PENSIONS

Occupational pension schemes in Britain face a major threat from European  Union legislation, which could force even more schemes to close, the  National Association of Pension Funds has warned.  New EU rules, which must be implemented within the next two years, will  force occupational schemes to be fully funded at all times, only allowing  underfunding for a "limited", as yet unspecified, period. It means that  companies will have to be able to meet all of their pensions liabilities at  any time, putting much greater strain on resources.  Christine Farnish, the chief executive of the NAPF, said this could have a  "huge consequence" for British company schemes. She said: "The UK has to  implement this directive. Continuing to provide a defined benefit pension  is a hugely costly undertaking for any supervising employer.  "We know a number of firms have closed their schemes to new members but our  concern is that greater numbers will also close to future accruals because  of these extra costs. It is unquantifiable, and finance directors do not  like having that sort of risk on their balance sheets.  "It is very dangerous and very costly to UK schemes, and because the rules  cannot be scheme-specific, will no doubt lead to endless battles in the  courts. It is ridiculous; it is not in the real world."  The NAPF has already seen 7pc of schemes close to new accruals - where  existing members of the final salary scheme are no longer allowed to pay in  and pension benefits from that scheme are frozen - in the past year. This  is up from 1pc the previous year. Another 8pc of scheme managers have said  they are considering taking this action. One in four companies have closed  their final salary schemes to new members in the past year, the NAPF said. (Daily Telegraph 22/12/2003 )

  Italy will grind to a halt today as millions join a  general strike to protest against a government overhaul of pensions that  aims to make people work longer.  The top three unions have asked their 11 million members to stage a  half-day strike, which will close schools and factories, ground planes,  stop the curtain rising at Milan 's La Scala opera, and threatens tourism at   Rome 's Colosseum.  "The majority of Italian workers are against...the so-called pension  reform. Soon their opposition will be there for all to see," said Guglielmo  Epifani, head of the largest union CGIL.  Prime Minister Silvio Berlusconi, whose first government fell over the same  pensions issue in 1994, must now weather the third storm of industrial  action since he won power again in 2001. And the timing could not be worse.  Not only does he hold the rotating European Union presidency, but the  economy is in recession, consumers are depressed about high inflation and  unemployment, and Brussels is pushing him to get Italian finances into shape.  Three weeks ago Berlusconi went on state television to sell his pension  reform to a sceptical nation, telling them in almost fatherly tones that it  was "necessary, fair and wise".  Effective from 2008, the reform proposes preventing Italians from retiring  before they have paid 40 years of contributions or reached a minimum  retirement age of 65 for men and 60 for women. Now they can retire at 57 if  they have 35 years of contributions to their name.  But unions -- who in April 2002 called the first full-day stoppage in two  decades -- are on the warpath once again. France and Germany have also already bitten the pensions bullet in the face  of public protest. ( ROME Reuters 24 October)

Fertility rates across Europe are now so low that the continent's population is likely to drop markedly over the next 50 years. The UN, whose past population predictions have been fairly accurate, predicts that the world's population will increase from just over 6 billion in 2000 to 8.9 billion by 2050. During the same period, however, the population of the 27 countries that should be members of the EU by 2007 is predicted to fall by 6%, from 482m to 454m. For countries with particularly low fertility rates, the decline is dramatic. By 2050 the number of Italians may have fallen from 57.5m in 2000 to around 45m; Spain 's population may droop from 40m to 37m. Germany, which currently has a population of around 80m, could find itself with just 25m inhabitants by the end of this century, according to recent projections by Deutsche Bank, which adds: 'Even assuming (no doubt unrealistically high) annual immigration of 250,000, Germany 's population would decline to about 50m by 2100.' Combine a shrinking population with rising life expectancy, and the economic and political consequences are alarming. In Europe there are currently 35 people of pensionable age for every 100 people of working age. By 2050, on present demographic trends, there will be 75 pensioners for every 100 workers; in Spain and Italy the ratio of pensioners to workers is projected to be one-to-one. Since pensions in Germany , France and Italy are paid out of current tax revenue, the obvious implication is that taxes will have to soar to fund the pretty generous pensions that Europeans have got used to. The cost is already stretching government finances. Deutsche Bank calculates that average earners in Germany are already paying around 29% of their wages into the state pension pot, while the figure in Italy is close to 33%. Governments are in a bind. It is no accident that in the past year France , Austria , Italy and Germany have all experienced angry outbreaks of labour unrest, sparked by attempts to make their pension systems less generous. But the longer governments wait, the worse the problem. Tensions are also likely between countries in the European Union. Britain and the Netherlands , which have high levels of private-pension provision and whose populations are predicted to remain more or less stable, are better placed to cope with the pensions problem. But they might still be affected by the financial problems of other EU countries, which could force up interest rates across Europe and undermine the euro. The fact that Europe 's population is shrinking and ageing will inevitably also affect the aspirations of some Europeans to create a superpower to rival the United States . A recent report from the French Institute of International Relations predicts that, by the middle of the century, the EU's GDP will be growing at just over 1% a year compared with more than 2% in North America and at least 2.5% in China . The EU, the report gloomily concludes, faces a 'slow but inexorable ' exit from history'. (The Economist Jul 17th 2003 )

