Procedure : 2007/2290(INI)
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Document selected : A6-0409/2008

Texts tabled :

A6-0409/2008

Debates :

PV 19/11/2008 - 17

Votes :

PV 20/11/2008 - 6.4
Explanations of votes
Explanations of votes

Texts adopted :

P6_TA(2008)0556

REPORT     
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15 October 2008
PE 402.875v02-00 A6-0409/2008

on the future of social security systems and pensions: their financing and the trend towards individualisation

(2007/2290(INI))

Committee on Employment and Social Affairs

Rapporteur: Gabriele Stauner

Rapporteur for opinion (*):

Astrid Lulling, Committee on Women's Rights and Gender Equality

(*) Associated committee – Rule 47 of the Rules of Procedure

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION
 EXPLANATORY STATEMENT
 OPINION of the Committee on Women's Rights and Gender Equality (*)
 OPINION of the Committee on Economic and Monetary Affairs
 RESULT OF FINAL VOTE IN COMMITTEE

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

on the future of social security systems and pensions: their financing and the trend towards individualisation

(2007/2290(INI))

The European Parliament,

–   having regard to the Commission Communication of 12 October 2006 on the long-term sustainability of public finances in the EU (COM(2006)0574),

–   having regard to Article 99 of the Treaty on European Union,

–   having regard to the Treaty establishing the European Community and in particular Article 141 thereof,

–   having regard to the judgments of the Court of Justice of the European Communities, in particular the judgment delivered by the Court on 17 May 1990 in Douglas Harvey Barber v Guardian Royal Exchange Assurance Group(1),

–   having regard to the legally binding Convention on the Elimination of All Forms of Discrimination against Women (CEDAW), adopted in 1979 by the United Nations General Assembly, and in particular to Article 11.1(d) and (e) and Article 11.2(c),

–   having regard to the Commission Communication of 1 March 2006on a roadmap for equality between women and men 2006-2010 (COM(2006)0092) ,

–   having regard to the Presidency Conclusions of the Brussels European Council of 13 and 14 March 2008,

–   having regard to the Commission Communication of 17 October 2007 on modernising social protection for greater social justice and economic cohesion: taking forward the active inclusion of people furthest from the labour market (COM(2007) 0620),

–   having regard to the International Labour Organisation (ILO) Convention concerning Minimum Standards of Social Security 1952,

–   having regard to the Commission Communication of 11 April 2008 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, concerning supplementary company or inter-company pension schemes outside the national statutory social security schemes (SEC(2008)0475),

–   having regard to the European social partners' recommendations in the report of 18 October 2007 entitled, Key Challenges Facing European Labour Markets: A Joint Analysis of European Social Partners,

–   having regard to the Commission's Green Paper on modernising labour law to meet the challenges of the 21st century (COM(2006)0708) and to the Parliament's resolution thereon of 11 July 2007(2),

–   having regard to the Commission Communication of 26 February 2007 entitled, Social reality stocktaking – Interim report to the 2007 Spring European Council' (COM(2007)0063) and to Parliament's resolution of 15 November 2007 on Social Reality Stocktaking(3),

–   having regard to the Commission Communication of 10 May 2007on promoting solidarity between the generations (COM(2007)0244), and to the Parliament's resolution of 30 January 2008 on the demographic future of Europe(4),

–   having regard to Rule 45 of its Rules of Procedure,

–   having regard to the report of the Committee on Employment and Social Affairs and the opinions of the Committee on Women's Rights and Gender Equality and the Committee on Economic and Monetary Affairs (A6-0409/2008),

A. whereas social security :

– is established, regulated, managed and financed (usually partly) by the state and also collectively through taxes or contributions paid by the insured, with the state having a public responsibility to fulfil the social security needs of its citizens,

– is characterised by accountability and ensuring adequate basic security for all,

– is based on the principle of solidarity,

– covers nine areas of the abovementioned Convention of the International Labour Organisation,

– aims to ensure fundamental security in the areas of employment (insurance against unemployment), income (pension payment) and earning capacity (health care insurance),

B.  whereas the total population of the European Union is expected to increase slightly until 2025 and to decrease slightly after 2025, becoming by 2050 slightly smaller and significantly older,

C. whereas, with immigration constant at present levels, the work force will decrease from 227 million people in 2005 to 183 million in 2050, the employment rate will rise to 70% in 2020, mainly due to higher female employment rates, the total number of people employed will increase by 20 million by 2017, but after that will decrease by 30 million by 2050 and the projected ratio of people over 65 to people of working age will rise from 1:4 in 2005 to 1:2 in 2050,

D. whereas a general increase in the pensionable age, based on the general trend of increased life expectancy, takes insufficient account of the fact that there are still numerous branches of industry in which the life expectancy of workers is significantly lower,

E.  whereas the social partners in general, and in those branches of industry with workers with a lower than average life expectancy in particular, have a serious responsibility with regard to the in and outflow of workers and can be the primary supporting parties in ensuring an effective age-conscious personnel policy,

F.  whereas, due to lower proportions of unemployed people, unemployment benefit spending will fall by about 0,6 percentage points of GDP by 2050, a decrease that is very modest and will not compensate higher expenditure in other sectors,

G. whereas the European Union spends 27,2% of GDP on social protection (2008), the major share being spent on old age benefits and pensions (46%),

H. whereas the term social security does not mean the relationship between spending and revenue but is rather a social contract, a relationship between rights and obligations both for citizens and for the state, and should be treated as such; whereas, under no circumstances should the budgetary character of social security, however, be undermined,

I.   whereas the fact of the ageing population is expected to lead to increases in public spending, most of it for pensions, health care and long-term care, in most Member States by 2050 if current policies are pursued, with the largest increase occurring between 2020 and 2040,

J.   whereas the objectives of the Lisbon Strategy as regards the employment of women, young people and theelderly and the Barcelona objectives as regards childcare services are essential for the viability of pension systems,

