The Liberal Professions, a lever for the Development of Europe: towards a European Manifesto of Professionals Professional integrated welfare and sectorial welfare, pension systems. Dr. Bernhard Wisleitner, CMC 1 December 2017 Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page1
Social protection branches Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page2
Social protection branches Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page3
Social protection branches Specific regulations for liberal professions focus on pensions schemes and health insurance Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page4
Three pillars of pension provisions Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page5
Three pillars of pension provisions Reality in many cases: First pillar based on public pensionscheme Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page6
Mid 20 th century self-employed No compulsory pension provision Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page7
Liberal professions pension provisions Compulsory pension provisions as 1 st pillar were founded Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page8
Liberal professions pension provisions Compulsory pension provisions as 2 nd pillar exist in some memberstates Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page9
Different solutions National regulations according to subsidiarity Variants during self-employement / liberal professions Public scheme, compulsory 1 st pillar Profession s scheme, compulsory 1 st pillar Profession s scheme, supplementary compulsory 2 nd pillar Private, voluntary 1 st + 3 rd pillar Liberal profession s schemes bridged the gap (when there was no compulsory public schemes for self-employed) by founding compulsory profession s 1 st pillar-schemes Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page10
History of professional welfare Initiatives can be found in the beginning of the 20 th century When there were no public schemes Or where public schemes were not open for Liberal Professions Examples Germany: Bavaria medical association: 1923 Austria, Notaries: 1925 France, CNAVPL: 1948 Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page11
Contributions and benefits The graphs are examples assumptions: Equal replacement rates for all schemes All figures present values (no future interest rate, no inflation) No evaluation of the contribution/pension feasibility Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page12
Average income profession s pension scheme 1 st pillar provided by a pension scheme founded and run by/for the respective liberal profession Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page13
Average income public + profession s supplementary pension scheme 2 nd pillar provided by a pension scheme founded and run by/for the respective liberal profession Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page14
Self-government Pension-schemes are self-governed by the representatives of the liberal professions Determination of the schemes by the representatives According to the needs and interests of all members they represent Determination of contributions and benefits Taking responsibility for Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page15
Self-government Self-administration = typical for social-security-schemes of liberal professions Board members nominated by Association/chamber of the respective profession Normally fully financed by member-contributions No tax subsidies Attention: Self-administration also known for public schemes Board members nominated by e.g. Workers Council Chamber of Commerce Tax-subsidies possible Normally for a wide(r) range of workers and/or professionals Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page16
Solidarity Financed by contributions the rate of which is not systematically proportionate to the risk insured Value of the benefits paid is not necessarily proportionate to the insured person s earnings Pension-schemes are based on solidarity Regardless the fact, that benefits are linked to contributions and/or earnings Solidarity elements: disability-insurance, gender-neutrality, survivor s pensions Individual life expectancy Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page17
Subsidiarity Subsidiarity is a common principle, applicable on social security legislation as well as on liberal professions. Following the fundamental principle of subsidiarity Member States shall have the freedom to choose their way of organising the professional structures of liberal professions. The liberal professions pension-schemes correspond to the principle of subsidiarity on EU-level on national levels Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page18
Mandatory affiliation Normally stated by national law Ensuring, that all members of the specific profession contribute and benefit Comparable to the public schemes Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page19
EU-Coordination EU-coordination based on Regulation 883/2004 (which replaced as from 2010-05-01 with some residuals reg.1408/71) Regulation 987/2009 Regulation 1408/71 Important for: Vesting periods Procedures No influence on national regulations with regard of beneficiaries, levels of benefits and eligibility conditions Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page20
European Pillar of Social Rights At the Social Summit for Fair Jobs and Growth in Gothenburg on 17 November 2017, the European Pillar of Social Rights was proclaimed by the European Commission, the European Parliament and the Council of the European Union. Regardless of the type and duration of their employment relationship workers and the self-employed (under comparable conditions) have the right to adequate social protection. Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page21
Financing of adequate social protection The pension schemes of the Liberal Professions provide adequate benefits No pension scheme can guarantee sufficient benefits without sufficient contributions Under comparable conditions, where low contributions based on low income lead to (insufficiently) low pensions, how can resources be provided that ensure living in dignity? In case of low life-income old age in dignity can be provided by paying higher pensions? by tax-financed needs-based minimum benefit systems? Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page22
Financing of adequate social protection low, average or high income? Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page23
Financing of adequate social protection Adequate social protection needs contributions Who should bridge the income gap. the pensionscheme?. or a tax financed needs based minimum benefit system? Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page24
Responsibility or privilege Liberal Professions provide services that are in the public interest in a personal capacity on the provider's own responsibility and in a professionally independent manner with substantive and economic independence in executing tasks Sectorial welfare can support the professions service-quality by tailor-made benefits considering the specific needs and risks of each liberal profession fostering independent decisions of representatives by self-govering their social security-systems of professionals relying upon self-governed welfare Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page25
Responsibility or privilege Sectorial welfare can take responsibility by supporting the professionals in providing the best possible service rather than on maximising profit granting profession-risk-related benefits Responsibility for the society Professionals relying on adequate social security have more capacity to contribute to the proper functioning of the administrative, political and economic life of a Member State Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page26
Responsibility or privilege Sectorial welfare means responsibility Are there privileges? For the liberal professions By running 100%-self-financed schemes? By paying tax-based subsidies to public social-security schemes? By not receiving subsidies from the state for their own welfare? Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page27
Contemporary challenges Growing number of one-person-enterprises Advantages for creative businesses Challenges in case of outsourced services Trends to lower income Less reserves for daily business More needs for security in times of unemployment Trend also evident for liberal professions Low interest-rates influences future benefits Ageing society influences future benefits Minimum benefits to avoid poverty Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page28
Financing future challenges Pay as you go: common in public schemes, partly in professions schemes Funded: mostly used in professions schemes Defined contribution (DC) Defined benefit (DB) Both types face several challenges Financial crisis Lower GDP s Low interest rates Interest rates below inflation-rates Preview of future pensions Demographic changes influence pay as you go Discount-rates influence funded pensions Inflation decreases purchasing power Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page29
Conclusion Liberal Professions took responsibility of their members welfare when the doors to participate in the public schemes stayed closed for them. Driven by the spirit of solidarity the self-administration bodies provide adequate benefits with a focus on sustainability. Compulsory affiliation and EU-coordination as part of the structured system of retirement pension schemes Professional and sectorial welfare ensure the role of the Liberal Professions and their capacity to contribute to the proper functioning of the administrative, political and economic life of the Member States. Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page30
Thank you for your attention Contact: Dr. Bernhard Wisleitner, CMC A-1190 Vienna, Austria Saarplatz 9/29 Mail: office@cfwa.at Phone: +43/664/4763586 +32 / 487/754181 Web: www.cfwa.at www.wisleitner.eu Consulting Services Coaching for Work and Economy Dr. Bernhard Wisleitner, CMC EESC Group III, Rome, 1 December 2017 European Manifesto of Professionals welfare& pension systems page31