Pension Reforms in the EU since the Early 2000’s: Achievements and Challenges Ahead

torsdag, 05 januar 2017

Most EU Member States have carried out substantial pension reforms over the last decades in order to enhance  fiscal  sustainability,  while  maintaining  adequate  pension  income.  The  intensity  of  pension reforms  has  been  particularly  strong  since  2000.

These  reforms  have  been  implemented  through a wide  range  of  measures  that  have substantially  modified  the  pension  system  rules  and  parameters. One of the most important elements of pension reforms, aside of whether countries engaged or not in  a  systemic  change,  has  been  the  introduction  of mechanisms  aimed  at  automatically  adjusting (indexing)  the  key  pension  parameters  (pension  age, benefits,  financing  resources)  to  demographic pressure  (e.g.  changes  in  life  expectancy,  increase  in  the  dependency  ratio).  Indeed,  since  the  mid-1990's,  half  of  the  EU  Member  States  have  adopted  either  automatic  balancing  mechanisms, sustainability  factors  and/or  automatic  links  between  retirement  age  and  life  expectancy.  All  these  pension  reforms  are  projected  to  have  a  substantial  impact  on  containing  future  pension  expenditure trends.  According  to  the  latest  long-term  projections  in  the  2015  Ageing  Report,  public  pension expenditure is projected to be close to 11% of GDP over the long run in the EU, almost the same as in 2013.