Autumn 2014 Issue of Economic and Social Review

Vol 45, No 3, Autumn (2014)

Table of Contents


Determinants of Pension Coverage and Retirement Income Replacement Rates – Evidence from TILDA PDF
Sanna Nivakoski 299–328
Income and Wealth in The Irish Longitudinal Study on Ageing PDF
Vincent O’Sullivan, Brian Nolan, Alan Barrett, Cara Dooley 329–348
Informational Efficiency in Distressed Markets: The Case of European Corporate Bonds PDF
Aurelio Fernández Bariviera, M. Belén Guercio, Lisana B. Martinez 349–369
The Socio-economic Gradient of Obesity in Ireland – Corrigendum PDF
David Madden 451–454

Policy Section Articles

The Risks of Intuition: Size, Costs and Economies of Scale in Local Government PDF
Mark Callinan, Ronan Murphy, Aodh Quinlivan 371–403
Winners and Losers on the Roller-Coaster: Ireland, 2003-2011 PDF
David Madden 405–421
The Impact of Training Programme Type and Duration on the Employment Chances of the Unemployed in Ireland PDF
Seamus McGuinness, Philip J. O’Connell, Elish Kelly 425–450


52 replies on “Autumn 2014 Issue of Economic and Social Review”

Nothing to do with the ESR but perhaps of interest to some, the Frankfurter Allgemeine’s ranking of the most influential economists in Germany (based on references to them by media, policymakers and researchers):

Beyond Dr Sinn, not many familiar names to the English-speaking public debate. They have a separate list of non-German-based economists, which is more a case of the usual suspects (scroll down):

It is interesting to note that the two top rated economists in Germany (Sinn and Fratzcher) are the main representatives of the opposing camps with regard to the economic policy that Germany should follow.

Battle will undoubtedly re-start shortly.

It may be noted that the concept of judicial restraint does not seem to have much weight in Germany, whether with former or acting judges of the constitutional court.

Here’s Krugman on wealth inequality and conspicuous consumption (which the proliferation of German luxury cars in Dublin suggests might be an issue here):

Here’s a chart showing who in the US benefitted from the growth in income in times of expansion:

I won’t hold my breath waiting for an Irish economist to do something similar for Ireland. That’s not where their bread is buttered. But I’d wager it’d show something similar.

re: Pension Coverage Report by Sanna Nivakoski above:

That is an excellent and comprehensive report that makes shocking reading for private sector employees who hope to live long enough to retire.

On an overall basis, Table 4 presents a fine summary of Ireland’s retired:
Of the bottom two income quartiles (50% of the retired population), about 87% of their income comes from either State Contributory, Non-Contributory or Social Welfare. In other words half the retired population is living pretty much, if living is the word, on the State pension which has a max of 230.30 per week.

In addition 49% of all male private sector employees, now retired, has no private pension coverage at all. [Table 5]

There is clearly a compelling societal case for a mandatory, employer and employee funded pension scheme for all private sector employees.

The politicians and PS, with their saver-than-houses pension provision, should be thoroughly ashamed to preside over the kind of pension apartheid that the report illustrates.

“If so, why not aim more accurately and insist that it be abolished?”

I thought I aimed rather well; on the assumption that there is actually a politician or public service policy maker that actually gives a s$it about general pension coverage, as long as they are left free to look after themselves. The facts speak for themselves on that assumption.

Abolishing the PS pension system, feather-bedded and lavish as it is at the higher and middle levels, will do nothing for the 50% of male private sector employees that have no occupational pensions.

There is a simple solution:
Over a ten year period, implement a mandatory individual pension scheme, 1/2% employee and 1/2% employer contribution= 1% per annum rising to 10% over 10 years. Hopefully the employee contributions would be offset by wage rises of 2% pa over that period.
The funds would be vested from the outset, belong to the individual, and be collected through the PAYE / Income tax system.

The above proposal would not affect the majority of export companies, that tend to be larger companies that already have pension schemes. The private sector is now recovering. It is important that the fruits of such recovery are not confined to the owners alone, but that some attempt is made to enhance the long term well being of the general workforce.

Didnt take long for the public sector to be blamed i notice. For …whatever
Its a regrettable tendancy for this blog that absent moderation EVERY thread degenerates.

@Sam Maguire

The politicians and PS are responsible for running the country, are they not?
As a lifelong private sector worker I have to wonder why no effort whatever has been made to insist on pension provision for over 75% (?) of the population that work in the private sector, while the people responsible for running the country feather-bed their own pension schemes, in addition to dumping on contract workers and new entrants within the public sector, their own fellow workers.