K. whereas the 2000 UN Millennium Objectives, in particular Objective 3, presuppose gender equality,

L.  whereas, in general terms, women's careers tend to be more fragmented and the rate at which their pay increases slower, while men tend to have a more continuous employment record and their pay tends to increase more steadily, which means that there is a discrepancy between their respective contributions to the pension system and an increased risk of poverty for women, which is in addition a longer-term risk, given their greater life expectancy,

General concerns

1.  Urges the Member States, in the light of the Lisbon Strategy and the need to cover social risks and secure the sustainability of the social security and pensions systems and maintain the core of the European social models, to make more progress in balancing social expenditure and social activation and, furthermore, to attract and retain more people in quality, secure and mandatory social insurance employment, promoting growth and job creation and access to employment on the basis of greater market transparency, to modernise social protection systems (for example through greater differentiation in benefit formulas and funding mechanisms) and to increase investment in human capital by promoting research and development and innovation and through better education and vocational training in the context of lifelong learning for all;

2.  Calls on the Commission to follow closely social security and pension reforms in the Member States, comparing their impact to date on the employment situation of women and focusing on the best practices that have emerged, particularly in reducing gender discrimination regarding pay and in reconciling professional and family responsibilities;

3.  Emphasises that sources of economic growth will alter as a result of demographic change and that increase labour productivity and technological innovation will become sources of economic growth; recognises that, in order to maintain a higher level of productivity, it will be essential to invest more in research and development and better management methods, where synergy between technological and social innovation will be a high priority;

4.  Highlights, in the context of current demographic, economic and social trends and the prevention of inter-generational and inter-societal conflicts, the importance of finding new methods for an efficient and equitable distribution of costs and benefits among what will be a smaller economically active and a larger economically inactive population: on a European and national level the aim should be maintaining the balance between the economic viability of the social security systems and pensions on the one hand and the coverage of social risks on the other;

5.  Recalls its belief that, to promote an economically viable social protection system, Community labour law should reinforce employment contracts of indefinite duration as the dominant form of employment under which adequate social and health protection is provided and respect for fundamental rights is ensured; recognises, however, that rights also need to be protected for those who have other working patterns, including the right to a pension which allows the retired to live in dignity;

6.  Recalls that the core of European social models is the principle of solidarity between generations and social groups, and that it is primarily financed by work-related earnings, such as contributions by employees and employers and labour taxation; nevertheless points out that the ageing population will put serious pressure on the active work force and that solutions to the demographic change should be a political priority; stresses that, otherwise, demographic change could jeopardise the principle of solidarity and European social models as a consequence; stresses also the significant importance, therefore, of strengthening the principle of solidarity, including fair financial compensation;

7.  Recalls that, under Article 141 of the EC Treaty, measures may be adopted to actively achieve equal pay and Community case-law regards social security contributions as an element of pay;

8.  Notes that, as a result of changing demographics, it is estimated that by 2030 the ratio of active to inactive persons will be 2:1; calls on the Commission and Member States to develop policies to ensure that carers, many of whom are obliged to withdraw from the labour market because of caring responsibilities, are not adversely effected by pension insecurity;

9.  Recalls that the trend towards individualisation, contributes to the modernisation of the second and the third pillars, without calling into question the first pillar of social security systems; this to enable people, especially women and other vulnerable groups, to have more freedom of choice and thus become more independent and able to build up their own, additional pension rights;

10. Calls on the Commission to carry out more detailed research and studies concerning the impact of the individualisation of social rights on the equal treatment of women and men;

11. Considers that equality between men and women must be one of the objectives of any reform of social security and pension systems, while stressing that inequalities in this respect are fundamentally of an indirect nature, resulting from persisting inequality on the employment market, in pay and career prospects and in the way family and domestic responsibilities are shared and can therefore only be corrected by more global measures;

12. Calls on the Commission and Member States to raise awareness among (young) adults of the importance of building-up pension entitlements early;

Work force

13. Believes that a decreasing work force will, if the present situation continues, lead to a decrease in the total number of hours worked; considers that, in order to reverse this trend, measures could be taken to reduce the unemployment rate and increase recruitment (combined with training and retraining) including persons who have a high labour potential such as disabled persons , women and the elderly; stresses the need to enable flexible retirement on a voluntary basis, change the organisation of working practices and make intelligent use of new technologies; stresses that it is also necessary that support services and services related to the care of children and family dependants are improved, in the light of reducing the number of people working part-time on a voluntary basis;

14. Recalls that higher employment rates are heavily dependent on the need to keep all groups – especially those excluded from the labour market – active; stresses, therefore, the need to fight discrimination on the labour market and to offer jobs to inactive persons in the labour force; stresses, furthermore, the need to provide reasonable accommodation so as to facilitate the employment of disabled persons and those with significant health problems, and to ensure that disabled persons and persons who are mentally ill have access to employment;

15. Stresses, therefore, the need for active policies on the employment of women, young people and the elderly so as to make proper use of manpower and business enterprise and to ensure that, inter alia, contributions to pension systems entitle the retired to a decent pension;

16. Stresses the need to discuss at national level raising the legal retirement age; considers that, irrespective of the various legal retirement ages in the Member States, it is necessary that employees should be encouraged to remain in employment on a voluntary basis and as long as conditions allow, until the age which applies or longer;

17. Calls on the social partners, among other things on the basis of experience gained in various sectors, to negotiate tailor made sector based measures in relation to ageing workers in general and a age-conscious personnel policy in particular;

18. Calls on Member States to create financial and social incentives to encourage employees voluntarily to continue to work even after reaching the statutory retirement age;

19. Calls on Member States to pursue an active policy to improve the prospects for safe working conditions in order to reduce risk in certain occupations and avoid the early retirement of a large proportion of skilled workers;

