GENEVA (ILO News) - Labour ministers of the 13 European Union (EU) accession countries - 10 of which are expected to become members of the EU on 1 May 2004 - are to meet during the ILO's annual International Labour Conference here to discuss pension reforms in their respective states.

Discussions will be based on a new ILO study (see note 1), available on the ILO website, which tracks the changes in social security schemes of the EU accession countries since the mid 1990s.

Experts on the issue will hold a press briefing on Tuesday, 10 June, at 2 p.m. in Press Room I in the Palais des Nations. Participating will be the chair of the meeting, Mr. Murat Basesgioglu, Minister of Labour and Social Security, Turkey; ILO expert and study author Elaine Fultz, and the head of the Social Security Policy and Development Branch of the ILO, Emmanuel Reynaud.

According to the study, the public/private controversy of sharing risks and financing benefits in the pension system has nowhere been more dominant and sustained than in the EU accession countries. Looking across countries reveals two general strategies that correspond roughly to the terms of the controversy.

One group of countries is scaling down public, pay-as-you-go schemes and putting in place parallel commercially managed individual savings schemes (Hungary, Poland, Bulgaria, Latvia, Estonia). This arrangement is shifting risks that were previously borne by workers, employers, and governments collectively to workers alone, the new study says.

A second group, including the Czech Republic, Slovenia, Turkey, and Romania, is combining adjustments in their public pension systems with the development of voluntary supplemental retirement schemes, according to the study.

Transitional financing costs are important in considering a move in the direction of scaling down the social insurance system and redirecting a portion of pension contributions to mandatory, commercially-managed individual savings accounts. These requirements will pose a fiscal burden for several decades in the range of 0.5-2.5 per cent of GDP per year on societies, the study says. Covering these costs involves specific problems in the accession countries, since most are operating under political constraints that prohibit increases in contributions to social security systems. In some countries, these costs are being financed by cuts in public pension benefits that will leave a generation of workers considerably less well off then under a reform of the existing pay-as-you-go system, the report says.

The study recommends that considering pension policy options governments should extend their deliberative processes to their social partners, including workers and employers, as well as all others with an interest in the future of the pension system. Countries can only find the right mix of policy solutions through open social dialogue.

For more information, please contact: Yvan Chemla or Hans von Rohland, ILO Department of Communication, tel.: +4122/907-6891 or +4122/907-6820.

Note 1 - Recent Trends in Pension Reform and Implementation in the EU Accession Countries, by Elaine Fultz, International Labour Office, Geneva, May 2003.