THE FRAGILE UK pension system could collapse in the wake of German moves to amend a key EU directive designed to pave the way for cross-border pensions, industry leaders claim. The National Association of Pension Funds and the CBI have sent an urgent appeal to British MEPs urging them to fight the threat to retirement provision. The two bodies, joined by the Engineering Employers Federation, are concerned that German moves to restrict the asset allocation of European pension funds could 'harm UK pension funds at a time when many of them are already under threat'. As the directive approaches its second reading in the European Parliament, some member states, principally Germany, are pushing amendments. The most damaging to the UK system is one that would restrict pension schemes investment in the stock market. It is unclear how harsh the restrictions would be under the amended directive, but experts fear it would replicate the German system. German pension schemes are allowed to hold only 30 per cent in equities, and the remainder is primarily held in bonds. A similar restriction on the £650 billion of UK company pension assets would cause havoc on the stock market and could accelerate the demise of struggling final-salary schemes. Equity weightings in pension schemes have fallen over the past two years of volatile stock markets, but the majority still hold at least half of their assets in shares. In their joint letter to MEPs, the industry leaders said they supported the existing compromise directive. They said: 'If, however, amendments are passed which make the existing investment policy and scheme provision more restrictive, then the directive could lead to a further decline in pension provision in the UK which would be both regressive and unwelcome.' (Times Business news November 25, 2002)

According to a recent study by the Commission even a doubling of the immigation of workers from third states would not be sufficient to solve the problems of the EU social systems. The study shows that it will be difficult to combat an ageing population coupled with a slow in birth rates: The EU population would grow again noticeably only if the fertility rates rose from their present 1.4 children per woman to 1,8, and the immigration increased from at present 680,000 persons per year to at least 1.2 million. "The immigation to Europe will help to close some gaps on our job markets. It has however no effects on the fundamental adjustment of our employment policy", said the Commissioner for Employment and Social affairs Anna Diamantopoulou to the Austrian newspaper "Die Presse." "We still need a radical reform with emphasis on the increasing participation of women and older workers to secure our job markets and pension systems." If the EU member states want to prevent a financial collapse of their social and pension systems, the pension entrance age must be raised substantially. The EU summit in Barcelona had already decided in March to increase the activity rate of older workers. The European Union citizens should therefore work at least five years longer. If there is no adjustment, public spending for the pension systems in the European Union would rise from its present 10,4 per cent of GDP to 13,6 per cent in the year 2040. The commission is of the opinion that, in all member states, further reforms of the pension systems are necessary. (EUobserver.com 4/6/02)

The Barcelona Summit on 15-16 March failed to make significant progress on economic reform. Tony Blair's frustration was caught on camera describing the Summit as "A joy, as usual". Spanish Prime Minister Jose Maria Aznar said "What a load of crap" (FT, 21 March). It was agreed, however, to increase the retirement age. The Presidency report says, "Early retirement incentives for individuals and the introduction of early retirement schemes by companies should be reduced. A progressive increase of about 5 years in the effective average age at which people stop working in the European Union should be sought by 2010" (Presidency conclusions, para. 32)