The numbers speak for themselves; more importantly they speak volumes for the apartheid nature of the pension system.

The people who get away Scot-free are profitable private sector companies who, down the years, despite a low PRSI contribution by European standards, have been compelled to make no provision whatever to either the education of prospective employees, or to the retirement welfare of their employees.

Wasnt there a plan to have mandatory pension coverage.? Is that now dead
And isnt there a state funded old age pension? To say private sector workers have no pension is simply wrong. They have, its the contributory or non contrib OAP. And wasnt the NPRF set up to make the public sector pension a more defined contribution process but was instead burned to save the pensions of those who invested in irish bank bonds? Has there not been a sea change in moving public sector pension coverage towards a more DC approach with a fairer charge on those in and a much changed system for those entering?
Googling “public sector pensions ireland ” i found these two links

Feel free to have a gander…

@ Sam Maguire

There is a well-documented major problem of inequity between (i) salaries and (ii) pensions of those in the permanent, pensionable employment of the state as compared with those not in the employment of the state. The problem is not unique to Ireland. Raising it cannot be equated with “blaming” the public sector. It will not go away without addressing its root causes, the major one IMHO being the often largely artificial distinction between the two sectors, a point I have made many times.

The countries – relatively few – that have overcome the problem have done so because of an exceptional effort of social cohesion; recognising that ALL workers must have the same minimum a standards of social protection; that ALL able-bodied adults must contribute and – most importantly – recognising that it is the traded private sectors of the economy that ultimately must pay the cost of pensions. Germany has IG Metall, we have the public service unions (and their own minister!).

@ Sam Maguire

I should add that the fact that many public servants are in receipt of very poor pensions – the argument invariably advanced by the unions, as in your links – is not the issue. The question is how pensions for ALL workers are funded and calculated. Workers not employed by the state cannot legitimately be expected to fund – through their taxes – without complaint the pensions of those employed by the state on a DB basis (with no sign of change in the offing) while they have either no pension provision themselves or have to fund them on a DC basis.

All workers tax goes to pay universal pensions. People who have other pensions, state or private, get rebated by that amount.

@ Sam Maguire

Of course! The defence “we pay taxes too” is also invariably heard. But that, again, is not the central issue. It is the basis on which pensions are calculated and funded across the work force. Not a simple matter but one that has to be addressed if for no other reason than the fact that the unfunded public service pension liabilities of the state are by now enormous.

One might also note the generous tax breaks to private pensions.
One might also note the unfunded nature of social welfare and state pensions, which dwarf the public sector. But one wont DOCM as one is blinkered.
Its a lovely day, time for a walk on the seashore


I have 2 links for you

a) the history of the EM and constant revaluations

b) the substantial, permanent shift of majorities in Germany and consequences

The standing of the Bundesverfassungsgericht is impeccable, in stark contrast to the criminal behavior of many institutions in other countries.


please expand on your extremely weird claim “judicial restraint does not seem to have much weight in Germany”

Leave it to DOCM to lobby (professionally) for a race to the bottom. The scandal for those he represents is not that some have inadequate pensions. It’s that anyone (other than himself and those he represents) has a pension. Cui Bono?

@Sam Maguire

It is better to look at the private sector pensions issue from the point of view of what employers are paying or as it turns out mostly not paying in retirement benefits, rather than seeing the issue purely in terms of the disparity in benefits between private and public sector employees.

I would be interested to know for example what ABP Foods (Goodman group) pay in employee pension contributions. The same goes for Denis O’Brien controlled companies and other large private sector employers.

I had a quick look at Ryanair’s accounts, and as far as I can tell (Note 18, Page 189), Ryanair contributed the princely sum of 2.6 million in 2014 to defined contribution pensions of employees. Ryanair’s total wage bill came to 441 million; so about 1/2 % of wage bill goes towards the defined contribution scheme members, the defined benefit scheme having been closed during the year. I may be misinterpreting the note but it would be interesting to know the facts of the situation.

So in effect the State is allowing very profitable companies, with so-called high powered executives, to blow about their success and trouser the profits, while the majority of their employees will have to depend pretty much fully on the State to support them in retirement.

Not a very good deal for the State or the employees involved.

We need the blow-h$oles in such private sector companies to stop blowing and start paying.

