Digitalization and automation. The challenges for European pension policies

This article summarises the potential impact of technological innovations on pension systems, their financial sustainability and social adequacy. The nature of the challenges largely depends on the different scenarios about the effect of technology on the labour market and the type of pension schemes. In case of massive job loss (due to the substitution of workers by robots and computers), the revenues and membership of contributory statutory schemes in social insurance systems could decline. In multi pillar systems, the coverage of supplementary pension funds would decline as well. In both cases, technology-driven labour market changes would lead to more demands for flat rate/means-tested benefits. In case of job transformation – with increased inequalities among workers – challenges would be more manageable with more ample room for incremental reforms, especially concerning benefit computation formulas. The analysis of different scenarios and reform options sheds light on the risk for future pensions and the need to rethink the reform priorities of the last decades. Policy risks may then lead to important political consequences, especially for the stakeholders (e.g. trade unions) implicated in the administration of the systems. Social partners need to refine their agenda to address future inequalities and risks for old age security.