Profiling Social Rights Public Old Age Pensions in Europe

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Profiling Social Rights Public Old Age
Pensions in Europe

• Jon Kvist
• Hans Hansen
• SFI The Danish National Centre for Social
  Research

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Who is this?

• Date of Birth 02 May 1975
• Birthplace Leytonstone, London
• Nationality English
• Height 180 cm (5ft 11in)
• Weight 67 kg (10st 8lb)
• Eyes Green
• Hair Brown
• Residence Hertfordshire and Madrid (Spain)
• Martial status Married to Victoria
• Current club Los Angeles Galaxy (US)
• Position Midfield
• Squad number 23

Source European Football Personalities
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Profiling welfare states - A summary overview of
regime characteristics
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Classic Social Policy Categorisation

• Personal scope of application
• Allocation criteria
• Benefit formulae

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First two filters not new

• Personal scope of application
• Population
• Wage earners
• Self-employed
• Other groups

• Allocation criteria
• Residence
• Work record
• Contribution record
• Membership

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Third filter Benefit formulae

• Policy Design
• Flat-rate
• Earnings-related
• Means-tested
• Floors
• Ceilings
• Minimum
• Maximum

• Policy Outcome
• Minimum pension
• Maximum pension
• Net replacement rates accross income range (more
  on this later)

More advanced than conventional studies
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Other important aspects

• Personal scope of application
• Allocation criteria
• Benefit formulae
• Indexation
• Taxation
• And yet others type of insurance and
  organisation.

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Indexation
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Taxation

• Average taxation of minimum and maximum pensions
• Marginal tax rates for increasing pensions
• (Marginal effective tax rates (METRs))
• Accummulated marginal accrual rates (AMARs)

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Accummulated marginal accrual rates of net
pensions for increasing income, percentage
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Conventional operationalization of welfare state
as (in)dependent variable

• Time data
• Mile stones, but not whole institution
• Social expenditure data welfare effort
• Function of need, demography and economic
  development
• Excludes private and fiscal expenditures
• Actors intentions (efforts) not revealed
• ? Social rights

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Social citizenship the right aspect

• Theoretical roots T.H. Marshall, W. Korpi, G.
  Esping-Andersen
• Mostly focus on rights, e.g. Marshall (1950)
• the right to a modicum of economic welfare and
  security to the right to share the ffull in the
  social heritage and to live the life of a
  civilized being according to the standards
  prevailing in the society. The institutions most
  closely connected with it are the educational
  system and the social services.
• Typical operationalisation of social rights
• Social rights
• Access
• Generosity

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Social citizenship the obligation aspect

• Marshall pretty vague pay taxes, due military
  service and live the lives of gentlemen
• Few studies include the obligation side to
  citizenship
• Conditionality
• - Penalties and other sanctions

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Surgical Precision

• S standard pension
• 40 years of work
• Previous income at the APW level
• Single person
• FP, pensionstilskott ATP
• SCIP 2000 61,8
• Scruggs 2002 60,0
• Mix S 2002 60,0
• Old S 2000 62,6
• New S 2002 51,4

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The Issue

• Precise and complex theoretical definitions
• Single-point indicators heavily dependant on
  assumptions
• Welfare state often crudely operationalised as
  (in)dependant variabel
• We suggest profiling social rights

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Three Ideal Typical Profiles

• Robin Hood rob from the rich and give to the
  poor
• Matthew for whosoever hath, to him shall be
  given
• Quid pro quo this for that, something for
  something

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Three ideal typical profiles
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Generosity
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Private pensions, coverage and income contribution
Source Social Protection Committee (2005),
Privately Managed Pension Provision, Brussels.
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Matching profiles

• All country profiles are mixes of ideal typical
  profiles, BUT
• Danish and Dutch profiles closest to Robin Hood
• Sweden and UK are lax Robin Hoods in,
  respectively, generous and not-so generous
  versions
• Italy is closest to quid pro quo type
• And the German profile is a mix of quid pro quo
  and Matthew principles

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• In real life countries have different
  combinations of social policy objectives, that is
  different combinations of ideal type profiles on
  social rights, e.g.
• Finland has a Robin Hood profile up to the level
  of an APW and thereafter it adopts a quid pro quo
  profile

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A summary overview ofold age pension systems
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Concluding remarks

• In studies on social policy systems one must
• STACK Include all relevant schemes, fiscal
  system as well as direct benefits, private
  schemes, cash as well as non-cash benefits
• PROFILE Access profiles across incomes, labour
  market record, family types, etc.

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Questions to be solved

• NRR for single in S (new, mix and old) across
  income range?
• NRR for single in D in 2003 (Grundsicherung im
  Alter)?
• Possibility of stacking analysis, especially
• Occupational pensions in NL and DK?
• Payment for care benefits?