Special Pensions in the EU

Per Eckefeldt and Anda Pătărău

No 125, European Economy - Discussion Papers from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

Abstract: Most EU countries have special pensions, alongside their general pension systems. Generally, special pensions are granted to beneficiaries with a special status, such as state employees of all branches of government (legislative, executive, judiciary), security and defence forces, including some civil professions, and people that work under difficult conditions. In most countries, special pensions were introduced long ago. Hallmarks of special pensions usually include a lower retirement age, contributory periods counted more favourably, or higher benefits. However, recent national reforms indicate that such preferential schemes are being phased out, especially in the case of security and defence workers and state employees. This raises questions on the rationale for continuing with special pension schemes in the future. On the one hand, certain special pension categories seem justified, such as those involving occupational risks that can harm workers’ health and safety. This includes people working under difficult conditions and professions for which physical condition is crucial for carrying out one’s duties, such as security and defence forces, civil aviation or air traffic controllers. However, compensation for these categories of workers could take the form of higher wages and/or employers’ contribution rates, rather than pensions, as these factors would automatically lead to higher pension benefits. On the other hand, special pensions for state employees and employees of (former) state-owned enterprises are more controversial in terms of social equity and administrative efficiency. The remaining categories of special pensions fall somewhere in between. Even when compensation for some groups experiencing negative externalities or inequalities appears justified, special pensions may not necessarily be the most suitable form of social transfer.

JEL-codes: H55 J1 J18 J26 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2020-04
New Economics Papers: this item is included in nep-age and nep-pbe
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