a range of work to map and consider the full scope of 
the  currently  rather  fragmented  EU  'framework'  for  pensions  and  whether  it  needed  to  be 
improved to offer sufficient support for Member States.  This led to a public consultation via a 
holistic Green Paper on pensions published on 7 July 2010.   

The  Green  Paper  took  an  integrated  approach  across  economic,  social  and  financial  market 
policies and recognised the links and synergies between pensions and the overall Europe 2020 
strategy  for  smart,  sustainable  and  inclusive  growth.  The  Green  Paper  noted  that,  whilst 
Member States are responsible for pension systems, at EU level national retirement systems 
are underpinned by a framework of activities spanning from policy coordination to regulation 
given  the  need  for  some  common  themes  to  be  addressed  in  a  coordinated  way.    These 
included the functioning of the internal market, the requirements of the Stability and Growth 
Pact and ensuring that pension reforms are consistent with the Europe 2020 strategy.  

An  accompanying  document  published  alongside  the  Green  Paper  covered  the  current 
framework of EU legislation, other regulation and policy coordination including the results of 
a  mapping  exercise  of  private  pensions  undertaken  with  national  pension  regulators  via  the 
Committee of European Insurance and Occupational Pensions Supervisors.   

A White Paper on pensions was announced in the Commission work programme for 2011 in 
order  to  further  develop  EU  level  support  for  Member  States  delivery  of  pension  systems, 
guided by the Green Paper consultation. 

This  impact  assessment  discusses  policy  options  for  such  a  White  Paper  that  proposes  to 
develop a holistic EU-level framework and strategy for supporting Member States to deliver 
adequate, sustainable and safe pensions.  

2.  Problem definition 

The  delivery  of  adequate  pensions  that  are  sustainable  and  safe  is  a  Member  State 
responsibility  with  the  EU  hitherto  in  a  limited  and  rather  fragmented  supporting  role. 

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However,  pension  delivery  is  getting  more  complex  and  increasingly  becoming  an  issue  of 
common EU concern.  

Pensions  are  the  main  source  of  income  for  a  large  and  growing  proportion  of  EU  citizens 
(approx.  ¼).  Thus  pensions  are  crucial  for  maintaining  living  standards  in  retirement  and 
preventing poverty in old age. In addition to being a major determinant of social conditions, 
pension systems are also an important economic factor. With about 10% of GDP in the EU 
(2010)  going  to  pensions  they  represent  a  major  share  of  public  spending.  Moreover,  the 
design of pension systems and the (dis)incentives these provide to retire at an earlier or later 
age have significant impacts on employment and hence economic growth. Furthermore, where 
private  pensions  are  highly  developed,  pension  funds  as  institutional  investors  are  major 
actors in financial markets.  

Importantly  pensions  impact  in  major  ways  not  just  on  the  public  budgets,  labour  and 
financial  markets,  and  the  overall  economy  of  Member  States,  but  also  on  those  of  EU 
including the stability of the Euro. 

For Member States the economic crisis and the prospects of lower growth have made it more 
difficult  to  tackle  the  key  challenges  from  population  ageing.  Furthermore  pension  delivery 
has  become  more  complex  and  more  contingent  on  the  well-functioning  of  labour  and 
financial markets. This is the result of the last decade of sensible efforts of Member States to 
adjust  pensions  better  to  the  ageing  challenge  by  tying  entitlement  closely  to  contributions 
over the entire working career, encouraging people to work longer and complementing public 
payg pensions with private prefunded retirement provisions.  

At EU level the risk of inadequate, unsustainable or unsafe pension systems in single Member 
States is developing into an issue of common EU concern. This is primarily an effect of how 
accelerating population ageing is proving harder to tackle given the economic recession, the 
deterioration of public budgets and the sovereign debt crisis and is impacting on the common 
currency and the overall social and economic well-being of the Union.  

Thus,  successful  pension  reforms  in  the  Member  States  are  key  determinants  of  the  EU’s 
ability to achieve two of the five targets of the Europe 2020 strategy, namely the employment 
rate  target  (75%  of  the  20-64  year-olds  to  be  employed),  which  requires  in  most  Member 
States a much higher participation of older workers, and the poverty reduction target (at least 
20  million  fewer  people  in  or  at  risk  of  poverty  and  social  exclusion)  noting  the  particular 
poverty risk for the elderly. 