RUTH KELLY, the Economic Secretary to the Treasury, yesterday criticised European Union plans that would restrict the investment freedoms of the UK’s beleaguered £800 billion pensions industry. Addressing the National Association of Pension Funds’ annual conference in Edinburgh, Ms Kelly vowed to oppose the parts of a draft EU directive that threaten to undermine employer schemes and disrupt the financial markets. "We will not allow inappropriate regulation to threaten the achievement of our objectives," Ms Kelly said, as she reaffirmed the Government’s commitment to closing the 27 billion savings gap in the UK by encouraging more people to contribute to pensions. Her comments came as it emerged that Spanish officials were trying to insert a clause that would limit the amount of equities that pension schemes can hold to 50% (Owing to the shortage of UK government bonds pension funds will have to invest in other EU government bonds). The EU directive could become UK law within as little as two years. The NAPF voiced concerns about another clause that calls on employers to provide a 100 per cent guarantee for pension scheme liabilities. This would render pension schemes too expensive for most companies. Rhos Roberts, the NAPF’s European expert, said: "UK pensions are already under pressure. Any additional restrictions would increase the pressure on funds and can only increase the reluctance of employers to provide these schemes." She added: "There is a feeling of resentment in the industry that countries without funded pension schemes are calling the shots over those that do." Only the Netherlands, the UK and the Irish Republic have strongly funded pension schemes. While UK pension funds hold an average of 70 per cent in equities, pensions in other European states are restricted by national law to abide by much smaller weightings. (Times Business March 15, 2002)

Alistair Darling, the work and pensions secretary, said yesterday he called in the Accounting Standards Board last week to discuss the impact of the change and discrepancies with international rules. The talks with the ASB, which is supposed to be independent of government, are a sign of deepening ministerial unease over the effects of rule FRS 17. Mr Darling told the BBC's On the Record: "I had the Accounting Standards Board in to see me and I made the point that the standard we have in the UK is different from the international accounting board standard. They're thinking about that." He said international rules caused less volatility in accounts than FRS 17, which requires companies to show changes in the market values of their pension funds as they happen rather than smoothing them out over many years. The rule has troubled companies and investors because it exposes previously hidden deficits in traditional occupational pension schemes under which companies promise employees a pension based on a percentage of their final salary. Iceland, the frozen food retailer, blamed FRS 17 for closure of its pension scheme to existing members. Abbey Nat-ional, the bank, and Ernst & Young, the accounting firm, have closed final salary schemes although both played down the impact of FRS 17. (Financial Times Mar 4, 2002).The final implementation of FRS 17 has been postponed (FT Nov 2002)

Since the beginning of 1992, just before the establishment of the single market, gross domestic product for the EU as a whole has risen by 20%. In Britain, in comparison, there has been a rise of 30%, while in America it was almost 40%, nearly double that of Europe. Lombard Street Research’s monthly economic review shows the EU’s growth rate can be broken down into three factors — the change in the population of working age (demographics), the change in the proportion of working-age people who are in jobs, and productivity (the growth in output per head). On the first, the EU looks holed below the waterline. World Bank projections show that the working-age population of the present EU will drop from 230m now to 167m by 2050, a fall of 63m. Most of this is concentrated in the 12 current euroland countries, where working-age population is projected to drop from 186m to 131m. The worst-hit individual countries are Italy, with a 15m, or 42% fall, from 36m to 21m, followed by Spain and Germany. Britain is not immune but fares relatively well. The World Bank projects a 5m fall in working-age population, from 35.2m to 29.9m In general, though, Europe's position is dire. As Lombard Street Research writes: "The last demographic shock on a similar scale was the Black Death of the late 14th century." Even two world wars did not stop Europe's population rising by nearly a fifth in the first half of the 20th century. Can Europe compensate by increasing its employment rate? One of the Eu’s targets is to raise the proportion of people in work from 60% of the working-age population to 70%, which would still leave it below the 75% rate in both Britain and America. Already there is evidence of a quiet revolution under way in Britain's labour market, with a rising number of people of pensionable age now working. Increasing retirement ages, or even getting people to work to retirement age, has to be part of the strategy for dealing with the twin problems of population decline and the pensions timebomb. Raising the employment rate is not, however, as easy as it sounds. Part of the reason why it is low in Europe is that, by convention, there are parts of the EU where married women do not work, particularly after they have children. Another reason is that the structure of welfare benefits often provides little incentive to take up a job. There is also the likelihood that a disturbing catch-22 will operate. A declining working-age population means a rise in the dependency ratio. At present in the EU people of working age outnumber those of school and retirement age — with dependants totalling about 80% of those of working age. By the middle of the century that will have turned round completely, with dependants outnumbering those of working age by 1.3 to 1. The implication of that is that workers will face even higher taxes and social- security costs, further reducing the incentive to work. The trouble with demographics, it should be said, is that it is more or less set in stone. Could Europe get out of its difficulty with a productivity miracle? It could, but the omens are not good. Productivity growth has been slowing rather than accelerating in recent years. (Times Online February 24, 2002)

