Politics Of Pension Reform Research Articles

Linking Pensions to Life Expectancy: Tackling Conceptual Uncertainty through Bayesian Model Averaging

Linking pensions to longevity developments at retirement age has been one of the most common policy responses of pension schemes to aging populations. The introduction of automatic stabilizers is primarily motivated by cost containment objectives, but there are other dimensions of welfare restructuring in the politics of pension reforms, including recalibration, rationalization, and blame avoidance for unpopular policies that involve retrenchments. This paper examines the policy designs and implications of linking entry pensions to life expectancy developments through sustainability factors or life expectancy coefficients in Finland, Portugal, and Spain. To address conceptual and specification uncertainty in policymaking, we propose and apply a Bayesian model averaging approach to stochastic mortality modeling and life expectancy computation. The results show that: (i) sustainability factors will generate substantial pension entitlement reductions in the three countries analyzed; (ii) the magnitude of the pension losses depends on the factor design; (iii) to offset pension cuts and safeguard pension adequacy, individuals will have to prolong their working lives significantly; (iv) factor designs considering cohort longevity markers would have generated higher pension cuts in countries with increasing life expectancy gap.

The politics of pension reform in Greece and Turkey: International institutions as external determinants of adjustments

Among welfare programmes public pension schemes have been particularly subject to cost-containment. Various countries have been exposed to relatively similar pressures such as ageing populations or growing unemployment. The literature on comparative welfare states tends to highlight the significance of domestic factors in mediating the influence of these pressures. This article instead explores the policy impact of international financial institutions (IFIs) including the World Bank, International Monetary Fund (IMF) and the European Union (EU) on the reform of old-age pension systems in Greece and Turkey. It suggests that in both countries, IFIs have helped to trigger the process of reforms and to spread the global pension orthodoxy. Although the pension schemes still diverge in institutional structure and benefit provision, in both cases adoption of the pension orthodoxy of individualisation of pension rights has followed the advice tendered by the IFIs.

Transnational actors and the politics of pension reform in Sub-Saharan Africa

ABSTRACT Drawing on recent scholarship on transnational actors and on the role of ideas in policy change, this paper analyzes the regional context of the pension reform debate in Sub-Saharan Africa, and shows that, at least since the 1980s, there was significant attention to pension reforms in Africa by global policy actors, including the World Bank. However, unlike in Latin America and Central and Eastern Europe, where the World Bank proved dominant, the regional environment of pension reform in Sub-Saharan Africa was characterized by a fierce competition between the World Bank and the International Labour Organization (ILO), with each institution promoting different policy preferences. As demonstrated, in Sub-Saharan Africa pension reform, the ILO has proved more influential than the World Bank. Theoretically, the paper stresses the role of transnational actors in the global diffusion of social policy ideas. Recognizing the need to explore the interactions between national and transnational actors, as well as between transnational actors themselves, the analysis explores the dialogical and competitive nature of the global politics of ideas.

Ageing and the politics of pension reforms in Central Europe, South‐Eastern Europe and the Baltic States

Cerami A. Ageing and the politics of pension reforms in Central Europe, South-Eastern Europe and the Baltic States Int J Soc Welfare 2011: 20: 331–343 © 2010 The Author(s), Journal compilation © 2010 Blackwell Publishing Ltd and the International Journal of Social Welfare. This article investigates ageing and the politics of pension reforms in Central Europe, South-Eastern Europe and the Baltic States. It emphasises the importance of historical legacies, presence of veto points, trade unions' power, electoral rules and country-specific patterns of political competition, but it also highlights the central role in institutional change played by other concomitant factors, such as those associated with the communicative actions of national and international actors. The role played by power politics, class conflicts and strategic use of social policies is also emphasised. The main argument put forward in this article is that pressures for reforms in the pension systems have not only been the response of demographic, economic and financial pressures but have also been the result of a new consensus found on new economic ideas and discourses that saw in the privatisation of the economy a new modernisation paradigm.

Are Old-Age Pension System Reforms Moving Away from Individual Retirement Accounts in Latin America?

