'Old' Europe struggles with pension

By John Leicester, The Miami Herald (Florida)

October 19, 2003  

European countries like France are dealing with a massive aging problem and the subsequent lack of pension funds for millions of current and future retirees.

After decades as a teacher, Francelise Madassamy envisioned a leisurely retirement in southern France, with occasional trips to Guadeloupe, the French Caribbean Island where she was born.

But her dreams have been clouded by new pension cuts, the government's response to an aging crisis looming over France's retirement system. Because of the cutbacks, she'll navigate her golden years with tightened purse strings. She'll retire on about $1,725 a month, some $345 less than she'd expected.

''I'll have to make fewer trips; I'm already traveling less now,'' said the 50-year-old, who aims to stop working at 60. ``I'm having to think about retirement differently.''

Giving new meaning to the term ''Old Europe,'' countries from France to Germany, Italy to Austria and beyond are grappling with a gargantuan problem: Millions of post-World War II baby boomers are trooping toward retirement, and their governments can't foot the astronomical pension bill.

For politicians, experts say, the choice is stark: Reform pensions now, or risk crippling economic, social and even political costs down the line.

''The more you wait, the more difficult it becomes,'' said Robert Holzmann, an Austrian economist at the World Bank. Failure to reform will force cutbacks that would ``hit those who have the least capacity to react, who are the old and the very old.''

Such warnings don't sit well with powerful trade unions and Europeans steeped in the idea of the state's providing amply in old age.

Italy's three largest unions are calling for a four-hour general strike on Oct. 24 after Premier Silvio Berlusconi said on prime-time TV that without reform, ``the state won't be able to pay pensions, and the elderly won't be able to live on their pensions.''

On Friday, the German parliament votes on plans to reform unemployment benefits and social security, stage two of reforms to trim welfare and revive Europe's largest economy. Chancellor Gerhard Schroeder has warned his very survival in office depends on pushing through the reform package.

Sporadic strikes over welfare hobbled transport and schools in France this spring, and in June, retirement reforms sparked postwar Austria's biggest strike.

''What's happening in Austria is not reform. People are just going to be denied what they deserve. I have to face the fact that I'll not have the money to pay for my basic needs,'' said Peter Preisinger, a 42-year-old computer specialist in Vienna.

Copyright 2002 Global Action on Aging
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