In his column in the Independent on, Sunday, Hamish McRae pointed out the problems Europe 's ageing population could have on the Eurozone. He wrote, "Thus a country like Germany officially has a national debt equivalent to about 60 percent of its GDP. But if you take into account its pension obligations, the debts will be more like 400 percent of GDP." As Hamish McRae points out, the Eurozone "is piling up obligations that it will have the greatest difficulty in repaying, except that these debts are off-balance sheet. It is the Enron solution. As with Enron, when it all ends in tears, we will say: 'Gosh, why didn't we see something that was staring us in the face.'" There has been an unwillingness so far to tackle this problem, but unless this is addressed the pensions crisis will put EMU under severe strain. The "no bail-out clause" in the Maastricht Treaty, which the euro lobby claims would insulate Britain from these liabilities, is meaningless. If one country has a financial crisis because it has huge debts (partly caused by unfunded pensions), then that problem becomes everyone's problem because they would have an impact on interest rates and the value of the euro. The problem of unfunded pensions is shared by almost all the other countries in the Eurozone, including France and Italy. Britain, however, does not face anything like this problem - we have more invested in private pensions than France, Germany and Italy combined. (Independent on Sunday 3 February 2002 )

EU Pensions policy agreed at Laeken. (Comments by major pensions advisor). This means: 1 - more rigid rules (will guard against Equitable Life type scandals, but at a real cost in flexible investments) 2 - pension investments will eventually have to mirror EU (state guided) investment plans (shades of the Wilson years of the 1970s in the UK) 3 - tax relief limited to a basic/standard rate of tax. (with some NI-type additional tax deducted when pension is paid out) 4 - pension funds in the UK will suffer by being forced to bail out (by means of a 'solidarity' surcharge) under-funded continental schemes. 5 - potentially the most damaging - UK & other private pension funds will be forced to support the unfunded state pension schemes such as, in the UK, the Police, many teachers, and health service workers. {Remember this single most important point re: health spending - the huge sum which is going to be spent on unfunded NHS pension promises given in the 1970s and subsequently.} Conclusion: Pensions will be even less worthwhile under an European Commission-directed system than they are now that Gordon Brown stole 20% a year from the returns on investments when he abolished the pensions tax credit in 1997. My recommendations: 1 - buy your own productive retirement assets 2 - make sure they can be removed from the UK if the euro is imposed (Eurofaq posting Dec 19, 2001)

At a time when most EU governments are trying to avoid the impact of unfunded pension schemes, Gordom Brown has announced a massive increase in the UK scheme: GORDON BROWN'S plans for a pensioner tax credit will eventually cost £10 billion a year, equivalent to more than 3p on the basic rate of income tax, according to independent expert analysis to be published today. A study commissioned by the Institute for Public Policy Research concludes that the Chancellor's flagship policy for older people is unpopular and unsustainable. The accountants PricewaterhouseCoopers calculate that the cost of the means-tested tax credit will rise to £10 billion a year. This would create a black hole in Mr Brown's finances. The Chancellor has set aside just £2 billion to pay for the pension credit, which he announced in last month's pre budget report, in 2004-5. The pension credit - used to top up the basic state pension to give every pensioner a guaranteed minimum income - will become unaffordable over the next 30 years, the study concludes. This is because the gap between the basic state pension, which grows in line with prices, and the guaranteed minimum income, which grows in line with earnings, will rise dramatically, Richard Brooks, author of the IPPR report, said: "This policy is simply not sustainable in the longer term. (Electronic Telegraph 11/12/2001)

The main Eurozone economies such as Germany and Italy have bankrupt state pensions, which is likely to mean further tax rises in the medium term. Professor Niall Ferguson of Oxford University has estimated that Germany will need to increase all taxes by 9.5 per cent and France all taxes by 6.9 per cent. Britain has more invested in pensions than all the EU countries put together. ("No" bulletin 12/4/01)

The French and German governments have backtracked on plans to deal with their bankrupt pensions systems. The European Commission commented earlier this year: "Further reforms are now strongly required. While dialogue and consensus amongst social partners are needed for reforms to succeed, there is a disturbing trend in these countries for pensions to be repeatedly postponed." ("No" Bulletin 23/3/01)

