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Work Longer, Says EUBy: Sarah Toyne, BBC News March 17, 2003
The European Union is to issue a stark warning to Britons that
they should be prepared to forget early retirement and work for longer. The most comprehensive look at member states pensions will be
presented at a key EU summit this week. Its main conclusion: workers should not be encouraged to take
up early retirement. The keystone EU report also issues a veiled criticism of the
level of state support for pensioners in the UK, the complexity of the
private pension system - and whether such a plethora of schemes can be
monitored effectively. Co-ordinated policies Back in December 2001 at the Laeken summit, it was agreed that
EU members would openly co-ordinate their pensions policies. It is estimated that by 2050, the number of people over 60 in
Europe will have doubled to 40% of the total population or 60% of the
working age population. The need to match this change in public policy has become a
major concern in Brussels. One problem identified in the report is that while life
expectancy has been increasing at a rate of more than one year per decade
for someone aged 65, the average retirement age has been "dropping at
an even larger speed". The UK is not a major culprit in this respect - the average
age of effective retirement is 62 for men and 59 for women - higher than
many other EU countries. But the EU still sees this as a problem: Britons are still
retiring too early. As many as 55% of men and one third of women retire before the
state pension age; while 10% of early retirement is linked to generous
occupational schemes. Pension reforms with a particular focus on reducing incentives
to take up early pensions and improving incentives for working longer will
be crucial to reverse the trend of early retirement, the report warns. Individual responsibility The report criticises the UK state pension system's funding. This is couched in rather diplomatic terms: "adequacy has
developed into a major challenge", but the meaning is explicit. Public pension expenditure on pensions was 5.5% of GDP in 2000
- the lowest in the EU - and is expected to fall to 4.4% by 2050. The report does acknowledge measures to address inadequate
incomes by the government through measures such as the Pension Credit, to
be introduced in October. But it also points out that pensioner incomes in the UK have
fallen well below average earnings. Between 1979 and 1996 the average earnings of the population
grew by 36%, while many pensioners saw their incomes rise at a faster
rate, with the income of the poorest fifth of pensioners grew by only 30%,
the report says. Gordon Deuchars, policy officer for Age, European Older
People's Platform, said: "The crisis for UK pensioners is worse than
in many other countries. "They have shifted the problem onto the individual. The
UK government expenditure on national pensions is far lower than other
European countries." Strategic errors Critics of the UK government's pension policy says the report
raises concerns about the government's strategy. "Basically the report is saying you can only get away
with paying a state pension if you can increase the level of private
pensions," says Neil Churchill, director of communications at Age
Concern. "But the number of people who have got them is
declining." One relief to some will be the explicit statement that the EU
does not recommend raising the statutory pension age. Instead, it wants greater flexibility towards retirement and
flexible working practices. However, such jubilation may be short-lived. The message is clear: people are increasingly on their own
when it comes to financing their future. Copyright
© 2002 Global Action on Aging |
