The Greek pension system prior to the crisis was fragmented and resistant to reform, allowing costs to rise unsustainably. This contributed directly to soaring national debt levels after Eurozone entry in 2001, as pension deficits were covered by borrowing rather than reform. The system was politically hijacked through the granting of privileges to buy influence, further raising costs. Governance failures like the lack of actuarial studies and a "somebody else's problem" mindset prevented needed reforms. By 2009, the pension system had become a mechanism for disaster that the looming crisis could no longer avoid addressing through externally imposed austerity measures.
2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institution...OECD_NAEC
This document summarizes a presentation on the social impacts of the economic crisis and policy responses. It discusses how the crisis widened income gaps and increased poverty and financial hardship. While governments initially increased social spending, fiscal pressures later led many to implement spending cuts. This compromised the effectiveness of social policies at a time when more support was needed. The presentation argues for policies that cushion income losses, support self-sufficiency, and prioritize social investments to avoid high future costs. Social policies need to adapt to economic cycles to maintain their effectiveness during times of both growth and crisis.
This document summarizes a report on tackling obesity and the implications for local government. It discusses the key findings and recommendations from the Foresight obesity report, including that the rise in obesity is due to an "obesogenic environment" created by modern lifestyle factors. It argues that a global response is needed to reverse obesity trends, and that local governments have a strategic role to play through policies like sustainable community strategies. The report also notes inequalities in obesity rates based on socioeconomic factors, gender and ethnicity. Matrices are provided outlining how different local government departments can address obesity through their areas of responsibility like planning, children's services, adult social care and parks/leisure services.
This document summarizes and analyzes the state of retirement in the United States. It argues that while there is a real retirement crisis due to unsustainable social programs, there is also an overstated "fake" crisis about individuals not saving enough. The real crisis stems from promising more retirement benefits than can be afforded. Possible solutions include cutting benefits, raising taxes, pursuing economic growth, or using inflation to reduce the impact of debt obligations. Inaction will only make reforms more difficult.
This document discusses changing perspectives on social security systems. It argues that social security is a fundamental human right recognized globally and provides important societal benefits like reducing poverty and inequality. However, social security systems have come under pressure in recent decades from economic stresses and a paradigm viewing social welfare as a trade-off for economic growth. The document advocates optimizing national social security systems within a framework of decent work and contests the view of an inevitable trade-off between social welfare and economic growth.
Micro Pensions - Helping the Poor to Save for the FutureAegon
Micro pensions offer a simple and effective means to alleviate the problem of persistent old-age poverty in emerging economies facing rapid population aging. They enable voluntary savings for old age among lower income individuals. There is significant potential demand and willingness among the working poor to participate in micro pension programs. However, providing pensions to large numbers of informal workers in developing countries poses socioeconomic challenges given low coverage of existing social security systems and a lack of resources to support aging populations. Microfinance institutions are increasingly diversifying their products to include pensions and other savings instruments in response to market saturation of microcredit.
The document critiques the current rhetoric around welfare reform and argues that while the welfare state is fundamentally good, it has been designed wrongly and many beliefs about it are false. It makes six main points: 1) the welfare state benefits society but is designed incorrectly, 2) many common beliefs about its costs and effects are untrue, 3) it is paradoxically biased against the poor, 4) the current reform agenda risks further corrupting the system, 5) citizenship rather than charity should be the guiding principle, and 6) a better system is needed that supports communities and basic securities for all as a matter of rights.
The document discusses several issues related to globalization and its effects on local communities. It notes concerns about continued poverty, the inability of globalization or localism alone to address issues like violence and war, and the need to redefine the roles of local, national, and international governance. It also outlines potential areas of future study, including reconciling global economic growth and environmental protection, dealing with powerful multinational corporations, and preserving democracy amid disruptions. Recent concerns mentioned include regulating financial markets in response to the global financial crisis and focusing on education and infrastructure. The document lists several thinkers addressing these topics.
1. The document analyzes the political stability of pension reforms that transition defined benefit systems to partially funded defined contribution systems in Poland.
2. Through an overlapping generations model calibrated to Poland, it finds that abolishing the funded pillar and shifting back to a purely PAYG system would have majority political support at every vote, as voters prefer lower taxes even if it means lower future pension benefits.
3. Contrary to some prior literature, the model does not find a coalition forming between low-productivity workers and retirees to preserve the status quo. Introducing altruism toward future generations increases stability of the reform.
2014.03.18 - NAEC Seminar_Assessing the vulnerabilities of social institution...OECD_NAEC
This document summarizes a presentation on the social impacts of the economic crisis and policy responses. It discusses how the crisis widened income gaps and increased poverty and financial hardship. While governments initially increased social spending, fiscal pressures later led many to implement spending cuts. This compromised the effectiveness of social policies at a time when more support was needed. The presentation argues for policies that cushion income losses, support self-sufficiency, and prioritize social investments to avoid high future costs. Social policies need to adapt to economic cycles to maintain their effectiveness during times of both growth and crisis.
This document summarizes a report on tackling obesity and the implications for local government. It discusses the key findings and recommendations from the Foresight obesity report, including that the rise in obesity is due to an "obesogenic environment" created by modern lifestyle factors. It argues that a global response is needed to reverse obesity trends, and that local governments have a strategic role to play through policies like sustainable community strategies. The report also notes inequalities in obesity rates based on socioeconomic factors, gender and ethnicity. Matrices are provided outlining how different local government departments can address obesity through their areas of responsibility like planning, children's services, adult social care and parks/leisure services.
This document summarizes and analyzes the state of retirement in the United States. It argues that while there is a real retirement crisis due to unsustainable social programs, there is also an overstated "fake" crisis about individuals not saving enough. The real crisis stems from promising more retirement benefits than can be afforded. Possible solutions include cutting benefits, raising taxes, pursuing economic growth, or using inflation to reduce the impact of debt obligations. Inaction will only make reforms more difficult.
This document discusses changing perspectives on social security systems. It argues that social security is a fundamental human right recognized globally and provides important societal benefits like reducing poverty and inequality. However, social security systems have come under pressure in recent decades from economic stresses and a paradigm viewing social welfare as a trade-off for economic growth. The document advocates optimizing national social security systems within a framework of decent work and contests the view of an inevitable trade-off between social welfare and economic growth.
