18 July 2002

Economic Policy Committee publishes paper on reform challenges of public pension systems

-
This report, prepared by the Working Group on Ageing Populations (AWG), which is attached to the Economic Policy Committee (EPC), illustrates the potential fiscal impact of certain fundamental pension reforms, and attempts to identify options for reforming the pension systems in the EU. It presents a number of additional simulations on the quantitative impact of certain changes of the basic parameters of public pension systems on pension expenditure and contributes to the discussion of the pros and cons of different pension reforms currently undertaken in the EU.

Possible answers to the reform challenges might therefore be:

With respect to the different pension schemes in the EU, reform priorities could be different in each country

In some countries a clear policy priority should be placed on increasing the employment rate and the activity rate of older workers.

Rethinking the benefit levels of public pension systems: the relative standard of living of pensioners, which is normally measured by the replacement rate for pension benefits, might be replaces by an alternative measure for the relative level of income replacement for a full career.

Taking into account the time spend in retirement: in earnings-related systems, the most straightforward answer would be to link in a more actuarial way the replacement rate or the contribution rate of a cohort to its life expectancy.

Reform challenges facing public pension systems: the impact of certain parametric reforms on pension expenditure

© Economic Policy Committee