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Bank urges tough pension reform in Europe
(Reuters) - European countries urgently need to overhaul their pension
systems or their rapidly aging populations will face a sharp fall in
living standards after retirement, a World Bank report warned on Thursday.
Lack of consensus in
Europe about how reform should be done, including among Europe Union
accession countries, has led to far slower progress than is needed to
tackle the problem, the bank said.
policymakers and citizens need to answer some tough questions for
themselves in order to safeguard and improve their pension systems,"
said Robert Holzmann, director of the bank's social protection unit.
The report, which
was due to be presented to the European Commission in Brussels on
Thursday, said reform is essential to deal with the rising cost of
pensions and changing economic and social conditions.
In 2000 the 15 EU
member countries spent around 11 percent of gross domestic product on
pensions and that cost is set to double as the population grows older.
Life expectancy is likely to increase in the next 50 years by 4.2 years
for women and 5 years for men.
On Wednesday, French
Prime Minister Jean-Pierre Raffarin vowed to push ahead with controversial
reforms of the country's creaking pension system, even if a planned union
protest later this month brings France to a halt.
Trade unions have
called a national strike for May 13 over changes that will bring pensions
for state sector workers in line with the private sector.
The bank report also
finds that in most European countries, the pension system has failed to
take into account rising divorce rates and growing numbers of female
for women still exist in many countries," the bank said.
And pensions in
Europe often fail to capture the increasing amount of part-time and
do not fare well under many current pension schemes, which are based on a
full-time employment model," the report said. "Again, reform
(and strict contribution-benefit relationships) are needed."
European economic integration also highlights the urgent need for reform, the bank said.