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The Logic of Funding European Pension Restructuring and the Dangers of Financialisation

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  • Ewald Engelen

    (Department of Geography and Planning, Faculty of Social and Behavioural Sciences, University of Amsterdam, Nieuwe Prinsengracht 130, 1018 VZ Amsterdam, The Netherlands)

Abstract

During the 1990s, pension funds seemed to dominate the world's capital markets, reaping unprecedented rates of return. This stands in glaring contrast to the budgetary difficulties of most nonfunded European pension arrangements, which are a result of the changing demographic composition of the population. As a result, a growing number of European states is trying to transform the existing pay-as-you-go systems into funded pension arrangements. After a critical examination of these demographic projections, the claim that funded pension systems are not subject to ‘demographic stress’ is critically assessed. Finally, given the logic to which funded pension arrangements are subject, it is argued that the introduction of such institutions could result in a growing financialisation of the economy. It is claimed here that this is not without dangers for the long-term wealth-generating capacity of firms. So, not only are the reasons for pension restructuring less compelling than is generally thought, restructuring could also result in unwanted side-effects.

Suggested Citation

  • Ewald Engelen, 2003. "The Logic of Funding European Pension Restructuring and the Dangers of Financialisation," Environment and Planning A, , vol. 35(8), pages 1357-1372, August.
    • Handle: RePEc:sae:envira:v:35:y:2003:i:8:p:1357-1372
    DOI: 10.1068/a35307
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    References listed on IDEAS

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    Cited by:

    1. Natacha Aveline-Dubach, 2017. "Embedment of “Liquid” Capital into the Built Environment:," Post-Print halshs-01563507, HAL.
    2. José Corpataux & Olivier Crevoisier & Thierry Theurillat, 2009. "The Expansion of the Finance Industry and Its Impact on the Economy: A Territorial Approach Based on Swiss Pension Funds," Economic Geography, Taylor & Francis Journals, vol. 85(3), pages 313-334, July.
    3. Manuel B. Aalbers, 2009. "The Globalization and Europeanization of Mortgage Markets," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 33(2), pages 389-410, June.
    4. Francesco Macheda, 2018. "The illusion of patient capital: evidence from pension investment policy in the Netherlands," Working Papers 0029, ASTRIL - Associazione Studi e Ricerche Interdisciplinari sul Lavoro.
    5. Giampaolo Gabbi & Elisa Ticci, 2014. "Implications of financialisation for sustainability," Working papers wpaper47, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    6. Ewald Engelen & Martijn Konings & Rodrigo Fernandez, 2010. "Geographies of Financialization in Disarray: The Dutch Case in Comparative Perspective," Economic Geography, Clark University, vol. 86(1), pages 53-73, January.

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