20. Recalls that any pro-active economic migration policy that addresses especially potential migrants of working age and offers fast-track immigration to highly skilled applicants would need to be complemented by better integration of migrants into the labour market and society as a whole; stresses that intensified efforts to increase immigration might lead to a brain-drain in the countries of origin, which might have a negative effect on the economical and societal development of these countries and encourage new waves of uncontrolled migration;

21. Recognises that “brain waste” can also be an issue, for both the economy as a whole and the individuals concerned, when qualified migrant workers are used to fill shortfalls in the need for the less-skilled; stresses the need for migrant workers to benefit from their contributions to pension schemes;

22. Calls on the Commission to take the necessary steps to ensure that EU citizens working and residing in a host Member State do not lose out on some or all of their social security rights;

23. Considers that the long term impact of immigration in the ageing of the population is uncertain as it depends on the behaviour of migratory flows, on family regrouping and on the birth rate amongst migrants; considers that immigrants can lead to a better balance of social security systems if they are legally employed and therefore contributing to its financing;

Pensions

24. Draws attention to the existing discrimination against all vulnerable groups in terms of access to and the conditions on the labour market, especially those who are working in jobs where social security contributions are not mandatory, which leads to lower employment rates and lower wages and therefore fewer opportunities for those groups to built up adequate pensions; insists on the need to provide equal opportunities for all, thus ensuring higher employment rates, equal pay and adequate pension rights;

25. Recognises the fact that public pension systems strengthen social solidarity and are the responsibility of Member States and that safeguarding these systems should be a political priority; believes that greater use of alternatives to state-funded pensions, such as supplementary schemes, could be a viable alternative; points out that private pensions could include occupational supplementary pension schemes by employers or other collective organisations and associations and individual supplementary pensions based on savings; emphasises that the existence of private pensions would increase the need for the appropriate regulation of private pension funds, the portability of such pensions and the promotion and continued modernisation (including more flexibility) of these alternatives; within this framework, believes that the risk should be taken into account that women in the context of the existing public pension system might lose insurance coverage if private provisions are to replace this system, but that this risk can be reduced by crediting pension entitlements maternity leave, parental leave and breaks from work for personal reasons;

26. Calls on the Member States to take serious account of the need to redesign traditional pension systems which are based on systematic risk assessments and the assumption of a typical, standard life course and adjust the social security system in line with the reforms of the pension system, this given that the assumed standard course of life is changing rapidly, and the so-called "patchwork biographies" will become more and more common; this could lead to a new social risk of increasing unpredictability for many individuals and for vulnerable groups in particular, especially immigrants, low-skilled workers, single parents and those with other caring responsibilities; stresses that this can lead to an early exit from the labour market or reduced participation in it; points out that a transformation of the pension systems is also necessary to achieve a flexible labour market;

27. Notes that a sustainable pension system needs to adapt to demographic and economic challenges and stresses that – provided that there is wide availability – a three-pillar structure is a balanced option; suggests that the statutory pensions (first pillar) be flanked by collectively funded occupational pension systems (second pillar) and by individual additional third-pillar products; stresses the value of pension systems that combine solidarity with often high returns because of volume, long-term and prudent but profitable investment strategies; invites the Commission to undertake the preparation of an appropriate and feasible framework of regulation and supervision of pan-European pension products; stresses that an internal market for occupational and third-pillar pensions would allow individuals to enjoy portable occupational pension arrangements, stimulate competition and reduce the cost of saving for retirement;

28. Observes that it is predominantly women who take care of children as well as elderly, ill or disabled members of the family, voluntarily or involuntarily under the pressure of cultural attitudes and social norms or of the poor quality or lack of childcare facilities and other care facilities (long-term care structures) and therefore have more interruptions in their working careers; stresses the need to compensate women and careers and to provide them with real choices as regards having children as in relation to caring responsibilities, without fearing possible financial disadvantages or suffering detriment to their career progression; welcomes action by Member States to prevent and compensate this situation, for example by crediting child and family care time in statutory pension insurance;

29. Calls on the Member States, the social partners and representatives of women's organisations to continue to pay close attention to the possible or actual effects of pension system reforms on equality between men and women and to ensure that remedial action is taken if necessary to guarantee equal treatment;

30. Requests that, as a matter of urgency, the Commission and the Member States take measures prohibiting direct discrimination in occupational pension schemes, including the practice of basing the level of payments and contributions on actuarial factors based on sex;

31. Recalls its resolution of 21 February 1997 on the situation of spouses helping self-employed workers(5) which inter alia called, for action to ensure that it was compulsory for spouses helping self-employed workers to be covered individually by a pension insurance scheme;

32. Recalls its resolution of 12 March 2008 on the situation of women in rural areas of the EU(6), calling once more on the Commission to submit a revised version of Directive 86/613/ΕECof 11 December 1986 on the application of the principle of equal treatment between men and women engaged in an activity, including agriculture, in a self-employed capacity, and on the protection of self-employed women during pregnancy and motherhood(7) by the end of 2008 providing for independent social and pension entitlements for women assisting on agricultural holdings;

33. Recalls its resolution of 11 July 2007 on financial services policy (2005-2010) (8) and stresses the importance of developing a transparent and flexible European social security and pension market, by reducing fiscal barriers and the obstacles of transferability of pension rights from a Member State to another; is of the opinion that the creation of an internal market for pensions requires a European framework regulating pension products;

34. Urges the Commission to review Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003 on the activities and supervision of institutions for occupational retirement provision(9) urgently in order to provide a solid solvency regime appropriate to such institutions for occupational retirement provision, based on advice from the Committee of European Insurance and Occupational Pensions Supervisors and a thorough impact assessment, examining level playing field issues through differences in calculation and underlying assumptions for measuring liabilities; stresses that such a regime could be based on an extension of some aspects of the amended Commission proposal of 26 February 2008 for a Directive of the European Parliament and of the Council on the taking-up and pursuit of the business of insurance and re-insurance (Solvency II)(10) to pension funds, taking into account the specificities of the institutions for occupational retirement provision, such as the long-term nature of the pension schemes they operate and the type of risk coverage or guarantees provided by pension funds; considers that such a special solvency regime would underpin financial stability and prevent regulatory arbitrage;

