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It may be described as a small miracle and celebrated as a big success that the EU Commission in one of the currently most important strategy papers, the White Paper on Pensions, regards the “dependency ratio calculator”, which was developed by the Austrian Federal Chamber of Labour, as a crucial Instrument in the debate on the financial sustainability of pension systems. However, the public debate in respect of the publication of the White Paper was mainly concerned with raising the statutory pension age, even though this has not been explicitly required by the EU Commission.
White Paper on Pensions: labour market plays key role in the debate on the future of pensions
The White Paper on Pensions is regarded as one of the key strategy papers of the EU Commission. It addresses the adequacy, safety and sustainability of pension systems, identifies problems resulting among other from demographic change, and proposes solutions. Important, but unfortunately not sensational enough in the eyes of the public to make it into the headlines of the media, is the mention in the White Paper on Pensions, as to what an important role the labour market is playing for the future financial sustainability of pensions. This view is supported by the dependency ratio calculator (DRC), developed by the Vienna Chamber of Labour, which is able to demonstrate that the improved labour market integration of people of working age renders many drastic changes, such as the often demanded increase of the statutory pension age, as not necessary. That the DRC is explicitly referred to in the White Paper, thereby giving the Chamber of Labour a prominent place in one of the most important strategy papers, may be interpreted as a genuine sensation.

Linking state pension age to life expectancy

Should one believe the demographers, all of us will be living longer - even adding five to seven years to our lives by 2060. According to the EU Commission, this will result in increasingly more young people and more and more elderly citizens living in Europe. The question is what the impact will be on the financial sustainability of the pension systems. Initially, one might conclude that longer life expectancy would have to be accompanied by raising the retirement age. That is already exactly the opinion of many Member States, which link the statutory pension age to the increasing life expectancy. Unfortunately, the fact that raising the statutory pension age does not give any indication whether the people are in employment, is easily forgotten. But this is exactly what should be taken into consideration when we think about the future of pension systems.

Opportunities for remaining in the labour market must be improved

However, the White Paper also notes that the success of reforms, which aim at increasing the pensionable age (for example phasing out the options of early retirement), require better opportunities for older women and men to remain in the labour market. These include the adaptation of workplaces and working arrangements, the promotion of lifelong learning, cost effective strategies to reconcile professional, private and family life, measures to promote healthy ageing and to combat gender specific inequalities and age discrimination. It is important that one never loses sight of these issues in the pensions debate and that they will have to be taken into account in the following discussion at Member State level.

Further Information:

White Paper on Pensions of the EU Commission


Dependency ratios and demographic change - The Labour market as a key element