Micro Pensions - Helping the Poor to Save for the FutureAegon
Micro pensions offer a simple and effective means to alleviate the problem of persistent old-age poverty in emerging economies facing rapid population aging. They enable voluntary savings for old age among lower income individuals. There is significant potential demand and willingness among the working poor to participate in micro pension programs. However, providing pensions to large numbers of informal workers in developing countries poses socioeconomic challenges given low coverage of existing social security systems and a lack of resources to support aging populations. Microfinance institutions are increasingly diversifying their products to include pensions and other savings instruments in response to market saturation of microcredit.
The document critiques the current rhetoric around welfare reform and argues that while the welfare state is fundamentally good, it has been designed wrongly and many beliefs about it are false. It makes six main points: 1) the welfare state benefits society but is designed incorrectly, 2) many common beliefs about its costs and effects are untrue, 3) it is paradoxically biased against the poor, 4) the current reform agenda risks further corrupting the system, 5) citizenship rather than charity should be the guiding principle, and 6) a better system is needed that supports communities and basic securities for all as a matter of rights.
The document discusses several issues related to globalization and its effects on local communities. It notes concerns about continued poverty, the inability of globalization or localism alone to address issues like violence and war, and the need to redefine the roles of local, national, and international governance. It also outlines potential areas of future study, including reconciling global economic growth and environmental protection, dealing with powerful multinational corporations, and preserving democracy amid disruptions. Recent concerns mentioned include regulating financial markets in response to the global financial crisis and focusing on education and infrastructure. The document lists several thinkers addressing these topics.
1. The document analyzes the political stability of pension reforms that transition defined benefit systems to partially funded defined contribution systems in Poland.
2. Through an overlapping generations model calibrated to Poland, it finds that abolishing the funded pillar and shifting back to a purely PAYG system would have majority political support at every vote, as voters prefer lower taxes even if it means lower future pension benefits.
3. Contrary to some prior literature, the model does not find a coalition forming between low-productivity workers and retirees to preserve the status quo. Introducing altruism toward future generations increases stability of the reform.
The article summarizes warnings from Simon Johnson and Peter Boone in their report "The Doomsday Cycle Turns: Who's Next?" that the developed economies of America, Japan, and countries in the euro zone are at risk of collapse due to a "doomsday cycle" where political and financial systems exacerbate risks rather than suppress them. They argue that repeated bailouts have encouraged reckless behavior by banks and that large debts and lack of reform have put these economies in a precarious position. If their financial and economic problems are not addressed soon, the risks of another global financial crisis and economic downturn are high.
Whose Welfare State Now? - Adrian SinfieldOxfam GB
Professor Adrian Sinfield, Emeritus Professor of Social Policy at the University of Edinburgh, talks about the welfare state.
Stephen Boyd, Assistant Secretary of the Scottish Trade Unions Congress, talks about how the Scottish economy works.
The Whose Economy? seminars, organised by Oxfam Scotland and the University of the West of Scotland, brought together experts to look at recent changes in the Scottish economy and their impact on Scotland's most vulnerable communities.
Held over winter and spring 2010-11 in Edinburgh, Inverness, Glasgow and Stirling, the series posed the question of what economy is being created in Scotland and, specifically, for whom?
To find out more and view other Whose Economy? papers, presentations and videos visit:
http://www.oxfamblogs.org/ukpovertypost/whose-economy-seminar-series-winter-2010-spring-2011/
The document discusses several topics related to income distribution and poverty, including:
- The utility possibilities frontier and how it relates to efficiency.
- Sources of household income such as wages, property income, and government transfers.
- Measures of income inequality like the Lorenz curve and Gini coefficient.
- Characteristics of poverty rates in the US over time for different demographic groups.
- Arguments for and against government redistribution programs and policies.
- Major US government redistribution programs like Social Security, Medicaid, food stamps.
The 1935 Social Security Act aimed to establish an income system for older persons to continue supporting themselves financially and provide basic protection for those most in need. It is financed through payroll taxes on employees and employers and provides benefits for retired and disabled workers through programs like OASI, DI, and HI. While not intended as a sole source of retirement, it aims to prevent poverty and uphold social responsibility and equity based on contributions. Current workers support current beneficiaries, though projections show the ratio of workers to retirees declining, raising questions about its sustainability.
The United States of America is in the midst of an enormous demographic and economic transformation; effects are witnessed through decreased labor force participation, stagnant economic growth, and financially strained government programs. Layered within the demographic change is a system morphed through partisan interests and inequitable assumptions. The country’s social insurance programs perpetuate on guarantees that supporters receive similar benefits as needed. Academics and government officials have warned of the coming population wave for decades, yet little action has been taken to mitigate associated problems.
Safety nets are critical for developed nations to maintain minimum living standards and some forms are sustainable. U.S. social insurance programs are underfunded by $39.698 trillion dollars, net of assets and future tax revenue, if continued under the current structure. The following research is provided to raise awareness of the existing system’s insolvency, generational inequity, and long-term costs in hope of instigating the necessary discussion of realigning economic, fiscal, and social policies onto a sustainable trajectory.
Greece experienced a major debt crisis beginning in 2008 due to corruption at multiple levels of government and society. Rampant tax evasion, bribery, and accounting fraud distorted Greece's economic realities and contributed significantly to budget deficits and debt levels. As corruption increased, so did budget deficits. Greece also misreported financial information to join the European Union. The root causes of Greece's debt crisis were lies and corruption rather than the 2008 recession alone. To solve the crisis, Greece needs integrity and transparency at both governmental and individual citizen levels.
The document discusses strategies to raise workforce participation and reduce welfare dependency in Australia. It argues that while training and education can help some groups like women rejoin the workforce, it may have limited impact for those with low IQ or skills, as many jobs now require minimum IQ levels or skills above what some groups can attain. It suggests two alternatives - creating more low-skilled, low-wage job opportunities through services, or accepting that conditional welfare will be a long-term reality for some with limited capabilities.
Presentation the three worlds of welfare capitalismXaveria Desi
The document outlines Esping-Andersen's theory of three worlds of welfare capitalism. It discusses how welfare states can be categorized into three regimes - Liberal, Corporatist, and Social Democratic - based on how they stratify social classes and commodify or decommodify labor. The Liberal regime minimizes decommodification and contains social rights to a clientele of low-income dependents. The Corporatist regime preserves status differentials through occupation-specific benefits. The Social Democratic regime promotes universal solidarity and preemptively socializes costs to allow choice beyond family or market dependence.
