Some related articles :
Politics of Reform: The Spread of Radical Change
decades after Chile's radical departure from the Bismarckian model of
old-age security, this novel type of pension reform has long ceased to be
an isolated event. Not only in Latin America but also in the
post-socialist world, compulsory fully funded schemes are being
introduced. What accounts for the political feasibility of such radical
moves? And how can the peculiar spread of ideas from the south to the east
were some of the questions that motivated research at European University
Viadrina on the politics of pension reform. A full or partial shift from
the state to the market as the main supplier of retirement pensions
amounts to a substantial rewrite of the underlying social contract, which
does not usually occur in the case of a mere change of the entitlement
conditions. The recent waves of radical pension reform are particularly
remarkable because it was long believed that old-age schemes were
difficult to reform.
research program identified the most important political actors in the
pension reform arena, while also considering the policy context that
shaped their room for maneuver. In many countries, radical pension reform
became feasible when the finance department and the World Bank - its most
active advocate - had stakes and leverage in the local reform process.
Pension privatization did not usually occur when the social affairs
department, traditionally a supporter of public pension provision, was the
only relevant pension reform actor. Critical indebtedness makes it more
likely that international financial institutions will become involved in
the local pension reform arena, while financial imbalances strengthen the
role of the finance department.
post-socialist old-age security, the state continues to play an important
role, and some countries have refused outright the shift to a private
funded scheme. Policy-makers are increasingly becoming aware that there is
a flip side to the economic factors that used to drive pension
privatization. The move results in substantial fiscal costs in the short
and medium term, thus complicating future compliance with budgetary
targets. Moreover, nascent capital markets and crisis-ridden financial
sectors have led some policy-makers and experts to be cautious about
pension privatization and to rely on innovative, unfunded options, such as
notional, defined contribution schemes. Thus, there may after all be some
potential for diversity in pension reform.
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