From Austerity to Austerity: The Political Economy of Public Pension Reforms in Romania and Bulgaria

This article discusses the trajectories of pension system reforms in two of the latecomers to the EU: Bulgaria and Romania. It finds that over the past two decades, the two countries pursued increasingly dissimilar public pension reforms for managing their respective public pay‐as‐you‐go pension systems. Using a political institutionalist theoretical framework, I argue that the divergence between the two cases is attributable to multiple factors. First, different temporary political compromises between national and international actors generated reforms that retrenched public pensions and introduced mandatory private accounts. Second, pension reforms often had unintended consequences that limited their intended impact. Third, incremental adjustments introduced by governments in response to political pressures caused alternating phases of austerity and generosity that catered to different constituencies in each country. In Romania, reform outcomes amounted to a moderately generous pension system, financed through relatively high contribution rates with a small funded component, while in the case of Bulgaria, the pension system evolved into a meagre programme, financed through low contribution rates and a larger private pillar.     

"Risk" and UK Pension Reform

“Risk” is a word that has become common currency in the financial services industry in general, and in the pensions industry in particular. This article critically examines its use in the context of the current debate about UK pension reform. “Risk” is used by a broad spectrum of interests to discuss a wide range of pension issues in a variety of contexts. The article outlines key theoretical perspectives on the nature and construction, or conceptualization, of risk. Their relevance to debate and policy initiatives, particularly public pension policy, is examined. It is suggested that current government policy is failing to carry with it those to whom the policy applies; that reforms implicitly, if not explicitly, underestimate the importance of “security”; and that failure to conduct a much broader debate about the fundamental notions of work, retirement, saving and security may simply condemn the UK to interminable pension reform.     

Pension reform in Sweden

Pension reform has been placed on the political agenda in many countries. The Swedish parliament has decided to make significant changes in the pension system. This article presents the Swedish pension reform, which goes further than the changes in other European countries. According to the Swedish pension reform, there will be a guaranteed pension that redistributes life-cycle incomes from rich to poor and an income-related actuarial pension without any intra- and intergenerational redistributive effects (with a few exceptions). The idea is to have an actuarial contribution-defined pension within a pay-as-you-go system.     

Pension Reforms in Europe and Life-course Politics

In recent years, somewhat drastic pension reforms have taken place in all European countries. The pension systems developed in the last century are no longer considered to be suited to the changing demographic constellations in European countries, and the financial sustainability of these systems is under threat. Moreover, the changing political and economic set‐up in European countries is also used to justify reforming the different pension systems. Different reasons can be given to explain the various pension reform measures without, however, there being any integrated coherence. We suggest that a politics of social policy, and of pension policy in particular, based on a life‐course perspective, facilitates the understanding of the whole range of pension reform measures. In the past, the elaborated pension systems were attuned to a normative standard biography. A new standard biography, with different phases and more transitions and combinations, enables one to understand the variety of the ongoing pension reform measures. Such a life‐course perspective integrates sequences of learning, working and caring considered necessary for the polity. In other words, it is based on a conception of human potential, and it integrates, to some extent, the previously separate domains of labour market policy, education policy, care policy and pension policy. However, recent theoretical and empirical studies of the life course lead to a critical evaluation of the new standard biography, with the conclusion that the new standard is one‐sided and scientifically unsound, entailing challenges for social policy.     

The Changing Face of Pensions in Latin America: Design and Prospects of Individual Capitalization Pension Plans

This paper discusses the spread of individual capitalization pension plans in Latin America in the 1990s. Following the example of Chile in 1980, Argentina, Colombia, Costa Rica, Mexico and Peru have all introduced individual capitalization pension schemes in the 1990s. The paper discusses the rationale for the reforms and compares the main design features of the reformed pension systems in these countries. Lastly, the likely success of pension reform is discussed by focusing on issues of pension scheme coverage, benefit adequacy and administrative costs.     

城市计生家庭的养老模式与养老储备

本文采用问卷调查的方式,考察计生父母对养老的看法,主要研究现阶段的养老储备、对未来养老的担心方面、养老意愿以及老年自养观念的倾向。从而进一步研究现阶段城市计生父母对未来养老的意愿,并发现其中所面临的问题和主导的养老趋势,更好地为今后的养老问题做决策。     

The Politics of Public and Private Pension Generosity in Advanced Democracies

The quantitative strand of social policy research suffers from a triple deficit: analyses of aggregate expenditure dominate, most of the few studies of replacement rates focus on unemployment or sickness benefits while pensions are excluded, and the interdependence between public and private pension plans is often ignored. This article addresses the said deficits, first, by discussing the pension sectors' theoretical peculiarities and by proposing two hypotheses: one on the role played by political parties in implementing public pension retrenchment, and the second on their role in extending private pension plans. Second, the article presents regression results of public pension replacement rate changes in 18 developed democracies. The findings show considerably smaller cuts to pensions than to unemployment or sickness benefits, and striking differences regarding partisan effects between the sectors. Lastly, the article assesses partisan effects on private pension plans, detecting some rather surprising effects. Most noteworthy is the fact that those parties which reduced public pension generosity during the 1990s (i.e. Social Democrats) cannot claim responsibility for compensating these cuts by eliciting higher private engagement.     

