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Public or Private Orientation of Pension Systems in the Light of the Recent Financial Crisis

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  • Christine Lagoutte
  • Anne Reimat

Abstract

This paper studies the appropriateness of a public or private orientation of pension systems in the light of the recent financial crisis, which has underscored the difficulties and contradictions associated with each system. The different institutional arrangements, in which public or private pension systems are embedded, are key components when assessing their responses to the crisis. Particularly, private pension systems are intertwined with financial markets, while social insurance-based pension systems are linked to the labour market mechanisms. This paper compares the British and French pension systems, as "archetypes" of private-oriented and public-oriented systems, respectively, the first relying on the market and private pension schemes, and the second on mandatory social insurance. This paper shows that the crisis has upheld the founding principles of the public (French) and private (British) pension systems to maintain the existing institutional configurations. At the same time, both systems have strengthened the role played by means-tested benefits and minimum pensions for low-income groups to offset the weaknesses of one or the other system, as emphasised by the crisis.

Suggested Citation

  • Christine Lagoutte & Anne Reimat, 2013. "Public or Private Orientation of Pension Systems in the Light of the Recent Financial Crisis," Review of Social Economy, Taylor & Francis Journals, vol. 71(3), pages 306-338, September.
  • Handle: RePEc:taf:rsocec:v:71:y:2013:i:3:p:306-338
    DOI: 10.1080/00346764.2012.761755
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    1. Henry J. Aaron & John B. Shoven, 1999. "Should the United States Privatize Social Security?," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011743 edited by Benjamin M. Friedman, December.
    2. Ian Tower & Gregorio Impavido, 2009. "How the Financial Crisis Affects Pensions and Insurance and Why the Impacts Matter," IMF Working Papers 2009/151, International Monetary Fund.
    3. Robert Holzmann, 1997. "Fiscal Alternatives of Moving from Unfunded to Funded Pensions," OECD Development Centre Working Papers 126, OECD Publishing.
    4. Holzmann, Robert, 1997. "On economic benefits and fiscal requirements of moving from unfunded to funded pensions," Financiamiento para el Desarrollo 5250, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
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