Pension reform in Europe: what lessons for Latin America?

NATALI, DAVID; ARZA, CAMILA

Mexico DF

Simposio; Conferencia Internacional de Reforma de Pensiones; 2005

Fundación Konrad Adenauer

Pension systems represent the core part of European welfare states. Historically, they were among the first social programmes to be introduced at the end of the XIX century. Their evolution all along the XX century led to an extraordinary growth both from a financial and organisational point of view. After the so-called ´golden age´ of welfare, they started to face increasing challenges. Population ageing, reduced economic growth, high-level unemployment, market integration and globalisation, have all contributed to put European old-age schemes under siege. This paper summarises the key traits of pension systems in Europe, their long-term evolution, and recent reforms. First, we re-propose the traditional classification between Bismarckian and Beveridgean models, adding more emphasis to Central-Eastern European systems. Secondly, we briefly summarise the common pressures (but with different degree of urgency) that contributed to put reforms at the top of the governments´ agenda. Thirdly, we consider some case-studies which have gone through substantial reform processes in the last few decades. While policy-makers introduced both innovative and path-dependent measures, recent steps originated a layered system, where new instruments and rules coexist with past institutions. Finally, we evaluate the similarities and differences within Europe and between Europe and Latin America to then raise some of the key aspects of European reform processes that can be of interest for Latin American reformers.