In  order  for  the  EU  to  offer  sufficient  support  for  the  efforts  of  Member  States  in  this  new 
situation of greater complexity of pension delivery and increasing common EU concern about 
pension outcomes there is a need for the EU to move from its hitherto somewhat disjointed 
and  piecemeal  approach  towards  a  comprehensive  and  integrated  framework  of  pension 
policies to assist Member States.. This approach is built around the understanding that pension 
decisions, including the decision to retire, is the outcome of a complex process, conditioned 
by  individual  and  household  characteristics,  as  well  as  macroeconomic  and  institutional 
variables. 

By  linking  better  the  various  forms  of  policy  coordination  and  regulation  of  relevance  for 
pensions  while  adjusting  somewhat  their  focus,  scale  and  scope  and  adding  some 
proportionate new initiatives the EU can substantially increase the value added of European 

4

 
 
 
 
 
  
 
 
 
activities.  This  would  also  allow  the  EU  to  better  tackle  the  common  concerns  of  Member 
States  by  pre-empting  and  where  necessary  mitigating  the  risk  of  negative  spill-over  from 
pension  problems  in  single  Member  States.  This  can  be  achieved  by  bringing  existing 
competences for regulation and policy coordination together better and using them in a more 
coordinated way as elements of a holistic EU approach.  

The  purpose  of  this  impact  assessment  it  to  determine  how  existing  activities  should  be 
adjusted, the character of the initiatives to be added and the mechanisms by which they will 
be coordinated into an integrated strategy of support for Member States. One key question is 
how much emphasis the move towards a more holistic strategy should give to legislation and 
binding regulation at this stage.  

Among  those  most  concerned  in  this  process  will  be  Member  States  and  other  key 
stakeholders  involved  in  processes  of  policy  coordination  and  regulation  with  Commission 
services. The ultimate beneficiaries would be citizens, who will benefit from policies that help 
Member States to better deliver the combined adequacy, sustainability and safety of present 
and future pensions. 

The impact assessment will in line with the nature of the White Paper primarily focus on the 
EU added value for Member States and key stakeholders. The effects for citizens cannot be 
closely assessed at this point as they will depend on the extent to which Member States and 
stakeholders utilise improved EU supports to improve policies and practices affecting pension 
delivery. 

Moreover,  this  impact  assessment  does  not  preclude  further  impact  assessments  being 
produced  for  individual  specific  measures  within  the  holistic  packages,  should  that  prove 
necessary in any particular case as a follow up to the White Paper.   

3.  Analysis of subsidiarity 

Whilst  pension  policies  are  largely  a  Member  State  responsibility,  the  EU  level  has  a 
supportive role to play.   

With  increasing  interlinkages,  as  demonstrated  by  the  current  debt  crisis,  failed  pension 
policies in one or more countries may have spill-over impacts with negative consequences on 
the  stability  of  the  Euro  and  the  economic  performance  of  the  EU.  Moreover,  given  the 
increasing mobility of people, inadequate pension policies can also have direct repercussions 
for social security systems in other EU countries.  

As a result, pensions are increasingly becoming a matter of common concern in the EU and 
this  was  the  rationale  for  the  2011  Europe2020  Country  Specific  Recommendations  on 
pensions endorsed by European Council on 24 June.  

The  capability  of  Member  States  to  follow  through  on  these  recommendations  would  be 
positively  influenced  by  enhanced  support  from  EU  policies  in  all  areas  of  relevance  for 
pensions.  But  the  EU  has  so  far  not  been  able  to  gather  its  range  of  pension  activities  and 
competences  into  a  comprehensive,  coherent  and  fully  coordinated,  framework  focussed  on 
helping Member States in their efforts to provide adequate, sustainable and safe pensions to 

5

 
 
 
 
 
 
 
 
 
 
 
 
citizens.  If  this  were  to  happen  as  the  White  Paper  will  suggest  this  would  help  to 
substantially improve the value added of EU support for Member States in pensions. 

