Pension pol icies are, to a large extent, the result of generational pol itics, which Hugh Heclo has defined as the ‘polit ical pro spects for sharing burdens across age groups and generations’ (Heclo 1988: 391). Almost all pub lic pension sys­ tems rest on a social contract between generations.2 In social insurance pension sys tems, which rely prim arily on the pay­ as­you­ go method of financing, the working generation is respons ible for sup porting the retired generation. Each month, em ployees’ pension insurance con tri bu tions are used for paying the pension bene fits of current retirees. In return, em ployees earn an enti tle ment to future bene fits which will be paid for by the next working generation. Pensioners used to finance earl ier cohorts of pensioners when they themselves were working. Even though tax­ financed pension sys tems do not have earmarked con­ tri bu tions and earned pension rights, they also rest on an implicit intergenera­ tional contract. Fair intergenerational burden­ sharing is an im port ant issue in the reform of pension sys tems in the twenty­ first century. Because of rapid popu la tion ageing, the burden of financing pensions for present and future generations is much bigger than it was 50 years ago. This creates difficult polit ical choices for policy­ makers and cit izens alike (Musgrave 1986; Myles 2002). Should retirees’ pen­ sions be cut so that workers do not have to pay higher con tri bu tions? Or should con tri bu tions of workers be increased so that retirees across all generations receive sim ilar pension bene fits? Or should the retirement age be raised so that both bene fit cuts and con tri bu tion increases could be avoided? Pension pol icy choices that redistribute the fiscal burden of popu la tion ageing across genera­ tions raise not only the question of how to design effect ive pol icies for improv­ ing intergenerational fairness but also the question of whether these pol icies are polit ically feasible (Scharpf 2000): under which con ditions are gov ern ments able to choose effect ive pol icies for intergenerational burden­ sharing in pension sys­ tems and enact pension legis la tion that improves fairness across generations? What are the common features of generational pol itics in the reform of pension systems? To examine these generational issues in the pol itics of pensions (Bonoli 2000; Ebbinghaus 2006; Immergut et al. 2007; Schludi 2005; Tepe and Vanhuysse 2009; Weaver 2004; Vanhuysse 2001, 2006), this chapter focuses on a highly

rel ev ant reform area: increases of the statutory retirement age. As Gøsta Esping­ Andersen and John Myles (2006: 853) have argued, retirement age reforms are ‘one logical ingredient’ in pension reforms that improve fairness across genera­ tions in the light of increasing life expectancy. An age increase is a solution for both fiscal and generational prob lems stemming from popu la tion ageing. Alter­ natively, if em ployees wanted to receive the same level of bene fits over a longer period of time, they would need to either pay higher con tri bu tions during their career or retire a few years later; and if they wanted to avoid shifting the cost of rising life expectancy to their chil dren, they would need to accept either lower bene fits or a higher retirement age. I ana lyze the 2007 pension reforms in the UK and Ger many, which increased the retirement age in pub lic pension programs from 65 to 68 years and from 65 to 67 years, respectively (on German reforms, see also Sciubba in this volume). The increase of the statutory retirement age by two or more years was a major departure from long­ standing pol icies: the age of 65 years-origin ally intro­ duced in Ger many in 1919 and in the UK in 1926-had not been changed between the 1920s and 2006. During the same period, life expectancy at 65 increased from 777.2 to 83.2 years in the UK (see also Table 1.1 in Goerres and Vanhuysse in this volume).3 The retirement age increase was also a major in nova tion in the advanced industrialized world. Together with the United States, which took the lead in 1983, the UK and Ger many were the first group of coun­ tries in the OECD to increase the statutory retirement age from 65 to 67 or more years.4 In 2009 and 2010, which was only a few years after these coun tries had made this change, retirement age increases from 65 to 67 years were enacted in Australia and France (see Table 4.1) and were proposed in Ireland, the Neth er­ lands, and Spain. The sim ilar ity of the reform outcomes in the UK and Ger many is surprising because they are very different coun tries (see Table 4.1 also for reform charac­ ter istics of selected other coun tries): the former has a majoritarian demo cracy, a lib eral wel fare state, and pluralist state-soci ety relations; the latter has a consen­ sus demo cracy, a con ser vat ive wel fare state, and cor porat ist state-soci ety rela­ tions (Esping­ Andersen 1990; Lijphart 1984). In addition, they were facing different pol icy challenges in the 2000s: the UK’s level of pension spending of less than 7 percent of GDP was low and the mean pension level increasingly in ad equate, while Ger many’s level of more than 11 percent was high and unsus­ tain able in the face of popu la tion ageing (Euro pean Commission and Euro pean Council 2006: 92). They also had different oppor tun ities for changing the retire­ ment age: the UK’s employment rate of older workers was well above the OECD average and the EU employment target of 50 percent, while Ger many’s was only about 40 percent and thus signi fic antly below these meas ures (Euro pean Com­ mission and Euro pean Council 2006: 84-5). Thus, by comparing crucial simil ar­ ities between other wise dissim ilar coun tries (Przeworski and Teune 1970: 183-4), one can identi fy rel ev ant con ditions for the successful adoption of a retirement age increase and, more gen erally, discover common features of gen­ erational pol itics in retirement age reforms. To conclude, a comparative ana lysis

