'Employment among older people must rise'

08-01-2007

'Employment among older people must rise'
European Union member states must increase the rate of employment among over-55s in order to reduce the likelihood of a pensions crisis, a survey has warned.

A study by Aon Consulting suggests that governments will find pension promises unaffordable unless they increase their efforts to raise employment rates among older workers, the Guardian reports.

Donald Duval, chief actuary at Aon, told Guardian Unlimited that old-age pensions were already "the single biggest item of government expenditure" in the majority of EU countries.

"As the EU population ages, this expenditure will naturally rise further, facing governments with the choice of either cutting back on other areas of expenditure or increasing taxes," he commented.

Mr Duval said that the situation could be helped by "substantial funded pensions" which, he said, would enable today's workers to pay for their own pensions rather than rely on their children to do so.

"Countries like the UK, with a tradition of strong funded pensions through corporate defined benefit schemes, will see their position coming under pressure as companies withdraw from these schemes because of their high cost and the unfavourable regulatory environment," he added, alluding to the fact that many employers have been freezing final salary schemes since 2003, opting to replace them with cheaper alternatives.

Related categories: Insurance / Pensions.


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