FSC Future Leaders Award - Stephen FleggSteve Flegg
This document discusses policy changes that could help insulate Australia from the future economic impacts of an aging population. It identifies three key issues with the current system: 1) inadequate retirement savings among many Australians, 2) a lack of regulation around how superannuation funds are used post-retirement, and 3) inadequacies in the age pension that discourage employment and burden individuals with longevity risk. Reforming contribution caps, increasing financial assistance, regulating post-retirement spending, and restructuring the age pension are some policy solutions proposed to address these issues and better prepare Australia for its aging population.
Gary Trennepohl presents "Financial Markets in 2012" during the annual 2012 Reynolds Business Journalism Seminars, hosted by the Donald W. Reynolds National Center for Business Journalism.
For more information about free training for business journalists, please visit businessjournalism.org.
The document discusses the role of the Lynn Carvill Women's Resource and Development Agency in Northern Ireland in advocating for a gender perspective in political discussions and decisions. It outlines key tools used like producing a Women's Manifesto and responding to government budgets and policies. It also discusses how recent austerity budgets have disproportionately impacted women through cuts to benefits and public services that women rely on more than men. There are concerns that proposed welfare reforms could further erode women's economic autonomy and labor market participation.
A policy is a set of principles that guides decision making and achieving rational outcomes. Policies are generally adopted by governance bodies and implemented as procedures by senior executives. Policies can assist both subjective and objective decision making, such as work-life balance policies or password policies. Policies differ from rules or laws in that they guide rather than compel behavior. Social welfare refers broadly to conditions like economic resources, contentment, and lack of threats that contribute to well being. A welfare state is a society where the government funds and provides a substantial part of citizens' welfare, such as through social programs, though there is debate around what qualifies.
EADI Conference 2014 - The Broker panel session - Presentation Marc Vandepittereinoutthebroker
This document discusses inequality and its relationship to democracy. It notes that inequality creates a fundamental contradiction with democracy as the wealthy elite seek to maintain their privileges against the interests of the poorer majority. Throughout history, elites have worked to limit democracy through mechanisms like census voting and neutralizing organizations of the poor. The document argues that today's concentrated economic power has enabled a "silent takeover" of the state and media, shaping democracy in a way that does not threaten wealth redistribution. To truly address inequality, it claims we must also address issues with the current form of democracy and corporate influence over policy debates.
The document discusses the high level of "churning" that occurs within Australia's welfare system, where around half of all welfare spending is returned to individuals in the form of benefits during their lifetime that they had previously paid in taxes. This level of churning is economically inefficient and unsustainable long-term. The document proposes several policy options to reduce churning such as making the pension and healthcare systems more voluntary and personal.
When contemplating a comfortable retirement you’re better off being an Australian or a Swede than a Thai, an Indian or a Greek, according to the Allianz Global Investors’ 2011 Pension Sustainability Index that shows which pension systems are best prepared for the future.
This document discusses reforms to the Social Security program in the United States. It notes that Social Security is projected to run out of funds by 2033 due to increasing life expectancies and fewer workers paying into the system compared to retirees receiving benefits. The document proposes means-testing Social Security by gradually phasing out benefits for high-income earners over $50,000 to help close the program's funding gap and extend its solvency by reducing projected shortfalls by around 75%. This phaseout plan aims to target benefits to those most in need while keeping Social Security funded for future generations.
This document discusses the myths surrounding taxation and benefits in the UK welfare state. It argues that those with lower incomes actually pay a larger share of their income in taxes due to regressive taxes like VAT. Meanwhile, benefits have been reduced to inadequate levels that trap people in poverty rather than help them find work. Growing inequality is also problematic, as more equal societies tend to fare better overall. The document calls for challenging myths, fairer taxation, better jobs, and policies that reduce inequality in order to establish "a society for people" as envisioned by past advocates for a fair welfare state.
Future of the welfare state - pension systemsJacques Bazen
Lecture held on 22/12 in Vilnius, Lithuania. About the future trends and developments of the European welfare state, in particular about the pension systems and options that exist in the choice of these systems.
How can the U.S. transition to personal public private social security saving...Matias Zelikowicz
This document provides an overview of the challenges facing social security and state pension plans in the United States. It discusses the demographic pressures on these systems from factors like increasing life expectancies and the retirement of baby boomers. The document also examines problems like underfunding of state pension plans. It proposes a transition to a system of personal public-private social security saving accounts (PPPSSS) that would allow some investment choice. Key investment options discussed for these accounts include market-linked CDs.
This document summarizes a research paper that investigates the antecedents and consequences of Greece's debt crisis as well as reforms to address it. 1) Weak fiscal management, misreported statistics, corruption, and inflexible policies made Greece vulnerable to the crisis. 2) The crisis had twin constraints - large budget and current account deficits - and its consequences included high unemployment and loss of investor confidence. 3) Greece undertook austerity measures to meet deficit targets under the Stability and Growth Pact but faced challenges due to its large external debt.
-Key sources of risk in the pay-out phase and retirement products
-Pay-out options and risk trade-offs
-Lump sum payments
-Programmed withdrawals
-Life annuities
-Reverse mortgage as a retirement financing instrument
-The role of public policy interventions
The article summarizes warnings from Simon Johnson and Peter Boone in their report "The Doomsday Cycle Turns: Who's Next?" that the developed economies of America, Japan, and countries in the euro zone are at risk of collapse due to a "doomsday cycle" where political and financial systems exacerbate risks rather than suppress them. They argue that repeated bailouts have encouraged reckless behavior by banks and that large debts and lack of reform have put these economies in a precarious position. If their financial and economic problems are not addressed soon, the risks of another global financial crisis and economic downturn are high.
Whose Welfare State Now? - Adrian SinfieldOxfam GB
Professor Adrian Sinfield, Emeritus Professor of Social Policy at the University of Edinburgh, talks about the welfare state.
Stephen Boyd, Assistant Secretary of the Scottish Trade Unions Congress, talks about how the Scottish economy works.
The Whose Economy? seminars, organised by Oxfam Scotland and the University of the West of Scotland, brought together experts to look at recent changes in the Scottish economy and their impact on Scotland's most vulnerable communities.
Held over winter and spring 2010-11 in Edinburgh, Inverness, Glasgow and Stirling, the series posed the question of what economy is being created in Scotland and, specifically, for whom?
To find out more and view other Whose Economy? papers, presentations and videos visit:
http://www.oxfamblogs.org/ukpovertypost/whose-economy-seminar-series-winter-2010-spring-2011/
The document discusses several topics related to income distribution and poverty, including:
- The utility possibilities frontier and how it relates to efficiency.
