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The politics of automatic stabilization mechanisms in public pension programs

Die Politik der automatischen Stabilisierungsmechanismen in öffentlichen Pensionsprogrammen
[working paper]

Weaver, Kent

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Corporate Editor Wissenschaftszentrum Berlin für Sozialforschung gGmbH
Abstract "Demographic and fiscal pressures have increased pressures on governments in most wealthy countries to reduce the generosity of their public pension programs. Mechanisms that automatically adjust public pension levels to take account of factors such as increased life expectancy and slower economic growth are appealing to politicians because it saves them from having to take loss-imposing actions that are likely to incur political blame. This paper analyzes the financial and political potential of automatic stabilizing mechanisms (ASMs), beginning with a discussion of design issues and alternatives. This is followed by a discussion of potential adoption, implementation, and sustainability challenges for automatic stabilizing mechanisms and a review of experiences with stabilization mechanisms in three countries: Canada, Sweden and Germany. The paper argues that ASMs are vulnerable to erosion over time, especially when the losses that the ASM would impose are substantial, and when elections are impending. Preserving the integrity of ASMs is most likely where the parties that initially supported their adoption continue to be able to sustain cartel-like behavior with respect to pension policymaking. Overall, the analysis in this paper suggests that automatic stabilizing mechanisms are no panacea for the problems of countries facing serious long-term pension financing problems." (author's abstract)
Keywords Federal Republic of Germany; Sweden; Canada; pension; retirement pension; politics; international comparison; population development; sustainability; funding; welfare state; stabilization; program
Classification Population Studies, Sociology of Population; Social Security
Method applied research; empirical; qualitative empirical
Document language English
Publication Year 2011
City Berlin
Page/Pages 43 p.
Series Discussion Papers / Wissenschaftszentrum Berlin für Sozialforschung, Forschungsschwerpunkt Bildung, Arbeit und Lebenschancen, Abteilung Ungleichheit und soziale Integration, 2011-201
Licence Deposit Licence - No Redistribution, No Modifications
data provider This metadata entry was indexed by the Special Subject Collection Social Sciences, USB Cologne