IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v10y2018i8p2891-d163868.html
   My bibliography  Save this article

What Makes Pension Reforms Sustainable?

Author

Listed:
  • Aaron George Grech

    (Central Bank of Malta, Castille Place, Valletta VLT 1060, Malta)

Abstract

Policymakers pushing pension reforms have tended to justify changes on the basis that they would make systems more sustainable by lowering future spending on pensions. This is a rather narrow interpretation of sustainability that fails to consider that other fiscal programs may need to accommodate the impact of reforms that reduce pension system adequacy. In this light, this article argues that in order to correctly assess the sustainability of pension reforms, one needs to adopt a more holistic framework that encapsulates the interaction between pension system goals and constraints. In a number of countries, reforms focused solely on reducing future spending were followed by reforms that restored generosity. A holistic approach to assess pension sustainability could help limit this cycle of reform and increase trust in pension systems.

Suggested Citation

  • Aaron George Grech, 2018. "What Makes Pension Reforms Sustainable?," Sustainability, MDPI, vol. 10(8), pages 1-12, August.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:8:p:2891-:d:163868
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/10/8/2891/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/10/8/2891/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dr Justin van de Ven, 2005. "Means Testing and Retirement Choices in Europe: A Comparison of the British and Danish Systems," National Institute of Economic and Social Research (NIESR) Discussion Papers 252, National Institute of Economic and Social Research.
    2. James Sefton & Justin van de Ven & Martin Weale, 2005. "Means testing and retirement choice in Europe: a comparison of the British and Danish systems," Fiscal Studies, Institute for Fiscal Studies, vol. 26(1), pages 83-118, March.
    3. Grech, Aaron George, 2007. "Pension policy in EU25 and its impact on pension benefits," MPRA Paper 33669, University Library of Munich, Germany.
    4. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66(6), pages 467-467.
    5. Disney, Richard, 2000. "Crises in Public Pension Programmes in OECD: What Are the Reform Options?," Economic Journal, Royal Economic Society, vol. 110(461), pages 1-23, February.
    6. Igor Fedotenkov & Lex Meijdam, 2013. "Crisis and Pension System Design in the EU: International Spillover Effects Via Factor Mobility and Trade," De Economist, Springer, vol. 161(2), pages 175-197, June.
    7. Helvia Bierhoff, 1996. "Laying the foundations of numeracy: a comparison of primary school textbooks in Britain, Germany and Switzerland," National Institute of Economic and Social Research (NIESR) Discussion Papers 90, National Institute of Economic and Social Research.
    8. Independent Evaluation Group, 2006. "Pension Reform and the Development of Pension Systems : An Evaluation of World Bank Assistance," World Bank Publications - Books, The World Bank Group, number 6956, December.
    9. Ondøej Schneider, 2009. "Reforming Pensions in Europe: Economic Fundamentals and Political Factors," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 59(4), pages 292-308, Oktober.
    10. Nicholas Barr & Peter Diamond, 2006. "The Economics of Pensions," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 22(1), pages 15-39, Spring.
    11. Giammarioli, Nicola & Annicchiarico, Barbara, 2004. "Fiscal rules and sustainability of public finances in an endogenous growth model," Working Paper Series 381, European Central Bank.
    12. Mr. N. A. Barr, 2000. "Reforming Pensions: Myths, Truths, and Policy Choices," IMF Working Papers 2000/139, International Monetary Fund.
    13. Mr. Benedict J. Clements & Mr. David Coady & Frank Eich & Mr. Sanjeev Gupta & Mr. Alvar Kangur & Baoping Shang & Mauricio Soto, 2013. "The Challenge of Public Pension Reform in Advanced and Emerging Economies," IMF Occasional Papers 2013/001, International Monetary Fund.