- Sources of household income such as wages, property income, and government transfers.
- Measures of income inequality like the Lorenz curve and Gini coefficient.
- Characteristics of poverty rates in the US over time for different demographic groups.
- Arguments for and against government redistribution programs and policies.
- Major US government redistribution programs like Social Security, Medicaid, food stamps.
The 1935 Social Security Act aimed to establish an income system for older persons to continue supporting themselves financially and provide basic protection for those most in need. It is financed through payroll taxes on employees and employers and provides benefits for retired and disabled workers through programs like OASI, DI, and HI. While not intended as a sole source of retirement, it aims to prevent poverty and uphold social responsibility and equity based on contributions. Current workers support current beneficiaries, though projections show the ratio of workers to retirees declining, raising questions about its sustainability.
The United States of America is in the midst of an enormous demographic and economic transformation; effects are witnessed through decreased labor force participation, stagnant economic growth, and financially strained government programs. Layered within the demographic change is a system morphed through partisan interests and inequitable assumptions. The country’s social insurance programs perpetuate on guarantees that supporters receive similar benefits as needed. Academics and government officials have warned of the coming population wave for decades, yet little action has been taken to mitigate associated problems.
Safety nets are critical for developed nations to maintain minimum living standards and some forms are sustainable. U.S. social insurance programs are underfunded by $39.698 trillion dollars, net of assets and future tax revenue, if continued under the current structure. The following research is provided to raise awareness of the existing system’s insolvency, generational inequity, and long-term costs in hope of instigating the necessary discussion of realigning economic, fiscal, and social policies onto a sustainable trajectory.
Greece experienced a major debt crisis beginning in 2008 due to corruption at multiple levels of government and society. Rampant tax evasion, bribery, and accounting fraud distorted Greece's economic realities and contributed significantly to budget deficits and debt levels. As corruption increased, so did budget deficits. Greece also misreported financial information to join the European Union. The root causes of Greece's debt crisis were lies and corruption rather than the 2008 recession alone. To solve the crisis, Greece needs integrity and transparency at both governmental and individual citizen levels.
The document discusses strategies to raise workforce participation and reduce welfare dependency in Australia. It argues that while training and education can help some groups like women rejoin the workforce, it may have limited impact for those with low IQ or skills, as many jobs now require minimum IQ levels or skills above what some groups can attain. It suggests two alternatives - creating more low-skilled, low-wage job opportunities through services, or accepting that conditional welfare will be a long-term reality for some with limited capabilities.
Presentation the three worlds of welfare capitalismXaveria Desi
The document outlines Esping-Andersen's theory of three worlds of welfare capitalism. It discusses how welfare states can be categorized into three regimes - Liberal, Corporatist, and Social Democratic - based on how they stratify social classes and commodify or decommodify labor. The Liberal regime minimizes decommodification and contains social rights to a clientele of low-income dependents. The Corporatist regime preserves status differentials through occupation-specific benefits. The Social Democratic regime promotes universal solidarity and preemptively socializes costs to allow choice beyond family or market dependence.
FSC Future Leaders Award - Stephen FleggSteve Flegg
This document discusses policy changes that could help insulate Australia from the future economic impacts of an aging population. It identifies three key issues with the current system: 1) inadequate retirement savings among many Australians, 2) a lack of regulation around how superannuation funds are used post-retirement, and 3) inadequacies in the age pension that discourage employment and burden individuals with longevity risk. Reforming contribution caps, increasing financial assistance, regulating post-retirement spending, and restructuring the age pension are some policy solutions proposed to address these issues and better prepare Australia for its aging population.
Gary Trennepohl presents "Financial Markets in 2012" during the annual 2012 Reynolds Business Journalism Seminars, hosted by the Donald W. Reynolds National Center for Business Journalism.
For more information about free training for business journalists, please visit businessjournalism.org.
The document discusses the role of the Lynn Carvill Women's Resource and Development Agency in Northern Ireland in advocating for a gender perspective in political discussions and decisions. It outlines key tools used like producing a Women's Manifesto and responding to government budgets and policies. It also discusses how recent austerity budgets have disproportionately impacted women through cuts to benefits and public services that women rely on more than men. There are concerns that proposed welfare reforms could further erode women's economic autonomy and labor market participation.
A policy is a set of principles that guides decision making and achieving rational outcomes. Policies are generally adopted by governance bodies and implemented as procedures by senior executives. Policies can assist both subjective and objective decision making, such as work-life balance policies or password policies. Policies differ from rules or laws in that they guide rather than compel behavior. Social welfare refers broadly to conditions like economic resources, contentment, and lack of threats that contribute to well being. A welfare state is a society where the government funds and provides a substantial part of citizens' welfare, such as through social programs, though there is debate around what qualifies.
EADI Conference 2014 - The Broker panel session - Presentation Marc Vandepittereinoutthebroker
This document discusses inequality and its relationship to democracy. It notes that inequality creates a fundamental contradiction with democracy as the wealthy elite seek to maintain their privileges against the interests of the poorer majority. Throughout history, elites have worked to limit democracy through mechanisms like census voting and neutralizing organizations of the poor. The document argues that today's concentrated economic power has enabled a "silent takeover" of the state and media, shaping democracy in a way that does not threaten wealth redistribution. To truly address inequality, it claims we must also address issues with the current form of democracy and corporate influence over policy debates.
The document discusses the high level of "churning" that occurs within Australia's welfare system, where around half of all welfare spending is returned to individuals in the form of benefits during their lifetime that they had previously paid in taxes. This level of churning is economically inefficient and unsustainable long-term. The document proposes several policy options to reduce churning such as making the pension and healthcare systems more voluntary and personal.
When contemplating a comfortable retirement you’re better off being an Australian or a Swede than a Thai, an Indian or a Greek, according to the Allianz Global Investors’ 2011 Pension Sustainability Index that shows which pension systems are best prepared for the future.
This document discusses reforms to the Social Security program in the United States. It notes that Social Security is projected to run out of funds by 2033 due to increasing life expectancies and fewer workers paying into the system compared to retirees receiving benefits. The document proposes means-testing Social Security by gradually phasing out benefits for high-income earners over $50,000 to help close the program's funding gap and extend its solvency by reducing projected shortfalls by around 75%. This phaseout plan aims to target benefits to those most in need while keeping Social Security funded for future generations.
