As the EU’s demographic shifts towards an older population, Brussels is pushing member states to enhance their private pension frameworks. However, many people in France, Germany, Spain, and Italy believe that their national pension systems are already beyond affordable.
Research from YouGov indicates that while citizens acknowledge the system’s financial challenges, they also see it as lacking in generosity. There’s little enthusiasm for radical changes, like increasing the retirement age.
A study highlights that Greece and Italy allocate the highest percentage of their national income to public pensions among OECD nations, roughly 16% of GDP. Following them, Austria, France, and Portugal spend between 13% to 14% of their budgets on pensions.
In France, Germany, and Spain, about two-thirds of respondents worry that the state pension system will falter by the time those now in their 30s and 40s are set to retire. Interestingly, retirees tend to view the potential of their national pension systems more positively.
Is there a consensus on a solution?
More than 70% of non-retired Italians and Poles express uncertainty about having sufficient funds for a comfortable retirement. In France and Spain, these figures stand at 66% and 64%, respectively.
Even though people recognize the issues within the national pension systems, there’s minimal backing for significant reforms. Popular suggestions among both retirees and working individuals in five EU nations include measures to help older workers remain in the workforce longer, alongside mandates for increased contributions to private or workplace pension plans.
Respondents in Poland particularly favor aiding older workers, while Germans lean more towards suggestions of enhancing personal or workplace pension wages.
Interestingly, Italy was unique in advocating for the reduction or complete removal of state pensions for high-income retirees. The least favored options included raising taxes on working-age individuals, reducing funding for governmental services aimed at older citizens, and cutting state pension amounts across the board.
How does the EU plan to tackle this issue?
Most EU countries’ state pensions function on a pay-as-you-go model, with current workers financing the pensions of retirees. With the working-age population dwindling and informal employment rising, many citizens in different member states—especially women—are uncertain about their future pension security.
The gender pension gap, indicating the disparity in average pension income between men and women, stands at 24.5%. To address these challenges, the European Commission has proposed a dual strategy to increase retirement savings and mobilize up to €10 trillion in bank deposits throughout the region, prioritizing support for EU strategic initiatives related to defense, security, and the green transition.