    14. Eckardt, Martina, 2003. "The Open Method of Co-ordination on Pensions - An Economic Analysis of its Effects on Pension Reforms," Thuenen-Series of Applied Economic Theory 39, University of Rostock, Institute of Economics.
    15. Mr. Daniel Leigh & Mr. David Hauner & Mr. Michael Skaarup, 2007. "Ensuring Fiscal Sustainability in G-7 Countries," IMF Working Papers 2007/187, International Monetary Fund.
    16. Mr. Nigel A Chalk & Mr. Richard Hemming, 2000. "Assessing Fiscal Sustainability in Theory and Practice," IMF Working Papers 2000/081, International Monetary Fund.
    17. Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-926, Sept./Oct.
    18. Robert Holzmann & Richard Hinz, 2005. "Old Age Income Support in the 21st century: An International Perspective on Pension Systems and Reform," World Bank Publications - Books, The World Bank Group, number 7336, December.
    19. Peter Diamond & Nicholas Barr, 2006. "(UBS Pensions Series 041) The Economics of Pensions," FMG Discussion Papers dp563, Financial Markets Group.
    20. Augusto Iglesias-Palau, 2009. "Pension Reform in Chile Revisited: What Has Been Learned?," OECD Social, Employment and Migration Working Papers 86, OECD Publishing.
    21. Pierson, Paul, 2000. "Increasing Returns, Path Dependence, and the Study of Politics," American Political Science Review, Cambridge University Press, vol. 94(2), pages 251-267, June.
    22. Marika Santoro, 2017. "Pension Reform Options in Chile: Some Tradeoffs," IMF Working Papers 2017/053, International Monetary Fund.
    23. Cardarelli, Roberto & Sefton, James & Kotlikoff, Laurence J, 2000. "Generational Accounting in the UK," Economic Journal, Royal Economic Society, vol. 110(467), pages 547-574, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ishay Wolf, 2022. "Studying the equilibrium of pension designs when shifting to funded pension schemes: economic theory and links to political factors," SN Business & Economics, Springer, vol. 2(7), pages 1-21, July.
    2. Qing Zhao & Haijie Mi, 2019. "Evaluation on the Sustainability of Urban Public Pension System in China," Sustainability, MDPI, vol. 11(5), pages 1-20, March.
    3. Yan Chen & Lisheng Zhao & Yubing Fan & Bingxue Xie, 2021. "Does the New Rural Pension Scheme improve residents’ livelihoods? Empirical evidence from Northwestern China," PLOS ONE, Public Library of Science, vol. 16(4), pages 1-16, April.
    4. Qing Zhao & Zhen Li & Yihuan Wang, 2019. "Adequacy Analysis of the Basic Old-Age Pension System Based on Local Administrative Data in China," Sustainability, MDPI, vol. 11(24), pages 1-18, December.
    5. Mel Cousins, 2021. "The sustainability of China’s Urban Employees’ Pension Programme: A case of getting old before getting rich?," International Social Security Review, John Wiley & Sons, vol. 74(1), pages 59-77, January.
    6. Said Outlioua & Abdesselam Fazouane, 2023. "Which factors affect the sustainability of pension schemes?," Economic Affairs, Wiley Blackwell, vol. 43(1), pages 89-108, February.
    7. Lorenzo Fratoni & Susanna Levantesi & Massimiliano Menzietti, 2022. "Measuring Financial Sustainability and Social Adequacy of the Italian NDC Pension System under the COVID-19 Pandemic," Sustainability, MDPI, vol. 14(23), pages 1-23, December.
    8. Jarmila Vidová & Peter Sika, 2020. "Christmas Allowance as a Non-System Tool for Sustainability of Quality of Life of Slovak Seniors," Sustainability, MDPI, vol. 12(9), pages 1-14, May.
    9. Huan Wang & Jianyuan Huang & Shuangyue Sun, 2019. "Assessment of the Financial Sustainability of China’s New Rural Pension Plan: Does the Demographic Policy Reform Matter?," Sustainability, MDPI, vol. 11(18), pages 1-22, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Grech, Aaron George, 2010. "Assessing the sustainability of pension reforms in Europe," LSE Research Online Documents on Economics 43865, London School of Economics and Political Science, LSE Library.
