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Profiling Social Rights – Public Old Age Pensions in Europe

Profiling Social Rights – Public Old Age Pensions in Europe. Jon Kvist Hans Hansen SFI – The Danish National Centre for Social Research. Who is this?. Date of Birth: 02 May 1975 Birthplace: Leytonstone, London Nationality: English Height: 180 cm (5ft 11in) Weight: 67 kg (10st 8lb)

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Profiling Social Rights – Public Old Age Pensions in Europe

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  1. Profiling Social Rights – Public Old Age Pensions in Europe Jon Kvist Hans Hansen SFI – The Danish National Centre for Social Research

  2. 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

  3. Profiling welfare states - A summary overview of regime characteristics

  4. Classic Social Policy Categorisation • Personal scope of application • Allocation criteria • Benefit formulae

  5. Personal scope of application: Population Wage earners Self-employed Other groups Allocation criteria: Residence Work record Contribution record Membership First two filters – not new

  6. 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) Third filter: Benefit formulae More advanced than conventional studies

  7. Other important aspects • Personal scope of application • Allocation criteria • Benefit formulae • Indexation • Taxation • And yet others: type of insurance and organisation.

  8. Indexation

  9. Taxation • Average taxation of minimum and maximum pensions • Marginal tax rates for increasing pensions • (Marginal effective tax rates (METR’s)) • Accummulated marginal accrual rates (AMAR’s)

  10. Accummulated marginal accrual rates of net pensions for increasing income, percentage

  11. 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

  12. 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

  13. 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

  14. 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

  15. 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

  16. 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

  17. Three ideal typical profiles

  18. Generosity

  19. Private pensions, coverage and income contribution Source: Social Protection Committee (2005), Privately Managed Pension Provision, Brussels.

  20. 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

  21. 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

  22. A summary overview ofold age pension systems

  23. 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.

  24. 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?

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