Public Pension Reform Research Articles

The Effects of Increasing the Eligibility Age for Public Pension on Individual Labor Supply: Evidence from Japan

This paper investigates the effects of increasing the eligibility age for public pension on workers' retirement decisions, focusing on recent Japanese public pension reforms. In Japan, the pensionable age for Employees' Pension Insurance benefits gradually increased from 60 to 65 for males over the course of a decade. Using individual-level administrative data and a regression discontinuity design, I find that raising the pensionable age for flat-rate benefits by one year increases male employment at the critical ages by about 7-8 percentage points. Individual labor supply responses are heterogeneous across closeness to the implementation date due to anticipatory responses. I also find some evidence of spillovers from an affected husband to his wife and children and effects on other labor market outcomes.

Narrative stories, institutional rules, and the politics of pension policy in Canada and the United States

ABSTRACTDeborah Stone’s Policy Paradox stresses the role of narrative stories in the construction of policy problems. This article takes a critical look at the Policy Paradox and at the claim that paying close attention to narratives is essential to the analysis of policy change. Drawing on recent scholarship on the role of ideas in public policy, the article shows that the analysis of narratives is part of a broader intellectual project associated with the ideational turn in policy analysis. The article explains how the analysis of narrative stories should take institutional factors into account, which can shape policy decisions. To illustrate these theoretical claims, the article analyzes the debate over public pension reform in the United States and Canada during the last 25 years. More specifically, the article compares the reform of the Canada Pension Plan during the mid-1990s and the failed push to privatize US Social Security during the Bill Clinton and the George W. Bush presidencies. The analysis stresses that, while narrative stories shape problem definition, institutional legacies influence policy adoption.

Higher Public Service Motivation for Accepting Public Sector Pension Reform? Evidence from Korean Government Organizations

Organizational reforms that employees do not voluntary accept are likely to negatively affect organizational effectiveness in the long term. We conducted an empirical analysis with survey data by reviewing related studies on public service motivation (PSM) and acceptance of organizational changes, the goal being to verify the relationship between government employees’ PSMand their acceptance of public sector pension reform in Korea. Results show that public servants highly driven by PSM are willing to accept this pension reform even though it reduces their own benefits. This study is distinguished from existing literature of PSM and responses to organizational changes because it reduces the possibility of endogeneity problems.

Between government unilateralism and corporatist bargaining: public sector pension reforms in the UK and Ireland, 2000s–2010s

AbstractStudies on welfare reform in advanced European countries have identified two established paths to welfare retrenchment: government unilateralism and corporatist bargaining. This study explores a more complicated path to welfare reform, wherein governments pursue ‘non-corporatist’ bargaining by actively combining features of unilateralism and negotiation. Such a hybrid case is explained by employing an ‘insider-outsider’ framework for public policy reform. The key argument is that the presence of exclusive insiders complicates the reform process, disqualifying both unilateralism and corporatist bargaining as feasible options for benefit cuts. The author demonstrates the validity of this claim by examining three cases of public sector pension retrenchment in the UK and Ireland during the 2000s and 2010s. Defying the common expectation that benefit cuts in residual welfare states would be promoted with government unilateralism, the public sector pension reforms in the UK and Ireland exhibited more complicated features which combined governments' unilateral initiatives andad hocnegotiations with public sector unions. Future studies may build on this finding to examine hybrid reform cases in a general European context.

The Impact of Fiscal Conservatism ; A Case Study of the 2007 National Pension System Reform in Korea

This research intends to identify the influential factors in the 2007 National Pension System (NPS) reform in Korea (the Republic of Korea) which drove the NPS toward a structural transformation. This research also examines the applicability of the theory of Clemens and Cook (1999) to the Korean policy shift, who argue that the innate driving force of a policy, an internal contradiction, can be a critical source of structural policy change. A literature review based case study was carried out in this research. The findings are as follows. Firstly, rising fiscal conservatism was the main determinant of the 2007 NPS structural reform. The processes and conditions of the reform documented were: the fiscal conservatism embedded in NPS generated serious policy problems and led to an accumulation of the internal contradictions within NPS by raising the question on its fundamental policy goal. As time passed without any self-correction mechanism with respect to the problematic policy, the NPS lost credibility in the eyes of the public and also lost policy legitimacy. At the same time, there was a competing policy alternative to the NPS. This was the universalistic tax-based Basic Old-Age Pension System. This has been a challenge to NPSin that it had been designed based on the social insurance financing principle. The pre-conditions for the structural NPS reform were fully complete and they could be exploited by self-interested political parties in the following policy-making stages. Secondly, the theoretical assumption that the internal contradiction of a policy can be a decisive power for structural transformation, as suggested by Clemens and Cook (1999) among others, was proven to be theoretically and practically accurate in the Korean public pension reform case.

