ABSTRACT

This chapter looks at reform activities of a group of European countries where hitherto earnings-related public schemes played a predominant role in pension provision. It analyses the effects of the financial market crisis on future and current retirees. Peter Taylor-Gooby has argued that trust is a major ingredient for the smooth functioning of welfare markets. The chapter observes an extension of the retirement income system in a number of Bismarck countries via the addition of new, fully funded components while, at the same time, there is a relative decline of PAYG financed public pensions. The Bismarck approach is characterized by a public contributory social insurance scheme being the central pillar for providing earnings replacement in old age. The chapter investigates some consequences of the redirection of pension policy that shift the weight of public and private components in old age security. Pension funds in OECD countries, on average, lost almost one quarter of their assets in 2008.