The gender impact of National Pension reforms in the Republic of Korea

This article examines the gender impact of National Pension reforms in the Republic of Korea. In 2007, the Korean government introduced an income-tested basic old-age pension scheme paying flat-rate benefits. It also introduced credited pension coverage periods for child rearing and changed entitlement conditions for divorcees and widows and widowers. This paper examines the impact of these policy changes for individuals with shorter working lives and lower wages, for survivors and for the traditional social protection role played by the family in Korea. Findings indicate that the reforms have some positive features. However, the reforms still offer better value for those with higher earnings and an uninterrupted employment history, both of which are more characteristic of male workers. Moreover, the important income security role played by the family is still strongly embedded in the provisions and the protection available to survivors remains weak.     

Political risk and pension privatization: The case of Argentina (1994-2008)

Proponents of pension privatization in Latin America argued that systems of private fully pre-funded defined-contribution individual accounts would be better insulated from politics than was the case with public pay-as-you-go pension systems. However as the Argentinean case demonstrates, most recently with the 2008 nationalization of its private individual accounts system, transferring pension management and investment to the private sector does not necessarily reduce or eliminate political risk. In fact, the implementation of systems of individual accounts creates a new set of political risks, in part because they are a potential financial resource for governments, especially during times of economic stress. This article describes the range of political risks inherent to individual account pension systems, with specific reference to Argentina's 1994-2008 experience with privatization.     

Modeling Pension Reforms and Estimating Implicit Pension Debt

The article reviews the major structures of pension schemes, their classification, prerequisites, and the reasons for pension reforms. Special attention is given to implicit pension debt as a tool for estimating future government obligations. The main principles of implicit debt estimation and a short review of its implementation are discussed.     

Evaluating the Possible Impact of Pension Reforms on Elderly Poverty in Europe

Since the 1990s, reforms have changed substantially both the nature of state pension provision and the level of generosity. This article tries to assess the impact of these changes using estimates of pension wealth for a number of hypothetical cases. By focusing on all prospective pension transfers rather than just those at the point of retirement, this approach can provide additional insights, especially on the impact of changes in benefit indexation. These estimates corroborate existing evidence that reforms have decreased generosity significantly. Moves to link benefits to contributions have made systems less progressive, raising adequacy concerns for certain groups. The reforms have, in particular, strengthened the need of ensuring better access to labour markets, of having in place adequate crediting arrangements and minimum pensions.     

Fundamental Decisions for the Reform of Pension Systems

This paper outlines the fundamental options for the design of pension systems in any country. The financing and benefits structure is described, with particular reference to distribution policy objectives. The need for thorough preparation to back up decision-making is emphasized, together with the need to take into account the many and varied interactions with other institutions and fields, particularly the long-term effects of changes and the prevailing conditions in the country concerned. Reforms often involve long-term transitional arrangements, so that different forms of pension provision should not be compared in isolation, although this is often done when comparing pay-as-you-go financing and capital funding. Moreover, a close link can be established between contributions and the subsequent pension in state pay-as-you-go schemes as well as private, funded pension provision. Finally, in the decision-making process, more attention needs to be paid to the flow of information to decision-makers, citizens and the media in order to increase the acceptability of reform measures.     

Ageing and the politics of pension reforms in Central Europe,South‐Eastern Europe and the Baltic States

Cerami A. Ageing and the politics of pension reforms in Central Europe, South‐Eastern Europe and the Baltic States Int J Soc Welfare 2011: 20: 331–343 © 2010 The Author(s), Journal compilation © 2010 Blackwell Publishing Ltd and the International Journal of Social Welfare. This article investigates ageing and the politics of pension reforms in Central Europe, South‐Eastern Europe and the Baltic States. It emphasises the importance of historical legacies, presence of veto points, trade unions' power, electoral rules and country‐specific patterns of political competition, but it also highlights the central role in institutional change played by other concomitant factors, such as those associated with the communicative actions of national and international actors. The role played by power politics, class conflicts and strategic use of social policies is also emphasised. The main argument put forward in this article is that pressures for reforms in the pension systems have not only been the response of demographic, economic and financial pressures but have also been the result of a new consensus found on new economic ideas and discourses that saw in the privatisation of the economy a new modernisation paradigm.     

The macroeconomic impact of reforming a PAYG system: The Portuguese case

Abstract   The article analyses the impact of various types of reform options on social security pension system financial sustainability and on a range of macroeconomic variables. The HERPOR model is used to consider the likely effects of parametric reforms of the existing pay-as-you-go system, as well as those of a systemic reform. The article concludes that the former are sufficient to ensure financial sustainability, although they should be accompanied by employment implementation measures. The article concludes that a fully pre-funded system does not seem to be a viable option for policy-makers in the redesigning of social security pension systems, due to the high transition costs involved.     