4.  Objectives of EU initiative 

Building  on  the  analysis  in  the  Green  Paper  and  other  key  work,  this  Impact  Assessment 
describes  the  rather  piecemeal  nature  of  the  development  of  EU  level  pension  policies  and 
processes  so  far  and  argues  the  need  to  now  build  a  comprehensive  and  integrated  policy 
framework and strategy for the future of pensions in the EU. This goal was endorsed by the 
Green Paper consultation, which revealed that stakeholders are overwhelmingly supportive of 
the innovative holistic approach taken in that paper. 

As  the  EU  is  increasingly  concerned  about  the  medium  and  longer  term  difficulties  of 
successful pension provision and the potential risk of pension policy failure in some Member 
States, it has to develop more effective ways of supporting policy at the national level.  

This  leads  to  the  general  objective  for  the  White  Paper  on  Pensions  to  "Provide  more 
effective support to Member States in their endeavours to make adequate pensions provision 
safe and sustainable".  

More  specifically,  EU  policy  guidance  needs  to  be  developed  with  regard  to  the  two  most 
powerful policy avenues for tackling the pension challenges Member States face, namely (1) 
achieving  a  better  balance  between  time  spent  working  and  time  spent  in  retirement  (i.e. 
raising the effective retirement age) and (2) enhancing the contribution to adequacy of private 
retirement savings. In addition, the EU must (3) strengthen its monitoring and coordination 
tools, notably by developing the monitoring of pensions adequacy alongside the surveillance 
of financial sustainability of pension systems (see table 1). 

Table 1: Objectives and policy areas 
General Objective  Specific objectives  and policy areas 

Provide more 
effective support to 
Member States in 
their endeavours to 
make adequate 
pensions provision 
safe and 
sustainable in the 
context of ageing 
societies and 
public finance 
constraints. 

1  Support  Member  States  in  achieving  a  better  balance  between 
time spent in work and in retirement  
Policy areas: 
(cid:190)  Pension system reform 
(cid:190)  People’s ability to stay longer on the labour market 

2  Support  Member  States  in  enhancing  the  contribution  to 
adequacy from complementary1 private retirement savings 
Policy areas: 
(cid:190)  Coverage and cost-effectiveness of complementary private pensions  
(cid:190)  Safety of complementary private pension provision 
(cid:190)  Mobility of supplementary2 pensions   

3 Enhance the EU's monitoring and coordination tools in the area 
of pensions 
Policy areas: 
(cid:190)  Coordinated monitoring of the adequacy, sustainability and safety of pensions  
(cid:190)  Coherent policy making at EU level 

1 The term word 'complementary private retirement savings' refers to both 2nd and 3rd pillar pensions, i.e. both occupational 
schemes and individual pension and retirement savings contracts. 
2 Supplementary pensions is the established EU term for occupational pensions. 

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These three constitute the specific objectives which moreover can each be said to relate to the 
policy areas that must be brought together in holistic framework at EU level.  

For  better  balancing  time  in  work  and  retirement,  the  combination  of  pension  reform  and 
labour market measures to raise people's ability to work longer would be key. For enhancing 
the contribution to adequacy from complementary private retirement savings the coverage and 
cost-effectiveness  of  complementary  private  pensions,  their  safety  and  mobility.  For 
enhancing  the  EU's  monitoring  and  coordination  tools  it  would  be  essential  to  establish 
coordinated  monitoring  of  adequacy,  safety  and  sustainability  of  pensions  and  to  secure 
coherent policy making at EU level. 

5.  Policy options  

This impact assessment compares three options, taking full account of the results of the Green 
Paper consultation and the focus on pensions in the 2011 Country Specific Recommendations 
under Europe 2020.  

The first option ("status quo") would be to continue business as usual with the EU dealing 
with  specific  pensions-related  issues  in  a  rather  narrow  way  on  a  case  by  case  basis.  There 
would be no common vision on how to secure adequate pensions for the EU as a whole.  

