The Political Economy of Pension Reform
Edited by Martin Rein and Winfried Schmähl
Chapter 9: How Societies Mix Public and Private Spheres in their Pension Systems
9. How societies mix public and private spheres in their pension systems Martin Rein and John Turner Most countries with occupational pension systems have developed policies designed to increase the percentage of workers taking part in the systems. Countries with well-developed pension systems have a considerable variety of pension policies to do this. While some countries rely on voluntary provision by employers with tax incentives for motivation, other countries have mandated that employers provide occupational pensions, and still other countries have widespread pension coverage through collective bargaining because of the pervasive role of labour unions in their economies. In some countries, pensions are provided in addition to social security, while in a few countries pensions can be an alternative to social security. In some countries, pensions are primarily provided by employers, while in others pensions are primarily oﬀered in the form of individual accounts provided through ﬁnancial institutions, with the employer only providing payroll withholding. In this chapter, we categorize and analyse the pension policies around the world in countries with well-developed pension systems. We consider both employer-provided pension plans and individual account plans. PATHWAYS AND PLANS We categorize the wide variety of policies around the world as four pathways to increase pension coverage. Those pathways are voluntary provision with tax incentives, contracted out, widespread labour contracts, and mandatory (see Table 9.1). These pathways range from unrestrained choice, to a choice between a government provided pension and a private sector pension, to mandatory provision determined by collective bargaining between...
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