This document discusses the myths surrounding taxation and benefits in the UK welfare state. It argues that those with lower incomes actually pay a larger share of their income in taxes due to regressive taxes like VAT. Meanwhile, benefits have been reduced to inadequate levels that trap people in poverty rather than help them find work. Growing inequality is also problematic, as more equal societies tend to fare better overall. The document calls for challenging myths, fairer taxation, better jobs, and policies that reduce inequality in order to establish "a society for people" as envisioned by past advocates for a fair welfare state.
Future of the welfare state - pension systemsJacques Bazen
Lecture held on 22/12 in Vilnius, Lithuania. About the future trends and developments of the European welfare state, in particular about the pension systems and options that exist in the choice of these systems.
How can the U.S. transition to personal public private social security saving...Matias Zelikowicz
This document provides an overview of the challenges facing social security and state pension plans in the United States. It discusses the demographic pressures on these systems from factors like increasing life expectancies and the retirement of baby boomers. The document also examines problems like underfunding of state pension plans. It proposes a transition to a system of personal public-private social security saving accounts (PPPSSS) that would allow some investment choice. Key investment options discussed for these accounts include market-linked CDs.
This document summarizes a research paper that investigates the antecedents and consequences of Greece's debt crisis as well as reforms to address it. 1) Weak fiscal management, misreported statistics, corruption, and inflexible policies made Greece vulnerable to the crisis. 2) The crisis had twin constraints - large budget and current account deficits - and its consequences included high unemployment and loss of investor confidence. 3) Greece undertook austerity measures to meet deficit targets under the Stability and Growth Pact but faced challenges due to its large external debt.
-Key sources of risk in the pay-out phase and retirement products
-Pay-out options and risk trade-offs
-Lump sum payments
-Programmed withdrawals
-Life annuities
-Reverse mortgage as a retirement financing instrument
-The role of public policy interventions
A very balanced presentation covering each and every aspect of eurozone economic crisis. A thorough analysis from the start of European Union formation and the further development of the problem of crisis. Also, effect on Indian Economy is pondered upon to make it good piece of word.
I hope it will fulfil everyone's need.
The document summarizes Greece's ongoing economic crisis and debt problems. It discusses:
1) Greece has €323 billion in total debt owed to European countries and banks.
2) Greece has relied on two EU-IMF bailouts totaling €240 billion since 2010 but failed to make a key €1.5 billion IMF debt repayment in June 2015.
3) Greece's problems stem from overspending before adopting the euro, then an inability to repay loans when borrowing costs rose in 2008.
The document analyzes Greece's debt crisis by comparing it to the US recession of 2007-2009. It finds that Greece's unemployment and GDP per capita were hit harder than the US. While Greece has received bailouts from the EU and IMF totaling over €240 billion, it still faces high unemployment of over 26% in 2014 and reform is needed. The response to the US recession through acts like TARP helped stabilize the economy, while Greece still has progress to make despite recent signs of improvement.
- Economies have been impacted differently by Covid-19 based on factors like public health responses, fiscal policy, and existing economic conditions.
- Countries that took earlier and stricter measures to control the virus, like testing, contact tracing, and promoting mask-wearing, have experienced better health and economic outcomes.
- Emerging markets face greater economic challenges due to lack of fiscal space and reliance on capital inflows, leaving them vulnerable to financial market shifts.
This document discusses the socio-economic challenges facing developed countries as the baby boom generation retires between 2007-2011. This will shrink the workforce and increase the proportion of older people requiring pensions and healthcare. Outsourcing work to India is proposed as a solution to supplement the shrinking workforce in countries like Germany, France, Italy and the UK. India has a large and growing workforce that could help address labor shortages in Europe through remote work outsourcing without increasing migration pressures. The document analyzes population trends and projections in European and Indian populations to 2050 to argue that India will have a large surplus workforce available to support developed country needs.
Saying Goodbye To One Crisis and Hello To The NextEdward Hugh
- The last crisis was caused by heavily indebted societies struggling to return to growth after the crisis. This process is structural due to demographic changes, not cyclical.
- Differences in debt levels between countries like Germany and Spain can be explained by the timing of their credit-driven private consumption booms and the age of their populations.
- While the worst of the last crisis is over, future crises may be driven by population aging in countries around the world, which will impact patterns of saving, borrowing, asset prices, and sovereign debt levels. Understanding these demographic forces is key to addressing the next potential crisis.
"It is clear that in a crisis, the rules do not apply. This which makes you wonder why they are rules in the first place. This is an unprecedented opportunity to not just hit the pause button and temporarily ease the pain, but to permanently change the rules so that untold millions of people aren’t so vulnerable to begin with".
Shared some interesting thoughts on the Coronavirus (Covid-19) crisis in regards to capitalism and society.
Please like, share and enjoy the read.
The Structure Of A Financial Crisis EssayAmber Moore
The document discusses the structure and causes of financial crises. It begins by providing context about Turkey's financial crisis in 2001 and discusses why countries experience financial crises. It then examines Turkey's privatization policies from the 1980s onward and some challenges they faced. Finally, it looks at Turkey's efforts to resume privatization in the early 1990s and the revenues generated, though the program progressed more slowly than planned. In general, the document analyzes Turkey's privatization approaches and the ongoing economic difficulties they faced.
The Greek government crisis (also known as the Greek depression) started in late 2009. It was the first sovereign debt crisis in the Eurozone later referred to collectively as the European debt crisis.
In 2012, Greece's government had the largest sovereign debt default in history.
On June 30, 2015, Greece became the first developed country to fail to make an IMF loan repayment. At that time, Greece's government had debts of €323bn.
No Longer a Purely Political Question: Challenging the Austerity Approach Thr...Gabriel Armas-Cardona
Reviewing the austerity crisis in Europe, the lack of human rights discourse, and how to promote economic, social and cultural rights in a similar context. Presentation given on April 8, 2016.
Elsa Fornero: Pension reform keynote - NZ OECD Global Symposiumcffc_nz
This document contains the text of a presentation by Elsa Fornero on pensions, pension systems, and pension reforms. Some key points:
- Pension systems help people save for retirement and prevent poverty, but face challenges from demographic aging, economic risks, and political pressures.
- Reforms are often needed to regain financial sustainability and reduce inefficiencies, while balancing adequacy of retirement provisions.
- Directions for reforms include increasing the link between contributions and benefits, raising retirement ages, and encouraging private pensions.