The EU framework would incrementally change, but outside of the governance framework of 
Europe 2020 few if any additional efforts would be made to integrate the various policy areas 
of relevance or to adapt this framework to the evolving needs of Member States as pension 
systems  change.  Thus  while  some  employment  and  minimum  adequacy  aspects  of  pensions 
would  be  included  in  Europe  2020  along  with  public  finance  issues  they  would  not 
necessarily  be  treated  in  an  integral  manner.  Moreover,  considerations  about  the  safety  and 
cost-effectiveness  of  private  pensions,  which  with  their  growing  role  in  overall  retirement 
provisions are of increasing importance, would continue to be separated from adequacy and 
sustainability  concerns.  Economic  policy  coordination  would  consider  pensions  primarily 
from  a  public  finance  perspective  and  focus  primarily  on  the  direct  expenditures  on  public 
pensions  whereas  the  indirect  expenditures  for tax  exemptions  to  private  pension  would  get 
less  attention.  Only  policy  coordination  on  social  protection  would  be  fully  focussed  on  all 
adequacy implications and attempt to consider contributions to the pension package from all 
pension  types.  It  would,  however,  not  be  integrated  with  sustainability  and  safety 
considerations.  

The  second  option  ("holistic  or  integrated,  comprehensive  approach")  consists  of  two  sub-
options both of which represent comprehensive packages of policy measures: IIa and IIb. It is 
important  to  note  that  both  these  packages  are  built  around  a  holistic  approach  to  pensions 
meaning  that  all  policy-areas  are  jointly  addressed  with  fully  synergies  exploited  and  trade-
offs  acknowledged  and  balanced.  Both  sub-options  bring  together  a  wide  range  of  existing 
and  new  policy  initiatives  in  a  strategic  policy  document  (White  Paper)  with  the  aim  of 
sketching out a common vision for adequate, safe and sustainable pensions and constructing 
the new EU framework to ensure delivery of this important policy goal over the coming years.  

The  sub-options  are  constructed  in  a  parallel  way.  They  combine  instruments  of  regulation, 
policy coordination and financial initiative in their packages of measures and envisage these 
to be launched over the years 2012 to 2014.  

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-  Under  the  specific  objective  1  of  supporting  Member  States  in  achieving  a  better  balance 
between time spent in work and in retirement, and in the policy area of pension system reform 
they both seek to address issues of gender equality in pensions, reduce early retirement, assess 
the specific reform needs of Member States and promote pension reform in line with the 2011 
Europe  2020  pension  recommendations.  In  the  policy  area  of  initiatives  aimed  at  raising 
people's ability to stay longer in the labour market, which need to be combined with pension 
system  reforms,  they  both  propose  measures  to  end  mandatory  retirement  ages,  promote 
healthy  ageing  at  work,  use  EU  funds  to  enable  older  workers  to  work  longer,  adapt  work 
places  and  labour  market  to  longer  working  lives  and  develop  opportunities  for  extended 
working lives including through end-of-career jobs.  

- Under the specific objective 2 of supporting Member States in enhancing the contribution to 
adequacy from complementary private retirement savings, and in the policy area of coverage 
and cost-effectiveness of complementary private pensions both sub-options propose initiatives 
to  promote  cost-effective  supplementary  pension  schemes  and  optimise  the  effect  of  tax 
expenditure in support of private pension savings. Suggested initiatives in the policy area of 
safety of complementary private pension provision seek to increase the safety of occupational 
pension schemes, improve protection in case of insolvency of pension sponsoring employer, 
raise  the  quality  of  third  pillar  pensions  and  improve  consumer  protection,  and  improve  the 
design and performance of funded occupational pension schemes. Proposed measures in the 
policy area of mobility of supplementary pensions aim to reduce the barriers to cross-border 
movement  from  supplementary  pension  rights  in  the  private  and  the  public  sector,  enhance 
people's ability to keep track of their various pension rights, remove tax obstacles to the cross-
border  mobility  and  investment  of  pension  funds  and  life  insurance  providers,  and  raise  the 
cross-border security of occupational pension rights for migrating researchers.  

