The “Great Recession” and Pension Policy Change in European Countries

Magnus Brosig,Karl Hinrichs

doi:10.1007/978-3-030-86645-7_30

Abstract

AbstractIn the wake of the “Great Recession” and its severe fiscal implications, many European countries enacted significant pension reforms aimed at reducing public spending and limiting contribution rates. Unlike most changes carried out before, they were implemented swiftly and without building a broad political and social consensus, usually being suggested or even mandated by inter- and supranational organisations such as the International Monetary Fund (IMF) or the European Union (EU). While some of these cuts were at least partly revoked during the following years of economic recovery, European welfare states still tend to face lower “pension burdens” in the upcoming decades than had been expected during the 2000s. Financial sustainability, however, puts adequacy at risk for present and future retirees, many of whom no longer achieve sufficient working careers anyway.

Highlights

In autumn 2020, the coronavirus disease 2019 (COVID-19) pandemic ravages countries around the world
The misery evolved as a kind of cascade, starting with the so-called “sub-prime crisis” in the USA already in the summer of 2007
It spread to Europe and ended the housing market bubble that had built up in Ireland, Spain and further countries

Summary

Introduction

In autumn 2020, the coronavirus disease 2019 (COVID-19) pandemic ravages countries around the world. The magnitude of policy changes was large, when adding up the sequel of alterations They caused a substantial and immediate negative impact on the living conditions of present and future retirees and contributed to the general decline in purchasing power, revealing interdependencies between the economic crisis and reforms. The post-2008 reforms in crisis-shaken EU countries swiftly passed parliaments, and mostly they were implemented with a short time lag. They can be considered as “rapid policy changes” (Rüb 2012). The third section informs about the type of old-age security systems in the countries selected, while the fourth deals with the actual changes that were concluded during the crisis or shortly thereafter.

Eight EU Countries in Need of External Assistance

Eight Countries

The Post-2008 Pension Reforms

Reform Impact and Outlook