35. Recalls that the Court of Justice has ruled against obstacles to tax exemptions for cross-border pension contributions; emphasises that tax relief offers the best incentive for long-term savings and that further harmonisation may be needed to remove all obstacles to cross-border contributions to pension schemes;

36. Notes the current trend away from defined benefit pension systems to defined contribution pension systems and is concerned about the decline in employer contributions that evidently accompanies this trend; emphasises the need for strengthened participation and contribution levels of employees in existing pension schemes in order to ensure adequate retirement income for individuals and emphasises the need for continued adequate contributions from employers, particularly in defined contribution pension schemes; is concerned that the envisaged revision of International Accounting Standard (IAS) 19 regarding employee benefits, as for example in the case of the possible abolition of the so-called "corridor-approach", could entail significant changes to pension systems that need to be carefully assessed, especially regarding possible adverse effects on the attractiveness of defined benefit schemes;

37. Observes that, in order to ensure decent living conditions for disabled peersons and to avoid the ‘benefits trap’, it is necessary to provide compensation for the additional cost of living associated with disability and to coordinate it with pension systems and social integration policies;

Financial sustainability

38. Stresses the need for the Member States to preserve adequate levels of funding for social security and pensions systems, the need to find alternative and robust tax bases in the face of the increased competition brought about by globalisation; stresses the importance of reducing reliance on labour taxation in order to increase the competitiveness of Member States" economies and provide more work incentives; recognises the complexity involved in shifting to a more capital based taxation, given the smaller capital tax base and greater mobility of capital; suggests that shifting to new ways of taxation and/or other alternatives could be considered to improve the financial sustainability of social spending, which would reduce the tax burden on people with lower incomes; maintains that the employers' social security contributions represent an investment because they result in increased productivity, this being one of the reasons why countries with high social spending are also the most competitive;

39. Underlines the fact that Member States must focus on the medium and long-term objectives of the Stability and Growth Pact (SGP) and ensure sustainable public finances to meet the increased pressure of an ageing population; notes that the Informal Economic and Finance Ministers Council held in Brdo on 5 April 2008, agreed that the focus on social spending should move from volume of expenditure to achievements and outcome; recommends that the Council reflect on further improvements to the SGP, for example by allowing longer term investments to be accounted for over a longer period of time;

40. Stresses that Member States should design their financial policies in a sustainable manner by fairly sharing the tax burden among employees, consumers, businesses and income from capital, and across generations;

41. Considers that regulation should aim to secure the solvency and protection of occupational pension schemes, not least in the event of takeover or other significant change in ownership or management;

42. Calls on the Member States to include in their annual budgets a fund for future pensions payments;

43. Stresses the need to consider a phased transition from joint contribution-based to fund-based insurance-type pension schemes,

Healthcare and long-term care

44. Expresses the conviction that measures to improve health mean a need to invest, which can contribute to reducing the costs in light of the ageing population and improve the soundness of public finances; insists on the importance of preserving the values and principles underpinning all health care systems in the European Union, which comprise universal coverage, solidarity in financing, equity of access and the provision of high quality health care, notwithstanding the need for rational consumption of scarce resources; underlines that by improving the organisation and provision of services in accordance with the principles of subsidiarity, there is the potential for improving both the quality and financial efficiency of health services;

45. Given the projected higher costs of health care and long term care, considers that Member States should reflect on their funding and take account of the fact that, given the possibility that less non-professional care will be available due to the trend towards smaller families and an increase in women's participation in the labour market, the increase in long-term care might be higher than projected;

46. Points out that the emphasis should be placed on persons needing expensive or long-term health care, persons and groups of persons facing particular access problems, such as ethnic minorities and persons on low incomes, on care for persons suffering from chronic illnesses and the development of open support structures for the rehabilitation, social integration and support of persons with physical or mental disabilities and the elderly, so as to avoid institutionalisation and to help them live independently;

47. Observes that the public funding of health care helps protect against financial risk, independently of the personal health risks and thus supports equality and social security, whereas, in contrast, private contribution mechanisms involve limited or no pooling of risks and usually link payments to the risk of ill health and ability to pay, while simultaneously guaranteeing a sustainable financing regardless of demographic change;

48. Recognises the importance of public financing in achieving the objective of solidarity, and the wide diversity of the levels of public and private financing of health care in the Member States; recommends that the Commission carries out research to determine the level and/or range of public financing, which meets the objective of solidarity, both for the system as a whole and for particular service areas;

49. Recognises the increasing popularity of market-based solutions and privatisation in health care financing as a panacea for cost explosion, inefficiency and problems of quality of care, especially among new Member States; recognizes the increasing evidence that the functional privatization of social health insurance systems, the profit motive and the competition between financial intermediaries usually make the administration of health care systems more expensive, whilst their beneficial effects in terms of cost containment, efficiency and quality of care are dubious; for this reason, recommends that Member States with a single payer model preserve that model;

50. Notes that health care systems that are predominantly funded through employment-based social insurance contributions may benefit from broadening the revenue base to include non-earnings-related income;

51. Notes that, in the light of the principle of freedom to provide services and the right of the insured under health insurance schemes to choose a doctor or establishment freely, it is not permissible for Member States to refuse to reimburse their citizens for any treatment received abroad but Member States can impose (fixed) individualised ceilings on the costs incurred and are not obliged to reimburse treatment that their nationals would not have received at home;

