By Marcin Grajewski
BRUSSELS (Reuters) - Countries in the European Union may have to increase the retirement age to prevent their social security systems from collapsing as life expectancy increases and birth rates fall, the EU executive said on Wednesday.
Launching a debate on overhauling pension rules, the European Commission said pension systems would come under severe stress in coming decades.
"Unless people, as they live longer, also stay longer in employment, or start contributing to their pension earlier on in their working life, either pension adequacy is likely to suffer or an unsustainable rise in pension expenditure will occur," the Commission said in a report.
The report, sent to the EU's 27 governments, said there were now four people of working age for every person aged over 65. But that ratio was expected to drop to only two for one by 2060 unless pension systems were overhauled.
The global economic crisis, followed by sovereign debt problems for some of the countries that use the euro, has highlighted how vulnerable the region's public finances are.
"The choice we face is poorer pensioners, higher pension contributions or more people working more and longer," EU Employment and Social Affairs Commissioner Laszlo Andor told a news conference.
Some countries, such as Greece, Spain, France and Britain, have already announced plans to raise the retirement age later this decade as part of austerity measures to head off potential debt crises.
The crisis has also pointed to a need for a pan-EU solution on pensions. Opponents of a 110 billion euro (97 billion pounds) rescue plan for Greece ask why Germans who often work until 65 should pay for Greeks, who have been able to retire at 55.
But the EU has little leverage over pensions, which remain the responsibility of national governments, and such moves could face fierce public opposition.
Some governments are trying to get around the problem by moves such a complementing state-subsidised pay-as-you-go systems with private pension schemes.
The Commission also said EU governments should increase cooperation on pension systems so people who move from country to country during their working lives do not end up with a patchwork of various pensions.
(Editing by John Stonestreet)