Pensions after the financial and economic crisis: a comparative analysis of recent reforms in Europe

This paper has two main aims. First, it assesses the initial impact of the financial and economic crisis. In relation to first-pillar pension schemes, short-term effects have been limited. PAYG (Pay-as-you-go) schemes are largely immune from short-term financial crisis, although reserve funds have suffered losses.1 Yet the long-term effects on first-pillar schemes may be also important and require further adjustments if their financial viability is to be secured. As for second- and third-pillar schemes, fully-funded schemes have experienced more direct effects since investment losses and negative rates of return have been massive, while interest rates have been low. Pension funds suffered from these trends (but subsequently started to recover). Secondly, the paper compares the reforms introduced in four different European countries: France and Sweden, representing social insurance pension systems (first and second-generation), and the UK and Poland which are representative of multi-pillar pension systems (first- and second-generation). All the countries under scrutiny have been affected by the financial and economic crisis (albeit with some differences in the magnitude of economic recession and budgetary strain) and have, in its wake, introduced new legislative measures.