- Under the specific objective 3 of enhancing EU's monitoring and coordination tools in the 
area  of  pensions,  and  in  the  policy  area  of  coordinated  monitoring  of  the  adequacy, 
sustainability and safety of pensions both sub-options propose initiatives for coordinating the 
monitoring of the adequacy, sustainability and safety of pensions, and for raising the quality 
of adequacy monitoring. Measures put forward in the policy area of coherent policy making at 
EU  level  aim  to  strengthen  the  coherence  and  integration  of  EU  policies  impacting  on 
pensions,  ensure  the  full  coordination  and  integration  of  Commission  pension  policies,  and 
secure holistic monitoring of progress in pension delivery in the EU 

The  two  sub-options  differ  in  how  far  the  specific  measures  try  to  make  use  of  potential 
legislative powers and in how much the measures build on the responses to the Green Paper 
by stakeholders. Sub-option IIa draws more closely on the consultation. Sub-option IIb puts 
more emphasis on legally binding instruments with the aim of strengthening support for the 
2011  Country  Specific  Recommendations.  Both  sub-options  would  consolidate  current  EU 
policy interventions into a holistic framework and while also adding some new measures that 
support  the  emphasis  in  the  2011  Country  Specific  Recommendations  on  raising  the 
pensionable age and linking it to longevity growth.  

While some measures are identical in the sub-options the differences between them are set out 
in the table below. 

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Table 2 Sub-option IIa compared to sub-option IIb 
Specific Objective 1:  
Support Member States in achieving a better balance between time spent in work and in retirement 

Pension system 
reform 

Issue Commission recommendation on 
gender equality in pension age and 
addressing the gender adequacy gap in 
pensions 

Propose amending Directive 79/7/EEC of 
19 December 1978 so to ensure that women 
become eligible for pensions at the same 
age as men.  

Gender equality in pensions: 

People’s ability to 
stay longer on the 
labour market 

Ending mandatory retirement ages: 

Issue a Commission recommendation on 
abolishing mandatory retirement ages and 
addressing other barriers to working longer. 

Propose amending Directive 2000/78/EC 
outlawing discrimination in employment to 
restrict use of mandatory retirement ages  

Enabling older workers to stay longer on the labour market. 

Encourage Member States to use European 
Social Fund means for greater support for 
measures that enable older workers to work 
longer  

Introduce tighter conditionality in ESF if 
MS do not follow Country Specific 
Recommendations  on measures to enable 
older workers to work longer and use ESF 
for this purpose  

Specific Objective 2: Support Member States in enhancing the contribution to adequacy from 
complementary private retirement savings 

Safety of 
complementary 
private pension 
provision 

Mobility of 
supplementary 
pensions   

Improved protection in case of insolvency of pension sponsoring employer: 

Ensure more effective enforcement of 
article 8 of the Insolvency directive  

Propose amending article 8 of the 
Insolvency directive to raise protection  

Raising the quality of third pillar pensions and improving consumer protection : 

Raise quality and consumer protection via 
voluntary codes possibly including some 
EU certification of third pillar products. 

Raise quality and consumer protection via 
binding standards and EU certification of 
third pillar products. 

Improving cross-border portability of supplementary pension rights: 

Table proposal for portability directive with 
minimum standards for acquisition and 
preservation of pension rights 

Table proposal for portability directive with 
minimum standards for transferability as 
well as acquisition and preservation  

Improving people's ability to keep track of their various pension rights: 

Promote basis for EU level pension 
tracking services through development of 
national pension tracking services  

Develop a European pension tracking 
service through public procurement and 
regulatory means. 

Specific Objective 3: Enhancing EU's monitoring and coordination tools in the area of pensions 

Coordinated 
monitoring of the 
adequacy, 
sustainability and 
safety of pensions 

Coherent policy 
making at EU 
level 

Raising the quality of adequacy monitoring: 

Use existing processes and indicators to 
raise quality and scope of adequacy and 
other pension performance monitoring 

Develop common standards for adequacy 
and other aspects of pension performance 
to be used in national/EU target setting  

Strengthening the coherence and integration of EU policies impacting on pensions: 

Strengthen role of the Pensions Forum in 
coherent EU pension policy.  