52. Calls on Member States to avoid a purely financial approach when adopting reform policies aimed at redesigning the legal framework which underpin their respective national healthcare systems;

53. Is deeply convinced that the starting point for any reform should be a careful analysis of the existing health (financing) system to identify weaknesses and problem areas, combined with understanding of the contextual factors that may contribute to or impede successful reform; expects Member States to be fully aware of the considerable impact of healthcare reforms on the operation, capacity, and efficiency of their respective healthcare systems, and of the threats that insufficiently or inadequately prepared reform measures can have on the quality and availability of healthcare services, on the health of citizens, and hence on their employability;

54. Calls on Member States to consider the whole range of health financing functions and policies, rather than focusing on contribution mechanisms alone; is convinced that raising the level of employment-based contributions, or raising the private contribution of patients to the cost of healthcare services are wrong-headed policies that can have disastrous consequences since they limit in an unacceptable way the access of citizens with low incomes to the full range of healthcare services;

55. Is convinced that the access of citizens with low incomes to high quality healthcare services should be seen as a clear priority that it is linked most closely with the European values of solidarity and equal rights, and that it constitutes a precondition for the successful achievement of the Lisbon objective of full employment;

56. Calls on the Commission to take into account the aspects of equal rights of all European Union citizens to high quality healthcare systems, and to integrate the necessary guarantees against discrimination against citizens relating to financing into the revision of Community anti-discrimination legislation, or any new legislative instrument dealing with the issue of access to healthcare services;

57. Recommends that Member States contribute to efficiency and equity in their respective healthcare systems by lowering the number of risk pools or – better still – by creating a single, national pool that can facilitate strategic direction and co-ordination throughout the health system;

58. Instructs its President to forward this resolution to the Council, the Commission, the Employment Committee, Social Protection Committee, and the governments and parliaments of the Member States and the candidate countries.

(1)

Case C-262/88, ECJ [1990] I-1889.

(2)

Texts adopted, P6_TA(2007)0339.

(3)

Texts adopted, P6_TA(2007)0541.

(4)

Texts adopted, P6_TA(2008)0066.

(5)

OJ C 85, 17.3.1997, p. 186.

(6)

Texts adopted, P6_TA(2008)0094.

(7)

OJ L 359, 19.12.1986, p. 56.

(8)

Texts Adopted, P6_TA(2007)0338.

(9)

OJ L 235, 23.09.03, p.10

(10)

COM (2008) 119.


EXPLANATORY STATEMENT

Demographic developments

The demographic trend in Europe will lead to a projected decrease of population and to the ageing of the population ageing. This will result in a slightly smaller and significantly older population in 2050. This will be induced by birth rates below the natural replacement rate and a higher life expectancy, which leads to a reversion of the age pyramid due to a shrinking number of younger people and a growing share of people above the age 65.

The average birth rate in the EU is not a reflection of women’s choice or of European citizens' actual aspirations for creating a family, and may therefore also be linked to the difficulty of reconciling work with family life (lack of child-care infrastructures, social and economic support for families, and jobs for women), the anxiety-inducing social environment (unstable work situation, expensive housing) and a fear of the future (late access to employment for young people and job insecurity).

To compensate the changes in the working population through immigration, the required demand of 90-100 million people, leading to much larger ethno-cultural and religious heterogeneity; reminds that intensified efforts to increase immigration of high-skilled persons might lead to higher brain-drain in the countries of origin, which might have seriously negative impact on the economical and societal development of these countries.

Social developments

The rapporteur believes that it is possible to make considerable progress in transforming the welfare state by shifting from a social expenditure to a social investment perspective.

Given the Lisbon strategy and the employment targets agreed on a EU level, there is the need to attract and retain more people in quality employment, to increase labour supply and to modernise social protection systems, to improve adaptability and security of workers and enterprises, and to increase investment in human capital through better education and skills.

It is recognised that their is a diversification of life forms, observable in fewer marriages, higher divorce rates, longer postponing the birth of the first child, which results in the complement of the still dominant traditional marriage model through alternative forms of living together.

The rapporteur realises that an increased individual behaviour changes the loyalty of people concerning societal institutions, like social security systems, and will put pressure on the discussion of redefining solidarity and social balancing.

Financial developments

The ageing population is projected to lead to increases in public spending - mostly to pension, health care and long-term care spending - in most Member States by 2050 on the basis of current policies. The potential offsetting savings in terms of public spending on education are likely to be limited due to increasing investments in lifelong learning.

The rapporteur recognises that tax collection has been impacted by structural developments and growing challenges, like an increasing global competition and an increasing mobility of factors of production; thus stresses the need for discussing alternative and robust tax bases.

Economic developments

Currently the world is characterised by globalisation, i.e. accelerated open trade, and rapid technological progress, which creates intense competitive pressures, forcing companies to be more flexible to enable market expansion. Projections show that the potential annual average GDP growth rate will decline in the next decades.

In the future the sources of economic growth will alter: employment will make a positive contribution to growth until 2010 and after 2030 turn significantly negative, whereas labour productivity will become dominant and sometimes the only source of growth. Thus to preserve a higher level of productivity, it will be essential to invest more in research and development.

The changed age structure of the workforce could alter the composition of consumption and domestic demand, potentially implying reallocations between sectors, which require a rise in job mobility, to avoid increasing labour market mismatches with even lower employment.

Labour market developments

Globalisation will lead to industrial and regional structural changes and changes in employment patterns and levels, and, as a response, to policies aimed at more flexicurity; stresses that the core challenge is to achieve economic flexibility with better social protection in order to create an environment capable of making the best use of the opportunities; recognises the need for a skilled and adaptable labour force, therefore combining active labour market policies with investment in lifelong learning to enhance employability.

This also means strengthening education and training notably for the low-skilled.

The labour market is the key to successful policy adjustment, since ultimately it is the economic output of a country that determines its capacity to sustain high quality welfare.

