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.     

Do public pensions matter for health and wellbeing among retired persons? Basic and income security pensions across 13 Western European countries

Esser I, Palme J. Do public pensions matter for health and wellbeing among retired persons? Basic and income security pensions across 13 Western European countries Int J Soc Welfare 2010: ??: ??–??© 2010 The Author(s), Journal compilation © 2010 Blackwell Publishing Ltd and International Journal of Social Welfare. Mortality rates suggest that elderly people in the advanced welfare democracies have experienced dramatically improved health over the past decades. This study examined the importance of public pensions for self‐reported health and wellbeing among retired persons in 13 Organisation for Economic Cooperation and Development countries in 2002–2005. New public pension data make it possible to distinguish between two qualities of pension systems: ‘basic security’ for those who have no or a short work history, and ‘income security’ for those with a more extensive contribution record. For enhanced cross‐national comparison, relative measures of ill‐health and wellbeing were constructed to account for cultural bias in responses to survey questions and heterogeneity among countries in the general level of population health. Overall, better health is found in countries with more generous pensions, although the results are gendered; for women's health, high basic security of the pension system appears to be particularly important. Women's wellbeing also tends to be more dependent on the quality of basic security.     

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.     

Pension financialization and collective risk sharing in Canada and Finland

This article contributes to the debate concerning pension financialization and how countries are adapting their pension systems to respond to demographic ageing. We do so by examining the statutory pension systems of Canada and Finland, which diverge interestingly from current international trends. The Canadian and Finnish public pension schemes reflect two tendencies often associated with pension financialization: an increasing reliance on financial markets and an investment policy with a diversified asset allocation. However, unlike in many other countries, this has not resulted in heightened individual risks in old-age income security caused by a shift from defined benefit to defined contribution pensions – an otherwise common trend internationally.     

Convergence or divergence? How the financial crisis affected European pensioners

The Member States of the European Union entered the financial crisis with very different pension systems. Although the use of standard adequacy measures suggest small impacts from the crisis, alternative measures based on pension wealth estimates indicate stronger effects. While the largest continental systems were left relatively unscathed by the crisis, Mediterranean systems were cut back significantly. This should lead to considerable convergence in system generosity across countries. Despite the cuts, state pensions in the stressed economies should still be generous enough to keep the majority of pensioners out of relative poverty, but this depends on a relatively quick turnaround in labour market performance in these countries.     

The interaction of pillars in multi‐pillar pension systems: A comparison of Canada,Denmark, Netherlands and Sweden

Canada, Denmark, the Netherlands and Sweden have advanced multi‐pillar pension systems. Using micro‐simulations, this article presents a close examination of the interaction of pillars in these countries. The relative importance and the role of the different pension pillars vary from country to country, and according to age, income, gender and socio‐economic dimensions as well as between generations. A further area of investigation is the mitigation capacity of the four pension systems. On the one hand, adverse labour careers lead to lower life‐time earnings and lower private pension accruals. On the other hand, these effects are mitigated through the design of pillars and their interaction. Mitigation is important to income security and stability in retirement and to post‐retirement income distribution. However, mitigation mechanisms come at the cost of incentives. Moreover, in many countries, the generosity of public benefits is set to decrease – increasing the importance of private pensions. This will shift risk and uncertainty from employers and pension institutions to individuals. Thus, risks and uncertainties related to private pensions will become more important, raising questions about the division of responsibilities between public and private pensions, and about the potential of mitigating such risk through pillar interaction. These concerns are further reinforced by labour market changes. Although a pension system free of distortions is inconceivable, this article seeks to contribute to addressing how mitigation should be designed, and how mitigation and risk sharing should be balanced against incentives, challenges which are as much political as technical.     

The performance of social security contributory and tax‐financed pensions in Central America,and the effects of the global crisis

Over the last 30 years, Latin America has pioneered structural pension reforms. This article focuses on a representative regional sample of seven Central American countries with diverse levels of development (Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama) studying contributory and tax‐financed pensions as well as recent pension reforms. It comparatively assesses system performance regarding five social security principles: unity; universal coverage; adequacy of benefits; equal treatment, solidarity and gender equality; and financial sustainability. It also evaluates the impact of the world crisis on these pension systems, highlighting the differences between public and private pensions, and extracts lessons and suggests policies for the future.     

Equity and Redistribution Between Generations: A Challenge for the Future of Pensions and all Social Protection Schemes

Throughout Europe today, the problems of employment and the prospects of pronounced demographic ageing combine to raise a number of questions on the future of pensions and on the underlying principles of redistribution between generations. Everywhere a new debate has arisen on intergenerational equity. It has often served as the justification for pension scheme reforms introduced or pending in most countries. Some clarification is needed on what is actually meant by intergenerational equity, all the more so with the ongoing complexity of the scientific and political arguments on the subject. In this paper I attempt to show, on the basis of information derived from my research, why a financial view of intergenerational redistribution seems inadequate and how, in discussing the future of such redistribution, there are new forms of life cycle organization and redistribution of worktime and compensated inactivity across this life cycle that need to be considered. This paper aims to show that in considering the future of pension schemes and the prospects of a contract between generations one must take into account the manner in which the distribution of work operates between all ages and across the whole life cycle, in relation to the structure of social security. Welfare states today constitute an inextricable tangle of risks and coverage systems. In such circumstances it would seem rash to countenance the kind of public pension reforms that have been envisaged by a number of member countries of the European Union, not leastFrance, without taking into account the close relationship that now exists between pensions, unemployment insurance and disability. Reform in one sector cannot meet the challenge of the ageing population in our developed societies.     

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.     

