The European Older People’s Platform (AGE )

AGE aims to voice and promote the interests of older people in the European Union and to raise awareness of the issues that concern them most. Everyone in the European Union is increasingly affected by decisions taken by its institutions: the Council of Ministers, the Commission, the European Parliament and the Court of Justice. Decisions affect the daily lives of all its inhabitants - including older people.

2 AGE Position on minimum pension in the context of work on minimum income2

Guarantee a minimum pension to prevent poverty among the most vulnerable older people

The vulnerability of older people is often related to their lack of financial resources. Older women are in a particularly precarious position as their right to a pension income is often derived from their marital status (spousal or survivor benefits) and they rarely have adequate pension rights of their own for diverse reasons (career breaks, low paid jobs). Other groups of older people, such as older single person, older migrants or disabled older people also face multiple disadvantages in building adequate old-age income. For all such vulnerable older people, suitable social protection provided by the state is necessary safety net.

AGE also questions the view that a minimum income in old age is a disincentive for employment, since the choices people have about employment are limited by a range of other factors, including job unavailability, family duties, mobility problems, age discrimination, or lack of training or inadequate skills. These often prevent them from getting a job or remaining active in the labour market. Minimum pension provision is a necessary safety net to protect the most vulnerable older people and as such does not distort employment activation policy.

Where pensions are not fully indexed to general wage rises, pensioners fall behind society’s progress as they grow older. Many who retired with an adequate pension then slip gradually into the pensions poverty trap, with an income close to the threshold for means testing. AGE believes the right to an adequate minimum income, without means testing, is fundamental to everyone’s dignity and independence.

Recommendations:

• Refer to the Article 1 of the European Charter of Fundamental Rights on human dignity when developing pension schemes i.e. the right to adequate minimum income should be recognised as fundamental and necessary for everyone’s dignity and independence.
• Member States should guarantee a minimum income for older people equivalent to at least the poverty threshold (60 percent of national median equivalised household income), as a way to promote their social inclusion and autonomy.
• When guaranteeing the minimum pension schemes, Member States should ensure that the provided income addresses older people’s expectations in terms of what they consider to be essential to preserve decent standards of living and personal dignity. In this respect, it will be necessary to develop and promote a minimum income standard, ensuring that national minimum pensions guarantee decent life and personal dignity.
• Ensure adequate indexation to allow pensioners to keep up with society’s progress and not fall gradually into the poverty trap. Modality of indexation is to be decided by the relevant national stakeholders according to the ongoing economic context.
• Member States should analyse the impact of the current financial and economic crisis on the adequacy and sustainability of their national pension schemes and develop comprehensive safety net mechanisms allowing every older person to live in dignity.