The open method of co-ordination: Some remarks regarding old-age security within an enlarged European Union



17

security systems as well as to assess their performance. They should help to evaluate how an or-
ganisation or a system is doing relatively to its peers. A main problem in this context is that
benchmarks might ignore
structural differences. Furthermore, it has to be kept in mind, that con-
cerning the OMC the
choice of indicators, as well as the definition of benchmarks are the result of
political decisions and therefore
not neutral. They strongly depend on the normative approaches
of the involved actors and on the objectives of the national old-age security systems.65

In view of the beginning of the discussion, and in the absence of empirical data it is very difficult
to draw a
specific scenario concerning the direct and indirect effects of the OMC for the old-age
security systems within EU member states, as well as in candidate countries. So far, the conse-
quences of the OMC, as well as the use of social indicators and benchmarks in this process are
unknown.66 However, following the discussions about social indicators and benchmarks, as well
in EU member states and candidate countries as by scientists and administration members, several
political and technical problems are pointed out, e.g. the question of what should be measured by
the indicator and benchmark as well? Should only those security systems be considered which are
defined as old-age security - the mandatory or the voluntary systems, and should private retire-
ment provision be included as well? That leads to the puzzle of what is old-age security? A further
question is in this context, what will actually be measured with an indicator?67

In view of these issues two different approaches to monitor pension reforms were discussed on the
Community level. One was developed by a rather socially orientated actor, whereas the other was
created by a more economically orientated actor. The more economically orientated approach was
developed by the Economic Policy Committee (EPC), who has presented in two reports a com-
prehensive projective analysis through 2050 on the impact of an ageing population on the public
old-age security systems.68 The economically orientated recommendations of the EPC are based
on this analysis. It consists of long-term simulations of public pension expenditure, which is based
on demographic and macro-economic assumptions. The central indicators proposed in the latest
report were on ‘old-age dependency ratio’69 and ‘budgetary projections of future expenditures on
pensions’. Table 1 shows the latest result of the projections on spending before taxes on public

65


66

67

68

69


For these aspects see Porte, et al. (2001) as well as Gesellschaft für Versicherungswissenschaft und -
gestaltung e.V. (2001); Devetzi / Schmitt (2002) and Semrau / Stubig (1999). The use of benchmarking as
an instrument to promote change and continuous improvement of Europe’s competitive performance was
developed in the mid-90’s by two Commission communications; for these communications see
Commission of the European Communities (1996) and Commission of the European Communities (1997).
It is interesting to note, that this work is obviously built upon a paper published by the European Round
Table of Industrialists (1996). This organisation is a forum of 42 European industrial leaders aiming at
promoting the competitiveness and growth of Europe's economy. For this link see Porte, et al. (2001: 293).

Cf. Schulte (2002: 26). A theoretical scenario will be lined out in part 4.

For extensive comments on this issue see Verband Deutscher Rentenversicherungstrager (2002).

Cf. Economic Policy Committee (2000) as well as Economic Policy Committee (2001).

This indicator measures the population aged 65 and over as per cent of population aged 15 to 64. Cf.
Economic Policy Committee (2001: 10 ff.).



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