Three Routes to Pension Reform: Politics and Institutions in Reforming Pensions in Denmark, Finland and Sweden

Abstract

By analysing pension reforms in three Nordic countries -Denmark, Finland and Sweden -that apply different institutional solutions in their old-age security programmes, this article argues that the political processes that shaped the country-specific pension set-ups in the 1950s and 1960s had important ramifications for subsequent reform possibilities. A high degree of inertia exists not only in the institutions themselves but also in the political reform options and the ways in which pensions were reformed. The analysis shows that the 'new politics' was not new in any of the three countries. Furthermore, given the differences in the three cases, the analysis questions the nature of pension reform. The Swedish reform in the late 1990s was a 'big bang' that eliminated the old and changed everything; the Finns built on piecemeal reforms of conversion that gradually changed the whole system; and, while the Danish story appears to be one of stability and status quo, the drift of Danish policy ultimately changed the basic characteristics of the system. Although all three countries have more or less thoroughly reformed their pensions, the reform processes have differed according to both historical legacies and institutional frameworks.

Gradual retirement, financial incentives, and labour supply of older workers: Evidence from a stated preference analysis

“…We find that highly educated workers tend to retire earlier when they have the option to gradually retire, while workers who are married will retire somewhat later. 20 Table 6 further shows that workers with a high wage rank gradual retirement significantly higher, which is consistent with abundant evidence suggesting that the elasticity of weekly hours of work with respect to the wage rate is negative (Camerer 1997;Chou 2002;Fehr and Götte 2007 19 Highly educated workers may tend to retire early because they are more likely to have accumulated sufficient pension wealth. Our data, however, do not allow us to control for workers' wealth.…”

“…Our data, however, do not allow us to control for workers' wealth. 20 As a robustness check, we also estimated a multinomial logit model to account for non-linearity and found similar results.…”

“…Most industrialized countries have therefore already started to implement major pension reforms aimed at increasing the labour supply of older workers. These reforms include, among others, decreases in the generosity of pension benefits and increases in the eligibility age for early and statutory retirement (Gruber and Wise 1998;Duval 2005;Mastrobuoni 2009;Kangas et al 2010;Börsch-Supan 2012;Staubli and Zweimüller 2013). In addition, in several countries gradual retirement schemes have been introduced, whereby workers do not end their career abruptly but rather in a stepwise fashion (Reday-Mulvey 2000;Warren 2015).…”

Shifting responsibilities in Western European pension systems: What future for social models?

“…Since the 1990s, different versions of multi-pillar pensions developed in the three Nordic countries (Kangas et al, 2010), breaking with the social democratic universalist basic pension model (which included guaranteed pension supplements). Denmark's basic pension was raised and supplemented by negotiated occupational pensions in the 1990s.…”

Youth Unemployment, Ageing and Regional Welfare: The Regional Labour Market Policy Response to Ageing in Sweden

“…The Lisbon Strategy aimed at full employment and the strengthening of social cohesion by 2010 (european Commission 2004a, b)� Since then, specific targets have been defined on overall employment rates (70%), employment rates of women (60%) and employment rates of older workers (50%) (european Commission 2005)� inevitably the Lisbon Strategy failed to reach its ambiguous targets because it did not have any clear instruments to reach the targets (Cantillon, 2010)� its successor, the Europe 2020 Strategy, targets to achieve an employment rate of 75% by 2020 (european Commission, 2010a)� in order to meet these challenges, the eu has to raise employment rates especially for women, young and older workers by focusing on four key priorities (european Commission, 2010b)� Some of the prioritised issues are to avoid early exits from the labour market and promote older labour to learn new skills� The nordic Cooperation Programme on Labour Market andWorking Environment 2005-2008 aimed at increasing female and older people's employment rates in order to reduce the outflow from labour markets (nordisk Ministerråd, 2005)� The programme did not reach its goals� despite this programme, the nordic countries have not included matching instruments or approaches in respect of current and future challenges in the labour market (rauhut and Kahila, 2008)� The present programme, Nordic Cooperation on Working Life 2009-2012, focuses on advancing employment, labour market policy, the working environment and labour law to favour women and older persons (nordisk Ministerråd, 2008)� The present order should be protected in this programme instead of promoting adjustment (Kahila and rauhut, 2009)� Sweden has a long tradition of active labour market policies which have been implemented side by side with the development of the welfare state (junestav, 2007)� it however lacks a comprehensive strategy to advance the labour market situation of ageing people, and the policies have thus far developed almost solely in relation to the different incentives related to welfare services (Kangas et al�, 2010)� The policies have targeted the general development of the labour market and upgrading skills across the labour force in order to achieve full employment in the country� a number of important steps have been taken in relation to improving the labour market participation of older workers (Finansdepartementet, 2007)� These incentives should however be reinforced and targeted on the demand side in the labour market (oeCd, 2003b)� Several reforms have taken place over the last ten years in the Swedish labour market� reforms have abandoned vocational training and subsidised programmes so that unemployed will have more personal responsibility in terms of finding a new job� also, they now have to face a number of new 'activation requirements' in return for receiving income support from the state (Köhler et al�, 2008)� The present labour market policy targets two specific groups: (1) long-term sick who have been transferred from the sickness insurance and are denied further benefits from the sickness insurance and (2) newly arrived immigrants who need to be introduced at the Swedish labour market; unemployed young adults are not prioritised� The only programme for them is 'jobbgrantin'� 3 Furthermore, the programmes to improve employability are either national or local (arbetsförmedlingen, 2011)� The programmes to improve employability f...…”