This article reviews two rounds of pension reform in ten Latin American countries to determine whether they are moving away from individual retirement accounts (IRAs). Although the idea is provocative, we conclude that the notion of ‘moving away from IRAs’ is insufficient to characterise the new politics of pension reform. As opposed to the politics of enactment of IRAs of the late twentieth century, pension reform in Latin America in recent years has combined significant revival of public components in old-age income maintenance with improvement of IRAs. Clearly, the policy prescriptions that were most influential during the first round of reforms in Latin America have been re-evaluated. The World Bank and other organisations that promoted IRAs have recognised that pension reform should pay more attention to poverty reduction, coverage and equity, and to protect participants from market risks. The experience and challenges faced by countries that introduced IRAs, the changes in policies by international financing institutions, and the recent financial volatility and heavy losses experienced in financial markets may have tempered the enthusiasm of other countries from applying the same type of reforms. Scholars and policy-makers around the globe could benefit from looking closely at these changes in pension policy.

Are Old-age Pension System Reforms Moving Away from Individual Retirement Accounts in Latin America?

AbstractThis article reviews two rounds of pension reform in ten Latin American countries to determine whether they are moving away from individual retirement accounts (IRAs). Although the idea is provocative, we conclude that the notion of ‘moving away from IRAs’ is insufficient to characterise the new politics of pension reform. As opposed to the politics of enactment of IRAs of the late twentieth century, pension reform in Latin America in recent years has combined significant revival of public components in old-age income maintenance with improvement of IRAs. Clearly, the policy prescriptions that were most influential during the first round of reforms in Latin America have been re-evaluated. The World Bank and other organisations that promoted IRAs have recognised that pension reform should pay more attention to poverty reduction, coverage and equity, and to protect participants from market risks. The experience and challenges faced by countries that introduced IRAs, the changes in policies by international financing institutions, and the recent financial volatility and heavy losses experienced in financial markets may have tempered the enthusiasm of other countries from applying the same type of reforms. Scholars and policy-makers around the globe could benefit from looking closely at these changes in pension policy.

Welfare State Restructuring without Grand Coalitions: The Role of Informal Cooperation in Blame Avoidance

This article argues that welfare state restructuring, which is highly unpopular among voters, is politically feasible if government and opposition parties cooperate informally with one another. Contrary to what key arguments made in the literature assert, restructuring does not require the formation of a grand coalition to diffuse blame from voters. Informal cooperation between parties is a distinctive blame-avoiding strategy, which differs not only from other party-oriented strategies such as building a grand coalition, but also from voter-oriented ones, such as obfuscation and exemption. By analysing the politics of pension reform in Germany, this article shows that informal cooperation enables political parties to restructure the welfare state without running the risk of electoral failure.

Ageing and pension reform around the world: evidence from eleven countries

1. Population Ageing and the Logics of Pension Reform in Western Europe, East Asia and North America 2. Reconfiguring Italian Pensions: From Policy Stalemate to Comprehensive Reforms 3. New Century - New Paradigm: Pension Reforms in Germany 4. The Politics of Pension Reform in France: The End of Exceptionalism? 5. Pension Reform in Sweden: Radical Reform in a Mature Pension System 6. UK Pension Reform: A Test Case for a Liberal Welfare State? 7. Switzerland: Adapting Pensions within Tight Institutional Constraints 8. The Politics of Pension Reform in Japan: Institutional Legacies, Credit-claiming, and Blame Avoidance 9. Pension Reform in Taiwan: Th e Old and the New Politics of Welfare 10. Pension Reform in Korea: Conflict between Social Solidarity and Long-term Financial Sustainability 11. Public Pension Reform in the United States 12. Stasis Amidst Change: Canadian Pension Reform in an Age of Retrenchment Index.

The Politics of Pension Reforms

About ten years ago, in 1994, the World Bank published a study that advocated multipillar pension systems. The report, Averting the Crisis: Policies Protecting the Old and Promoting Growth (World Bank 1994), set forth a number of arguments why pensions systems should have three pillars: a publicly managed redistributive pillar as protection against poverty, a privately managed mandatory pillar funded by individual contributions, and a voluntary pillar comprised of company and industry plans. Given that the majority of the continental European countries at the time relied heavily on state-run “pay-as-you-go” systems, the World Bank urged far-reaching pension reforms to institutionalize the second and third pillars. Last year, the World Bank invited a number of scholars to assess the process of moving toward a multipillar pension system around the world, particularly in Europe. The edited volume that resulted is an interesting and timely contribution not only to the debate...

