14
taking due account of the principle of subsidiarity”48. Since then, the strong inter-dependency
between the financial sustainability of public finances and essential reforms concerning the old-
age security systems is officially accepted and widely established among the European popula-
49
tion.
The Council is the central decision-making body of the EU. But, regarding the debate on old-age
security systems two different approaches become obvious, an economic one and a social one.50
The Ecofin Council and its advisory groups, on the one hand, promote an economically orientated
approach. That focuses on the financial sustainability of the old-age security systems within the
Community. As mentioned above, the EMU and especially the SGP with its new constraints have
re-enforced the discussion on the reduction of size of the pay-as-you-go financed pillar of old-age
security systems in order to curb the public dept and to reach a balanced budget. In view of that,
the discussion on financing old-age security has moved into the centre. These developments show
the report on Budgetary challenges posed by ageing populations: the impact on public spending
on pensions, health and long-term care for the elderly and possible indicators of the long-term
sustainability of public finances. This report, which was prepared by an Ecofin advisory group,
concludes (again) that ageing will result in further increases of old age dependency ratios (even if
the Lisbon targets on employment are met) and in public spending on old-age security in most
member states. The report suggests that further cuts in spending on public old-age security sys-
tems may be needed,51 but this implied that elderly persons wishing to attain a certain standard of
living would have to continue to work after the current retirement age, and/or to invest in private
pension plans throughout their active years. Moreover, the most controversial issue concerning the
indicators, namely the central old-age security indicator proposed in this report, was on budgetary
projections of future expenditures on old-age security.52
The ESP Council and its advisory groups on the other hand promote a socially orientated ap-
proach. That focuses on maintaining people’s trust in their national old-age security systems. In its
report Sustainability of Pensions these actors trace out three main tasks for national governments
regarding their old-age security systems.53 The first is to ensure that old-age security systems meet
their social functions of providing safe and adequate pensions.54 The second is to generate long-
term financial sustainability of old-age security systems, in order to ensure intergenerational fair-
48
49
50
51
52
53
54
European Council (2001: 8).
Awareness of these problem has been growing among citizens, as is shown by the results of a Euro-
barometer survey (56.1) conducted by the Commission in autumn of 2001. A more comprehensive analysis
of the results is forthcoming. For first results see Commission of the European Communities (2002: 14 ff.).
For these aspects see Schulte (2002: 26 ff.) and Porte / Pochet (2002) as well.
Cf. Economic Policy Committee (2001: 30 f.).
This issue will be discussed in part 3.3.
The report is based on fifteen national studies of EU member states on the challenges for their national old-
age security system.
These actors highlighted earlier the importance of evaluating the social and financial sustainability of old-
age security systems: “It will not be possible to separate financial sustainability; one cannot be guaranteed
without the other” Council of the European Union (2000: 12).