Risk of old age poverty means bold thinking on pensions required – new report
Brussels, 27 June 2017 - A squeeze on pension provision is putting millions of EU pensioners at risk of old age poverty, making it essential for policymakers to explore alternative models to provide for citizens in old age, according to a new report by Finance Watch published today.
The report explains how pensions are being squeezed by a perfect storm of demographic shifts, slow growth and increasing inequalities, while occupational pensions are being disrupted by an increasingly fragmented job market characterised by shorter tenures and rising automation, leaving a potentially serious future gap in provision.
Finance Watch Senior Analyst, Christian M. Stiefmueller, said:
“Promoting Pillar 3 pensions could be helpful in reducing the pension gap, and we look forward to seeing the Commission’s proposal on Pan-European Personal Pension (PEPP) products later this week. Even with this initiative, however, there is no certainty that the contribution of Pillar 3 pensions will be sufficient. Given the scale of the problem, we would encourage policymakers to explore the feasibility of alternative models to build a future-proof foundation for the European model of the Welfare State.”
The report considers a range of factors, including:
- what the next generation can expect, based on current demographic trends,
- how women are more exposed to pension poverty than men,
- how wealth and income inequalities are increasing the risk of poverty in old age,
- the impact of robots and automation on wages and pensions,
- the different effects of immigration on the pension system,
- a glance at alternative models, such as a Universal Basic Income.
Finance Watch Secretary General, Benoît Lallemand, said:
“Nearly every citizen will be affected by pension policy at some stage in their lives. This report looks at the tough choices we face to avoid old age poverty becoming a common problem in the EU in the near future.”
The report is being launched today at a Finance Watch conference in Brussels. DG FISMA Deputy Director General John Berrigan (standing in for Olivier Guersent) will be the keynote speaker.