Replace the Pensions Forum with a new 
European platform on pensions covering 
all types of pension provision. 

Securing holistic monitoring of progress in pension delivery in the EU: 

Publish one report on progress towards 
adequate, sustainable and safe pensions in 
2014. 

Publish periodical reports on progress 
towards adequate, sustainable and safe 
pensions. 

9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
A  third  option  consisting  of  a  general  harmonization  of  national  pension  policies  has  not 
been examined in depth since it would not pass the subsidiarity test. However, sub-option IIb 
contains some elements approaching a form of harmonisation in areas where EU legislation is 
already in place. 

6.  Assessment of impacts 

The Impact Assessment does not evaluate the impacts of the individual measures. Instead, it 
examines  the  impacts  of  the  proposed  options  as  a  whole  in  order  to  provide  a  general 
assessment of possible economic and social impacts  associated with  different approaches to 
pension  policy  at  EU  level.  The  legislative  measures  will  where  relevant  be  individually 
analysed in separate Impact Assessments. 

The assessment of the proposed options shows that it is difficult to reach firm conclusions on 
the precise economic and social impacts as this will depend on how Member States respond to 
the new EU policy framework.  

Overall option II is likely to deliver more positive economic and social benefits compared to 
the status quo (option I). Some of the main economic impacts could include: more effective 
use of resources at EU level, enhanced cross-border mobility of workers and positive effects 
on EU competitiveness. In addition, option II is likely to have a positive impact on businesses 
including  Small  and  Medium  Enterprises  (SMEs),  even  though  some  temporary  transition 
costs are to be expected. Lower or better use of public expenditure could result from work on 
the cost effectiveness of tax expenditures for private pensions. 

As  for  social  impacts,  stronger  focus  on  adequacy  and  gender  issues  combined  with  better 
monitoring at EU level, and measures to facilitate longer working lives and to strengthen the 
quality  of  supplementary  private  pension  provision,  envisaged  under  option  II,    should 
contribute to achieving better adequacy of pensions and lower at-risk-of poverty rates. 

If  legislative  measures  under  sub-option  IIb  are  successfully  implemented,  sub-option  IIb  is 
likely  to  have  stronger  positive  economic  and  social  impacts  compared  to  sub-option  IIa.  
However, preparation and implementation of legislative proposals envisaged under sub-option 
IIb  is  likely  to  be  a  very  lengthy  and  difficult  process  which  would  require  much  more 
resources  at  EU  and  national  level,  and  may  weaken  the  support  of  various  stakeholders 
(including Member States) for EU actions. 

The options examined are not expected to have any significant, direct environmental impacts 
or impacts on third countries.  

10

 
 
 
 
 
 
 
 
 
 
 
 
 
Table 3 Summary of main social and economic impacts 
Policy option  

Social Impacts 
Too little attention paid to adequacy 
and poverty issues in old age 

Economic Impacts 
The EU will not make the best use of available 
resources (duplication of work, weak 
coordination between different structures) 

Option I 

Focusing on raising pensionable ages 
without measures to support longer 
working lives could lead to negative 
social impacts (more older workers 
flowing into social assistance benefits) 

Gender specific problems will continue 
to receive too little attention 

Slow progress in developing new 
indicators could impede EU's ability to 
comprehensively monitor the 
performance of pension systems 

The lack of coordinated approach can lead to 
development of sub-optimal and fragmented 
policies which may fail to maximize positive 
economic impacts and mitigate negative 
economic effects 

Little progress in removing barriers to worker 
mobility 

Reduced ability of the EU to quickly react and 
adapt to socio-economic and financial 
challenges that may emerge in the future 

Measures to increase effective 
retirement ages will have positive 
employment effects. This can enhance 
retirement incomes of older people and 
combat issues of social isolation and 
exclusion.  

More attention will be paid to gender 
issues 

Removing barriers to worker mobility would 
contribute to more efficient labour markets 
especially in view of expected labour market 
bottlenecks for certain professions. 

Measures to increase effective retirement ages 
can have positive impacts on public finances 
(higher revenues and lower social assistance 
expenditures), EU competitiveness ( increased 
labour supply) and GDP growth. 