At constant immigration, the work force will decrease from 227 million people in 2005 to 183 million in 2050; the employment rate will raise to 70% in 2020, mainly due to higher female employment rates, primarily resulting through the retirement of older women, where the employment rates were low; the total number of persons employed will increase by 20 million to 2017, but after that will decrease by 30 million to 2050.

This will also lead to lower proportions of unemployed people and thus the unemployment benefit spending will fall about 0.6 percentage points of GDP in 2050. This decrease is very modest and relatively small and will not compensate higher expenditures in other sectors.

The decrease of people in the work force will lead to a decrease of the total amount of hours worked. To compensate this development, it is necessary to increase the overall hours worked of the remaining workers or to reduce the number of people, who work part-time.

Higher employment rates depend strongly on the activation of all groups facing discrimination in the labour market. In this light the need to reconcile women's economic roles in ways that are equitable and efficient and changes in the provision of essential household services like child care to enable women to reconcile work with family life are needed.

In this light it is also important that there must be enough job opportunities for older people with appropriate working skills. Therefore, age-discrimination need to tackled, lifelong learning promoted, flexible retirement pathways provided for and healthy work conditions in place.

The rapporteur is of the opinion that Member States should use these developments as a window of opportunity to pursue structural reforms.

Age related developments

The ageing of the population will put more pressure on public spending and on some categories of tax revenues, as at the same time, globalisation will render it increasingly difficult to collect taxes from mobile tax bases.

Much of the projected gain in life expectancy will result from lower mortality rates at older age, which will change the relation of duration of retirement to work.

The rapporteur is convinced that one of the key challenges will be to develop labour market policies and reforms in the tax and benefit systems aimed at increasing labour supply and further reforms of the welfare state that guarantee the long-term sustainability of public finances in the face of an ageing population.

Pensions

Demographic development will lead to an increase of public pension spending in all Member States. This increase can be lowered by a partial switch of the public old-age pension scheme into private funded schemes, but a stronger focus on private funded pensions can create new challenges and forms of risks and the necessity of appropriate regulation of private pension's funds.

Pension regimes in the Member States are - although to a different degree - historically developed systems based on the so-called male-breadwinner model, i.e. are highly familiarised.

Attention needs to be paid on redesigning traditional pension systems, which are based on systematic risk assessments, starting from the assumption of the typical standardised life course, in face of the current trend that the assumed standardised life course is changing rapidly and so-called patchwork biographies will become more and more common, which leads to a new social risk of an increasing unpredictability of the future for many individuals and for vulnerable groups in particular, especially immigrants, low-skilled workers, and single parents. Unstable work biographies substantially influence pension claims and that in most professions interruptions are disadvantageous for career paths and wage levels.

Women predominantly take care for children, voluntarily or involuntarily due to cultural attitudes and social norms or due to low quality or the lack of childcare facilities. This fact is compounded by the design of the terms of maternity leave in many Member States, which stipulate that women have to take the break; stresses the necessity to compensate women for that loss of career to provide them with a real choice to have children without fearing possible financial disadvantages.

Healthcare developments

Age itself is not the causal factor of health care spending, but an ageing population will put pressure for increased public spending, thus public expenditure on health care will increase by 1.5-2 percentage points of GDP in most Member States to 2050.

There is a strong impact of an ageing population on long-term care, mainly caused by the increase in the number of elderly people and the increase in the need for long-term care, which result in an increase of 0.5-1 percentage points of GDP.

Furthermore, less informal care will be available within households due to the trend to smaller families and the increase in women's participation in the labour market, thus the increase in long-term care could be higher than projected due to the need of more formal care.

In face of an ageing population, the provision of health care for all will increase the costs for provided services, which - seeing that an increase in contribution is not an option - will accelerate the trend to reduce the amount of public financed services to a minimum core of vital services, leading to a perpetual discussion on the extent of this core. People, who have the possibilities to withdraw from solidarity, could leave public health care schemes to find more and higher quality services at private health care provider, which will put additional pressure on public health care financing, resulting in fewer services in lower quality, which will deteriorate the confidence in public health care and will put solidarity under pressure.

Main considerations of the rapporteur

Demographic pressures induced by ageing and more diverse population structures will - in combination with stringent fiscal realities - push Member States to rethink elements of traditional social security systems as pension schemes, labour market programmes, and health and education policies.

Possible solutions to mitigate the development are higher labour force participation rates, especially for the age group 55 -65 and for women, whose employment rates are at the moment significantly lower. This will require adequate possibilities for women to reconcile work with family life, particularly child care facilities and all-day-schools and also to improve work opportunities and conditions for people with disabilities and strengthened efforts to tackle social exclusion. To meet this it is necessary to implement the Lisbon Agenda with a focus on getting people into jobs, providing them with decent pay and other incentives to work.

Ensuring at the same time the sustainability and adequacy of health care and retirement income for the population in the Member States over the coming decades is a task requiring action at all levels of society, government, firms and households.


OPINION of the Committee on Women's Rights and Gender Equality (*) (10.9.2008)

for the Committee on Employment and Social Affairs

on the future of social security systems and pensions: their financing and the trend towards individualisation

(2007/2290(INI))

Rapporteur (*): Astrid Lulling

(*) Associated committee – Rule 47 of the Rules of Procedure

SUGGESTIONS

The Committee on Women's Rights and Gender Equality calls on the Committee on Employment and Social Affairs, as the committee responsible, to incorporate the following suggestions in its motion for a resolution:

–   having regard to the Treaty establishing the European Community and in particular Article 141 thereof,

–   having regard to the 2006-2010 gender equality roadmap,

–   having regard to the judgments of the Court of Justice of the European Communities, in particular judgment C-262/88(1),

–   having regard to the legally binding UN Convention on the Elimination of All Forms of Discrimination against Women (CEDAW 1979), in particular Article 11.1(d) and (e) and Article 11.2(c),

