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Assessing the sustainability of pension reforms in Europe

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  • Grech, Aaron George

Abstract

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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  • Grech, Aaron George, 2013. "Assessing the sustainability of pension reforms in Europe," MPRA Paper 51474, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:51474
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    References listed on IDEAS

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    1. Nicholas Barr & Peter Diamond, 2006. "The Economics of Pensions," Oxford Review of Economic Policy, Oxford University Press, vol. 22(1), pages 15-39, Spring.
    2. 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.
    3. 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.
    4. Grech, Aaron George, 2007. "Pension policy in EU25 and its impact on pension benefits," MPRA Paper 33669, University Library of Munich, Germany.
    5. Disney, Richard, 2000. "Crises in Public Pension Programmes in OECD: What Are the Reform Options?," Economic Journal, Royal Economic Society, vol. 110(461), pages 1-23, February.
    6. Modigliani,Franco & Muralidhar,Arun, 2005. "Rethinking Pension Reform," Cambridge Books, Cambridge University Press, number 9780521676533, May.
    7. Ondøej Schneider, 2009. "Reforming Pensions in Europe: Economic Fundamentals and Political Factors," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 59(4), pages 292-308, Oktober.
    8. Edward Whitehouse, 2007. "Pensions Panorama : Retirement-Income Systems in 53 Countries," World Bank Publications, The World Bank, number 7177, April.
    9. Zaidi, Asghar & Grech, Aaron George & Fuchs, Michael, 2006. "Pension policy in EU25 and its possible impact on elderly poverty," LSE Research Online Documents on Economics 6225, London School of Economics and Political Science, LSE Library.
    10. Grech, Aaron George, 2012. "Evaluating the possible impact of pension reforms onfuture living standards in Europe," LSE Research Online Documents on Economics 51296, London School of Economics and Political Science, LSE Library.
    11. Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-926, Sept./Oct.
    12. 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.
    13. Georges Menahem, 2007. "The decommodified security ratio:A tool for assessing European social protection systems," Post-Print halshs-00198398, HAL.
    14. 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.
    15. Martin, John P. & Whitehouse, Edward, 2008. "Reforming Retirement-Income Systems: Lessons from the Recent Experiences of OECD Countries," IZA Discussion Papers 3521, Institute for the Study of Labor (IZA).
    16. Barr, Nicholas & Diamond, Peter, 2008. "Reforming Pensions: Principles and Policy Choices," OUP Catalogue, Oxford University Press, number 9780195311303.
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    Citations

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    Cited by:

    1. Aaron George Grech, 2013. "How best to measure pension adequacy," CASE Papers case172, Centre for Analysis of Social Exclusion, LSE.
    2. Grech, Aaron George, 2012. "Evaluating the possible impact of pension reforms onfuture living standards in Europe," LSE Research Online Documents on Economics 51296, London School of Economics and Political Science, LSE Library.
    3. Grech, Aaron George, 2014. "Evaluating the possible impact of pension reforms on elderly poverty in Europe," MPRA Paper 57639, University Library of Munich, Germany.
    4. R. Melis & A. Trudda, 2014. "Mixed pension systems sustainability," Working Paper CRENoS 201413, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    5. Lijian Wang & Daniel Béland, 2014. "Assessing the Financial Sustainability of China’s Rural Pension System," Sustainability, MDPI, Open Access Journal, vol. 6(6), pages 1-20, May.
    6. Yuehong Tian & Xianglian Zhao, 2016. "Stochastic Forecast of the Financial Sustainability of Basic Pension in China," Sustainability, MDPI, Open Access Journal, vol. 8(1), pages 1-17, January.
    7. Hasan U. Altiok & Glenn P. Jenkins, 2013. "Social security generosity, budgetary deficits and reforms in North Cyprus," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 16(2), pages 218-235, June.
    8. Giuseppe Marotta, 2011. "Are defined contribution pension schemes socially sustainable? A conceptual map from a macroprudential perspective," Centro Studi di Banca e Finanza (CEFIN) (Center for Studies in Banking and Finance) 11101, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
    9. Grech, Aaron George, 2014. "Assessing the sustainability of pension reforms in Europe: a pension wealth approach," MPRA Paper 57638, University Library of Munich, Germany.
    10. repec:sph:rjedep:v:2:y:2017:i:6:p:14-23 is not listed on IDEAS
    11. Dilshodjon Alidjonovich Rakhmonov, 2016. "Improvement of the Pension System in Uzbekistan: Through the Experience of the European Union Countries," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 4(1), pages 80-90.
    12. Aaron George, Grech, 2014. "Pension policy design: The core issues," MPRA Paper 53662, University Library of Munich, Germany.
    13. repec:cep:sticas:/161 is not listed on IDEAS
    14. Grech, Aaron George, 2015. "Pension reforms in the 1990s and during the financial crisis: More of the same?," MPRA Paper 66894, University Library of Munich, Germany.
    15. repec:cep:sticas:/172 is not listed on IDEAS

    More about this item

    Keywords

    Social Security; Public Pensions; Retirement; Poverty; Retirement Policies;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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