The Politics of Public and Private Pension Generosity in Advanced Democracies

Abstract

The quantitative strand of social policy research suffers from a triple deficit: analyses of aggregate expenditure dominate, most of the few studies of replacement rates focus on unemployment or sickness benefits while pensions are excluded, and the interdependence between public and private pension plans is often ignored. This article addresses the said deficits, first, by discussing the pension sectors' theoretical peculiarities and by proposing two hypotheses: one on the role played by political parties in implementing public pension retrenchment, and the second on their role in extending private pension plans. Second, the article presents regression results of public pension replacement rate changes in 18 developed democracies. The findings show considerably smaller cuts to pensions than to unemployment or sickness benefits, and striking differences regarding partisan effects between the sectors. Lastly, the article assesses partisan effects on private pension plans, detecting some rather surprising effects. Most noteworthy is the fact that those parties which reduced public pension generosity during the 1990s (i.e. Social Democrats) cannot claim responsibility for compensating these cuts by eliciting higher private engagement.

Moral Societal Renewal or Getting the Country Back to Work: Welfare State Culture as a Resource and a Constraint for Policy Discourse

“…Following previous policy research, labor market‐related policies should allow for a more strongly normative justification, especially based on the idea of “deservingness” (Elmelund‐Præstekær and Klitgaard ; Green‐Pedersen ; Larsen ; Wolf, Zohlnhöfer, and Wenzelburger ). These kinds of policies concern welfare risks that are not universal (like in health or pensions) but are related to social positions and therefore involve more scope with regard to the dimension of merit and the deservingness of welfare benefits.…”

Voluntary Pensions Development and the Adequacy of the Mandatory Pension System: Is There a Trade-Off?

“…It is defined as a ratio between the pension benefit and the income from work. As shown in numerous studies, the replacement rate can be expressed in a variety of ways (see for example Bajtelsmit et al 2013;Borella and Fornero 2009;Grech 2013;Wolf et al 2014;Zohlnhöfer et al 2013). In this study, first, the adequacy is examined from the perspective of the current working-age generation.…”

Policy instruments and welfare state reform

“…Finally, means-test is an important feature of the liberal welfare state, which is why this policy instrument should play an important role when existing 1 We do not discuss changes in private and occupational systems here. Although their development may be related to changes in public schemes (Wolf et al 2014), the decisions are usually outside the direct responsibility of the governments which is why strategic use of instruments is not to be expected. 2 It may be argued that nominal benefits are so low in Denmark that cutting them is unrealistic in an otherwise generous welfare state.…”