The EU is facing tough challenges, including demographic changes and Member States are adapting their retirement practices and pension systems to keep them sustainable and adequate. Yet, pension reforms often result in trade-offs between sustainability and adequacy, and this does not come without a price in terms of health inequalities.
By Stecy Yghemonos
Over the last decade Member States have reformed their pension systems to improve their medium and longer-term sustainability. But in the context of accelerating population ageing and the current economic crisis, achieving pension policy objectives is becoming more challenging. The purpose of pensions is to provide an adequate income stream in retirement which will not only replace previous revenues but provide a decent standard of living. For the 20% of EU citizens aged 65 or older with pension incomes just below or just above the poverty risk threshold, relatively small increases or decreases in pensions can have life-changing consequences: pension support is one of the most important weapons to ward off the threat of poverty, ill health and social exclusion. Providing adequate pension support is therefore an essential component for an environment that is conducive to dignified and healthy living conditions.
Successfully raising pension ages depends on workplace and labour market measures that enable and encourage women and men to stay healthy and work longer. There are clear limits regarding how much age management practices at work can be influenced by incentive structures in pensions. Tackling the pension adequacy challenge thus requires determined efforts to promote longer and healthier working lives through employment and industrial relations policies.
While the Europe 2020 strategy emphasises higher and better quality jobs, and focuses on positive employment transitions (both of which are decisive factors for workers to accrue pension rights), effectively addressing gaps in pensions is also crucial to the fight against social and health inequalities. To achieve social justice and economic efficiency, the reform of EU pensions systems should be sensitive to existing health inequalities and healthy life expectancies across the social gradient. Universally proportionate actions – with a scale and intensity that is proportionate to the level of disadvantage – and solidarity within and between generations should also be recognised as cornerstones of sound national social protection systems. Because we are just no longer able to afford lost labour potential and social exclusion, a social and health investment perspective is urgently needed to successfully prepare Europe’s future. This is what the European Commission is now fostering through its recently launched Social Investment Package. After all, old age is like everything else. To make a success of it, you’ve got to start early!
EuroHealthNet press releases: EuroHealthNet emphasizes the link between pensions and health equity
16 February 2011