Pensions: Arresting a Race to the Bottom
Pensions: Arresting a Race to the Bottom
This chapter argues that reforming pensions can provide only partial fixes. It sheds light on why Greek pensions present special difficulties and maintains that reforms since 2010 have not disposed of pension problems, but in some respects seem to have made them worse. As such, this chapter outlines a reform that brings in elements of prefunding as well as providers other than the state. It sketches an explicit multipillar pension system, similar to that introduced in many European countries, which can establish a stronger link between contributions and pensions. Finally, this chapter deals with the transition period, which is thought to be the Achilles' heel of pension reform because of the “double payment contention,” and proposes a solution to the transition problem that spreads the costs of transition across all future generations.
Keywords: pensions, pension reform, transition problems, pensions problems, multipillar pension system, Greek pensions
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