@ Sam Maguire

The problem of understanding between us is that I do not accept the premise that there is an immutable relationship between the “public” and the “private” sector or that there need by any necessary conflict between them. However, it is so ingrained in Ireland as to be in practice a major drag on any attempts at change. (In some countries with which I am familiar, the distinction is nowhere near as big and there is ready movement by staff between the two because they share common basic employment and pension provisions. The use of the blunt instrument of staff embargoes and salary and pension cuts without a radical examination of fundamental questions relating to the purpose and functioning of all areas of state activity is an admission of failure).

I do not often find myself in agreement with Fintan O’Toole but this contribution some time ago struck a chord.

“From the civil service to the media, from politics to the arts establishment, you find demographic landscapes that have been largely frozen for the last six years. The thinning ranks of the young have been unable to mount any sustained challenge to the self-serving orthodoxies of their elders. Which would be fine if the place they leave could afford the consequent culture of stasis and complacency.”

Issues relating to the public sector come up constantly on this blog not because those raising it are inimical to the latter, but because its cost and how it is managed is central to any economic, social and cultural revival of the country. The best hope is the fact that the “elders” in question must gradually leave the stage. In the meantime, their juniors will have to put up with the discriminatory changes in salary and pension entitlements that enable them to do so.

P.S. The answer to over generous tax breaks is to remove them, wherever they apply

@ francis


From the Encyclopedia Britannica

“Judicial restraint, a procedural or substantive approach to the exercise of judicial review. As a procedural doctrine, the principle of restraint urges judges to refrain from deciding legal issues, and especially constitutional ones, unless the decision is necessary to the resolution of a concrete dispute between adverse parties. As a substantive one, it urges judges considering constitutional questions to grant substantial deference to the views of the elected branches and invalidate their actions only when constitutional limits have clearly been violated.”

I am sure the judges of your constitutional court are a fine body of men and women. However, to say that they do not subscribe much to the above legal doctrine is simply a statement of fact.


your mere recitation of an english encyclopedia doesn’t provide the slightest hint, where the actions of Bundesverfassungsgericht might have been even in the slightest way less then completely perfect.

This kind of nebulous postings seem to become your habit.

Again, please be specific : – )

@ francis

By all means!

Dissenting opinion of Judge Gerhardt in relation to the first – procedural – aspect;

“I hold that the constitutional complaints and the application in the
Organstreit proceedings, in so far as they relate to the OMT Decision,
are inadmissible. The Senate’s decision extends the possibilities of the
individual to initiate via Art. 38 sec. 1 GG – without connection to a
substantive fundamental right – a review of the acts of Union
institutions by the Constitutional Court. By admitting such an ultra
vires review, the door is opened to a general right to have the laws
enforced (allgemeiner Gesetzesvollziehungsanspruch), which the Basic Law
does not contain.”

Dissenting opinion by Judge Lubbe-Wolff on the second – substantive – aspect.

“In an effort to secure the rule of law, a court may happen to exceed
judicial competence. In my view, this has occurred here. The motions
should have been rejected as inadmissible. How Bundestag and Federal
Government are to react to a violation, martial or non-martial, of
German sovereign rights is a question that cannot reasonably be answered
by rules making certain predetermined positive actions mandatory.
Selecting from the variety of possible reactions, which range from
expressions of disapproval to an exit from the Monetary Union, can only
be a matter of political discretion. Accordingly, it comes as no
surprise that no such rules are detectable either in the text of the
Constitution or in the case-law interpreting it.”

In normal circumstances, what a national constitutional court decides is solely of concern to the citizens of the country in question. Not so in this instance!


soo, where is your problem?

A clear 6:2 decision, with 1 guy having a slightly deviating opinion in one minor aspect and another in different aspect with respect to what the vast majority sees as minor aspects.

5:4 decisions happen in the US Supreme Court all the time (wiki “16 decisions were made by a 5–4 vote (about 20%, compared to 18% in the October 2009 term, and 29% in the October 2008 term”). Objection noted and overruled.

What do you expect? Unaminousity? Should we stuff our courts with yesmen?

We will see in 2 weeks what the ECJ says on OMT,

what the ultimate “master of the treaties”, the German supreme court rules on that for Germany

and what more funny ideas people come up with trying to break the “no-bail-out” treaty, and only then what to do about it.

Back to Irish stuff:


a) Is that article tongue in cheek, or is that genuinely going to be the way this is to be spun?

b) Is anyone going to bother to refer back to things like the initial ‘value’ of the ‘deal’?

c) Has everyone nodded off, or is this just normal service being resumed after a bit of an interruption connected with banks, or German nerds, or something…?

