Pensions aim to protect retired people from poverty and allow them to enjoy decent living standards. They are the main source of income for about a quarter of the EU population, with the main source of income for older citizens in Europe being state pensions.

The European Pillar of Social Rights stresses:

• the right of workers and the self-employed to a pension commensurate with contributions and ensuring an adequate income
• the right to equal opportunities to acquire pension rights for both women and men
• the right to resources that ensure living in dignity in old age.

Challenges

The share of older people in Europe's population and life expectancy are both increasing. European pension systems will need to adapt to stay financially sustainable and be able to provide Europeans with an adequate income in retirement.

Even though pensioners in most EU countries are less likely to be poor than those who work, inequality among pensioners persists:

• There are significant country differences in poverty risk and pension income.
• Older women face a higher risk of poverty or social exclusion than older men do, and women's pensions are more than a third lower on average.
• People in non-standard or self-employment often face less favourable conditions for accessing and accruing pension rights than those in open-ended, full-time job contracts.
• The older people get, the higher the risk of poverty or social exclusion.

Policy responses

Pension policy is decided and implemented by each EU country at the national level. The EU supports national efforts to ensure a high level of social protection, including pension adequacy, by facilitating mutual learning and exchange of best practices.

This support includes:

• The 2018 Pension Adequacy Report of the Commission and the Social Protection Committee provides an overview of pension policies, focusing on the adequacy of old-age incomes today and in the future. Volume II provides a description of the pension system and pension adequacy in each of the 28 Member States. The report's key conclusions were endorsed by the EU Council on 21 June 2018 and discussed with Member States, social partners, stakeholders and experts at the international conference Pension adequacy in an ageing society.
• Ageing Report on the sustainability of ageing-related public expenditure
• A High-level group of experts on supplementary pensions to explore the potential contribution of supplementary pensions to adequate old-age incomes.

EU legislation protects the pension rights of people who move between EU countries. Social security coordination ensures cross-border protection of state pensions, while the right of mobile workers to supplementary pensions is protected by special rules.

In the European Semester economic coordination cycle, pensions are a priority area, given their role in the wellbeing of Europeans and in the sustainability of public finances.