Pension Adequacy in the European Union 2010-2050
Over the last decade most Member States have reformed their pension systems to improve their medium and longer term sustainability as a precondition for delivering on adequacy objectives. But in the context of accelerating population ageing and the current economic crisis achieving pension policy objectives are becoming more challenging.
When trying to reconcile and optimise sustainability and adequacy concerns Member States face trade-offs and difficult choices. Achieving the goal of cost-effective and safe delivery of adequate benefits that are sustainable is quite challenging.
Public pension expenditures make up a big part of public expenditure (EU-27: 11.3% of GDP in 20102, variance 6% - 15%) and are a major factor in the present and medium to longer term public budget position. Sustainability relates to the fiscal and financial balance between revenues and liabilities (and ratio of workers/contributors to pensioners/beneficiaries) in pension schemes. Pension reforms are needed to ensure that a balance can be maintained even as the population ages. They may also be necessary to improve possibilities for short to medium term budget consolidation.