Α. whereas the objectives of the Lisbon strategy as regards the employment of women, young people and older people and the Barcelona objectives as regards childcare services are essential for the viability of pension systems,

B.  whereas the 2000 UN Millennium Objectives, in particular Objective 3, presuppose gender equality,

C. whereas the employment situation in Europe is not in line with the Lisbon strategy which has as its aims more and better jobs, full employment and social inclusion, especially for women,

D. whereas the gender and intergenerational dimension greatly increase the risk of having a weaker position in the labour market, since women, and older and also younger workers engaged in non-standard contracts have fewer chances to improve their position in the labour market,

E.  whereas, in general terms, women's careers tend to be more fragmented and the rate at which their pay increases is slow, while men tend to have a more continuous employment record and their pay tends to increase more steadily, which means that there is a discrepancy between their respective contributions to the pension system and an increased risk of poverty for women, which is in addition a longer-term risk, given their greater life expectancy,

1.  Considers that equality between men and women must be one of the objectives of any reform of social security and pension systems, while stressing that inequalities in this respect are fundamentally of an indirect nature, resulting from persisting inequality on the employment market, in pay and career prospects and in the way family and domestic responsibilities are shared and can therefore only be corrected by more global measures;

2.  Stresses, therefore, the need for active policies on the employment of women, young people and older people so as to make proper use of manpower and business enterprise and to ensure that, inter alia, contributions to pension systems entitle them to a decent pension;

3.  Recalls that, under Article 141 of the EC Treaty, measures may be adopted to actively achieve equal pay and Community case law regards social security contributions as an element of pay;

4.  Calls on the Commission to carry out more detailed research and studies concerning the impact of the individualisation of social rights on equal treatment for women and men;

5.  Calls on governments, social partners and representatives of women's organisations to continue to pay close attention to the possible or actual effects of pension system reforms on equality between men and women and to ensure that remedial action is taken if necessary to guarantee equal treatment;

6.  Requests that the Commission and the Member States as a matter of urgency take measures prohibiting direct discrimination in occupational pension schemes, including the practice of basing the level of payments and contributions on actuarial factors based on sex;

7.  Considers that the following remedial action may provide means of safeguarding or encouraging equality between men and women in connection with reforms of pension systems, while paying due regard to differences between the Member States' respective systems:

     – recognition of periods spent devoted to reconciling work and family life, such as maternity leave, parental leave, periods spent looking after a dependent relative and educational, further education, retraining and lifelong learning responsibilities, for example by increasing periods of compulsory insurance to complete the period of social insurance coverage necessary to ensure entitlement to a pension;

     – dividing up pension rights in the event of divorce ('pension splitting')(2);

     – maintaining or creating derived rights for the surviving spouse in the form of widowers' or widows' pensions, particularly for spouses who have reduced or stopped their paid employment in order to take on family and domestic responsibilities;

     – the possibility of awarding a minimum pension even to those who have not paid contributions continuously or whose contributions were based on low pay;

     – indexing pensions by reference to price and pay indicators to maintain pensioners' purchasing power;

     – introducing systems to enable people to opt for gradual retirement while continuing to work part-time before or after retirement age;

8.  Recalls its resolution of 21 February 1997 on the situation of spouses helping self-employed workers(3) which called, among other things, for action to ensure that it was compulsory for spouses helping self-employed workers to be covered individually by a pension insurance scheme;

9.  Recalls its resolution of 12 March 2008 on the situation of women in rural areas of the EU(4), calling once more on the Commission to submit a revised version of Directive 86/613/ΕEC(5) by the end of 2008 providing for independent social and pension entitlements for women assisting on agricultural holdings;

10. Calls on the Commission to follow closely social security and pension reforms in the Member States, comparing their impact to date on the employment situation of women and focusing on best practices which have emerged, particularly in reducing gender discrimination regarding pay and in reconciling professional and family responsibilities.

RESULT OF FINAL VOTE IN COMMITTEE

Date adopted

9.9.2008

 

 

 

Result of final vote

+:

–:

0:

17

0

4

Members present for the final vote

Edit Bauer, Emine Bozkurt, Ilda Figueiredo, Věra Flasarová, Lissy Gröner, Zita Gurmai, Anneli Jäätteenmäki, Rodi Kratsa-Tsagaropoulou, Urszula Krupa, Astrid Lulling, Siiri Oviir, Marie Panayotopoulos-Cassiotou, Zita Pleštinská, Teresa Riera Madurell, Eva-Britt Svensson, Anna Záborská

Substitute(s) present for the final vote

Gabriela Creţu, Lidia Joanna Geringer de Oedenberg, Mary Honeyball, Filiz Hakaeva Hyusmenova, Maria Petre

(1)

Judgment of 17 May 1990 in the Barber case, ECJ 1990, p. I-1889.

(2)

Resolution of 21 January 1994 on pension rights for divorced or separated women in the Member States of the Community (OJ C 44, 14.2.1994, p. 218).

(3)

OJ C 85, 17.3.1997, p. 186.

(4)

Texts adopted on that date, P6_TA(2008)0094.

(5)

Council Directive 86/613/ΕEC of 11 December 1986 on the application of the principle of equal treatment between men and women engaged in an activity, including agriculture, in a self-employed capacity, and on the protection of self-employed women during pregnancy and motherhood, OJ L 359, 19.12.1986, p. 56.


