Privileging Policy Change? Sustaining Automatic Stabilizing Mechanisms in Public Pensions

In: Social policy and administration, Band 50, Heft 2, S. 148-164

Abstract

AbstractAutomatic stabilizing mechanisms (ASMs) in pension systems change the policy default so that benefits or contributions adjust automatically to adverse demographic and economic conditions without direct intervention by politicians. This is politically attractive to politicians because it facilitates blame avoiding. But it only works if politicians can refrain from ad hoc interventions when an ASM is triggered. Evidence from Canada, Sweden and Germany suggests a mixed record about their sustainability. Politicians may seek to evade or manipulate the trigger mechanism to avoid blame. A cartel of major parties that insulates pension policy‐making from electoral competition can help to sustain ASMs.