Pension Reforms and the Political Economy of the Welfare State

Journal of European Integration, Vol. 32, No. 4, pp. 413-419

Posted: 25 Jul 2011

See all articles by Olaf van Vliet

Olaf van Vliet

Leiden University - Leiden Law School; Leiden University - Department of Economics

Date Written: July 2010

Abstract

The last decennia, pension systems of many western countries have been under increasing pressure. Ageing populations have lead to situations of more liabilities than contributions, resulting in budgetary pressure in the short run and harming the financial sustainability in the long run. Prospects have even gotten worse due to the current global financial crisis. Depending on the type of pension plan, the impact of the current crisis differs across countries. In general, countries in which pension plans comprise more funded elements are, due to their dependence on investment performance, more affected than countries with more unfunded elements. Another relevant variable here is whether pensions are individually or collectively arranged. The more individual pension plans are, especially defined-contribution pensions schemes, the more individual retirees will be affected. Moreover, the financial crisis also generates different impacts within countries, along the lines of generations. This impact again varies with the type of pension plan, but retirees and people near to retirement are generally more affected than younger workers. Without doubt, these consequences of the crisis will call for pension reforms.

Keywords: pension reform, crisis, ageing

JEL Classification: H55, J26

Suggested Citation

van Vliet, Olaf, Pension Reforms and the Political Economy of the Welfare State (July 2010). Journal of European Integration, Vol. 32, No. 4, pp. 413-419. Available at SSRN: https://ssrn.com/abstract=1894735

Olaf Van Vliet (Contact Author)

Leiden University - Leiden Law School ( email )

Steenschuur 25 PO Box 9520
Leiden, 2300 RA
Netherlands

HOME PAGE: http://www.law.leiden.edu/organisation/taxlawandeconomics/economics/staff/vliet.html

Leiden University - Department of Economics ( email )

P.O. Box 9520
2300 RA Leiden, NL-2300RA
Netherlands

HOME PAGE: http://www.law.leiden.edu/organisation/taxlawandeconomics/economics/staff/vliet.html

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