European Commission wants pensions privatised

2 July 2010

European Commission wants pensions privatised

The SP group in the European Parliament has been examining a leaked version of the European Commission discussion document on pensions. The document contains no definitive proposals but makes it clear that whatever else, the European Commission wants to see pensionable retirement ages increased and pension security reduced. In the view of SP Euro-MP Dennis de Jong, "it's obvious that the Commission sees pensions primarily as a financial market. It's the old story: we must offer consumers a choice, but as for solidarity between old and young, between the sick and the well, or between men and women, forget it."

Dennis de JongThe Commission's drive for austerity goes as far as excluding, on the basis of the Stability Pact, any possibility that the Netherlands will be able to maintain its existing pension system, the AOW. It wants to see the pensionable age linked to average life expectancy, so there'll be no further discussion as to 65, 66 or 67, but an automatic raising of the retirement age as life expectancy increases.

In addition, the Commission wants to move towards a pension system based on fixed premiums, but one in which you will not know how much your pension will be worth, which will depend on the profitability of the pension scheme's investments. "The Commission admits that in such a system all the risks will fall on to the shoulders of the employee and that this is meant to reduce the burden on employers. For the SP, that's unacceptable."

In the Netherlands most people are currently covered by collective systems under which employees know how much pension they can expect and any fall in returns on investment is compensated for by adjustments to the contributions of both employees and employers. According to the Commission, this must change. Workers will be seen increasingly as 'consumers' who must shop around for themselves to find the most attractive ways of assuring an income for their old age. As De Jong points out, you can do this already, but "now above all, when we've seen the reality of these opaque financial products, we shouldn't be saddling working people with more of the same."

You are here