- Financial literacy can help citizens understand reforms and support long-term sustainability of pension systems.
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KI a INESS v spolupráci s ďalšími partnermi organizovali medzinárodnú
konferenciu v rámci Free Market Road Show 2012 na tému Európa na ceste do
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1. Pensions and the Greek
Crisis
A TRAGEDY OF RETROSPECTIVE EXTERNALLY
IMPOSED REFORM
Platon Tinios
Piraeus University, Athens,
1
CNseg September 2017
Rio De Janeiro, Brasil
2. Overview of the Greek Economic Crisis
2009-2018 (?)
•Greece is still in the midst of the deepest and longest
recession of any developed country (worse than US in the
1930s).
•At least 7 successive years of falls in GDP. Stagnation after
•GDP per head is 25% lower than in 2007. Earnings 30%.
•Three international bailouts (the largest ever). The third is
due to end in August 2018 – still not clear what it will be
succeeded. No Exit in sight.
•A dismal record for economic policy (projections
consistently proved too optimistic).
•The crash followed a period of high growth – from 1990s
and after Eurozone entry (2001) – ‘The Balkan tiger’ Phase
(?!)
Real GDP growth trajectory and forecasts for differentvintages, Greece
Source: OECD Economic Surveys: Greece 2016, page 67. OECD Economic Outlook 87 to 98 databases.
-12
-10
-8
-6
-4
-2
0
2
4
6
8
-12
-10
-8
-6
-4
-2
0
2
4
6
8
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Y-o-y % changeY-o-y % change
2
3. Pensions and the Greek crisis: 3 vignettes
A. A pension reform bill for every bailout.
• Pension reform was the first bill passed after the first bailout in July 2010.
• Pension changes key prior actions and May 2016 pension reform part of the 3rd bailout in August 2015.
• May 2017 – Advance legislation passed for further changes to take place in end-2018
B. Close Link to sovereign debt crisis – The Hierarchy of obligations imposed by politics
• June 2015 the Government was faced with a dilemma: Cash to pay either the IMF or current pensions
• A choice of a legal or a moral obligation? Explicit vs Implicit debt.
• The government chose to honour pensions – It chose moral over legal.
C. Who will go bankrupt first? The Pension system and the State in a danse macabre.
In 1997 a prominent committee warned that the pension system was facing collapse ‘by 2007’
• The head of the Confederation of Trade Unions said “The State will go bankrupt before pensions do”
• His prediction was right – only off by 3 years.
3
4. Pensions and the Greek crisis: 3 paradoxes
1. Tsipras: “We must not cut pensions as Grandmothers give pocket money to their Grandchildren”.
• Why not do something directly for the Grandchildren?.
• Appears to be unaware of basic economics : Who pays for Grandmothers’ pensions?
2. Persistence of pre-crisis perceptions, privileging pensions.
◦ Low income pensioners a perennial ‘deserving case’, while in fact they were the group least affected by the crisis.
◦ During the crisis Pensioners’ poverty risk fell by half (by 7 points) while others’ skyrocketed. Prefer pensioners to
unemployed families with children.
◦ In December 2016 they were singled out to receive a bonus (labelled the ’13th pension).
3. Illogical conclusions: if bond holdings of pension providers were not included in the debt haircut of
2012 (known as the PSI), there would now be no pension problem.
◦ Despite bonds being a liability of the State which is providing more than 40% of pension providers revenue in grants. Ageing, etc…
4
5. OUTLINE: PENSIONS AND THE CRISIS AS
GREEK TRAGEDY
Three strong statements:
1. THE PAST: The Greek crisis would not have happened if pensions had been reformed in time.
2. THE CURRENT: The exit from the crisis is prevented by side-effects of the pension reform.
3. THE FUTURE: long term prospects are being poisoned by an inappropriate pension system.
A Greek tragedy has three parts (according to Aristotle):
1. Hubris – Ambition the preceding period setting up a mechanism for disaster
2. Ate – Blindness/folly the evolution of the crisis - blame avoidance
3. Nemesis – Punishment. what pensioners are experiencing now. And the young generation will
experience in future.
5
7. Pensions before the crisis: Fragmentation
Greek pensions look like other advanced country systems – direct contemporary of US Social Security.
◦ IKA founded in 1934. But two key differences
1. Governance – system abandoned. E.g. requirement for regular actuarial review ignored.
2. FRAGMENTATION. Fragmentation by occupational group; by pension tranche; by cohort.
A BUILT-IN LANDMINE: In PAYG system, fragmentation enables widespread cross-subsidization.
1. Pensions used to secure privileges for different occupations – a component of clientelistic system
o E.g. in retirement ages the ‘rule’ was followed by 15%. The remainder 85% followed various exceptions.
2. Removed constraints on expenditure growth at the micro level.
o Groups tried to secure privileges and shift the costs to others (consumers; taxpayers; other groups).
3. After 1980s’ inflation, expenditure decoupled from revenue – government grants make up.
o Removed constraint to expenditure at the macro level.
4. Reform proceeds in piecemeal fashion– Syncopated progress in the right direction but too little :
o within-generation issues overshadow between-generations equity.
7
8. The system in 2009: A mechanism for disaster
8
1st EU Joint Report on pension strategy
(2002). The pension system was :
1. Costly. 2009 Pensions ≈ 14% of GDP
2. Faced dramatic demographic
challenges. Highest expected pension
expenditure in 2060.. (+12,5 points)
3. Was economically inefficient. Cross-
subsidisation, and high non-wage costs.
4. Is socially ineffective. ‘Poverty is grey in
colour’.
5. Is resistant to change. Attempts in 1990,
1992, 1998, 2002, 2008…
◦ EMU membership removes urgency for
change as made financing deficits easier
(Fernandez et al 2013)
Όριο ΙΚΑ
Pensioners
Women
Workers
Men
Όριο ΙΚΑ
10090 80 70 60 50 40 30 20 10 0 10 20 30 40 50 60 70 80 90 100
0
5
10
15
20
25
30
35
40
45
50
55
60
64
68
73
78
83
88
93
98
’00s
2009 Demographic pyramid
Demography and labour participation as
the inexorable drivers
9. What happened?
Incomplete pension reform → Debt bubble
• Structural Deficits in the pension system endemic from early 1980s
• (due to linking minimum pensions to the minimum wage -- 2/3 of pensions rise to the minimum)
• So, pensioners were exempt from stabilisation; waited for structural pension reform.
