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Assessing the sustainability of pension reforms in Europe

  • Grech, Aaron George

Europe’s pensions landscape has changed dramatically since the 1990s. This paper tries to assess better the impact of these changes using a broad social sustainability framework. Pension wealth estimates for a variety of hypothetical cases are used to assess the ability of systems to alleviate poverty and maintain living standards, while setting out how reforms could change future costs and relative entitlements for different generations. By focusing on all prospective transfers rather than those at retirement and by looking into the interaction between entitlements and labour participation, this approach provides additional insights on the impact of reforms. Our estimates suggest that generosity has fallen significantly, but remains strong in many countries. However, moves to link benefits to contributions have raised adequacy concerns for certain groups and strengthened the need for longer careers. Though reforms have helped address fiscal challenges, in many countries pressures remain strong and further reforms are likely.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 51474.

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Date of creation: 18 Oct 2013
Date of revision:
Publication status: Published in Journal of International and Comparative Social Policy 2.29(2013): pp. 1-20
Handle: RePEc:pra:mprapa:51474
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  1. 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.
  2. Georges Menahem, 2007. "The decommodified security ratio:A tool for assessing European social protection systems," Post-Print halshs-00198398, HAL.
  3. Libor Dušek & Juraj Kopecsni, 2008. "Policy Risk in Action: Pension Reforms and Social Security Wealth in Hungary, Czech Republic, and Slovakia," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 58(07-08), pages 329-357, Oktober.
  4. 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.
  5. Ondřej Schneider, 2009. "Reforming Pensions in Europe: Economic Fundamentals and Political Factors," Working Papers IES 2009/08, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Feb 2009.
  6. 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.
  7. Disney, Richard, 2000. "Crises in Public Pension Programmes in OECD: What Are the Reform Options?," Economic Journal, Royal Economic Society, vol. 110(461), pages F1-23, February.
  8. Bottazzi, Renata & Jappelli, Tullio & Padula, Mario, 2006. "Retirement expectations, pension reforms, and their impact on private wealth accumulation," Journal of Public Economics, Elsevier, vol. 90(12), pages 2187-2212, December.
  9. Modigliani, Franco & Muralidhar, Arun, 2003. "Rethinking pension reform," Journal of Financial Transformation, Capco Institute, vol. 8, pages 8-9.
  10. Barr, Nicholas & Diamond, Peter, 2008. "Reforming Pensions: Principles and Policy Choices," OUP Catalogue, Oxford University Press, number 9780195311303.
  11. John P. Martin & Edward R. Whitehouse, 2008. "Reforming Retirement-Income Systems: Lessons from the Recent Experiences of OECD Countries," OECD Social, Employment and Migration Working Papers 66, OECD Publishing.
  12. Whitehouse, Edward, 2007. "Pensions panorama: retirement-income systems in 53 countries," MPRA Paper 14797, University Library of Munich, Germany.
  13. Nicholas Barr & Peter Diamond, 2006. "The economics of pensions," LSE Research Online Documents on Economics 2630, London School of Economics and Political Science, LSE Library.
  14. Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-26, Sept./Oct.
  15. Michael F. Förster & Marco Mira d'Ercole, 2005. "Income Distribution and Poverty in OECD Countries in the Second Half of the 1990s," OECD Social, Employment and Migration Working Papers 22, OECD Publishing.
  16. Grech, Aaron George, 2007. "Pension policy in EU25 and its impact on pension benefits," MPRA Paper 33669, University Library of Munich, Germany.
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