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Pension Policy in EU25 and its Possible Impact on Elderly Poverty


  • Michael Fuchs
  • Aaron George Grech
  • Asghar Zaidi


This paper reviews changes in pension policies in EU countries between 1995 and 2005 and describes how they might affect risk of poverty for future pensioner populations. The pension landscape in Europe has changed considerably in the past decade and the paper highlights commonalities as well as differences in pension reforms across these countries. A common trend is that the retirement incomes drawn from the public pension systems are on the decline, the changes are likely to shift more risks towards individuals, and there are fewer possibilities of redistribution in favour of the lower income individuals. The paper includes exploratory projections of how the risk of elderly poverty might evolve in the future. The countries where the benefit ratio is set to decline significantly, as expected, would see at-risk-poverty rates increase quite substantially, especially during the period 2025-2050, when the bulk of the decline is expected. This analysis points towards the importance of a more comprehensive assessment of the reforms, in particular in their impact on vulnerable groups (such as women and disabled people with disruptive work history) and in the clarity of the signals they give to individuals in extending their working career if they want to avoid greater risks of poverty during retirement.

Suggested Citation

  • Michael Fuchs & Aaron George Grech & Asghar Zaidi, 2006. "Pension Policy in EU25 and its Possible Impact on Elderly Poverty," CASE Papers case116, Centre for Analysis of Social Exclusion, LSE.
  • Handle: RePEc:cep:sticas:case116

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    References listed on IDEAS

    1. Gábor Orbán & Dániel Palotai, 2005. "The sustainability of the Hungarian pension system: a reassessment," MNB Occasional Papers 2005/40, Magyar Nemzeti Bank (Central Bank of Hungary).
    2. Giuseppe Carone, 2005. "Long-Term Labour Force Projections for the 25 EU Member States:A set of data for assessing the economic impact of ageing," Labor and Demography 0512006, EconWPA.
    3. Grech, Aaron George, 2007. "Pension policy in EU25 and its impact on pension benefits," MPRA Paper 33669, University Library of Munich, Germany.
    4. Whitehouse, Edward, 2000. "Paying for pensions: An international comparison of administrative charges in funded retirement-income systems," MPRA Paper 14171, University Library of Munich, Germany.
    5. Markus Knell, 2005. "Demographic Fluctuations, Sustainability Factors and Intergenerational Fairness – An Assessment of Austria's New Pension System," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 23-42.
    6. Wehlau, Diana & Sommer, Jörg, 2004. "Pension policies after EU enlargement: Between financial market integration and sustainability of public finances," Working papers of the ZeS 10/2004, University of Bremen, Centre for Social Policy Research (ZeS).
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    Cited by:

    1. Grech, Aaron George, 2010. "Assessing the sustainability of pension reforms in Europe," MPRA Paper 27407, University Library of Munich, Germany.
    2. 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.
    3. Aaron George Grech, 2013. "How best to measure pension adequacy," CASE Papers case172, Centre for Analysis of Social Exclusion, LSE.
    4. Rod Hick, 2009. "The SocialWelfare Pensions in Ireland: Pensioner Poverty and Gender," Working Papers 200902, Geary Institute, University College Dublin.
    5. Poteraj, Jarosław, 2008. "Pension systems in 27 EU countries," MPRA Paper 31053, University Library of Munich, Germany.
    6. Peeters, Marga, 2011. "“Better Safe than Sorry” - Individual Risk-free Pension Schemes in the European Union - Macroeconomic Benefits, the Mobile Working Citizen’s Perspective and Why Nots," MPRA Paper 33571, University Library of Munich, Germany.
    7. Arie Kapteyn & Jinkook Lee & Gema Zamarro, 2013. "Does Retirement Induced through Social Security Pension Eligibility Influence Subjective Well-being? A Cross-Country Comparison," Working Papers wp301, University of Michigan, Michigan Retirement Research Center.
    8. Aaron George, Grech, 2014. "Pension policy design: The core issues," MPRA Paper 53662, University Library of Munich, Germany.
    9. Poteraj, Jarosław, 2007. "Systemy emerytalne w Europie - Cypr
      [Pension systems in Europe - Cyprus]
      ," MPRA Paper 33159, University Library of Munich, Germany.
    10. repec:cep:sticas:/161 is not listed on IDEAS
    11. Marga Peeters, 2012. "Better Safe than Sorry - Individual Risk-free Pension Schemes in the European Union," Contemporary Economics, University of Finance and Management in Warsaw, vol. 6(3), September.
    12. repec:cep:sticas:/172 is not listed on IDEAS
    13. Figari, Francesco & Matsaganis, Manos & Sutherland, Holly, 2011. "The financial well-being of older people in Europe and the redistributive effects of minimum pension schemes," EUROMOD Working Papers EM7/11, EUROMOD at the Institute for Social and Economic Research.

    More about this item


    Social Security and Public Pensions; Retirement; Retirement Policies; Private Pensions;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions


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