chapter
31 Pages

II5 NDC -

A Magic All-European Pension Reform and Coordination Formula?

Robert Holzmann has provided an interesting and innovative approach to rapid and comprehensive pension reform in Europe (Holzmann and Palmer, 2006: 225-65). He shifts the debate beyond the conventional focus on fiscal affordability at national level, towards broader economic and social adjustment needs. And he proposes NDC as an “ideal” approach, not just for dealing with a great variety of reform require­ ments but also for inducing pension harmonization across Europe, while allowing for continuous country-specific preferences “to lead to a political reform movement” towards NDC. This is a strong claim and he puts forward powerful and sophisticated arguments in favour of it, some (but not all) that I find convincing. The rationale for much wider domestic reform needs throughout Europe, as well as for a move toward a more coordinated “Pan-European” pension reform, is more persuasive than the proposals for its potential structure and transition strategy. While I share the central claim of the contribution (which is new and sound), on occasion I start from differ­ ent working hypotheses and arrive at different policy conclusions, as in the case of atypical employment. At times, additional or other empirical evidence is suggested to strengthen the points, as with highlighting pension barriers to mobility between the public and private sectors. While NDC may be generally close to an “ideal” pension framework, it remains to be explored whether the “ideal” NDC as proposed in the Holzmann design is truly “ideal” . Partly, parameters are not yet fully specified, partly risk reinforcement may be more probable than the risk diversification claimed by the Holzmann design of combining pillars. Furthermore, the guaranteed minimum social pension should rather not be conceptualized as a “zero pillar” . Crucial dimensions such as disability pensions may be missed. One could rather underline the primacy of the political - not just the economic - desirability, feasibility and sustainability of NDC. And finally one would stress some of its underestimated comparative ad­ vantages, such as its functions as a fairness standard, an anti-corruption device, a core component of any pension constitution and a differentiation of welfare trigger, as well as its superior risk management (Gora and Palmer, 2003).