If misery loves company, then there’s perversely good news out of Europe. Like us, Europeans are struggling with how to pay for pensions as is the ratio of retirees to workers shifts. As inflamed protesters in France hit the streets, behind the scenes the Eurocrats in Brussels are working overtime on sustainable pension plans.
Whether their efforts have legs or not, let’s give them credit for calling attention to the problem of deficit spending in a way not yet heard inside the beltway recently. The EU October Paper, “Towards adequate, sustainable and safe European pension systems,” is supposed to help countries prepare for 2011 when the first of the baby boomers reaches 65: “… Europe is facing a major demographic challenge, reaching a critical stage as the first cohorts of baby boomers are now approaching retirement and Europe’s working age population is set to start shrinking from 2012 onwards…. There is now a need to thoroughly review demographic aging …and the recent financial and economic crisis that had a dramatic impact on budgets capital markets and companies.”
Calling attention to a problem, especially one as massive as the pension crisis is better than ignoring it. But these Eurocrats offer mainly platitudes, like announcing they are preparing a European Year on Active Aging in 2012. One that will, “encourage Member States, social partners and other stakeholders to create better opportunities and working conditions for the participation of older workers in the labor market….Measures could include adjusting age management, working arrangements and attitudes in labor markets and other work places, and considering conditions for older self employed workers”. Duh!
So, while we have company across the Atlantic sharing similar aging challenges, how much further will they go? How far will we go? In France a measly two year extension to working life brought on rioters and firebombs. Instead, why not real tax incentives – for workers and employers -- to work longer, addressing the risks associated with the shift from defined benefits to defined contribution pension plans. The result will be confidence that pensions are secure.
That’s a plan that could work on both sides of the pond.