OPINION of the Committee on Economic and Monetary Affairs (11.9.2008)

for the Committee on Employment and Social Affairs

on the future of social security systems and pensions: their financing and the trend towards individualisation

(2007/2290(INI))

Rapporteur: Ieke van den Burg

SUGGESTIONS

The Committee on Economic and Monetary Affairs calls on the Committee on Employment and Social Affairs, as the committee responsible, to incorporate the following suggestions in its motion for a resolution:

1.  Underlines that Member States must focus on the medium and long-term objectives of the Stability and Growth Pact and ensure sustainable public finances to meet the increased pressure of an ageing population; notes that on 5 April 2008, the Council concluded that the focus on social spending should move from volume of expenditure to achievements and outcome; recommends that the Council reflect on further improvements of the SGP, for example by allowing longer term oriented investments to be accounted for over a longer period of time;

2.  Stresses that Member States should design their finance policies in a sustainable manner by fairly sharing the tax burden among employees, consumers, businesses and income from capital, and across generations;

3.  Notes that a sustainable pension system needs to adapt to demographic and economic challenges and stresses that – provided that there is a wide availability – a three-pillar structure is a balanced option; suggests that the statutory pensions (first pillar) be flanked by collectively funded occupational pension systems (second pillar) and by individual additional third-pillar products; stresses the value of collectively funded pension systems that combine solidarity with often high returns because of volume, long-term and prudent but profitable investment strategies; invites the Commission to undertake the preparation of an appropriate and feasible framework of regulation and supervision of pan-European pension products; stresses that an internal market for occupational and third-pillar pensions would allow individuals to enjoy portable occupational pension arrangements, stimulate competition and reduce the cost of saving for retirement;

4.  Recalls its resolution on financial services policy (2005-2010) - White Paper of 11 July 2007(1) and stresses the importance of developing a transparent and flexible European social security and pension market, by reducing fiscal barriers and the obstacles of transferability of pension rights from a Member State to another; is of the opinion that the creation of an internal market for pensions requires a European framework regulating pension products;

5.  Urges the Commission to review Directive 2003/41/EC urgently in order to provide a solid solvency regime appropriate to institutions for occupational retirement provision, based on advice from the Committee of European Insurance and Occupational Pensions Supervisors and a thorough impact assessment, examining level playing field issues through differences in calculation and underlying assumptions for measuring liabilities; stresses that such a regime could be based on an extension of some aspects of Solvency II to pension funds, taking into account the specificities of those institutions such as the long-term nature of the pension schemes they operate and the type of risk coverage or guarantees provided by pension funds; considers that such a special solvency regime would underpin financial stability and prevent regulatory arbitrage;

6.  Recalls that the Court of Justice has ruled against obstacles to tax exemptions for cross-border pension contributions; underlines that tax relief offers the best incentive for long-term savings and that further harmonisation may be needed to remove all obstacles to cross-border contributions to pension schemes;

7.  Notes the current trend towards moving from defined benefit pension systems to defined contribution pension systems and is concerned about the observed decline in employer contributions that accompanies this trend; emphasises the need for strengthened participation and contribution levels of employees in existing pension schemes in order to ensure adequate retirement income for individuals and emphasises the need for continued adequate contributions by employers, particularly in defined contribution pension schemes; is concerned that the envisaged revision of IAS 19, as for example in the case of the possible abolition of the so-called "corridor-approach" could entail significant changes to pension systems that need to be carefully assessed, especially regarding possible adverse effects on the attractiveness of defined benefit schemes;

8.  Stresses that solidarity based financing is a crucial element in Member State health-care systems; underlines that strengthening the rights to access cross-border health-care services must not undermine that solidarity and must take into account the structure and specificities of national health-care financing schemes in order to ensure sustainable, equal and universal access to health care.

RESULT OF FINAL VOTE IN COMMITTEE

Date adopted

9.9.2008

 

 

 

Result of final vote

+:

–:

0:

37

1

0

Members present for the final vote

Mariela Velichkova Baeva, Paolo Bartolozzi, Zsolt László Becsey, Pervenche Berès, Sebastian Valentin Bodu, Sharon Bowles, Udo Bullmann, Manuel António dos Santos, Christian Ehler, Elisa Ferreira, José Manuel García-Margallo y Marfil, Jean-Paul Gauzès, Robert Goebbels, Donata Gottardi, Gunnar Hökmark, Karsten Friedrich Hoppenstedt, Othmar Karas, Christoph Konrad, Guntars Krasts, Kurt Joachim Lauk, Andrea Losco, Astrid Lulling, Gay Mitchell, Sirpa Pietikäinen, John Purvis, Alexander Radwan, Bernhard Rapkay, Heide Rühle, Eoin Ryan, Antolín Sánchez Presedo, Olle Schmidt, Peter Skinner, Ieke van den Burg

Substitute(s) present for the final vote

Harald Ettl, Piia-Noora Kauppi, Vladimír Maňka, Bilyana Ilieva Raeva, Margaritis Schinas

(1)

Texts Adopted, P6_TA(2007)0338.


RESULT OF FINAL VOTE IN COMMITTEE

Date adopted

7.10.2008

 

 

 

Result of final vote

+:

–:

0:

36

2

1

Members present for the final vote

Jan Andersson, Edit Bauer, Iles Braghetto, Philip Bushill-Matthews, Milan Cabrnoch, Alejandro Cercas, Ole Christensen, Derek Roland Clark, Luigi Cocilovo, Jean Louis Cottigny, Jan Cremers, Proinsias De Rossa, Harlem Désir, Richard Falbr, Ilda Figueiredo, Roger Helmer, Stephen Hughes, Karin Jöns, Ona Juknevičienė, Raymond Langendries, Elizabeth Lynne, Thomas Mann, Maria Matsouka, Elisabeth Morin, Juan Andrés Naranjo Escobar, Csaba Őry, Marie Panayotopoulos-Cassiotou, Rovana Plumb, Bilyana Ilieva Raeva, José Albino Silva Peneda, Jean Spautz, Gabriele Stauner, Ewa Tomaszewska, Anne Van Lancker

Substitute(s) present for the final vote

Françoise Castex, Petru Filip, Richard Howitt, Jamila Madeira, Csaba Sógor

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