Europe’s pension systems can be expected to deliver adequate pensions also to future generations of retirees provided Member States pursue strong policies to enable as many workers as possible to stay in jobs until they reach the statutory pension age, a new report on pension adequacy shows.

The findings of the 2015 Pension Adequacy Report will be endorsed today by the Employment and Social Affairs Council.

Sufficient protection but more efforts needed to guarantee income security in old-age

Employment policies should provide more possibilities for older workers to stay longer in the labour market. However, pension systems must also provide protection for those who are unable to remain in the labour market long enough to build up sufficient pension entitlements.

According to the report, for the EU as a whole, pensions currently provide most people with sufficient protection against poverty and adequate income security in old-age. Overall, older people in the European Union enjoy living standards close to those of the younger population. On average in the EU-28, the median disposable income of people aged 65 or above stands at 93 percent of the income of those younger than 65. Even during the crisis older people have been better protected than other age groups. But several Member States still need to put more effort into tackling poverty risks and guaranteeing income security in old-age.

Gender differences

Across Member States pension outcomes are marked by persistent gender differences, with women being more exposed to poverty and having lower pensions than men, due to lower salaries and shorter working lives linked to caring duties. Women also live longer than men, become widowed and end up in more precarious single person households. On average in the EU28 women's pensions are 40 percent lower than men's. Gender gaps in pensions can be reduced, but often it will require long-term policy efforts that combine equal opportunity policies across several fields before people reach the pensionable age with changes in the pension system.

Pension reforms

Recent pension reforms have postponed retirement and restricted early exits from the labour market. The success of such reforms will depend to a great extent on the ability of older workers to continue in employment as pension ages go up.

In 2012 only about half of retirements from the labour market occurred because people had reached the pensionable age. A lot of people retired earlier for reasons such as

• health,
• unemployment,
• caring duties.

It will therefore be crucial to provide people with the necessary skills, and health and social support to maintain their employability as they age. The Commission is pursuing initiatives that go in that direction, such as the recent Recommendation on long term unemployment, which aims at better supporting the long-term unemployed so they can return to the labour market and avoid becoming inactive.