Mailing It In: European Union Efforts at Pension Reform

By Stransky, Michael K. | Chicago Journal of International Law, Spring 2001 | Go to article overview

Mailing It In: European Union Efforts at Pension Reform


Stransky, Michael K., Chicago Journal of International Law


Occupational pension schemes are one pillar of the European pension system; the other pillars are public schemes and individual pension plans. Authoritative sources have noted that the dearth of specific European Union ("EU") rules regarding occupational pension schemes and the stringent requirements upon them, such as workers losing their pension rights should they move between countries, have certain negative consequences, such as impairing labor mobility. On October 11, 2000, the EU issued a Proposal for a Directive of the European Parliament and of the Council on the activities of institutions for occupational retirement provision ("Directive").1 The catalyst to this Directive was to assist the efforts of occupational fund schemes in relieving the impending financial pressures on the Member States' public systems. The Directive is to address various challenges to the overall pension system by strengthening one of its pillars, the occupational pension scheme.

The most prevalent challenge to the European (as well as the US) pension system is the prospect of an aging population, represented demographically by the retirement of the "baby boomer" generation with a corresponding low fertility rate today. In fact, the European Commission has noted that "[p]opulation ageing [sic] will be on such a scale that, in the absence of appropriate reforms, it risks undermining the European social model as well as economic growth and stability in the European

Union."2 Currently in the EU, four workers support every pensioner; however, that ratio is expected to drop to two workers by 2025, and even to a one-to-one ratio in some states at that time.3 These demographic facts lie in the background of the pension system and any effort to reform it.

In addition to these demographic challenges, Member States have various national restrictions and statutory provisions detrimental to economic efficiency.4 In some Member States, pension funds are often restricted in their investment decisions by rigid and uniform quantitative thresholds-for example, a fund can only invest a certain amount of its assets in domestic stocks, foreign stocks, or government bonds. Also, pan-European companies cannot centralize their pension investments and activities in a single fund, but rather are restricted to executing pension funds in accordance with the pension laws of the individual Member States. Workers moving from one Member State to another often lose a part or all of their acquired pension rights when moving, and their cross-border pension contributions do not attract the same tax advantages as purely domestic contributions.5 These national restrictions deter labor mobility, an efficiency requirement absolutely crucial to the success of the single market and common currency.6

It is the sole responsibility of the EU Member States to maintain the legal framework of their respective pension regimes, and thus they have the exclusive power to address these demographic challenges and statutory inefficiencies. France and Spain have emphasized adjustments to the parameters of their existing, mandatory "pay-as-you-go" schemes,7 such as adjustments to the contribution rate, retirement age or benefit payment level. Sweden has favored accumulation of reserves within the existing public scheme, while Italy has opted for an increased reliance on private schemes. The long-term sustainability of pension schemes is most sound in the two countries with the most open and private systems, the United Kingdom and the Netherlands.8 The differing actions taken to meet the challenges to the pension system clearly exemplify the various governing philosophies of the Member States with respect to reforms in this area.

The Commission noted its ability to coordinate national regulatory schemes at the supranational level, and its recent Directive addresses directly some of the outlined concerns. Though the Directive maintains qualitative restrictions, it proposes that pension funds be allowed to invest up to 70 percent of their assets in shares, far more than is allowed in most EU states. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Mailing It In: European Union Efforts at Pension Reform
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.