British Academy: The UK's National Academy for the Humanities and Social Sciences
Why has it all gone wrong? The past, present and future of British pensions
Abstract
Perspectives on Pensions in Central and Eastern Europe
Dr Katharina Müller (German Development Institute, Bonn, Germany)
In Central and Eastern Europe, the process of economic transformation put great strain on the existing retirement systems. In spite of a common legacy, the paradigm choices made in post-socialist pension reform reflect considerable diversity, including parametric reforms of the existing public schemes, the introduction of notional defined contribution schemes, and the establishment of fully funded schemes on a voluntary or mandatory basis. The number of transition countries that have introduced far-reaching reforms is significant, when compared with the difficulties facing more modest pension reform attempts in Western Europe. However, a closer look reveals that by embarking on radical reform, the transition countries did not necessarily tackle the most pressing issues facing their pre-reform pension schemes. The move from a universalist-redistributive heritage to strongly differentiated, earnings-related benefits translates into widening differences in level and scope of old-age protection, while plummeting formal employment results in sharply decreasing coverage ratios.