If Europe's demographic decline is left unchecked, the 15 EU member states will have 40 million fewer inhabitants in 2050 than they do today. With other regions - notably North America - still growing, Europe will find its economy weakened and its relative global power much diminished. The United Nations Population Division's average-case scenario forecasts that the combined population of current EU members will peak around 2005 and then begin a slow decline. In a vicious circle, a shrinking population reduces Europe's overall resource base. An expanded retiree community boosts pension costs, while a smaller population produces fewer resources to pay those pensions. Unless European governments reduce their lavish - but heretofore politically untouchable - pension packages, they will be forced to raise taxes. That will reduce Europe's competitiveness, decrease its attractiveness as an investment destination and ultimately further reduce the resource pool. Over the past fifty years, the proportion of workers to retirees has dropped from 7:1 to 4.3:1. Without drastic policy changes, the United Nations projects the ratio will drop to 2:1 by 2050. One way the EU could address the issue is by admitting new members. That will not solve the long-term problem, however. Most of these states face the same demographic trends as current members. Across the Atlantic, a completely different scenario is unfolding. If U.N. projections are correct, Europe will have a population of about 430 million in 2050, as compared with today's 476 million. Canada and the United States will have a total population of 530 million, up from today's 310 million. While making governments more supportive of family-friendly policies would indeed boost Europe's sagging birth rate, it would come at a staggeringly high economic cost. Sweden adopted many of these family-friendly policies during the 1980s but dropped them to meet budget targets in the early 1990s. If the stoic Swedes were unwilling to shoulder so heavy a burden - Sweden's welfare state consumes 60 percent of its gross domestic product - it is unlikely other Europeans will do so. The second solution is to allow more immigration from outside Europe. The scale on which Europe would need to import labor is daunting. If the goal is to maintain a steady population, the 15 current members will need 1.6 million new immigrants each year. The final option - for the EU to admit a country with a high birth rate - is the most practicable solution. Turkey is the only realistic candidate. Its admittance would largely solve the demographic problem. But the consequences would be completely redefining Europe. The United Nations estimates Turkey's population of 66 million people will balloon to over 100 million by 2050. That would give an enlarged EU a population of 530 million people, one-fifth of whom would be Turkish - and Muslim. That may be a price most Europeans are unwilling to pay. (http://www.stratfor.com 23 February 2001) Britain has a much lower rate of decline and has by far the most put aside for future pensions. (Eurofaq posting CS 42/2/01)

The idea floated in Nice that all member nations could be called upon to help individual countries in trouble indicates that the pensions menace should be taken seriously. (Daily Mail 9.12.00)

A report given to French Prime Minister Lionel Jospin considered wider share ownership and stock options. The authors rejected any move to introduce pension funds as a means of encouraging individual savings and providing a back-up system for the state-run pay-as-you-go pensions. Their main proposal was to encourage share savings schemes in all French companies. To get around the problem of the many small companies unable to operate such schemes they suggested the creation of a vaguely defined regional inter-company savings plan. On stock options the report came out against expanding the practice that the French left regards as an unacceptable aspect of Anglo-Saxon capitalism. (FT 29/1/00)

Fund Managers Phillips and Drew have calculated that British pension funds could lose £4 - £5 bn. if we scrap the pound and join the euro. The total loss by the entire UK institutional investor community could be as high as £10 bn. (Today prog. Radio 4 12/07/00)

The danger to pension funds of holding weak euro investments is having a disastrous effect on pension values. Britain's pension savers are facing a £13bn loss owing to the slumping value of the euro. (Sun Tel, 07/05/00)

Quite the most alarming divergence between European economies, however, is the wild variation of funding of future pensions liabilities. Writing in the March/April issue of Foreign Affairs, Niall Ferguson and Laurence Kotlikoff use generational accounting to estimate the true size of the future fiscal burden in different European countries and what governments would have to do in terms of cutting public spending or raising income tax to ensure that pensions commitments are met. Their figures are astonishing, not just for what they reveal about the sheer enormity of euro zone's pensions problem but also for the huge divergences between countries. Measuring the problem in terms of income tax rates, the authors estimate that Austria would have to raise income tax by 55 per cent, France by 64 per cent, Germany by 29 per cent, Spain by 45 per cent and Italy by 28 per cent. Ireland is the one euro zone economy in good shape - it would be able to cut income taxes by nearly 5 per cent and still meet its pensions obligations. Ironically, it is the members of the European Union who have opt-outs from EMU and therefore more flexibility on fiscal policy which are far less badly off than most euro zone economies. Denmark would, it is estimated, have to raise income taxes by a relatively small 6.7 per cent and Britain by 9.5 per cent to reach sustainability on pensions funding. Tax harmonisation becomes a nonsense if pension funding were to require income taxes rising by 55 per cent in one economy and falling by 5 per cent in another. The Maastricht Treaty's 3 per cent limit on budget deficits, which we are all supposed to be converging on, looks downright fantastical. (March/April Foreign Affairs; S Telegraph 16/4/00)

