Uncertainty in the labour market and atypical employment could undermine pension adequacy for young people in EU countries, according to industry research.

The international study, which was conducted within the EU Cost Action Young-In network and involved 15 researchers, found that current pension systems do not fully consider non-continuous and atypical careers.

These types of careers are considerably more common among young people than previous generations, the report noted.

Furthermore, it said that pension reforms carried out over the past few decades in several EU countries would lead to less generous pension benefits in the future.

This is due to the reforms strengthening the link between earnings accrued during long, continuous employments and adequate income in retirement.

The study warned that the pension earnings of young people may remain low due to atypical employment relationships and periods of unemployment, which, at worst, could lead to an inadequate income in retirement.

“In many countries, pension reforms increasingly shift the responsibility for old-age income to the individual,” commented Finnish Centre for Pensions senior research and report co-editor, Kati Kuitto.

“At the same time, the ability of the young to accrue pensions and save for their retirement has weakened.”

Gaps in pension accrual in Europe were found, especially during periods of unemployment.

While part-time and fixed-term employment was described as fairly well taken into account in pension systems by the report, new work forms, such as solo self-employment and zero-hour contracts, may be being overlooked.

Kuitto stated that the findings show that the labour market position and attachment of young people should be continuously monitored to allow for timely adaptations of pension policies.

Additionally, according to Kuitto, all social security coverage during career breaks should be reviewed, and all pension reforms should carefully assess how the changes made affect the position of young people.

“It’s not only about the pensions of the youth but about their income and wellbeing throughout their life course,” she added.

“A strong start to working life is required, and education plays a key role. In addition, we need to support the health and working ability of the young in different ways.”

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