The AAE paper, “The ageing of the EU – implications for pensions” was shortlisted in the “Best Pensions Paper 2016 (Europe)” Award category as “Highly Commended” in Savvy Investor Awards 2016.
This discussion paper analyses some of the key features of “The 2015 Ageing Report” and “The 2015 Pension Adequacy Report”, published in 2015 by the European Commission. It comments on the underlying population projections and the scope for differences of view and then considers what the projections tell us about future sustainability and adequacy of pension systems in the EU.
This paper should be a ‘must read’ for decision-makers and interested parties concerned with pensions and social security throughout the EU. Although there is a lot of uncertainty in the projections and the paper draws attention to some of their shortcomings, overall the picture is one of improving fiscal sustainability. The 2015 Ageing Report shows significant reductions in the long-term fiscal public expenditure implications of pensions. In part this results from the changes that have been made to the underlying population projections and other technical assumptions, but it also reflects a wide range of pension reform activity in most member states.
Amongst the most prevalent of reform measures are those relating to increasing retirement age, but there have also been important changes to benefit accrual, to indexation, to qualifying periods for pension and some quite radical restructuring of social security program structures, for example the move in several member states from defined benefit to notional defined contribution arrangements.
However, the paper warns that much has been assumed about the impact of reforms and there is still a long way to go to be sure that they will have the impact projected, for example with raising the effective retirement age.
Actuaries are professionals with expertise in the quantification and management of long-term risks which are susceptible to mathematical modelling.
This includes all types of social security, as well as complementary workplace or mandatory pensions, whether funded or not. The member associations of the Actuarial Association of Europe have robust educational and professionalism requirements for those who are qualified actuaries and the AAE is also starting to issue model standards of actuarial practice for the associations to adopt for some specifically EU applications. Actuaries are well-placed to play an active role in analysing the impact of future changes on pension provision and to advise EU and national institutions.
As lons as the AAE is ready to work with the European Commission, the European Parliament and other stakeholders to assist in further developing the necessary conditions for an adequate European pension environment, the IAE is ready too to do that with the Spanish Government, the Parliament and the Toledo´s Pact Commission.