•BUT, reform was hard to implement and painful to discuss. While waiting for reform, deficits
were financed by government grants.
• A reform increasing contributions was passed in 1990/2; but the changes affecting entitlements
(age; system structure; privileges) were left for later
•Reform of Pension expenditure was repeatedly postponed (in 1998, 2001, 2003 and 2008). But, as
contributions were already high, all expenditure increases were financed by grants.
• After Eurozone entry in 2001, interest rates and external borrowing became cheaper just as deficits
were rising . Borrowing to finance pension deficits after 2001 was directly responsible for fuelling
the national debt which finally led to the bankruptcy in 2010.
9
10. Why did expenditure keep rising?
Pensions and Buying off political influence
•A fragmented PAYG system allows transfers between occupational groups.
• In Greece fragmentation by occupational group; by layer of protection; by cohort;
• In IKA retirement ages: 85% of men follow exceptions; 15% the rule.
•Pensions redistribute resources between generations but also between occupational groups. The latter allowed the
pension system to be used in buying political support. Examples:
1. Pension privileges bypass income policies and can ‘buy influence’ without immediate budgetary cost.
2. E.g. ‘Heavy and Hazardous occupations’ – allow hairdressers and newscasters of state TV earlier retirement; One year’s
contribution count for 3; unmarried daughters of generals receive pensions for life.
3. Invalidity pensions buy individual support (Zakynthos blind taxi drivers arranged by aspiring MP).
4. Operation of minimum pensions subsidises non-payment of contributions. With between 15 and 23 years’ contributions you
received the same minimum pension is received.
‘Collateral damage of the political hijacking of pensions’ : Three consequences key for long term developments:
i. The reform agenda was one of consolidation – reducing inequality – and remained unchanged throughout.
ii. Entrenched tendencies to raise expenditure, over and above the rises due to ageing.
iii. Very little reciprocity – the insurance function of pensions was totally neglected.
10
11. Why was it not prevented?
The role or non-reform/ governance
Any system should have homeostatic mechanisms – bringing back to balance. In Greece these did not
work. Why?
I. The absence of discussion
◦ Hiding the elephant in the room (“Somebody else’s problem” – no one wants to raise the issue)
◦ Dearth of data. Data starts being produced by the EU centrally, but still ignored.
II. Pension reform comes in spurts. In between episodes everyone behaved as if a problem did not exist
III. Organisational fragmentation.-The ‘Why Me?’ argument always works. Expenditure ratchets up
◦ Asymmetry: Deficit funds receive grants; surplus funds can increase expenditure.
◦ Easier for deficit funds to secure grants.
IV. Actuarial studies never produced. Requirement for regular studies ignored.
◦ No one responsible to produce studies for the system as a whole. Each sector shifts the blame.
◦ Difference of view between Ministry of Finance (who saw flows of grants) and Ministry of Pensions (who saw
stocks of entitlement)
11
13. A pension reform game with new rules
What should have happened?
1. Macroeconomic adjustment– Greece was proved not as rich as was thought
◦ Average GDP per head down by 25%. Pensioners had to share in overall adjustment
◦ In previous stabilisations this was done by inflation erosion. When in the EZ adjustment had to be in the forms of nominal cuts.
2. Postponed change externally imposed after delay. Equalising privileges
◦ As the bailout was financed by German taxpayers, sensitivity to comparisons
◦ E.g.: Why should Hildegard the German hairdresser (retirement age recently raised to 67) pay for her colleague Maria to retire at 50?
3. Deal with future challenges -- ageing rapidly accelerates; transformation of work
4. Key Difficulty: Had to be done in a deep crisis without a functioning social safety net. Social safety net needed to be
built at the same time
Two key differences in the rules of the game with previous period:
A. A new player with a veto – the troika representing the creditors. Blame avoidance on the part of governments
B. An absolute budget constraint – no borrowing possible – expenditure overruns lead repeated to cuts in pensions
13
14. The process of reform:
Discussions without change replaced by change without discussions
A confused process unfolds between 2010 and 2018, 5 major pension laws, over three bailouts and five governments and
over 12 pension cuts. Last major law passed in May 2017.
The end result (apparent only now):
1. New pensions will apply to everyone (even old pensioners – retrospectively)
2. Retirement ages increased to 67 for everyone not able to retire by May 2016. In some cases increases of up to 17 years.
3. All separate pension providers consolidated into a single unitary pension organization.
However the confused process generated major extra costs: A large cohort of early retirees (mostly women) meaning permanently
higher costs plus a reduction of trust in the pension system.
It happened through a process repeated at least 3 times (2010, 2013, 2015-7):
The Troika pushes for decisive action to cure fiscal problems.
The Government tries to protect those close to retirement – favouring a dual system (old/new contributors).
The attempt to protect leads to early retirement and increases deficits.
Two reactions: (a) cut existing pensions (b) pass new law extending application of new system retrospectively.
By the third attempt, new system should apply to everyone by 2019. As if system always existed
14
15. Four key aspects of reform 2010-2018
1. New’ State 1st pillar system - Two-tier PAYG pension system.
a. First tier EUR 384 / month for everyone with >15 years contributions
b. Second tier proportional to years of constitution on Defined benefit base
c. Income to be replaced is career average (up from 5 years)
d. Replacement rates for minimum pay recipients close to 80% for 40 years contributions (current average c 23 years)
e. Low ceilings (EUR 2000 mean than better paid contributors receive low replacement.)
f. Applies to all (even pensioners who retired under the previous system –to forestall a court decision on unconstitutionality.
2. Retirement ages
a. 67 for all (62 with 40 years’ contributions).
b. Applies to all who retire after May 2016.
c. Exceptions for the Hazardous Occupations
d. Retirement ages to be reconsidered every 10 years to match longevity increases.
e. Work by pensioners severely discouraged
3. Consolidation on the revenue side
• All contributors equated to salaried workers and pay the same contribution rates
• Major change for the self employed and farmers (who from a system of classes move to paying 27% on declared net business income)
• Workers on non-starndard contracts and for second jobs face big rises in contribution payments.
4. Organisational consolidation
◦ All primary pension providers folded into a single organization.
15
16. A unique feature of the 2010-8 period:
Cuts in pensions-in-payment.
Pension cuts as ‘collateral damage’.
In the context of the bailout, there is no finance for fiscal
surprises. Any overruns from budget execution had to be met
from within the system:
Repeated Cuts in pensions-in-payment (10 occasions 2010-3;
smaller ones 14/5, again in 2017 )
◦ In some cases over half of the pension was lost
◦ Hopes were kept up that the cuts would be made up.
