Public Pension Reform in Europe and the USA

38 Pages Posted: 26 Mar 2012

Date Written: March 31, 2005

Abstract

The reform of pension systems is on the political agenda in most European countries and in the USA. The paper considers the main factors underlying the reform process and examines the reforms introduced in recent years and those currently under discussion in order to trace common features, but also highlight country peculiarities. Pension reform have been characterised by three main lines of action: parametric changes in traditional PAYG public schemes, the introduction of new pension formulas (such as notional funding) in PAYG schemes and the development of funded schemes. All reforms basically aim at guaranteeing adequate living standards to an increasing number of elderly citizens without imposing an excessive cost on taxpayers. Most reforms try to do so by lengthening the working life and by diversifying the sources of income of the elderly. A number of important reforms have been introduced but several problems remain open. The process is frequently slow and tortuous and far from completion in most developed countries. The need to reform pension systems has spurred the development of ad hoc policy solutions, such as bipartisan committees, and new technical tools, such as long-term projections. The reform debate has taken different directions in Europe and the USA. While the US debate is essentially about the role of funding, in Europe it is mostly about the timing and features of changes in the PAYG schemes.

Keywords: Keywords: social security, public pensions, pension reforms

JEL Classification: H0, H55

Suggested Citation

Francese, Maura and Franco, Daniele and Tommasino, Pietro, Public Pension Reform in Europe and the USA (March 31, 2005). Available at SSRN: https://ssrn.com/abstract=2028372 or http://dx.doi.org/10.2139/ssrn.2028372

Maura Francese (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Daniele Franco

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy
+39 06 4792 2793 (Phone)
+39 06 4792 2324 (Fax)

Pietro Tommasino

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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