Pensions are inherently risky because they are long-term contracts, which complicates financial planning for individuals and governments. If things turn out better than expected, who will reap the gains? If things turn out worse, who will bear the cost? No one wants to bear risk, but, in most cases, someone has to. Risks in pension systems have, in the past, been poorly measured or even just ignored.

Fleksibel uttaksalder for alderspensjon ble innført i 2011. Så langt har nesten 45 prosent av de som har hatt muligheten til det, tatt ut alderspensjon før 67 år. Dette er flere enn ventet, men nesten to av tre alderspensjonister under 67 år har valgt å arbeide ved siden av pensjonen. Sysselsettingen blant eldre har dermed fortsatt å øke etter at pensjonsreformen ble gjennomført. Andelen 62–66-åringer i registrert arbeid har økt fra 39 prosent til 42 prosent fra tredje kvartal 2010 – 2012. Dette har gitt 9 000 flere sysselsatte i denne perioden.

A decade after major structural reforms, pension reform has again become a burning issue in Central and Eastern Europe. Indisputably, social security systems have played an important role in mitigating the adverse impact of the global economic crisis on the population. However, social security systems – notably pension systems – in Central and Eastern Europe are under pressure of short-term financial consolidation due to budget constraints resulting from the global economic crisis. In addition, ageing populations pose a structural challenge for their long-term financial sustainability.

The debt crisis in the Economic and Monetary Union has revealed the need in many member countries to engage in an unprecedented fiscal consolidation process, not only in the short term, but also in the long term. Therefore, the urgent need to accelerate in many cases the reforms of their pension systems with a view to ensuring the sustainability of their public finance over time has been revived.

Pension systems differ throughout the EU-27 as each system reflects in a certain way a specific institutional arrangement. Still there are some features which most of these systems contain, and similar developments can be observed as many Member States are faced with the same general challenges regarding pension sustainability and adequacy.

Over the last decade most Member States have reformed their pension systems to improve their medium and longer term sustainability as a precondition for delivering on adequacy objectives. But in the context of accelerating population ageing and the current economic crisis achieving pension policy objectives are becoming more challenging.

The trust-based schemes included in this study were typically insurer-administered, single employer schemes; although larger schemes were more likely to use multiple providers for different services like fund management, scheme administration and investment consultancy.

When social security is established to provide pensions to parents, their reliance upon children for future financial support decreases; and their need to save for retirement also falls.

This paper discusses the insights from the field of behavioral economics with a focus on the implications for the design of pension schemes.

Over the last decade most Member States have reformed their pension systems to improve their medium and longer term sustainability as a precondition for delivering on adequacy objectives. But in the context of accelerating population ageing and the current economic crisis achieving pension policy objectives are becoming more challenging. When trying to reconcile and optimise sustainability and adequacy concerns Member States face trade-offs and difficult choices. Achieving the goal of cost effective and safe delivery of adequate benefits that are sustainable is quite challenging.

The global financial and economic crisis has affected pension schemes in Europe in three major ways. Firstly, these schemes have served as one form of ‘automatic stabiliser’ – in other words, as a means of mitigating the potential social consequences of the negative state of the economy – and their use to this end is expected to increase social expenditure in many EU countries. Secondly, the worsening economic situation has entailed new challenges to the financial sustainability of social protection: growing unemployment and negative GDP growth represent a loss in revenues for welfare programmes and may thus lead to the deterioration of public budgets. Thirdly, the financial shock has dealt a severe blow to both private fully-funded schemes and public
reserve funds.

In the last two decades, pensions policy has undergone numerous innovations across Europe and the changes have been characterised by common trends. These include cost-containment measures under the public pillar; increased attention to the regulation of supplementary pension schemes; the revision of tax policy; and the introduction of new forms of governance of public and nonpublic pillars. In many European countries reforms have thus led to increased complexity of pension systems, insofar as they now typically entail parallel action of the first public pillar and supplementary pension funds.