Pension reform, the stock market, capital formation and economic growth: A critical commentary on the World Bank's proposals

Proposing far-reaching reforms to pension systems, the World Bank has recently suggested that the existing pay-as-you-go systems in many rich as well as poor countries should be replaced by fully funded, mandatory, preferably private pensions, as the main pillars of the new system. It argues that these reforms will not only benefit pensioners but also enhance savings, and promote capital formation and economic development. This paper provides a critical examination of the Bank's theses and concludes that it has adopted a one-sided view of the relationships between the key critical variables. The proposed reform may therefore neither protect the old nor achieve faster economic growth.     

Labor Mobility Without Pension Portability: Migrant Workers’ Endangered Pension Entitlement in China

This paper investigates migrant workers’ endangered pension entitlement in China from a perspective of political economy. The decentralized pension governance structure in China led to limited portability of the urban pension program. The movement of migrant workers challenges this decentralized governance structure, and have also produced clear winner and loser provinces in the pension program. This study argues that the interests of migrant‐receiving provinces, the winners, became a major obstacle in reforms that sought to address the pension portability problem. The migrant workers’ pension issue has in fact contributed to inter‐regional welfare inequality. This resulting inter‐regional inequality makes any central government's plan on centralizing the pension program a challenging task.     

A State‐centred Explanation of the Finance‐Pension Nexus: New Zealand's Pension Reforms as a Typical Case

This study analyses the decision‐making processes that led to the introduction of the New Zealand Superannuation Fund (a public pension reserve and investment fund), as well as the KiwiSaver Scheme, which is New Zealand's first soft‐compulsory private pension scheme. Why and how are governments engaged in the development of funded pensions? These are the questions this study addresses. In analyzing the finance‐pension nexus in New Zealand, this article adopts a state‐centric approach. It argues that pension funding reforms are shaped by state officials who pursue their own motives because policymakers frame funded pensions as an instrument for achieving broader fiscal, economic and financial policy outcomes. Because New Zealand is a typical case of a state‐centric explanation, a study of its pension funding reforms helps in finding causal links between finance and pensions.     

Ethnicity and Occupational Pension Membership in the UK

Reflecting a relatively low‐value Basic State Pension, occupational pensions have historically been a key aspect of pension protection within Britain. Existing research shows that minority ethnic groups are less likely to benefit from such pensions and are more likely to face poverty in later life, as a result of the interaction of their labour market participation and pension membership patterns. However, the lack of adequate data on ethnic minorities has so far prevented the direct comparison of different ethnic groups, as well as their comparison to the White British group. Using data from the UK Household Longitudinal Study, this article explores patterns of employment and the odds ratios of membership in an employer's pension scheme among working‐age individuals from minority ethnic groups and the White British population, taking into account factors not used by previous research, such as one's migration history and sector of employment (public/private). The analysis provides new empirical evidence confirming that ethnicity remains a strong determinant of one's pension protection prospects through being in paid work, being an employee and working for an employer who offers a pension scheme. However, once an individual is working for an employer offering a pension scheme, the effect of ethnicity on that person's odds of being a member of that scheme reduces, except among Pakistani and Bangladeshi individuals for whom the differentials remain. The article also provides evidence on the pension protection of Polish individuals, a relatively ‘new’ minority group in the UK.     

Reality and Challenges of Pension Schemes in Tunisia

This article tries to establish whether the statutory system of pensions based on the pay-as-you-go principle is financially defensible in the context of an ageing population. Our study uses the case of Tunisia. The hypothesis that the population is ageing has been confirmed by a prospective study of the Tunisian population to 2050. A simulation of the pension schemes reveals a deficit which is growing at an exponential rate and which must inevitably jeopardize the financial viability of the schemes. Pension reform is thus unavoidable. After studying a number of experiences from other countries, which we describe, we propose a switch to notional defined-contribution schemes and/or organized in tiers.     

Public–Private Partnerships in European Old‐Age Pension Provision: An Accountability Perspective

Over the last few decades, the boundary between public and private responsibility in old‐age pension provisions has been redrawn throughout Europe. A new, public–private mix has emerged, not only in pension policy, but also in pension administration. The purpose of this article is to map and conduct a comparative analysis of the administrative design of public–private partnerships (PPPs) in European pension regimes, with a specific focus on how accountabilities are institutionally enforced within the PPP design. Previous literature has recognized accountability as an important factor in promoting trust in mandated pension schemes. However, as the literature on PPPs suggests, institutional arrangements of accountability are more complex in the case of PPPs than has been suggested by previous studies on pension administration. Thus, there is a need for further elaboration of existing comparative models. This study's analysis examines 19 old‐age pension schemes that existed in 18 European countries at the beginning of 2013. The findings suggest that significant variations in accountability structures exist, even among schemes that are similar in terms of their pension policy targets. It is concluded that various schemes suffer from ineffective accountability structures that may compromise the legitimacy and sustainability of PPP‐type pension schemes.