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What Makes Pension Reforms Sustainable?

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  • 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
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    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. 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. 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.
    8. 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.

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