Millions of pounds have been wiped from the value of council workers' pension funds because of Gordon Brown's support for the ill-fated Euro, a Mail on Sunday investigation has revealed. "The Chancellor urged local authorities to consider investing some of the pension contributions made by their staff in the new currency, which was launched on January 1". The London Boroughs of Brent (loss of £1.8 million) and Enfield (loss of £1 million) were those whose pension funds suffered most through investing in Euros (Mail on Sunday ?1999).

THE number of people of working age in the European Union is falling so fast that a vast inflow of immigrants will be needed to keep the economy running into the new century and prevent the collapse of the pension system. Within 25 years, the EU will need up to 159 million immigrants to keep the current ratio between workers and the increasing number of retired people, according to a study by the United Nations Population Division. Europe is caught in a demographic squeeze on two fronts. The overall population is not only declining - with losses of five million expected by 2025 and 40 million by 2050 - but it is also ageing at an unprecedented rate. Italy and Germany have the lowest fertility rates in the world, with their populations falling by 0.9 per cent and 0.8 per cent respectively. Britain has a positive birth rate and is closer to North America in its demographic structure but even Britain will face a serious imbalance early in the century that will have to be offset by immigration or an overhaul of the retirement system. (Electronic Telegraph 11/1/00) - Is this how the EU will solve its pensions timebomb? - Ed

UK pension funds have assets of £600 billion. This is more than all the pension funds of all the rest of the EU put together. The EU relies mainly on paying the pensions of an increasingly ageing population from income earned by a diminishing labour force. If we joined the EMU then some of this money could be put at the disposal of the EU. (P Lilley MP 5/7/96). Unfunded pension liabilities should form part of the EMU entry criteria. The UK's unfunded pension liabilities amount to GBP4,000 per capita of the population. If the UK were to join a single currency the level of debt would rise to GBP30,000 for every person. (FT29/10/96). Jacques Delors said "EMU means, for instance, that the EU recognises the debts of all countries in EMU." (European Parliament 1995/ CIB). According to the IMF, the net present value of public sector pension liabilities as a percentage of GDP is 10% for Britain, 75% for Italy, 110% for Germany and 115% for France. (The European 22/6/98). The risks of pension upheaval for the single currency are potentially huge, economists say. The European Central Bank could come under pressure to relax monetary policy. Or bond issuance to fund pensions could blow apart the EU's deficit-spending pact, sending interest rates higher. The debate is also creating waves in Britain, which boasts a competitive edge from low non-wage labour costs due in part to its relatively small state pension bill. Britain spends only half as much as its big EU partners on pensions and some Euro-sceptics fear it will come under pressure to narrow the gap as part of a push for harmonised taxes. "If we just let them walk all over us, I have no doubt they will try to harmonise social security," said Professor Tim Congdon of Lombard Street Research. (Feb 15 1999 Reuters)

Social affairs experts from across the union will meet in Helsinki in a bid to breath some new life into the ongoing debate over how to reform the EU's crumbling pensions and benefits systems. The union's 15 national health, benefit and pensions systems, are all buckling under the weight of an ageing population. Changing demographics mean that more money is being taken out of the schemes than is being paid in by taxpayers. While responsibility for financing social security schemes remains at national level the European Commission believes there are strong arguments for discussing reforms at union level. Many health and benefits schemes actually prevented jobs from being created. Companies wishing to hire new workers were often deterred by unreasonable obligations under national social security rules, with those keen to become self-employed facing particular problems. (European Voice 18/11/99)

The House Of Commons Select Committee on Social Security reported that the UK's current national debt is the equivalent of an around £5,000 for every man, woman and child in the country. If the UK's unfunded pension liabilities are added in, then the debt per capita figure increases to around £9,000. If we joined the euro then we would be adopting the unfunded pension liabilities of the EU. Our debt burden would then soar to £30,000 for every man, woman and child in the UK. (Eurofacts 19 March 1999)