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How European pension promises changed in austere times: 2002–15

How European pension promises changed in austere times: 2002–15
How European pension promises changed in austere times: 2002–15
This chapter compares the pension promises made by governments in 2002 and 2015, a period of cost constraints which were enforced, but not triggered by the Great Recession. It focuses on the projected pension replacement rates of citizens earning low, average and above average wages in twenty EU member states, using OECD data. Countries are grouped according to the Bismarckian and the Beveridgean type of pension insurance, because scholarship has assumed that the latter protects low waged individuals better while the former favours higher earners. The analysis shows a decline in pension promises in most countries during the period, but, interestingly, in both systems replacement levels remain fairly high for most and especially for those on lower incomes, suggesting that even though pressures on governments to reduce statutory pension commitments have led to cuts, states are ready to guarantee substantial levels of replacement income for future retirees, with few exceptions. Three extreme cases do not fit this trend: Germany, characterised by steep cuts for all; Sweden as only country where entitlements for lower earners declined most drastically while entitlements for the better-off improved, and the United Kingdom which extended entitlements more significantly than elsewhere in the EU. The results do not align well with recent research on “dualisation” showing that contemporary labour markets increasingly marginalise vulnerable groups while the more privileged remain protected, but they are consistent with the assumption that austerity and modernisation go hand in hand, that welfare states have “recalibrated”, reserving the strongest control for the most vulnerable.
The distinction between Beveridgean and Bismarckian systems is also shown to be less significant than often assumed: the low-waged individuals analysed here are not necessarily better protected in Beveridgean countries, while in Bismarckian ones they do not have to resort to the means-test.
329-350
Edward Elgar Publishing
Meyer, Traute
ee469bf0-ab32-43ac-9f25-1261c24123fe
Kennett, Patricia
Lendvai-Bainton, Noemi
Meyer, Traute
ee469bf0-ab32-43ac-9f25-1261c24123fe
Kennett, Patricia
Lendvai-Bainton, Noemi

Meyer, Traute (2017) How European pension promises changed in austere times: 2002–15. In, Kennett, Patricia and Lendvai-Bainton, Noemi (eds.) Handbook of European Social Policy. UK. Edward Elgar Publishing, pp. 329-350.

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Abstract

This chapter compares the pension promises made by governments in 2002 and 2015, a period of cost constraints which were enforced, but not triggered by the Great Recession. It focuses on the projected pension replacement rates of citizens earning low, average and above average wages in twenty EU member states, using OECD data. Countries are grouped according to the Bismarckian and the Beveridgean type of pension insurance, because scholarship has assumed that the latter protects low waged individuals better while the former favours higher earners. The analysis shows a decline in pension promises in most countries during the period, but, interestingly, in both systems replacement levels remain fairly high for most and especially for those on lower incomes, suggesting that even though pressures on governments to reduce statutory pension commitments have led to cuts, states are ready to guarantee substantial levels of replacement income for future retirees, with few exceptions. Three extreme cases do not fit this trend: Germany, characterised by steep cuts for all; Sweden as only country where entitlements for lower earners declined most drastically while entitlements for the better-off improved, and the United Kingdom which extended entitlements more significantly than elsewhere in the EU. The results do not align well with recent research on “dualisation” showing that contemporary labour markets increasingly marginalise vulnerable groups while the more privileged remain protected, but they are consistent with the assumption that austerity and modernisation go hand in hand, that welfare states have “recalibrated”, reserving the strongest control for the most vulnerable.
The distinction between Beveridgean and Bismarckian systems is also shown to be less significant than often assumed: the low-waged individuals analysed here are not necessarily better protected in Beveridgean countries, while in Bismarckian ones they do not have to resort to the means-test.

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Published date: August 2017
Additional Information: This is a draft chapter. The final version is now available in Handbook of European Social Policy edited by Patricia Kennett, Professor and Noemi Lendvai-Bainton 2017, Edward Elgar Publishing Ltd The material cannot be used for any other purpose without further permission of the publisher, and is for private use only.

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Local EPrints ID: 413026
URI: http://eprints.soton.ac.uk/id/eprint/413026
PURE UUID: 5ac2ef2b-39fa-4ae9-98c3-ffa7b6b875be
ORCID for Traute Meyer: ORCID iD orcid.org/0000-0003-0767-8351

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Date deposited: 14 Aug 2017 16:30
Last modified: 12 Feb 2020 01:27

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