A critical review of the 2015 South Korean civil service pension reform

ABSTRACTThe Republic of Korea’s civil service pension (KCSP) was established in 1960 and has been changed several times to overcome the serious financial burdens it has placed on the country. Major problems related to the KCSP include its structure (low contribution and high benefit) and the country’s rapidly aging population. The authors examine the 2015 KCSP reform, reviewing the reasons for the reform, its process, and its fiscal and policy implications. Reforms in other countries are briefly compared. The paper provides important lessons for researchers and practitioners involved in public sector pension reforms.

4 東アジアにおける公的年金制度改革の比較(I 共通論題=東アジアの経済発展と社会政策)

4 東アジアにおける公的年金制度改革の比較(I 共通論題=東アジアの経済発展と社会政策)

The retirement age and the hiring of senior workers

This paper examines the effect of decreasing the distance to the minimum legal retirement age on the hiring of senior workers. Using variation brought about by a comprehensive old-age public pension reform in Norway in 2011, I identify a positive effect on the hiring of senior workers. The results suggest that the increase was mainly caused by a positive shift in the demand for “risky” senior workers (workers with prior sick-leave and blue-collar workers). This lends support to the notion that risk-averse firms are more willing to hire senior workers when the minimum legal retirement age is decreased.

State and Local Public Pension Finances and Reform Proposals:Are Lump-Sum Payout Offerings a Solution?

Some states and municipalities are in difficult financial straits. Many more have severely underfunded defined benefit pension plans for their past and current employees. At the intersection of these two sets, it is likely that the pension plans are not sustainable and cuts are inevitable, affecting even the benefits of current retirees. But in many of these states and municipalities, the courts have not allowed changes to the pension plan. Therefore, we propose that all government pension plan participants be given accurate information about the funded status of their pensions. Furthermore, we propose that, at the discretion of the plan sponsor, retirees and older workers be given the voluntary option to take their pensions as a lump sum, discounted according to the funded status of the plan.

Fiscal institutions and the funding of US state and local pension plans

This paper investigates the relationship between the funded ratio of US public pension plans and several fiscal institutions adopted by state governments. The author analysed a large data set from 1997 to 2012, and found that states with stricter balanced budget requirements and debt limits had a lower pension funded ratio, whereas states with tax and spending limits in place had a higher funded ratio. The findings contribute to the current debate on public sector pension reforms in the US and internationally.

Reforming public pensions in democratizing Korea and Taiwan: actors, institutions and policy outcomes

ABSTRACTDespite the fact that Korea and Taiwan are often cited together to have shared a common path, their post-democratization developmental trajectory shows a diverging pattern. Taking the case of public pension reform, we argue that the changing nature of political competition and its impact on pension reforms are key, particularly in relation to the ways in which the existing structure of old-age protection influences the configuration of pension politics. The arrival of democratic governance itself does not tell us much about the possible reform agendas and trajectories. Nor does it provide us with a clear understanding of the distributional implications of public policies as institutions. Instead we see growing prominence of the policy dynamics around the question of how the early decisions and choices shape the emerging interest formation. Democratic politics has accelerated policy’s influence on politics, reinforcing the conditioning effect of the legacies the earlier policymaking episodes have created.

Contribution volatility and public pension reform

AbstractIn the wake of the economic downturn of 2008–2009, researchers and policymakers have focused considerable attention on the extent of unfunded liabilities in US public sector pension plans and the implications for the long term fiscal sustainability of state and local governments. In response to the growth in liabilities, many states have introduced legislation that cuts back on defined benefit (DB) plan commitments, in some cases even shifting the pension system from a DB to a defined contribution or hybrid plan. This paper explores the factors that have led states to engage in pension reform, focusing particular attention on one factor that has only recently gained attention in the research literature: contribution volatility. While unfunded liabilities have significant long-term solvency implications, in the short term fluctuations in the amount of required contributions pose substantial difficulties for the ability of plan sponsors to balance budgets and engage in strategic planning. We begin by quantifying the volatility in the required contributions US states were expected to make between 2001 and 2013 and comparing the volatility of pension spending to other relevant tax and spending measures. Next, we describe the various types of pension reforms that states have implemented and examine the fiscal pressures facing those states that have engaged in reform. States with greater fluctuations in their required payments have been more likely to reduce benefits and increase employee contributions; they have also been more likely to institute these reforms sooner.

Pension principles in the Swedish pension system

ABSTRACTThis article analyses the role of pension principles of funding and benefit provision for the development of the Swedish pension system. Focusing on four major public pension reforms in the twentieth century, it discusses why certain pension principles were used and under what circumstances they were more or less likely to change. The analysis shows that change was implemented to a large extent as a response to the previous pension system failing to fulfil its intended purpose in terms of financial stability, work incentives and redistribution.

State and Local Public Pension Finances and Reform Proposals:Are Lump-Sum Payout Offerings a Solution?