Better monitoring of adequacy of 
pensions 

Better use of resources at EU level 

Positive impacts on fundamental rights 

Some positive impacts on the financial sector 

Sub-
option 
IIa 

I
I
n
o
i
t
p
O

Sub-
option 
IIb 

If negative reactions of Member States 
to more interventionist EU approach 
can be avoided  the overall social 
impacts could be more positive than 
under IIa 

Possibility to transfer occupational 
pension rights to a new pension 
schemes can have additional positive 
social impacts 

Greater positive impacts on 
fundamental rights compared to sub-
option IIa 

Small transition costs on business and SMEs of 
adapting to new legislation 

Increased safety of supplementary private 
pensions 

Optimising the effect of tax expenditure in 
support of private pension savings 
Stronger positive economic impacts compared to 
IIa if proposed measures are successfully and 
timely implemented 

However there is a risk that Member States will 
resist to proposed solutions which will weaken 
the overall effectiveness of the package and the 
positive economic impacts. 

Increased protection under the insolvency 
directive and transferability of pension rights 
can lead to more significant costs on business 
and SMEs 

11

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7.  Comparison of options  

The Impact Assessment, which proceeds by first comparing option I with option II, concludes 
that the second option is the preferred option.  

The first option fails to sufficiently meet the objective of providing more effective support to 
Member States in delivering adequate, sustainable and safe pensions. Option I would not meet 
the need to consider pension policies in a comprehensive manner, which was identified in the 
Joint  Report  on  Pensions  by  the  Economic  Policy  Committee  and  the  Social  Protection 
Committee and called for in Council Conclusions. It would in particular fall short of the need 
highlighted by Council of taking into account the many interlinkages between labour markets, 
social protection systems and financial market policies the analyses of reform progress, crisis 
impacts  and  accentuated  challenges.  Nor  would  such  an  option  meet  the  expectations  of 
stakeholders, who strongly supported a holistic approach to pensions in their responses to the 
Green Paper consultation. 

The third option does not seem realistic at this point in time.  

The Impact Assessment also concludes that within the second option the preferred sub-option 
is IIa. The measures in IIa are more likely to have the overall impact intended and to receive 
wide support from stakeholders than those in sub-option IIb.  Since many of the measures rely 
on collaborative engagement from stakeholders the latter is of importance for policy delivery.  

Whilst some of the measures in sub-option IIb could be seen to be more effective because of 
the greater use of legislation, this would only be the case if the legislation could be agreed and 
implemented within a reasonable timeframe. Moreover, given the great diversity of national 
circumstances and the fact that the EU can legislate only in a few of the necessary areas, there 
are clear limits to the value of the extra EU wide legislation proposed under IIb. To obtain a 
more  timely  delivery  and  a  better  fit  with  national  circumstances  it  could  be  preferable  to 
leave  regulation  of  pensionable  ages  for  men  and  women  and  mandatory  retirement  ages  to 
national reform efforts while giving these as much orientation and support as possible through 
softer measures. 

By contrast sub-option IIa addresses the problems identified with a proportionate mix of EU 
policy  instruments  including  legislation  and  soft  instruments,  and  would  contribute  to 
building  a  strong  partnership  between  the  EU,  Member  States  and  other  stakeholders  in 
promoting reforms through guidance and support for adequate, sustainable and safe pensions. 

8.  Monitoring and evaluation  

The  Impact  Assessment  presents  the  mechanisms  to  monitor  the  implementation  of  the 
preferred  package.  This  includes  both  strict  and  regular  monitoring  of  the  performance  of 
national  pension  systems  starting  in  2012  further  building  on  the  instruments  developed  for 
the  Open  Method  of  Coordination  (based  on  common  indicators  and  established  reporting 
structures) as well as regular monitoring of the comprehensiveness of the EU approach by the 
Commissioners  Group  on  Pensions  and  the  Inter-service  Group  on  Pensions.  Finally,  the 
White  Paper  implementation  will  be  evaluated  in  a  report  on  progress  towards  adequate, 
sustainable and safe pensions, which will be published in 2014.  

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