The Social Protection Committee's report on the sustainability of pensions.
Commission Communication: supporting national strategies for safe and sustainable pensions through an integrated approach.
||(a) 18 May 2001
(b) 3 July 2001
|Forwarded to the Council:
(b) 6 July 2001
|Deposited in Parliament:
||(a) 20 June 2001|
(b) 13 July 2001
||Work and Pensions |
|Basis of consideration:
||(a) EM of 18 June 2001
(b) EM of 8 August 2001
|Previous Committee Report:
||None; but see (22157) 6457/01: HC 28xii (200001), paragraph 11 (25 April 2001)
|To be discussed in Council:
||(a) Discussed on 15-16 June 2001
(b) December 2001
30.1 The Social Protection Committee (SPC) was
mandated by the Lisbon, Feira, Nice and Stockholm European Councils
to undertake a study of the sustainability of pensions. The SPC's
preliminary study was cleared by our predecessors in April 2001.
30.2 Document (a), the SPC's final report, sets
out the general principles of and the challenges facing pension
systems in Member States. Although it does not offer precise proposals,
it identifies three challenges that the SPC considers need to
be met if pension systems are to remain sustainable in the long
- safeguarding the capacity of pension systems
to meet their social aims;
- maintaining the financial sustainability of pension
- increasing the ability of pension systems to
respond to the changing needs of society and individuals.
30.3 The report suggests that the growing imbalance
between the number of those in employment and the number of pensioners
will need to be addressed in any strategy for improving the sustainability
of pension schemes. As noted above, the report provides no specific
proposals for reform of pensions, but it does call on Member States
to co-ordinate their efforts and exchange views and information
on enhancing the sustainability of their pension schemes, in an
approach it calls the "open method of co-ordination."
The report was presented to the European Council at Goteborg in
30.4 Document (b) sets out proposals for improving
coordination between Member States in modernising pension
systems. The Minister says the document:
"outlines a process
that would require the setting of common objectives, translating
these objectives into national policy strategies and finally,
as part of a mutual learning process, periodic monitoring on the
basis of commonly agreed and defined indicators. The document
suggests potential objectives centred around three main areas:
adequacy of pensions, financial sustainability of public and private
pension schemes and modernisation of pension schemes. This process
would be integrated into parallel work being conducted by ECOFIN."
30.5 Figure 2 (appendix) sets out the next steps
in the proposed process. A key feature of the process will be
the publication by Member States of the first National Strategy
Reports by July 2002. The Commission outlines the purpose of these
"The reports should
contain a strategic statement and focus on reforms undertaken,
or envisaged, to meet the common objectives. They should be supported
by commonly agreed indicators, and, where appropriate, national
targets could be usefully included.
"Drawing on the information provided in the
national strategy reports on the sustainability of pensions, the
Commission would present a report assessing the national strategies
and identifying good practice and innovative approaches, as a
contribution to a joint report to be agreed jointly by the Commission
and the Council. The timing of this joint report should allow
for its conclusions to be included in the synthesis report to
be discussed at the Spring European Council in 2003 in accordance
with the Lisbon process.
"The first national strategy reports to be prepared
in 2002 should be updated as appropriate in subsequent years,
highlighting new developments in national strategies and progress
made in implementing them. In 2005 a major review should be carried
out on the basis of the latest available data and following a
dialogue with all relevant actors."
The Government's view
30.6 The Government broadly welcomes document (a),
which it says recognises the diversity of approaches adopted by
Member States and emphasises the fact that pension systems are
the responsibility of individual Member States. The Government
particularly welcomes the recognition that the report gives to
the work being undertaken by the Economic Policy Committee and
the Employment Committee on financial sustainability and employment.
It is the Government's view that such work should be conducted
jointly between the Committees.
30.7 As regards document (b), the Government broadly
endorses the open method of co-ordination, while having reservations
about what it sees as an "ambitious proposed timetable and
the heavy, bureaucratic nature of the process proposed".
The Minister of State for Work at the Department for Work and
Pensions (Mr Nicholas Brown) says:
"The current timetable
proposed is particularly ambitious with initial objectives being
agreed in a joint progress report with the EPC to be presented
at the European Council at Laeken in December 2001. It is envisaged
that this would go before the relevant Councils in December. Full
agreement should be achieved in time for the Spring 2002 Council
30.8 The Minister says there will be opportunity
to comment on and influence the proposal before it is put to the
Employment and Social Policy Council for adoption in December.
"The UK Government would
wish to see sustainability as the overarching objective for pension
systems, together with greater recognition of the importance of
keeping people in the labour market for longer. Among the objectives
suggested by the Commission, the UK would wish to see added an
objective on the portability of pensions and the completion of
the single market in financial services.
"Work on the adequacy and sustainability of
pensions is currently being taken forward by both the Economic
Policy Committee (EPC) and the SPC. The UK has been strongly supportive
of moves to ensure the longerterm financial sustainability
of pension systems in the Member States through the work of the
EPC. The Commission proposal recognises the importance of both
committees jointly proceeding with work on pensions. This is in
line with UK Government policy."
30.9 Pension systems are clearly the responsibility
of individual Member States. However, we recognise that there
may be some benefit in requiring Member States to exchange information
on their pension provision so that best practice can be disseminated.
The process for doing this needs to be flexible and should not
impose unnecessary burdens on Member States. We share the Government's
reservations that the Commission has proposed a process and timetable
that may be "ambitious", "heavy" and "bureaucratic",
and we support the Government's efforts to make
the approach as flexible as possible.
30.10 We clear the documents.
77 (22157) 6457/01; see headnote to this paragraph. Back