Imposed solely on size of pension. No influence of (a) age or
(b) contribution record.
Low pensions only cut by holiday bonuses (14%)
◦ Half of the fall of private sector earnings (30%)
◦ Low pensions become more attractive compared to working.
The arbitrary nature of the cuts mean that a vicious circle
further reinforced. Function of pensions as promoting old
age income security put in question
Figure 2: Cumulative falls of different kinds of pensions, May 2010-
September 2015
Source: Tinios, 2013, updated for 2014 cuts in auxiliary pensions and 2015 increase of pensioners health contributions. Impact
may differ according to the type of auxiliary pensions and their share of the total. Sums are annualised to take into account the
abolition of holiday bonuses.
16
Two decisions of the Supreme Court
1. Cuts up to 2012 constitutional – 2012 decisions
2. Cuts after 2013 unconstitutional – 2015 decision)
17. Still promoting disaster…
Even after 5 years’ implementation, pensions are
the highest in the EU.
Revenue down due to (a) unemployment (b) rising
evasion due to liquidity problems.
Pensions are rising fast because: (a) Demographic
change (b) early retirement, especially of women,
public sector; (c) Denominator ↓ – GDP fell by 26
per cent.
The pension system relies on transfers from the
central government of more than 10% of GDP – the
largest in the EU>
17
Pensions as a percent of GDP, Italy, Germany and Greece
2003-2017
11,1
12
12,3
14,3
14,8
16,4
17,7
16,7
17,1
17,9
18,3
10
11
12
13
14
15
16
17
18
19
2003 2005 2007 2009 2011 2013 2015 2017
Pensionsas%ofGDP
Greece
Germany
Italy
Source: Εurostat (accessed 13/1/2016), Ministry of Labour (for 2015
on).
18. Evaluation:
Parametric reform or Neoliberal agenda?
Resistance to reform to 2010 was in to protect pension rights. What did actually happen?
A. Retirement ages – those who could retire by 2016 were able to. The others have to work to 62 or 67. Early
retirees especially women vulnerable to pension cuts. Women are overrepresented in the early retirees and
hence lose most
B. Pension amounts – Noone escaped. Pensions are lower than they were. There was a major redistribution
from high to low pensions
◦ A major change in the reciprocity of the system. High pensions amongst greatest losers > low pensions amongst relative
winners
C. Organisational change – despite early resistance all are now included in a single provider – private+public;
The reform is a major change in parameters. One of the most drastic parametric reforms ever.
“Implementation of a neo-liberal agenda”? Continuity chosen over systemic change. New system relies on the
State exclusively. No advance in the direction of a multi-pillar system. PAYG, Defined Benefit.
Was the system ‘imposed from the outside”? True in that the ‘troika’ was moving things along. “TINA”.
BUT: The troika proposed what was the logic of preexisting discussion.
18
20. Is this what the new system should look like?
This is a reform that looked to the past rather than the future. The new system, will still be:
Too ambitious. Pensions which (though lower than before) are still at the top end of the EU.
Too expensive. Non-wage costs are high and will become higher. A major drain on competitiveness.
Too inflexible. Little leeway for individual or sectoral differentiation. No possibility of opting out.
Too statist. Pensions are exclusively provided by the State. Leaves very little room for other providers.
Even though occupational and private pensions are permitted, the State system leaves little room for them
High nominal replacement rates (80% for 40 years) crowd out demand
High social insurance contributions (27-38%) crowd out supply.
Discouragement of involvement by the insurance sector in supplementary insurance cover.
The new system is exclusively State-run, Defined Benefit, PAYG. It looks like a 1960s type system of the kind
being abandoned in the advanced world.
It is better than the pre 2010 system, but is it good enough?
20
21. Has the baby been thrown out with the
bathwater? The new insurance contract
The 2010-8 reforms dealt with fiscal problems (macroeconomics). But ignored insurance aspects
(microeconomics).
i. The way it came about (Blame avoidance, little discussion,) has eroded trust.
ii. Arbitrary pension cuts have created a sense of insecurity – very little security of income
iii. High non-wage costs coupled with violations of assurances undermine confidence.
iv. Younger contributors see little difference between social contributions and a tax on work.
• So the pension promise is more viable, but it is trusted less.
•Needs to be supplemented by a reform to repackage the pension promise. A fresh start to regain
trust.
21
22. A multi-pillar reform is needed to change
the structure of pension promises
A large DB pension system hands out pension promises, redeemable in the distant future.
Future pensioners are very similar to bondholders. They want their promises honoured; they
don’t care how.
External debt is similar. Both mortgage future output a long time ahead. So, large DB systems
replicate in the future the conditions that led Greece to bankruptcy in the past.
In contrast, in DC pre-funded systems pensioners share in the risks of production like
shareholders. Their pensions will be higher if the economy goes well. A contingent and not an
absolute claim.
The parametric reform has reduced the size of future claims. Systemic reform must alter the
structure of future claims.
22
23. Turning a new leaf with a public-private
partnership
The trend in the EU is towards mixed systems. Total pensions are provided in three layers:
• 1st: A state pillar focuses on lower pensions and poverty prevention
• 2nd : Occupational pillars focus on income replacement and allow sectoral differentiation
• 3rd: Personal pensions allow individual flexibility .
•Faced with a major challenge – ageing – all sectors of society help out, each according to its
comparative advantage.
•Greece indicates that it is not enough to reign in the total size of future claims; one must also
manage their structure;
•above all that it is important to rebuild trust.
23
24. Two lessons
•It is important not to postpone pension reform.
• The attempt to protect system participants proved self-defeating. Pensions fell, retirement ages rose but
in an abrupt fashion – harder to prepare properly. The costs of being caught out.
• Large State-run systems create a promise bubble similar to external debt. But they are less transparent.
There are too many mechanisms to promote complacency until it is too late.
• The type of pension reform is very important. Otherwise you may “throw the baby away with
the bathwater”:
• Parametric reform (to reduce the size of the pension promise) is unavoidable. But it is not enough:
• External compulsion (There is no Alternative) is not a good strategy. Pensions need trust.
• The microeconomics of insurance should not be forgotten. Pension reform is more than a fiscal exercise.
• The reform should make sure that the basic insurance functions of the system are preserved.
•Hence it is important to think about managing the structure of the pension promise and not only
the size.
24