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

21

forms should help them to prepare efficiently for accession and to design reforms in line with the
principles set out by the European Council. Furthermore, EU member states could take advantage
of the experience with recent reforms of candidate countries.⁸⁰

Concerning this issue one remaining questions is whether the OMC will entail any significant
changes in the old-age security systems of the EU member states and of the candidate countries.
Within the current framework, old-age security systems compete with each other directly and
publicly.⁸¹ The crucial question is: Will the OMC have any (direct or indirect) effects, will it
strengthen the process of convergence of old-age security systems within the EU or will it lead to
a common system effective in all member states within an enlarged Union? And if so, what kind
of reform measures will be implemented?

In theory, one could think of the following scenario: the OMC will be implemented as described
and result in a development towards the convergence of systems. The rating of the old-age secu-
rity systems with the help of the indicators and benchmarks - and possibly a ranking - would lead
to peer-pressure in the direction of best-practice. In that case, those member states with old-age
security systems that do not match the common conception of old-age security could feel obliged
by the Community respectively the other member states and for economic and/or fiscal reasons to
modify their old-age security systems by national regulations. These regulations could alter the
benefits of the former old-age security system and its financing, the age limit or the insured per-
sons. In this case the OMC would lead to a (strongly) converging European model of old-age se-
curity. With a view to the EU enlargement this scenario is of relevance. The old-age security sys-
tems of the candidate countries are marked by different analogies with regard to their conception:
obligatory poverty avoiding security by pay-as-you-go measures as a first pillar and supplemen-
tary obligatory capital funded schemes as second and third pillars for the maintenance of the stan-
dard of living reached in the course of gainful activity. Within the framework of the OMC these
structural elements could establish themselves as benchmarks and best-practice: on the one hand
these elements are widely in line with the recommendations of the authoritative (i.e. the eco-
nomic-orientated) actors of the OMC. On the other hand and as indicated, the choice of indicators
as well as the definition of benchmarks are the result of political decisions. Thus, they strongly
depend on the normative approaches of the involved actors and on the objectives of the national
old-age security systems. This constellation could force a clear-cut vision towards an economic-
orientated model of old-age security within an enlarged EU. In this case, the peer-pressure re-
sulting from the OMC would effect particularly current EU member states. The majority of their
old-age security systems do not coincide with the old-age security model of the candidate coun-
tries or of the economic-orientated actors. A converging old-age security system could - accord-
ing to the previous considerations - show analogies to the already existing old-age security sys-
tems of the candidate countries.

For recent old-age security reforms, e.g. in Poland, Hungary and the Czech Republic, see Deutsche Bank
Research (2002: 20 ff.).

Cf. Terwey (2002: 436).

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