    2. Grech, Aaron George, 2014. "Evaluating the possible impact of pension reforms on elderly poverty in Europe," MPRA Paper 57639, University Library of Munich, Germany.
    3. Aaron George Grech, 2013. "How best to measure pension adequacy," CASE Papers case172, Centre for Analysis of Social Exclusion, LSE.
    4. repec:cep:sticas:/172 is not listed on IDEAS
    5. Aaron George, Grech, 2014. "Pension policy design: The core issues," MPRA Paper 53662, University Library of Munich, Germany.
    6. James Banks & Carl Emmerson, 2000. "Public and private pension spending: principles, practice and the need for reform," Fiscal Studies, Institute for Fiscal Studies, vol. 21(1), pages 1-63, March.
    7. repec:cep:sticas:/161 is not listed on IDEAS
    8. Koomen, Miriam & Wicht, Laurence, 2022. "Pension systems and the current account: An empirical exploration," Journal of International Money and Finance, Elsevier, vol. 120(C).
    9. Sabina Hod?i? & Lucija Rogi? Duman?i? & Emira Be?i?, 2019. "Financial stability of pension system in the European Union member states," Proceedings of International Academic Conferences 9912130, International Institute of Social and Economic Sciences.
    10. Grech, Aaron George, 2012. "Evaluating the possible impact of pension reforms on future living standards in Europe," MPRA Paper 39851, University Library of Munich, Germany.
    11. Markus Leibrecht & Joelle H. Fiong, 2017. "Economic Crises and Globalisation as Drivers of Pension Privatisation: an Empirical Analysis," ICMA Centre Discussion Papers in Finance icma-dp2017-05, Henley Business School, University of Reading.
    12. Mauro Visaggio, 2019. "Extending the retirement age for preserving the costitutive pension system mission," Public Finance Research Papers 40, Istituto di Economia e Finanza, DSGE, Sapienza University of Rome.
    13. Kotlikoff, Laurence J., 2002. "Generational policy," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 27, pages 1873-1932, Elsevier.
    14. Brown, Alessio J.G. & Fraikin, Anne-Lore, 2022. "The old-age pension household replacement rate in Belgium," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    15. Woodland, A., 2016. "Taxation, Pensions, and Demographic Change," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 713-780, Elsevier.
    16. Malgorzata Gumola-Kardas, 2021. "Change in a Pension System: A Manageable and Measurable Process?," European Research Studies Journal, European Research Studies Journal, vol. 0(3B), pages 421-433.
    17. Dr. Miriam Koomen & Dr. Laurence Wicht, 2020. "Demographics, pension systems, and the current account: an empirical assessment using the IMF current account model," Working Papers 2020-23, Swiss National Bank.
    18. Cruz-Martinez, Gibran, 2019. "Older‐Age Social Pensions and Poverty: Revisiting Assumptions on Targeting and Universalism," SocArXiv y9uk6, Center for Open Science.
    19. Arza, Camila, 2008. "The Limits of Pension Privatization: Lessons from Argentine Experience," World Development, Elsevier, vol. 36(12), pages 2696-2712, December.
    20. Marhanum Che Mohd Salleh & Mohammad Abdul Matin Chowdhury & Siti Salwani Razali & Nan Nurhidayu Megat Laksana, 2020. "Retirement Schemes, its Challenges and Ways of Reformation: A Cross-Border Study," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 10(9), pages 507-520, September.
    21. Casey B. Mulligan & Xavier Sala-i-Martin, 1999. "Social security in theory and practice (II): Efficiency theories, narrative theories and implications for reform," Economics Working Papers 385, Department of Economics and Business, Universitat Pompeu Fabra.
    22. Sergio Nisticò & Mirko Bevilacqua, 2018. "Some Notes On The Redistribution Inherent In The U.S. Public Pension System," Contemporary Economic Policy, Western Economic Association International, vol. 36(3), pages 566-581, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:10:y:2018:i:8:p:2891-:d:163868. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.