Politics of Pension Reform — The French Case in a Comparative Perspective

This paper analyzes national processes of pension reform in countries with systems of old-age provision largely following the Bismarckian type (Austria, France, Germany, Italy, Sweden). Operating on a defined benefit/pay-as-you-go basis and mainly financed out of wage-based social contributions, pension systems in these countries are highly vulnerable to demographic and economic pressures. Therefore, pension reform has emerged as a major issue in these countries since the early 1990s. However, since substantial pension reform inevitably requires the imposition of tangible losses to large parts of the electorate, pension policy-makers face considerable political risks. As a closer inspection of national patterns of pension policy-making shows, the political feasibility of pension reforms and the degree of adjustment in pension policy critically depends on the government's ability to orchestrate a reform consensus either with the parliamentary opposition or with the trade unions. The paper tries to identify the conditions under which a ‘pension pact’ between those actors is likely to emerge. It argues that among the countries under study only France lacks the preconditions for a stable political consensus over pension reform and therefore has only made very limited progress.

The Politics of Pension Reform: Lessons from Public Attitudes in Greece

While the construction of a rational case for pension reform is often straightforward, the political implementation of such reform can be somewhat more difficult. In large part, this can be attributed to sceptical public opinion. The precise role played by public opinion in constraining the political feasibility of pension reform is, however, unclear. The purpose of this paper is to distil the ways in which public attitudes influence pension reform. This is done through examining survey data from Greece, where progress with the implementation of pension reform has been particularly modest. Political opposition to pension reform appears to be rooted in a general lack of public appreciation of the case for reform combined with the desire to protect interest group privileges. Public ignorance and insecurity breed attitudes not conducive to reform. Public attitudes do not simply act as a given constraint on reform but are a product of the structure of the pension system and the reform process itself. In this path-dependent process, implementation of a reform agenda of rationalisation is more difficult from the starting point of a severely fragmented and distorted system.

The Politics of Pension Reform in Latin America

Latin America has been a world pioneer of neoliberal, structural reform of social security pensions (‘privatisation’). This article focuses on the diverse political economy circumstances that enabled such reform, analysing why policy makers have chosen such a costly strategy and how they have managed to implement it. First, in nine countries with diverse regimes (authoritarian and democratic) it examines the internal political process that led to the adoption of reform. There tends to be an inverse relationship between the degree of democratisation and that of privatisation, but the political regime alone cannot fully explain the reform outcomes in all cases. To expand the search for explanatory variables, other key factors that might have influenced the reform design are studied, among them relevant political actors (driving and opposing forces), existing institutional arrangements, legal constraints, internal and external economics and policy legacy.

The politics of pension reform in Peru

To date, the bulk of the research on the politics of social security reform analyzes privatization as a dependent variable and explores the political and economic conditions leading to the implementation of pension reforms. Departing from the tradition of previous scholarship, this article redirects attention to the political consequences of pension privatization by focusing on how pension reform affects social interests, and the effects of those interests on reform processes. The analysis reveals the importance of looking beyond the initial alignment of interests surrounding market reform initiatives to explore the broader political implications. In Peru, the pension reform created concentrated beneficiaries who pushed for the deepening of the reform process at the expense of costs that were widely distributed among workers in the formal sector.

Book Review: The Politics of Pension Reform: Institutions and Policy Change in Western Europe

Book Review: The Politics of Pension Reform: Institutions and Policy Change in Western Europe

The Politics of Pension Reform: Institutions and Change in Western Europe

The Politics of Pension Reform: Institutions and Change in Western Europe

The Politics of Pension Reform Under Ageing

In this paper we address the question whether in case of population ageing a transition from an unfunded to a more funded pension scheme is politically feasible in a representative democracy. We consider two parties: a right-wing party which is willing to trade off intragenerational equity against efficiency gains in intergenerational redistribution, and a left-wing party which does not want to adjust the level of intragenerational distribution. We show that, in an economy with an exogenously given interest rate, only a thus defined right-wing government will propose a social-security reform. Moreover, we demonstrate that such a policy proposal may lead to electoral success if it entails an appropriate mix of distributional efficiency and equity.