Sovereign Debt Crisis and Pension Reforms in European Countries

The „Great Recession“ and sovereign debt crises in several EU countries in the wake of the 2008 financial market crisis have triggered drastic reforms of old-age security systems. They aim at ensuring the financial viability of public pension schemes in the short and long run and/or at realizing notions of intergenerational fairness. Most urgent, however, was regaining room for fiscal manoeuvre and obtaining financial aid from supranational organizations (IMF, EU). These pension reforms differ from previous changes with regard to the magnitude and the political process. (1) They were large, causing a substantial and immediate impact on the on the living conditions of present and future retirees and, sometimes, changed the hitherto pursued policy direction. (2) The post-2008 reforms passed swiftly the legislative process and are implemented with a short time lag. Hence, they can be considered as “rapid policy changes”. The paper analyses pension reforms in eight crisis-shaken EU countries: Greece, Hungary, Ireland, Italy, Latvia, Portugal, Romania, and Spain. It looks into the reform contents and the circumstances which led to the respective changes or facilitated them. It is shown that the challenges these countries were (or still are) confronted with allowed or enforced alterations which would not have been feasible otherwise or which would not have been initiated by the respective governments in view of the political consequences. Moreover, cross-national comparison reveals similarities and differences and also sheds light on the social consequences that are already visible today.