Left to Market and Family – Again? Ideas and the Development of the Rural Pension Policy in China

The rural pension policy in China is characterized by a high degree of instability. In the past 15 years since the introduction of pilot schemes in some regions, the state has been unable to establish a stable institutional framework for rural old‐age security. This article seeks to integrate the theoretical insights from a growing body of international literature on the role of ideas in social policy reform in order to shed new light on the study of Chinese rural pension policy. I argue that the rise of the rural pension scheme and its eventual failure to make consistent progress towards a comprehensive system is directly related to conflicting ideas among bureaucrats with respect to what sort of welfare provision the rural elderly actually need. The fluctuations in this policy realm vividly illustrate the predominance of the policy idea that peasants could still rely on their land and family, supplemented by private commercial insurance, in their old age. Given this alleged self‐reliance on the part of rural residents, the state is very reluctant to set up a comprehensive rural pension scheme. As a result, the old‐age security of the peasants in rural China is standing on very thin ice, and the prospect for more active state involvement in the near future remains dim.     

Exploring a blind spot in comparative pension reform research: Long‐term trends in non‐contributory pensions in Europe

Over the past two decades, pension reforms have been high on the agenda of social policy makers in Europe. In many countries, these reforms have resulted in less generous public pensions. At the same time, minimum income protection for older adults has received attention from policy makers, but much less so from social policy researchers. Therefore, this study explored how benefit levels of non‐contributory minimum income schemes for older adults evolved from 1992 to 2012 in 13 ‘old’ EU member states. Building on two cross‐national longitudinal datasets with comparative data on minimum income protection in Europe, the study shows that over the past 20 years, the erosion of the principal safety net of last resort for older persons has been limited. Moreover, a substantial number of European countries have pursued a deliberate policy of considerably increasing minimum income benefits.     

Promoting a higher retirement age: A prospect‐theoretical approach

Demographic ageing and the necessity of raising the retirement age is one of the most frequently debated topics among European welfare policy experts. This study used prospect theory as developed in behavioural economics to explain public attitudes towards pension reforms. It argues that, in line with prospect theory, negative incentives are more useful in changing people's attitudes in favour of a higher statutory retirement age than are positive incentives. Therefore, in the case of increasing life expectancy, defined‐contribution schemes that apply actuarial formulae linking the level of starting monthly pension benefits to life expectancy are more useful in promoting a higher retirement age than conventional defined‐benefit schemes, which typically do not forge an automatic connection between longevity and starting pensions. The implications of prospect theory for attitudes towards pension reforms were tested using Eurobarometer survey data collected in 2004 and 2009 in the Czech Republic, Poland and Slovakia.     

Are good governance principles institutionalised with policy transfer? An examination of public–private partnerships policy promotion in China

This article explores the following question: To what extent are good governance principles being institutionalised in China as a result of public–private partnerships (PPP) policy transfer? Since 2013, China has been pursuing PPP and applying aspects of related good governance drawing from Western experience despite its radically different fragmented authoritarian regime. This makes China a unique case to observe the extent to which good governance principles can be institutionalised in very different contexts. This article assesses the degree of institutionalisation of three good governance principles that guide PPP policy elsewhere: transparency and accountability, willingness to collaborate and equity between partners. It argues that while the PPP policies have been applied extensively in recent years, these good governance principles have been institutionalised to varying degrees as they have had to be adapted and compromised to fit with existing power relations in authoritarian China. The findings aim to add value to the literature regarding PPP policy transfer and good governance, by revealing the challenges of institutionalising good governance principles through PPP policy transfer in an alien context.     

The distributive impact of private pensions in the context of the institutional designs of public pension systems across OECD countries

Income inequality has been increasing across the developed world for the last few decades. The welfare state has played an important role in reducing income inequality, but it has now entered into an era of transformation. The shift from public to private pension schemes is one of the main policy instruments in this shift. An increase in private pensions is expected to create an increase in income inequality. Therefore, using data from OECD SOCX, this study examined how the effect of private pensions on income inequality might be changed by the institutional design of public pension systems. The results suggest that the effect of private pensions differs when the institutional design of the public pension system is considered. An increase in private pensions is related to an increase in income inequality when the public pension has a low level of coverage and a high level of earnings‐relatedness.     

