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17.08.07, 22:33
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Last Updated: Friday, 17 August 2007, 05:40 GMT 06:40 UK
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Guide to Europe's pension woes
Who is going to pay for the retirement of future generations? Most
European countries face the same difficulty, amid ageing populations
and low birth rates.
Italy's budget crisis makes pension reform especially pressing for
Prime Minister Romano Prodi, but France, Germany and the UK have
also announced ambitious plans to overhaul pensions.
The big stock market losses have fuelled fears about the future
value of pensions.
BBC correspondents in Europe examine the challenges EU members face.
Italy France
UK Ireland
Hungary Germany
Denmark Spain
Have your say: Are you concerned about your pension?
ITALY - DAVID WILLEY
Italy's hitherto generous state pension scheme faces bankruptcy
within the next decade unless some radical reforms are enacted soon.
Immigrants are filling care jobs in many EU countries
Italy's state pension fund will shortly have to pay out to retirees
more than it receives each year in contributions from an ever
decreasing national workforce.
The governor of the Bank of Italy, Mario Draghi, put the problem
bluntly recently.
Today, the number of Italians over 60 is equivalent to 42% of the
working population, he said. That figure will reach 53% by 2020.
Unless the government gets its pension accounts quickly into order,
young people entering the workforce today will have to pay
contributions amounting to 127% of their salaries over the next 15
years in order to receive the same benefits current pensioners
receive.
The official retirement age at present for women is 55, for men 57
plus a minimum of 35 years of pension contributions.
Under the latest reform scheme agreed last month by the centre-left
coalition headed by Romano Prodi, the official retirement age will
be progressively raised each year until 2014.
Pension reform has been a major stumbling block for Italian
governments during two decades.
In 1994 Silvio Berlusconi's first coalition fell after less than a
year in office because of massive protests against his plan to prop
up the already failing state pension scheme.
During his second much longer term as prime minister which ended in
2006, he managed to push through a reform scheme under which the
retirement age would be raised to 60 by 2009 and workers would be
encouraged to take out supplementary private pension schemes.
Once Mr Prodi came to office, the former Communists and the unions
managed to force a backtrack, despite warnings that the whole state
pension system was in jeopardy.
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FRANCE - EMMA-JANE KIRBY
During the French election, Nicolas Sarkozy went on the campaign
trail to Metz in eastern France where he visited factories and
former mines.
President Sarkozy wants to tackle pensions with other labour reforms
The theme of his speech there was the same as the theme of all his
speeches - that France had to work harder to earn more pay:
"If you think 53 makes you old enough to retire," yelled Mr Sarkozy
from his podium (who had himself just turned 53), "then fine, go
ahead and retire. But don't expect the state to pay for it."
He is determined to overhaul France's generous welfare system and
cut back on state pensions, which are crippling the country's
finances.
The state coffers are badly in the red. Public debt stands at 67% -
five times its level in 1980. Including gross pension liabilities
raises the public debt to 120% of GDP.
One in four people are employed by the public sector and there are
simply not enough people working to fund the pensions of those who
are retired.
France has one of the lowest labour rates in the world with just 41%
of the adult population working and extremely few workers in the 55-
65 age group still employed.
And despite having the highest birth rate in Europe, France, like
other EU countries, faces the challenge of an ageing population.
France's 2003 pension reform gave priority to extending people's
working lives, to finance pensions in the long term. The retirement
age is now 65 for certain groups and public sector workers must work
for 40 years rather than 37.5 to qualify for full pension rights.
In September, President Sarkozy intends to push things further -
reforming the "special pensions" that certain public sector workers
currently enjoy. Such schemes allow transport workers and others
full pension entitlements even if they retire early.
But the unions are not likely to accept change without protest.
Previous attempts at reforming state workers' pensions have ended in
mass strikes which have brought the country to a standstill and have
toppled governments.
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UK - JULIAN KNIGHT
The UK is going through the biggest pension shake-up in 50 years.
In response to rising life expectancy and falling levels of pension
saving, the Labour government has overhauled the state pension
system.
The UK has seen protests over pensions and the cost of council tax
As a result, the age at which Britons can claim the state pension
will rise gradually from 65 to 68 over the next three decades.
In return for a delayed state pension, payments will be increased in
line with average earnings rather than inflation.
Generally earnings rise faster than prices, so, in effect, the UK
state pension will become more generous.
In an attempt to improve the state pension prospects of women - who
often take time out of work to look after children - the number of
years of National Insurance Contributions (NICS) it takes to earn a
full state pension will be cut from 44 to 30.
This will mean millions more people, mainly women, will be entitled
to a full state pension.
The government has also tried to tackle the issue of vanishing
workplace pension provision, as firms move to cut staff pensions.
From 2012, at the earliest, workers who do not currently pay into a
work pension will be automatically enrolled into a state-sponsored
Personal Accounts pension scheme.
There has been a surprising degree of agreement over the UK
government's plans for pensions.
Opposition parties have agreed with the broad thrust of the reforms.
The Conservatives are happy that the reforms will not cost much
extra cash; mainly because of the later state pension age.
The current high levels of immigration may prove a saving grace
UK's ageing revolution
The Liberal Democrats have welcomed the focus on women's' pensions.
Meanwhile, the unions have been brought on board, as lucrative
public sector pensions schemes in local and central government have
been largely ring-fenced.
They are also pleased that employers will be compelled to contribute
into their employers' Personal Accounts scheme once it is up and
running.
But the pension settlement merely aims to hold things as they are.
The UK still has an ageing population and it will become difficult
to pay for pensions and long-term care for the elderly.
The current high levels of immigration may prove a saving grace,
however. An influx of young people will address the balance between
the number of workers and the retired.
Ultimately, this could prove a more important development than the
present round of pension reforms.
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GERMANY - TRISTANA MOORE
Germany has one of the lowest birth rates in Europe, and at the same
time, people are living longer. Recently, the pensions debate has
become a political hot potato.
In March, the German parliament voted to raise the retirement age
from 65 to 67 as part of a reform programme aimed at tackling rapid
population ageing and spiralling
