EUROPE - The European Union has been criticised for "short-sighted" policies that threaten the sustainability of pensions on the continent, following a meeting of central and eastern European pension experts.

Meeting to discuss the impact of the Stability and Growth Pact on the pension industry, the Central and Eastern European Countries (CEEC) Forum decried the fact the pact prevented the introduction of funded pension pillars in several European countries.

The forum, part of the European Federation for Retirement Provision (EFRP), said rules stipulating that new debt should not exceed 3% per annum had triggered the closure of funded pillars in both Poland and Hungary.

Csaba Nagy, EFRP CEEC Forum chairman and Bulgaria's representative, said: "The Stability and Growth Pact should take into account the introduction - as well as the reversal - of funded pension systems on a permanent basis.

"Europe cannot afford to encourage short-sighted policies that threaten the adequacy and sustainability of future retirement income."

His comments echo those made by EFRP chairman Patrick Burke, who last month warned that the policies being pursued by Europe were jeopardising the "adequacy and sustainability" of pensions.

At the time, the organisation warned the pact currently allowed member states to claw back privately managed pension assets to the public pay-as-you-go scheme or sell off assets in public pension reserve funds.

Both have already occurred, with Ireland employing its National Pension Reserve Fund to recapitalise its banking system and Hungary transferring the majority of private pension fund assets to the treasury to offset its budget deficit.

Topics