Public pension institutions and old‐age mortality in a comparative perspective

Norström T, Palme J. Public pension institutions and old‐age mortality in a comparative perspective Int J Soc Welfare 2010: ??: ??–??© 2010 The Author(s), Journal compilation © 2010 Blackwell Publishing Ltd and International Journal of Social Welfare. The aim of the study was to estimate the impact of changes in pension rights on old‐age mortality. We made a distinction between two dimensions of pension benefits, one of providing basic security (BASIC), and the other of providing income security (INCOME). Analyses were based on data for 18 OECD countries during the post‐war period. The outcome comprised old‐age excess mortality, defined as the ratio of the mortality rate 65+ to the mortality rate in the age group 30–59 years. The latter was regarded as a proxy for unobserved factors potentially related to old‐age mortality as well as pension rights. The pooled cross‐sectional time series data were analysed through fixed effects modelling. The results suggest that BASIC (but not INCOME) has a beneficial impact on old‐age excess mortality, which was statistically significant. We interpret the results in terms of the poverty‐reducing effects of pension entitlements with a basic security orientation.     

Getting back on track: the expanded use of PPPs in Ireland since the global financial crisis

The global financial crisis that took hold in late 2008 resulted in a major slowdown of activity in the global market for public-private partnerships (PPPs). Ireland was one of the countries most affected with over 20 major infrastructure PPP projects postponed or abandoned. Since 2012 however, the Irish government has adopted a number of initiatives to make PPP more attractive to bidders and private sources of finance. This paper describes these initiatives and shows that they have been associated with a renewal of PPP activity. It suggests that some of the adopted measures may involve trade-offs between encouraging PPP investment and achieving standard PPP objectives such as economic efficiency and better innovation. However, the attraction of public sources of finance from sources such as the European Investment Bank should result in a relatively lower cost of finance and enhance value for money if providers adopt rigorous risk management strategies.     

Saving public pensions: Labor migration effects on pension systems in European countries

European countries have experienced population aging and consequent pressure on public pensions. Some European countries, therefore, have welcomed migrants, expecting that the inflow of people will ease the demographic and fiscal problems. It is important to ask if this policy approach has had the intended effects. This paper examines the effects of labor migration on public pension systems. Using error correction models (ECMs) with cross-country time-series data on European countries from 1981 to 2009, this analysis demonstrates that labor migration has deterred the reduction of public pension benefit levels and government expenditure on pension as well as the expansion of private pensions. This implies that labor migration eases the pressure on public pension systems. Migration contributory effects have been larger in countries with Bismarckian pension systems because those countries have experienced greater pressure on public pension systems than other countries.     

Poverty Reduction: The Missing Piece of Pension Reform in Latin America

Employment‐based pension plans constitute the main form of pension provision in Latin America. Although recent pension reform in the region has focused on strengthening these, old‐age poverty remains high in most countries in the region, with older people over‐represented among the poor. The article argues that ensuring old‐age support for poor and vulnerable groups involves a different set of priorities and options for pension reform, namely a strong focus on tax‐financed public cash transfer programmes. Cash transfer programmes focused on poor older people are the missing piece of pension reform in the region. The article examines the experience of the handful of countries with such programmes in place, and draws the lessons for the future of social policy in the region.     

A call for more elaborate and transparent pension data to inform policy‐making: A critical examination of World Bank data for Eastern Europe

This article offers a critical analysis of the methods by means of which data relating to the performance of second pillar pension schemes are collated, compared and reported. This is done with regard to the performance of mandatory private second pillar pension funds in Eastern Europe. By critically examining data published in a number of World Bank studies, and through the identification of data problems and irregularities, the article argues that a much more elaborate and transparent approach to the collation, comparative analysis and reporting of data is needed. Required is the establishment of a consensus regarding what should represent a robust basis for making credible policy recommendations, not least with regard to pension re‐reforms in the countries of Eastern Europe and elsewhere. In the absence of such a consensus, unresolved data problems and irregularities may potentially continue to influence the formulation of incomplete national policy conclusions regarding the performance of second pillar pension funds and, in turn, the ability of policy‐makers to evaluate appropriately the need for, and assess the feasibility of implementing in a sustainable manner, pension re‐reform.     

