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Welfare Reform on the Web (October 2011): Pensions - overseas

Assessing the public pension scheme of the Republic of Cyprus

C.N. Louca and others

Pensions, vol. 16, 2011, p. 151-167

This article focuses on the pension scheme for civil servants in Cyprus. In 2004 paying civil servants' pensions required 2.3 percent of GDP. It is projected that by 2050 the cost will rise to an unsustainable 2.8% of GDP. In order to reduce the pressure exerted by the cost of the scheme on the public finances, the government needs to: 1) increase civil servants' contributions to the scheme; 2) raise the retirement age of all civil servants to 63; and 3) break the link between civil service pension rises and inflation/wage increases paid to employed civil servants.

Can the EU achieve adequate, sustainable and safe pensions for all in the coming decades?

A.-S. Parent

Pensions, vol. 16, 2011, p. 168-174

At present, EU coordination is limited to the coordination of statutory and occupational pension schemes in which rights are based in legislation. Given the increased impact of EU economic, fiscal and single market legislation on member states' pension systems, EU coordination should be extended to cover all pension schemes in an integrated way to support member states' efforts towards adequate, sustainable and safe pensions. Events in recent years have shown that member states' economies are interdependent, and EU and peer supervision and coordination are needed to ensure that no one rocks the boat. To facilitate such coordination, a European Pension Platform should be set up to create a common space where EU institutions, member states' representatives, social partners and relevant stakeholders could debate pension reforms, exchange best practice and develop common guidelines.

Dutch pensions discord

I. Oudenampsen

European Pensions, Summer/Sept. 2011, p. 20-21

The Dutch government and the social partners presented proposals for reform of the pension system in June 2011. The proposals have been subject to criticism on two main grounds. Firstly, the new system will expose employees to increased risks and secondly it will allow all pension funds to estimate their own investment returns. The latter has resulted in fears that schemes might pay out money they do not (yet) have, thus leaving no money for future generations.

The European Commission Green Paper on pensions: lessons from the Dutch experience

V. Kalloe and M. Kastelein

Pensions, vol. 16, 2011, p. 175-190

This article seeks to contribute to the EU-wide debate on pensions triggered by the publication of a consultation paper in 2010. The Dutch pension system is universally admired as a model of high participation rates, high levels of retirement income, and sustainability. The Dutch state retirement pension is funded on a pay-as-you-go basis, but occupational and private pensions are fully funded. The Dutch retirement reserve equals more than 100% of the country's GDP and 90% of the workforce is entitled to an occupational pension. The Dutch practice of a 50/50 split between pay-as-you-go and funded schemes gives a robust and balanced outcome for beneficiaries. However, the Dutch pension system has recently come under pressure due to population ageing and current adverse economic conditions. The authors conclude by drawing lessons from the Dutch experience for a European approach to pensions.

Germany: a new approach

K. Mössle

European Pensions, Summer/Sept. 2011, p. 24-25

Most German workers have unrealistic expectations about their level of retirement income, and save too little in occupational and private schemes. Germany needs to strengthen its occupational pension schemes and disseminate information about the gap in people's pension planning. People need to understand that the value of the state pension is declining, and that they need to plan for 25-30% of retirement income to come from occupational schemes, up from 4% in 2011.

Learning lessons from the Dutch market

E. Bergamin, C. Hoekstra and T. Jackman

European Pensions, Summer/Sept. 2011, p. 42-43

The Dutch pension system is characterised by solidarity and collectivism. Most Dutch workers are automatically enrolled into a collective second pillar pension scheme. Scheme members pay an average contribution that is related to their salary, but which is irrespective of age. Investment returns and losses are shared between the members. The Dutch system has come under pressure in the last decade but its solidarity and collectivism have been preserved through the use of innovative solutions such as conditional indexation and collective defined contribution schemes. The article goes on to consider whether the Dutch model would work in the UK.

The survival and return of institutions: examples from pension reforms in Central, Eastern and South-Eastern Europe

I. Guardiancich

West European Politics, vol. 34, 2011, p. 976-996

This article investigates what Streeck and Thelen call 'survival and return' types of institutional change. It identifies two phenomena falling into this category. Survival through replication is where the institutions that are the object of reform survive despite a structural overhaul. Return by reaction occurs where an institution's old incentive structure returns as consequence of demands for its reintroduction and despite structural reforms. The argument is illustrated through case studies of pension reforms in Croatia, Hungary and Poland. In the early 1990s these countries implemented multi-pillar pension arrangements aimed at replacing the old PAYG public schemes. In Croatia and Hungary reaction against the reforms led to the reintroduction of generous public pillar benefits in Hungary and the return of costly parts of the PAYG pillar in Croatia. In Poland a very progressive reform took place linking contributions to benefits and diversifying risk through a multi-pillar structure.

Vive la revolution

A. Cadle

European Pensions, Summer/Sept. 2011, p. 22-23

A law was passed in November 2010 raising the French retirement age from 60 to 62, a measure that will come into effect by 2018. A review is still taking place of the number of contribution years required to obtain a full public pension, but this is likely to be extended. The reforms will also require employees to save more for their retirement through supplementary schemes.

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