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Special Report

ESG: The metrics jigsaw


European pension reform ‘no effect on savings’

EUROPE - European pension reforms in the 1990s had little impact on savings rates, according to a new academic study.

"This paper assesses the effectiveness of pension reforms - [which] occurred in Europe in the Nineties - in increasing saving," authors Andrea Buffa and Chiara Monticone of the Centre for Research on Pensions and Welfare Policies, CERP, state.

"In particular, we focus on the patterns of private sector savings within countries that have adopted fundamental social security reforms.

"Our results suggest that no remarkable effect emerges… our analysis argues that the European reforms did not have a sensible influence on the private savings rate." They note that the academic literature on pensions and savings has rarely focused on the effect of pension reforms.

The researchers report they did not find that reforms caused a "structural shock" in the savings trend.

The analysis led them to conclude "that European pension reforms in the Nineties had no impact on private saving: none of the countries that implemented pension reforms experienced a significant change in the trend of saving residuals after the reform".

The 14-page study - ‘Do European pension reforms improve the adequacy of savings' - looked at those countries which adopted (notional) defined contribution public systems, or started building new pre-funded private pillars, or undertook substantial parametric reforms in order to make their public systems more sustainable.

The countries covered included Austria, Belgium, Finland, France, Germany, Italy, Portugal, Spain, Sweden and the UK.

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