Second‐pillar pensions in Central and Eastern Europe: Payment constraints and exit options

During 1998–2007, a majority of Central and Eastern European (CEE) governments enacted laws obligating workers to save for retirement in privately managed individual accounts. The governments funded these accounts with a portion of public pension revenues, thus creating or increasing deficits in public systems. After the onset of the global financial and economic crisis (2008), most CEE governments reduced these funding diversions and scaled back the accounts. Now, a decade after the crisis, this article examines the benefits that the accounts are beginning to pay retiring workers. In general, these benefits are shown to be disadvantageous compared with public pensions. Some pay lump sums in lieu of regular monthly benefits, most fail to adjust pensions regularly for inflation, and some pay women less than men with equal account balances. In several countries, pensioners with individual accounts receive lower benefits than those without them. To enable retiring workers to avoid these disadvantages, several CEE governments have allowed them to refund their account balances and receive full public pensions. Yet while this strategy diffuses worker dissatisfaction, it also places strains on public pension finance. To assist second‐pillar account holders without weakening public pensions, governments should consider making private pension savings voluntary and financing these schemes independently of public pensions – i.e. by worker and employer contributions and, possibly, direct state support.     

Shifting the Pension Mix: Consequences for Dutch and Danish Women

All European countries are aiming to reform their pension systems in line with two conceptual ideas: firstly, that systems should combine public, occupational and private pensions; secondly, that entitlements should be individualized. The Dutch and the Danish pension systems already consist of these three different pensions with relatively individualized entitlements and in a way form an ideal type of pension system. However, these systems are far from ideal since they are deeply gender biased. The positive effects of citizenship‐based state pensions conceal the negative ones. In addition, recent developments in the combination of the pension schemes counteract the positive effects. Given the male‐oriented norm when it comes to full pension entitlements, and given the fact that life courses are still gendered, these countries’ systems and developments have negative effects for women.     

Design limitations of long-term care insurance schemes: A comparative study of the situation in Spain

Social and demographic changes are gradually transforming the way Western societies cope with old‐age dependency, in particular the provision of long‐term care (LTC). In response to the need for formal care services and financing instruments, this study examines a range of both private and public insurance tools. As a general rule, LTC insurance is markedly underdeveloped. Furthermore, in southern European countries, the role of the public sector in LTC is unclear compared with its role in other, related welfare areas such as healthcare. The study examines the financing alternatives for LTC insurance, taking as its benchmark the Spanish LTC financing reform. It briefly examines some existing, publicly funded LTC financing tools and explores the potential role of private LTC insurance, arguing that it has an active part to play alongside compulsory mainstream insurance schemes and self‐insurance alternatives. As in other European countries, Spanish social attitudes show a preference for some kind of general entitlement to publicly funded schemes, although this preference is subject to significant regional heterogeneity.     

Private and public pension schemes: Elements of a comparative approach

The comparative approach offers improved understanding of what is at stake for enterprises, workers and States in developing private pension schemes to fill the gap left by public schemes. The features that distinguish private schemes result from the freedom with which they were designed — by enterprises themselves or through collective bargaining — and the limits imposed by growing state intervention in granting fiscal concessions or stipulating social guarantees. Depending on how these various components are combined, private schemes may offers workers added protection or form a source of insecurity.     

Do social allowance transfers crowd out private transfers? An analysis of responses among elderly households in Taiwan

Chuang JCC. Do social allowance transfers crowd out private transfers? An analysis of responses among elderly households in Taiwan This article examines whether public transfers ‘crowd out’ private inter‐household transfers in Taiwan, focusing on two old age social allowance schemes (old age allowance and old age farmer allowance) during the 2002–2008 period. This study used a data set from the Survey of Family Income and Expenditure in Taiwan. Empirical evidence suggests that Taiwanese donors are strongly motivated by altruism, and that the increase of public transfers will crowd out private transfers, and vice versa. Besides, altruism is more likely to dominate among poorer elderly recipients, whereas the exchange motive would dominate among richer recipients. Thus, the response of Taiwanese donors is likely to neutralise the distributional impact of public transfers. Finally, the elderly are not a homogenous group, and the effect of public transfers on private transfers varies significantly by household characteristics, in particular depending on age, marital status and living arrangements.     

