The EU population, like those of most other world regions, is living longer and in better health. Since 1960, life expectancy has climbed by eight years, and demographic projections foresee a further five-year increase over the next 40 years. This is a historic achievement. Together, with the low birth rates of the past decades, however, it means that Europe’s population is aging fast—something that is happening all over the world with the exception of the poorest countries. The European Statistical Office projects that, by 2060, there will be only two people of working age (15–64) in the EU for every person aged over 65, compared to a ratio of four-to-one today. The strongest push in this direction is expected to occur during the period 2015–35 when the baby boomers, who were born in the two decades after World War II, start to retire.
Population aging presents a number of challenges for our welfare systems and public finances. Indeed, the EU member states spend, on average, more than a quarter of their gross domestic product on social protection, most of it for older people in the form of pensions, health care, and long-term care. The economic crisis has left us with large public deficits and a huge public debt burden at a time when the large cohorts of the postwar Baby Boom Generation are entering their 60s and starting to retire from the labor market. The EU is proud of the level of social protection it has achieved for its elderly population, although there is of course much room for improvement. Now the key question is how these achievements can be maintained in the current economic and demographic context.
In this context, many perceive aging as a threat instead of one of our greatest achievements. They see the growing number of older people as a burden on the working-age population. These fears neglect, however, the fact that a growing number of older people are in good health, have valuable skills and experience, and are willing to make a significant contribution to society—a contribution from which young people can strongly benefit. Enabling people to staying active as they grow older and to continue contributing to society is key to tackling the challenge of demographic aging.
Focus on Active Aging
This is why, over the coming years, we will focus our attention on promoting active aging. Active aging is not just about the participation of older workers in the labor market; it is about their active contribution to society through voluntary work, notably as family caregivers, or their ability to live independently thanks to adapted housing and infrastructure, such as transport. It is also about the provision of services and technologies that reduce the dependence of older people on others. It is about lifelong learning, crucial to helping older workers stay active.
Promoting active aging requires a wide range of policies at all levels of governance. Mainly national, regional, and local governments, as well as civil society and the social partners, have to take action, but there is also a role for the European Union, which complements or coordinates national policies in areas such as employment, public health, information society, transport, and social protection.
The European Year 2012 for Active Ageing and Solidarity between Generations will seek to raise awareness of older people’s contributions to society, and the fact that solidarity between generations is about more than just young people supporting the elderly. It will be an opportunity to identify and disseminate good practice, in particular, by encouraging all policy makers and stakeholders to set themselves specific goals related to active aging and to take action to meet these goals.
Active aging is an essential element of the European Union’s strategy for smart, sustainable, and inclusive growth, known as “Europe 2020.” The strategy aims to achieve an employment rate of 75 percent for the 20 to 64 age range and to lift at least 20 million people out of poverty and social exclusion by 2020. Achieving these objectives—and preserving strong solidarity between generations—will not be possible without active aging.
Pensions are another crucial element in the concept of smart, sustainable, and inclusive growth. European pension systems are under enormous pressure from demographic aging. Starting this year, the working-age population in Europe will begin to shrink, so the challenge is very much upon us. The financial and economic crisis has made the situation even more urgent. Unsurprisingly, EU citizens are more concerned about pensions than ever before.
The EU must play its full part—while respecting national competencies—in ensuring that member states can provide adequate, sustainable, and safe pension systems for their citizens both now and in the future. The president of the European Commission, José-Manuel Barroso, highlighted this need ahead of his appointment by the Parliament for a second term, saying, “We need to ensure that pensions do the job intended of providing the maximum support to current and future pensioners, including vulnerable groups.”
A Green Paper on pensions, published in summer 2010, looked at a wide range of policy issues and triggered a major debate on how the EU could build a comprehensive policy response to the challenges confronting European pension systems. The responses included the need for pension reforms to support the sustainability of public finances and adequacy of pensions and the need for higher effective retirement ages.
The role of pensions in public spending is reflected in the Euro Plus Pact, which aims to create sound fundamentals for the common currency and highlighted the importance of pension reform, notably raising retirement ages.
The Europe 2020 strategy entails a stronger coordination of policies in the member states, in the context of the European Semester. More than half of the EU member states received recommendations relating to pensions. Recommendations mainly focused on the need to speed up planned reforms and increase effective retirement ages, for instance by curbing early retirement and disability and by extending careers through active aging policies and (re)training. Another important recommendation, addressed to a number of member states, was to link statutory retirement ages to life expectancy, and in some cases to equalize the pension ages of men and women (or to do so more quickly than currently planned). Some countries were encouraged to improve the coverage of funded complementary pensions. As these latter schemes grow in importance, the regulatory framework ensuring the safety and portability of such pensions needs to be improved. This too will have to be part of a comprehensive EU policy agenda on pensions.
The place for presenting such a policy agenda will be a White Paper on pensions, which we expect to be adopted by the end of this year. It will pick up and reinforce the important messages coming out of this first European Semester and, like the Green Paper, it will make strong links to the Europe 2020 agenda. After all, only good jobs and a good balance of time spent in employment and in retirement can secure adequate and sustainable pensions.
Should we be worried about having to work longer in the future? It is certainly a lesser evil than spending old age in poverty. And some preliminary data of a future Eurobarometer show that the older they get, the more people are willing to work after their official retirement age. Moreover, raising the retirement age does not mean that we have fewer years of retirement to look forward to—with rising life expectancy, we can have both longer working lives and more time in retirement. A recent survey found that older people are happier than young ones. The greyer the world gets, the brighter it becomes—provided we can stay active longer as we grow older. It’s now time to take a different view of life after 60: It is full of possibilities, and the challenge is to make the most of them to create a better society for people of all ages.
Koos Richelle is Director-General of the European Commission’s Employment, Social Affairs and Inclusion Directorate-General (DG). Previous positions he has held within the Commission were as Director-General of the EuropeAid Cooperation DG (2004–10) and of the Development DG (2001–04). Prior to joining the Commission in 2001, Koos worked in the civil service in the Netherlands, including as Director-General for International Cooperation in the Ministry of Foreign Affairs, Director-General for Welfare in the Ministry of Welfare and Health, and Deputy Director for Adult Education and Vocational Education and Training in the Ministry of Education and Science.