15 December 2022

EURACTIV: Nine EU countries need pension reform

Nine EU countries have not explicitly committed to pension reforms in their recovery and resilience plans despite Commission recommendations on the matter from the 2019 European Semester, according to Commission documents and declarations made to EURACTIV.

In 2019, during the European Semester, 17 EU countries received recommendations on the “long-term sustainability of public finances”, and 15 were urged to specifically reform their pension systems. Some of them were again asked to pursue reforms of the retirement system with the Next Generation EU plan and again in 2022.

Asked by EURACTIV, the Commission considers that only six of the 15 countries have “explicitly” planned to reform their respective pension systems, with the other nine being late – or rather not officially committed. These are the Czech Republic, Germany, France, Ireland, Italy, Luxembourg, Malta, the Netherlands and Poland.

For those member states, reforms would “improve fiscal sustainability”, while they are “identified as posing risks to the sustainability of public finances due to ageing populations,” the Commission told EURACTIV recently.

The Commission considers “they should follow up on the specific recommendations […] and commitments made in their recovery and resilience plans” to “limit the budgetary impact of ageing populations”.

Germany, although it has taken steps to gradually increase the statutory retirement age to 67 by 2031, needs to make “further adjustments” to preserve the system in the long term, according to the Commission. The country is currently debating measures to increase pension amounts and the stability of that amount over time, with Chancellor Olaf Scholz having ruled out any age-related measures during the election campaign.

France has not formalised its plans for pension reform in the budget documents sent to the Commission, but the institution notes the French government’s willingness to carry out an “ambitious reform”, which should notably raise the legal retirement age from 62 to 64 or 65.

But the Commission’s recommendations for France focused mainly on the need to “progressively standardise the rules of the different pension schemes to strengthen the equity of the system while supporting its sustainability” – something the government would also wish to reform.

These special schemes are numerous and allow for earlier retirement or a more advantageous calculation of the pension amount. However, the fate of the reform depends on the consensus that might emerge in parliament, where President Emmanuel Macron’s coalition does not have an absolute majority and needs votes from the right to pass the text.

In the Czech Republic, there is a political will to reform the retirement system in 2023 or 2024 and bring up the retirement age from the current 63 years of age, in line with the Commission’s recommendations, though this has not yet been made official.

Italy, for its part, has “excessive [fiscal and macroeconomic] imbalances”, but the European Semester does not propose further pension reforms, focusing mainly on fiscal recommendations, which could have a better effect. Indeed, the “Fornero” reform, modified in 2019, already established a retirement age of 67.

EURACTIV

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