Entitlement Reforms in Europe: Policy Mixes in the Current Pension Reform Process
AbstractMany European countries have begun (or have announced) programs intended to reduce the growth of entitlement programs, in particular of public pensions. Current costs are high, and the pressures will increase due to population aging and negative incentive effects. This paper focuses on the pension reform process in Europe. It links the causes for current problems to the cures required to make the pay-as-you-go entitlement programs in Continental Europe sustainable above and beyond the financial crisis. It discusses examples which appear, from a current point of view, to be the most viable and effective options to bring entitlement systems closer to fiscal balance and still achieve their key aims. There is no single policy prescription that can solve all problems at once. Reform elements include a freeze in the contribution and tax rates, an indexation of benefits to the dependency ratio, measures to stop the current trend towards early retirement, an adaptation of the normal retirement age to increased life expectancy, and more reliance on private savings – elements of a sustainable but complex multipillar system of pensions and similar entitlement programs.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18009.
Date of creation: Apr 2012
Date of revision:
Publication status: published as Axel H. Börsch-Supan. "Entitlement Reforms in Europe: Policy Mixes in the Current Pension Reform Process," in Alberto Alesina and Francesco Giavazzi, editors, "Fiscal Policy after the Financial Crisis" University of Chicago Press (2013)
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Find related papers by JEL classification:
- H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt
This paper has been announced in the following NEP Reports:
- NEP-AGE-2012-05-02 (Economics of Ageing)
- NEP-ALL-2012-05-02 (All new papers)
- NEP-EEC-2012-05-02 (European Economics)
- NEP-EUR-2012-05-02 (Microeconomic European Issues)
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