The impact of the new public and private pension settlements in Britain and Germany on citizens’ income in old age

Paul Bridgen and Traute Meyer

in Converging Worlds of Welfare?

Published in print May 2011 | ISBN: 9780199584499
Published online September 2011 | e-ISBN: 9780191728792 | DOI:

Series: Creating Sustainable Growth In Europe

The impact of the new public and private pension settlements in Britain and Germany on citizens’ income in old age

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This chapter uses policy simulation to illustrate the scale and nature of the institutional changes made to the German and British pension systems by reforms undertaken in the first decade of the new century. The projected outcomes of the new systems for a range of hypothetical biographies in both countries are compared with those of the systems they replaced. The chapter argues that the results of these simulations are consistent neither with the predictions of the globalization thesis nor regime theory. There is no evidence of institutional convergence on the basis of a ‘race to the bottom’, but neither have the two systems remained constrained by regime logic. In fact, Britain’s reform is strongly social democratic in orientation, with Germany’s strongly liberal. In the short term these developments might generate some convergence of pension levels as German citizens spend more of their working life under the new, less generous state system while Britain’s gradually gain the benefits of recent reforms. However, when analysis focuses purely on the nature of current public/private pension institutions as revealed by their projected outcomes, the German system is shown to be more consistent with an ideal typical liberal regime than Britain’s.

Keywords: pension policy simulation; model biographies; public pensions; private pensions; policy outcomes

Chapter.  12012 words.  Illustrated.

Subjects: Economic Development and Growth

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