Pensions in the European Union

The proportion of older people in the EU is increasing much faster than the population of younger wage-earning taxpayers, making pensions reform in the EU essential. The fear is that the costs of caring for such a large number of older people will overwhelm the future budgets for pensions and health care.

Member States have to prepare for the challenge of accelerated demographic ageing which will make it more difficult to provide adequate pensions in a financially sustainable way. In March 2006, the European Council adopted a new framework for the social protection and social inclusion process. There is a new set of common objectives: three overarching objectives and objectives for each of the three policy areas of social inclusion, pensions and health and long-term care.

The second round of national strategy reports covering all 25 Member States has been launched in 2005. Member States submitted their National Strategy Reports in July 2005. These strategies were analysed by the Commission and the Social Protection Committee in a Synthesis Report on Adequate and Sustainable Pensions of February 2006. This report includes three parts: a general synthesis, 25 national country fiches and a horizontal analysis along common objectives.

Since the first round of National Strategy Reports, the Social Protection Committee carried out several studies on key issues related to the adequacy and financial sustainability of pension systems (see Key Documents, below). Member States submitted their first reports on their strategies for securing adequate and sustainable pensions in September 2002. These strategies were analysed by the Commission and the Council in a Joint Report of March 2003. This first round of National Strategy Reports built upon the set of eleven common objectives adopted in December 2001. These objectives for the modernisation of pension systems were adopted as a basis for closer cooperation in accordance with the Open Method of Coordination.

The Commission also seeks to improve supplementary pension provision and has set up, for that purpose, the Pensions Forum, an advisory committee composed of experts from governments, social partners and representative organisations at EU level. Based on the work of the Pensions Forum, the Commission promotes measures to ensure that mobility is not an obstacle to the acquisition of occupational pension rights.