The Impact of Neo-liberalism on South Korea's Public Pension: A Political Economy of Pension Reform

This article examines the recent Korean pension reforms from a political economy perspective. It argues that these reforms are of particular interest because, unlike major pay-as-you-go pension schemes in Europe, the Korean pension scheme is a funded one and, therefore, is subject to market exposure. Also in contrast to the problems that public pension reforms have encountered in European and other OECD countries, especially 'blame avoidance', the more radical Korean reforms were implemented without significant challenge or resistance. First of all, the National Pension Scheme is described prior to the 1997 Asian economic crisis. Then the impact of this crisis on the Korean welfare state and, especially, its pension system are analysed. The main part of the article consists of a political economy of the pension reform process, in which the key roles of the international governmental organizations and the domestic neo-liberal policy elite are pinpointed. This neo-liberal ideology was critical in developing and sustaining an influential discourse on the 'crisis' in Korea's national pension fund. The article concludes by arguing, against the neo-liberal tide, for the inclusion of a pay-as-you-go element in the national pension in order to tackle escalating poverty in old age.     

Reforming against all odds: Multi‐pillar pension systems in the Czech Republic and Romania

Attempts to replace pay‐as‐you‐go pension schemes with private funded systems came to a halt in Central and Eastern Europe after 2005. However, more recently, the region has witnessed two belated reformers: the Czech Republic and Romania. Both countries decided to partially privatize pensions despite the rising tide of evidence concerning the challenges associated with the policy. We argue that while part of the domestic political elite remained supportive of private funded pensions, the difficulties experienced by earlier reformers and reduced support from International Financial Institutions led to the adoption of small funded pension pillars. Such cautious attempts at privatization might become more common in the future as large reforms have proven politically unsustainable.     

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.     

The effects on intra‐generational inequality of introducing a funded pension scheme: A microsimulation analysis for Estonia

This article uses a single male cohort microsimulation model to analyse the intra‐generational and distributional effects of a shift in Estonia from a defined benefit pay‐as‐you‐go (PAYG) pension system to a multi‐pillared system with a PAYG scheme with contribution‐based insurance components and a funded pension scheme. We contribute to the literature on microsimulation by showing how introducing contribution‐based insurance components and compulsory defined contribution (DC) schemes can increase pension inequality. Our results show that in the case of a high level of inequality in labour earnings and high long‐term unemployment rates, such as in Estonia, the introduction of a very strong link between contributions and future benefits leads to considerably higher inequality in pension incomes as measured by the Gini coefficient. Simulation results for Estonia suggest that inequality in old‐age pension incomes more than doubles when the reforms mature. In contrast, the inequality in replacement rates decreases.     

When Is a Change Big Enough to Be a System Shift? Small System‐shifting Changes in German and Finnish Pension Policies

In the wake of Esping‐Andersen's and Pierson's landmark publications, comparative welfare state research has revolved around the retrenchment of social policy and the transformation of welfare state regimes. One of the chief problems of these studies is the treatment of time. Very often, changes are incremental and their real impacts are not immediately visible but take years or even decades before the consequences fully materialize. The purpose of this paper is to discuss those incremental processes—that consist of series of smaller “not‐system‐shifting changes”—which may gradually change central features of a welfare state. Pension programmes, spanning long time periods, provide a good example. Only in some rare cases were pension schemes reformed in one step and in such a way that one can definitely ascertain a system shift. Most changes, however, are gradual, and recurrently enacted minor adjustments seem to leave the basic principles of the scheme intact. In this paper pension reform policies in Germany and Finland will be used to answer the question of when a change is big enough to be labelled as a system shift. It is argued that small “not‐system‐shifting” changes of the last two decades will eventually alter the basic characteristics of old‐age security in both countries.