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      The Binary Path of Risks in Pension Systems and Political Pressure

      Published
      research-article
      * ,
      World Review of Political Economy
      Pluto Journals
      social security, pension, risk, minimum pension guarantee
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            Abstract

            In this paper, we offer an explanation for cyclical reforms to pension systems, based on the experience of countries in Central and Eastern Europe (CEE) over the last three decades. We conclude that in making the transition to funded pension design, governments not only transfer longevity and fiscal risks to the individual but also absorb risks transferred from the public, with each market actor transferring undiversifiable risks to the other. This pathway of hidden risks, which has not previously been discussed in the literature, stems from a public expectation that citizens will enjoy risk premiums and adequate old-age benefits, an expectation that evolves into political pressure. The outcomes of this risk path are realized in financial transfers, such as means-tested social security and minimum pension guarantees. Consequently, funded pension designs converge naturally into a new landscape paradigm of risk-sharing, with intergenerational and intragenerational components. Financial crises such as the one accompanying the recent COVID-19 pandemic foster the convergence process.

            Content

            Author and article information

            Journal
            10.13169/worlrevipoliecon
            World Review of Political Economy
            WRPE
            Pluto Journals
            2042-8928
            01 July 2021
            : 12
            : 2
            : 255-275
            Author notes
            [* ] Correspondence: Ishay Wolf ( ishay.wo@ 123456ono.ac.il )
            Article
            10.13169/worlrevipoliecon.12.2.0255
            6f7e6480-25e3-4ea9-a6a6-f0efaf899c3d
            © WORLD ASSOCIATION FOR POLITICAL ECONOMY 2021

            All content is freely available without charge to users or their institutions. Users are allowed to read, download, copy, distribute, print, search, or link to the full texts of the articles in this journal without asking prior permission of the publisher or the author. Articles published in the journal are distributed under a http://creativecommons.org/licenses/by/4.0/.

            History
            Page count
            Pages: 21
            Categories
            Articles

            Political economics
            minimum pension guarantee,risk,pension,social security

            References

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