Pension Adequacy: Halt the increase of old-age poverty!

Published every three years by the European Commission and the Social Protection Committee, the report provides important insights on the evolution of old-age poverty, income maintenance through pensions, income evolutions after retiring and the role of health and care spending.

AGE was invited to send a contribution on the report results.

EU poverty targets slipping away

At the launch conference of the report on 27^th June, we underlined unacceptably high numbers of old-age poverty, which now affects more than one in three persons in seven Member States,. We also observed that for other pensioners, the rate by which pensions replace past income from work is falling over time.

Behind these numbers, there are people who struggle to keep their home warm or cool during winter and heat waves, or who are unable to visit their children and grandchildren as much as they would like, who forego medical treatment or care, and, more and more older women living along are struggling to make ends meet. The European institutions should intensify the analysis of pension schemes and propose reforms to maintain universal, accessible, and adequate minimum pensions that fulfil the promise to ‘End Poverty’ by 2030, to which the EU and Member States have committed.

Adequate pensions sustains economic stability

Older persons have shown extraordinary resilience during the COVID-19 pandemic: beyond the care and support they provided to their younger family members as childcare and schools were reduced, they struggled less to maintain their mental well-being than other age groups, and with a stable pension income they supported the economy in a context where many had to reduce their income and activity. This shows that an adequate pension allowing to maintain a large part of one’s standard of living has both moral and economic value.

During the price shock linked to the Russian invasion of Ukraine, our members realised that they needed to mobilise to maintain their standards of living, as pension indexation arrived often too late or insufficiently. We must ensure that pensions remain adequate also over time, in the face of economic crises and for people who might spend more than four decades with pensions as their only income.

Furthermore, health and long-term care weigh manifold on people’s shoulders: financially, as co-payments are sometime prohibitive. When people reduce treatment or care because of costs or the inaccessibility of care services people pay a toll with their own health and quality of life – sometimes leading to more expensive, intensive medical care as their conditions are not properly treated. Also, expensive or inaccessible care services divert family members from the labour market as they provide informal care, risking the reduction of their income, social isolation and mental and physical health issues. Member States must provide for ambitious reforms under the EU Care Strategy to ensure affordable, accessible and quality care for all who need it – especially community-based and home care.

Pensions need to be sustainably funded

We insist that rather than focussing on legal retirement ages, we need a quality-of-work offensive: we must eliminate ageism and age discrimination at the workplace, provide training to all age groups, ensure workplaces keep people physically and mentally healthy and provide for flexibility in the reconciliation of professional and private life. This will increase employment rates of older workers and raise effective retirement age, as less people will need to leave early. AGE has developed the AGE Barometer 2023 with concrete measures and examples of what can be done at all levels to empower older workers.

We also propose to expand the coverage of social protection schemes to include all forms of work to raise contributions and prevent inadequate pension rights.

Tackling gender inequalities

In face of a 26% Gender Pension Gap, and poverty and social exclusion affecting one in four women over 75, we need to strengthen gender equality also in older age. Encouragement of men to take care breaks, expansion of early childhood education and care, strengthening affordable and adequate long-term care services and measures to decrease differences in salaries between women and men are extremely important policies in this regard – but they come too late for currently older women.

The EU should step up the recognition of unpaid care work, provided overwhelmingly by women, in the form of pension credits.