Some states and municipalities are in difficult financial straits. Many more have severely underfunded defined benefit pension plans for their past and current employees. At the intersection of these two sets, it is likely that the pension plans are not sustainable and cuts are inevitable, affecting even the benefits of current retirees. But in many of these states and municipalities, the courts have not allowed changes to the pension plan. Therefore, we propose that all government pension plan participants be given accurate information about the funded status of their pensions. Furthermore, we propose that, at the discretion of the plan sponsor, retirees and older workers be given the voluntary option to take their pensions as a lump sum, discounted according to the funded status of the plan.

From Austerity to Austerity: The Political Economy of Public Pension Reforms in Romania and Bulgaria

AbstractThis 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.

Social dialogue and public pension reform in Greece and Turkey

This article explores the involvement of organized social actors (trade unions and business groups) in the reform of public pension systems in Greece and Turkey. Most early studies of the reform of welfare policies perceived benefits in a consensual policy process, but more recent neoliberal literature has been critical of the political involvement of trade unions. On the basis of interviews with actors involved in the reform process in Greece and Turkey, I conclude that the effectiveness of social pacts is contingent on the financial, political and organizational resources available to the actors involved.

Les structures ontologiques de l’éditorial socio-politique : une approche socio-cognitive

Ontologic structures in a socio-political editorial – a socio-cognitive approachThe aim of the present study is to analyze the conceptualization of ontological structures in a special type of journalistic writing represented by a socio-political editorial. According to the socio-cognitive approach (Goffman, Langacker), the author discusses the problem of discursive mechanisms related to the persuasive function of language and classification. Therefore, in basis of the gathered linguistic corpus, which constitutes of forty French editorials, treating about university and public service pension reforms, culled from the web pages of different journals and magazines (2007–2008), the author intends to describe the distribution of two semantic roles such as agent and patient (by means of the synthetic scheme presented in this paper) in the context of the persuasiveness of media communication. The way of constructing the semantic roles of participants both influences and modifies the readers’ opinions and their perception of the world.

The Drivers of Public Sector Pension Reform Across the U.S. States

This study analyzes the diffusion of public sector pension reforms across the American states between 1999 and 2012, a policy area notable for its fiscal implications as much as its recent political polarization. Previous enactment in other, non-contiguous states was the largest and most consistent driver of reform. Otherwise, empirical findings suggest that reform antecedents varied by reform type. Existing funding levels reduced the likelihood that states would cut benefits, change pension governance, or reduce cost of living allowances, but had no effect otherwise. Evidence for partisan legislative influence is weak, although Republican control had partial, positive effects on the enactment of pension governance reforms and increases to the retirement age. Across the board, other relevant factors such as constitutional pension protections, collective bargaining rights, and union membership density had no effect. That external contagion pressures have a more robust influence than endogenous conditions raises questions about the future efficacy of pension reform.

Public Pension Reform in California

The Public Employee Pension Reform Act became effective in 2013. It will take many years before it has a meaningful impact on pension plan underfunding due to the so-called California Rule under which public employees are guaranteed the pension benefits in force on the date of hire. Meanwhile, three California cities have filed for Chapter 9 bankruptcy and more will follow. In an effort to annul the California Rule, and allow employers to change benefit accruals prospectively, the mayors of San Jose and four other cities have sponsored an initiative to amend the California constitution to allow public employers to alter pension benefit formulas prospectively. This article appraises these several developments and their interaction.

Public Pensions and the Initiative Process: Winds of Change?

DOI 10.1515/cjpp-2013-0002 Calif. J. Politics Policy 2013; 5(4): 597–625 Jinping Sun a, * Public Pensions and the Initiative Process: Winds of Change? Abstract: The most recent recession has put considerable stress on state and local government budgets and has pushed public pension reforms to the spot- light. Through the lens of the initiative process, this paper intends to examine the impact of the Great Recession on public pensions in California local gov- ernments. Based on a review of the literature and a study of local government budgets, Comprehensive Annual Financial Reports and other reports, this paper reviews 13 pension reform measures passed by voters in California cities and counties in an attempt to answer the question: What has caused the pension measures to be put on the ballot? The paper finds that the recent economic downturn, market crash, poor public decision-making, negative coverage, and inability of the State to solve pension problems all contributed to the rise of local ballot measures on public pensions, and through the initiative process, the voters decided to take public pension reforms in their hands. Essentially, ballot- box pension reforms reveal the public’s distrust of government. The victories of local pension mea­sures in California have attracted national attention, and may inspire other cities and counties in California and other states to attempt similar actions. Keywords: public pension reform; the iniative process. a Jinping Sun’s research interests are in public budgeting and finance. *Corresponding author: Jinping Sun, Ph.D., Associate Professor, Department of Public Policy and Administration at California State University, Bakersfield, E-mail: jsun2@csub.edu 1 Introduction The most recent recession that officially began in December 2007 and ended in June 2009 is the longest and deepest economic downturn since the Great Depres- sion and has put considerable stress on state and local government budgets. To weather the economic and budgetary crisis, states and localities across the US have examined all possible alternatives to cut current costs and control future expenses, one of which has focused on public pensions. Pensions in the public sector have taken center stage and have spurred heated debate recently partly