Chapter 18 - The Political Economy of Pension Reform in Europe

Abstract

Pension reform has become central to the European social policy agenda—first in terms of construction and expansion, then increasingly in terms of consolidation and retrenchment. Thus, pension systems (both public and private) need to be viewed in a broader political economy framework. Their major purpose is to provide income security to retirees. Pension systems form a major part of the political economy of current societies. In the political economy of European welfare states, both the Bismarckian and Beveridgean types of pension systems were used for similar purposes, such as for the institutionalization of retirement and the management of the labor market. There is broad agreement on the list of challenges that pension schemes now face, but disagreement on how these challenges should be interpreted, what impetus for reform they should provide, and, most of all, what the reforms should be. The willingness of citizens to pay taxes still varies widely among nation-states. Pensions have a peculiar place in as they are the one policy area where a productivist emphasis seems inappropriate and income protection remains paramount. As pension reforms have strengthened the link between contribution history and benefits, the impact of working careers on future entitlements has become more salient.