Pension privatization in crisis: Death or rebirth of a global policy trend?

From 1981 to 2007, more than thirty countries worldwide fully or partially replaced their pre‐existing pay‐as‐you‐go pension systems with ones based on individual, private savings accounts in a process often labelled “pension privatization”. After the global financial crisis, this trend was put on hold for economic, ideational, and institutional reasons, despite a rise in critical indebtedness that has facilitated pension privatization in the past. Is the global trend towards pension privatization dead or in the process of being reborn, perhaps in a somewhat different form? Several recent trends point to rebirth as policy‐makers scale back public and private pension systems, attend to minimum pensions and “nudge” rather than mandate people to save for retirement.     

Portability of Supplementary Pension Rights in the European Union

European Union (EU) legislation on portability of supplementary pension rights accrued by private-sector migrant workers is at an early stage. The recent directive on this topic, aiming to preserve accrued pension rights at least at the level guaranteed in the case of within-borders mobility, emphasizes the role of country-specific legislation on pension portability issues. This paper analyses EU as well as national pension portability regulation for a representative sample of EU countries, in the light of recent empirical evidence outlining the role of occupational pensions in individual job mobility choices in these countries.     

The gender gap in pensions in Latin America

Lower female lifetime labour market participation rates, greater interruptions during their working lives, and wage gaps contribute to create gender gaps in pensions at the time of retirement. The design of social security systems may reinforce or attenuate these gaps. This article provides new evidence on gender gaps in access to pensions and in pension income in four Southern Cone countries in Latin America and analyses their evolution between 2000 and 2013, showing significant improvements in both gaps, with differential patterns by countries. The decrease in the gender gap in pension income has been particularly significant in Argentina and Brazil. In both cases, the largest increases in pension values during the period correspond to the lowest income percentiles, where women are overrepresented. The application of redistributive policies in these countries, aimed at reducing poverty and inequality but not necessarily focused on gender equity, has had positive and probably unintended consequences in terms of reduction in gender gaps in pensions.     

Voluntary Pension Saving for Old Age: Are the Objectives of Self‐responsibility and Security Compatible?

Fiscal pressure and demographic change lead governments to seek ways of reducing state expenditure on pensions. Individuals are asked to take more responsibility, and funded, supplementary pension schemes have been established in many countries. This article looks at schemes that are voluntary – the NEST or Personal Accounts scheme in Britain and the Riester Pension scheme in Germany. It examines the debate about whether it is worthwhile for some people to participate in pension schemes that are not mandatory – particularly those with low incomes and/or potentially broken careers. The small pensions they accumulate in such schemes merely offset entitlements to means‐tested pension benefits, leaving them no better off in old age. Concerns about the behavioural consequences of pension means‐testing are not new. Nonetheless, few policymakers have been willing to look at when and how such concerns were expressed in the context of voluntary pension savings. Equally, they have seldom been prepared to explain the costs involved in guaranteeing savings‐based pensions or the implications that the lack of offering such a guarantee might have for individual behaviour. The state has sought for people to take greater ‘self‐responsibility’ for their retirement income, but many people wish for some certainty with respect to the pensions they can expect. These goals might well be in conflict. Whether the ‘state pension for the 21st century’, as proposed by the UK government, will succeed in satisfying the objectives both of the state and of pension savers remains an open question.     

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.     

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.     

Developing countries and systemic pension reforms: Reflections on some emerging problems

Since 1981 close to forty countries have introduced systemic pension reforms that have replaced all or part of prior pay‐as‐you‐go (PAYG) schemes with privately managed funded defined contribution (FDC) pillars or systems. However, over the past decade about half of these countries have subsequently cutback on, or entirely eliminated, these FDC schemes. In this article we explore some of the reasons why this reversal is often taking place in developing countries. As part of our analysis we propose a new pension reform typology that goes beyond the commonly used dichotomy between PAYG and pension privatization. We identify and discuss four factors that are of particular relevance to those seeking to understand the pension policy reversals that have been taking place in many developing countries: low pension coverage and incentive incompatibility, triple burden costs, tradeoffs between pension reforms and social pensions, and difficulties with annuitization.     

Social risks and public pension in South Korea

This study investigated how traditional and new social risks have emerged in South Korea and how policies have coped with them, focusing on the public pension program. Using national statistics data and publicly published government reports, factors such as marital status, economic activity, and the insurance trend of the public pension by age and gender for the last decade were examined. Main results are as follows. Women's labor force participation has slightly increased; however, career discontinuity remains and new family risks have increased. Second, women's public pension coverage as a percentage of the employment rate has substantially increased, implying that old labor market risks have largely been reduced for female workers. Third, the public pension insured rate among male workers has decreased to a small degree, which implies that new labor market risks are increasing for male workers. Consequently, the gender gap in risk has been reduced; however, policies established to deal with new risks have introduced some gender effects     

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.     

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.     

An International Comparative Study on Women's Pension Rights and Their Economic Risks

This article examined the theoretical meanings of pension rights and analyzed their effects on women's economic risks in developed countries. First, based on the status of a citizen, worker, parent, and spouse, this study investigated how pension benefits are guaranteed as a citizen regardless of work history, the degree to which women's disadvantageous situations in the labor market and unpaid work are compensated by public pension as workers and parents, and how marital status is treated in the different pension systems. Second, analysis of the effect of pension rights showed that individual rights is a significant factor to prevent economic risks of elderly women. Derived rights did not seem to secure the economic welfare of elderly women, at least in a comparative context. This finding suggested that developing individual rights, rather than derived rights, is the way to guarantee long‐term elderly women's economic welfare.