7 Pensions Green Paper |
|Commission Green Paper: Towards adequate, sustainable and safe European pension systems|
Commission staff working document: description of EU legislation concerning pensions
|Document originated||7 July 2010
|Deposited in Parliament||14 July 2010
|Department||Work and Pensions
|Basis of consideration||EM of 26 July 2010
|Previous Committee Report||None
|To be discussed in Council||No date set
|Committee's assessment||Politically important
|Committee's decision||Not cleared; further information requested
7.1 Member States are responsible for establishing their national
pensions framework and, as a result, there is considerable diversity
in the types of pensions schemes available in each Member State.
Some aspects of pension provision are covered by EU legislation.
So, for example, EU law on the co-ordination of social security
systems enables pensioners who have paid into a statutory scheme
in one Member State to receive their pension when resident in
another Member State. EU prudential rules, which seek to ensure
that pension fund or life assurance providers are financially
sound, apply to some (but not all) occupational pension schemes.
EU rules on insolvency provide some protection for employees'
pension rights. EU legislation on financial services has sought
to standardise the provision of pre-contractual information to
enable investors to make informed choices.
7.2 There are many other areas of EU activity
that have an impact on pension provision. These include the internal
market, especially rules on the free movement of labour, services
and capital; the Stability and Growth Pact, which may constrain
public expenditure on pensions; and the Europe 2020 Strategy for
jobs and sustainable and inclusive growth which sets a 75% employment
target for those in the 55 to 65 age group and advocates the long-term
sustainability of public finances.
The Green Paper
7.3 The purpose of the Green Paper is to launch
a debate "on the key challenges facing pension systems and
how the EU can support Member State efforts to deliver adequate
and sustainable pensions".
The Commission identifies the following challenges:
- a rapidly ageing population
which will increase public expenditure on pensions, health and
- reform of national pension systems to keep people
in work longer and to provide greater choice of pension schemes;
- the impact of the financial and economic crisis
notably rising unemployment, lower growth, higher national
debt, and financial market volatility on the provision
of adequate and sustainable pensions.
7.4 The Commission suggests that ensuring the
adequacy and sustainability of pension systems should serve as
the overarching objective of pension reform. The Green Paper invites
responses from all interested parties to 14 questions which seek
to clarify what role the EU should play in supporting Member States
to achieve this objective. Some of the questions are general in
nature, others are detailed and specific, suggesting the amendment
of existing legislation.
7.5 The questions are grouped under the following
- adequacy and sustainability
should the EU seek to define what an adequate retirement
income might entail, and is the existing pension framework at
EU level sufficient to ensure sustainable public finances?
- achieving a sustainable balance between
time spent in work and in retirement
what role should the EU play, for example, in extending
working lives, tackling age or other forms of discrimination in
the labour market, and raising pensionable ages?
- removing obstacles to mobility in the EU
should, for example, the scope of application of existing
EU measures be extended to include a wider range of pension schemes,
or changes be introduced to stimulate greater cross-border activity,
and is there a need for special provision (such as a cross-border
EU pension fund) for mobile workers to overcome difficulties with
the transfer of pension rights from one Member State to another?
- ensuring safety and transparency in pension
provision should the EU seek
to close gaps in existing EU regulation, consider the scope for
further EU action to achieve a better balance between risks, security
and affordability for pension providers and beneficiaries, and
improve rules on the solvency of pension funds and the protection
of employees in the event of employer insolvency?
- improving the provision of information
to enable informed choices
should the EU seek to develop a common approach on the information
to be provided about pension schemes and define "desirable
features" to help inform decisions about the most appropriate
7.6 The Commission's final question goes to the
nub of the Green Paper by asking whether there is a need to strengthen
policy co-ordination on pensions at EU level and, if so, how best
to achieve "an integrated approach" involving all stakeholders
public authorities, social partners, industry and civil
society in designing and implementing future pension policy.
The Commission invites responses to the questions set out in its
Green Paper by 15 November.
The Government's view
7.7 In his Explanatory Memorandum of 26 July
2010, the Minister of State for Pensions (Steve Webb) notes that
that the Green Paper is a consultative document and therefore
has no immediate legal, financial or policy implications for the
UK. He says that, in its response to the Commission's consultation,
the Government will stress the importance of the subsidiarity
principle and that "pensions policies should generally be
at national and not European level but that improved indicators,
reporting and information sharing at European level could be helpful".
7.8 The Green Paper provides a useful analysis
of the challenges facing pension systems across the EU and raises
an important question about whether, and how, the EU should respond
to them. We agree with the Minister that subsidiarity should be
the guiding principle in determining an appropriate role for the
EU. We should be grateful for a copy of the Government's written
response to the questions raised in the Green Paper. Meanwhile,
we shall keep the Green Paper under scrutiny.
15 Introduction to the Green Paper, fifth paragraph. Back
Minister's Explanatory Memorandum, page 2, para 9. Back