Motivation, Purpose and Processes in Pension Reform

Abstract

The worldwide nature of the pension reform debate and the wind of change which seems to prevail justify the search for clear answers to three questions: (1) Why change the legislative and institutional framework of social security? (2) What do governments and society at large hope to achieve through change? and (3) If change is desirable, how can it be achieved without disrupting the country's social and financial order? The motivations which incite reformers fall into a few neat categories. A simple typology, as suggested in this article, should help avoid confusion in the public interpretation of recent policies and trends. A regrettable source of untidiness in the pension reform debate is also the use of ambiguous terminology. This is not merely a semantic concern. It has to do with the political meaning that the term conveys, as it may reflect an ideological stance and thus become a divisive issue. Another advantage of putting pension reform into a clearer conceptual framework is that it introduces and explains five specific goals which are common to all contemporary reformers. They are (1) social acceptability, (2) financial sustainability, (3) political feasibility, (4) coherence with economic and labour market realities, and (5) client‐friendly management and administration. Ideally the perfect reform should aim at all five goals. In the real world, however, reformers have to settle for less because political feasibility – one of the five – is likely to limit their ambitions of fully meeting the other four.