Incremental or paradigm shifting? Evidence about the retrenchment of public pension schemes in the industrialised world from expenditure and replacement rate data, 1980-2015

Pension systems have often been regarded as difficult to retrench, particularly in the larger conservative and social democratic welfare states. Empirical testing has generated significant doubts about such expectations. Using institutional analysis, most commentators accept significant reforms have occurred, often inconsistent with regime theory. Some regard the scale of the change in the conservative, Bismarckian world as paradigmatic. This chapter focuses on outcomes in 18 OECD countries using pension expenditure, adjusted for the size of older populations, and social rights data. Such data has been avoided due to the long-term nature of pension entitlement, but as we move further away from major reforms these concerns becomes less constraining. Based on this data, the chapter argues reforms from the 1980s to the early 2000s have generally resulted in retrenchment of outcomes which can be considered incremental at most. Support for pensioners has remained strong in most countries, both in terms of the public pension resource allocation and benefit generosity, although the strength of this commitment has diminished somewhat in more recent decades. This is true for all worlds of welfare. The only two major exceptions are Germany and Sweden.