On 7 July 2010 the European Commission released their Green Paper towards an adequate, sustainable and more transparent European pension system. The Paper aims to address and promote discussion in the following areas:

• Ensuring that pensions are adequate and sustainable in the long term
• Achieving a sustainable balance between time spent in work and in retirement
• Removing obstacles to mobility in the EU
• Having safer and more transparent pensions with better awareness and information
• Improving EU statistics on pensions

The Paper also examines some of the key challenges facing European pensions including that of an ageing population which will see the old-age dependency ratio double from the present situation, where we have four people working for every person over 65, to a situation in 2060 where it is expected that there will be just two people of working age for every person over 65.

Other points of interest contained in the Paper include the Commission’s estimate that the average pension age in Europe is likely to increase to 67 by 2040, and to 70 by 2060. Additionally, the discussion of cross-border pension schemes and in particular the issue of mobility of pensions, which has been stalled at European Council level for a number of years, will bring fresh impetus to this important area.

There has been a mixed reaction to the Paper with most commentators welcoming the opportunity to have a Europe wide debate on the key issues.  A number of specific concerns have also been raised, however. Chief among these is in relation to the Commission’s assertion that Solvency II (the solvency requirements for insurance companies) may be a “good starting point” for developing a pensions solvency regime. The potential difficulty which has been raised with this is that pension schemes, unlike insurance schemes, are not likely to face sudden and unforeseen demands on their capital and, as such, having a similar solvency scheme might create an unnecessary burden for pension schemes to manage.

The Commission is now holding consultations with interested parties and a deadline of 15 November 2010 has been set for anyone who wishes to submit contributions to a dedicated website which can be found at www.eupensiondebate.eu