The politics of pensions in European social insurance countries

This paper analyzes national processes of pension reform in countries with systems of old-age provision largely following the Bismarckian type (Austria, France, Germany, Italy, Sweden). Operating on a defined benefit/pay-as-you-go basis and mainly financed out of wage-based social contributions, pension systems in these countries are highly vulnerable to demographic and economic pressures. Therefore, pension reform has emerged as a major issue in these countries since the early 1990s. Although there are substantial similarities in the direction of reform, the degree of policy change varies considerably even among countries with similar legacies in pension policy. As a closer inspection of national patterns of pension policy-making shows, the political feasibility of pension reforms and the degree of adjustment in pension policy critically depends on the government's ability to orchestrate a reform consensus either with the parliamentary opposition or with the trade unions. The paper tries to identify the conditions under which a pension pact between those actors is likely to emerge.