of the UK and Ger many, two inter na tional leaders in retirement age reforms, allows one to draw lessons for advanced industrialized coun tries that are facing sim ilar challenges-increasing life expectancy, growing fiscal constraints, and increasingly in ad equate pensions-and are con sidering an increase of the retire­ ment age either on their own initiative or in response to re com mendations from inter na tional organ iza tions such as the OECD and the EU (OECD 2006; Euro­ pean Commission and Euro pean Council 2006). I argue that one can identi fy three common con ditions for successful inter­ generational burden­ sharing in the face of growing life expectancy: (1) an expert commission that is concerned with intergenerational fairness and re com mends a retirement age increase; (2) a gov ern ment that is committed to both fiscal sustain abil ity and pov erty pre ven tion; and (3) a grand pension reform co ali tion that uses classic blame­ avoiding strat egies. More specifically, I de velop three arguments re gard ing the generational pol itics of retirement age reforms: The first one is that inde pend ent expert commissions, which de veloped re com mendations for the German and British pension reforms of 2007, were the key actors in placing a retirement age increase on the polit ical agenda: they created a shared understanding of the challenges of sustain abil ity and adequacy, brought the con­ sequences of rising life expectancy to policy makers’ attention, and showed that an increase in the retirement age was neces sary for achieving sus tain able finances, adequate pensions, and intergenerational fairness.5 If the expert com­ missions had not re com mended a retirement age increase, the British and German gov ern ments would likely not have con sidered it. They would have likely made second­ best choices-large rev enue increases balanced with more bene fit cuts-and thus failed to achieve either sus tain able finances or adequate pensions, or both. Expert commissions can play an im port ant role in the pol itics of pension reform (Kingson 1984; Marier 2008, 2009). Even though expert com­ missions are created by gov ern ments, they are not always used as a tool for binding the gov ern ment’s own hands (Dyson 2005); as the British and German cases show, they can be partially inde pend ent polit ical actors that de velop and promote new, effect ive, and accept able solutions for difficult pol icy prob lems (Hills 2006; Tiemann and Rürup 2006). It is likely that inde pend ent expert com­ mission will play an increasingly im port ant role in de veloping difficult but un avoid able pol icies in times of signi fic ant demographic change. The second argument is that in the mid­ 2000s British and German gov ern­ ments had no al tern ative to raising the retirement age, if they wanted to solve their two pri mary prob lems: the containment of rising pension spending and the pre ven tion of rising old­ age pov erty. Large rev enue increases would have threat­ ened fiscal sustain abil ity, and further bene fit cuts would have led to the resur­ gence of pov erty in old age, which was quite high in the UK with 26 percent of the 65+ having 60 percent or less of the national median income at their disposal and which grew fast in Ger many from 10 percent in 2000 to 16.2 percent in 2007 (Eurostat 2011; Euro pean Commission and Euro pean Council 2006: 54).6 Governments were still able to escape this dilemma up until the mid­ 1990s, but had-in the first decade of the 2000s-reached a polit ical limit to adjusting

rev enues upward and bene fits downward (Hering 2008a). If an effect ive al tern ative to raising the retirement age had existed, gov ern ments would likely not have been willing to make this unpop ular de cision. Thus, the sequence of pension reforms, and the constraints it created, clearly shaped gov ern mental de cisions (Bonoli and Palier 2007; Myles and Pierson 2001). The third argument is that the British and German gov ern ments were success­ ful in legislating a retirement age because they were able to reduce blame: the major competitors for office-the Labour and Conservative par ties in the UK, and the Social Democratic and Chris tian Democratic par ties in Ger manyformed a grand co ali tion for pension reform and employed many classic policy­ design strat egies for re du cing elect oral mobil iza tion against, and blame for, this unpop ular pol icy change (Weaver 2003; Pierson 1994; Hering 2008b; Kitschelt 2001; see also Tepe and Vanhuysse in this volume on the polit ical timing of ‘pension pain’). If the British and German gov ern ments had not been successful in forming a grand co ali tion and employing other blame­ avoiding strat egies, they would likely not have been able to increase the retirement age. They would have either aban doned their plan because of strong opposi tion or been pun ished in the next election. To conclude, all three factors-expert commissions, limited adjustment options, and blame­ avoiding strat egies-con trib uted to the success­ ful enactment of controversial retirement age increases in Ger many and Britain. The retirement age reforms in Ger many and the UK show that fiscal austerity and blame­ avoidance (Pierson 1996; Weaver 2003) still play a central role in pension pol itics but that other im port ant concerns compete with them (Weaver 2004). Specifically, pension pol itics in the twenty­ first century are concerned with the maintenance and restoration of one of the core functions of pub lic pension programs-the pre ven tion of old­ age pov erty-and, increasingly, with the fair distribution of the effects of rising life expectancy across generations (Chomik and Whitehouse 2010; Whitehouse 2007). Moreover, the German and British reforms show that inde pend ent expert commissions play an im port ant role in the generational pol itics of pensions. Commissions can de velop fair and accept able solutions for dis trib uting the costs of popu la tion ageing across both cohorts and age groups, and thus reduce the risk of ‘a more conflictual pol itics of burden sharing between the elderly and the working aged’ (Heclo 1988: 401) which could lead to a weakening of the intergenerational contract upon which pension sys tems rest. The German and British cases also challenge existing argu­ ments. Most im port antly, since German and British gov ern ments successfully adopted very sim ilar-and polit ically difficult-pension pol icy changes despite their coun tries’ very different polit ical institutions, pol icy legacies, and pol icy challenges, these cases raise questions for institutional and path­ dependence approaches (Bonoli 2000; Myles and Pierson 2001): why did large dif fer ences both in the concentration of polit ical power and in the size and maturity of pay­ as­you­ go pension sys tems not lead to different outcomes? This chapter is divided into three sections. The first section ana lyzes the crucial role of expert commissions in proposing a retirement age increase. The second one examines the pol icy constraints and pref er ences that led gov ern ments

to raise the retirement age. The third one studies the blame­ avoiding strat egies that made retirement age increases polit ically feasible. The conclusion discusses the im plica tions of this comparative case ana lysis for theories of pension politics.