@ francis

I would like to think that the majority view is always correct. However, in the matter of decisions by final courts of appeal, the record tends to prove the opposite as was the case with an unfortunate majority decision known as the Crotty judgement (1986) in Ireland. This made referendums almost de rigeur on all matters relating to changes in EU treaties. I hope that the constitutional court in Germany does not end up making a similar error. I doubt that it will!

@ Ufc

Where is the mystery? The ECB could evidently be only brought over the line on converting the PNs to bonds with difficulty. Cutting a deal on repaying early the IMF with the assent of the ECB evidently requires that the sale of these bonds be accelerated to help remove any suggestion of “monetary financing”.

Draghi made the link in reply to a query at his most recent press conference.

cf. exchanges above with francis above on the related issue of OMT.

@ All


Marian Finucane grills Olli Rehn! (Item on Brian Lenihan).


What do you mean “where is the mystery?” ?

What “mystery”?

You have been hanging around this blog long enough to be able to understand that the presentation in the IT article is misleading. Why bother to spin this – selling these bonds beyond the minimum schedule is something the Irish CB and government did not want to have to do. The article presents it as a beneficial achievement.

Why not just be straight about it and say it is an unavoidable consequence of the return of financial stability?

a) Is that article tongue in cheek, or is that genuinely going to be the way this is to be spun?

b) Is anyone going to bother to refer back to things like the initial ‘value’ of the ‘deal’?

c) Has everyone nodded off, or is this just normal service being resumed after a bit of an interruption connected with banks, or German nerds, or something…?

@ Ufc

My apologies! The question was innocently meant.

My point is that the link made between the two issues by the ECB is fairly evident although, admittedly, the IT article only hints at it. That the sale of the bonds can actually be accelerated given present market conditions is surely good news.

It is not, however, IMHO an unavoidable consequence of the return of financial stability but of the ECB guarding its flanks.

This quote sums up present reality in the EU/EZ.
“The truth is that the attitude of Euro area policymakers, and indeed of many northern Europeans, to periphery countries owes little to common sense, or even good economics, and much to moral and ideological belief in hard money, tight budgets and mercantilism as the path to prosperity. When macroeconomics becomes a morality play, debt is equated with sin, and debtors must atone for their crime with hair shirts and self-flagellation. The Glienicke group’s call for creditors to be held responsible for excessive lending inevitably falls on deaf ears.”

@UFC /Sam Maguire

“Is that article tongue in cheek, or is that genuinely going to be the way this is to be spun?”

Karl Whelan calls it as it is, bad news.

“In fact, things are so great now that even unmitigatedly bad news is presented as good news.”

We are being rolled over by the ECB again. The ECB is now blackmailing Ireland by not allowing Ireland to save money by paying back expensive IMF loans, unless we do what the ECB dictates (again); regardless of whatever arrangements were made on Angle replacement bond.
[Arrangement trumpeted by FG as a huge success at the time]

Can the govt not reissue the bonds at today’s rates, thereby foregoing any immediate gain, but locking in a potential future interest rate saving (even though there may be a future capital on bond sale, it seems worth the risk). Or would the ECB attempt stop any such sale/ reissue, even though the bonds are Irish bonds and Irish govt owned?

To paraphrase the late Jim Kemmy (in the Dail) referring to Willie O’Dea at the time, Minister Noonan seems to be roaring like Mighty Mouse when in the Dail, but when he goes to the ECB, all he can do is squeal like Mickey Mouse.

@ JR

I am no expert with regard to the trade in government IOUs (aka bonds), but is not Karl Whelan missing the essential point viz. the arrangement between the CB and the government is clearly a circular one which cannot continue indefinitely? The fact that it can be brought to an earlier than expected end is a welcome indication that such artificial arrangements are no longer required which, in turn, is a welcome indication of the markets’ assessment of the present and future solvency of the state.

Or am I missing something?


You are missing something.

The arrangement was circular, but with a defined timetable specifying amounts and date of release of the bonds into the market, at which point the bonds become a true cost to the State.
Any early release pulls forward the point at which the interest cost is no longer circular, but becomes a net cost to the State.

Even if the bonds sell now, the immediate capital gain to be received on the par value, (due to the better interest they pay), will be offset by a higher interest cost that the State will pay on these bonds, versus what the State would currently pay on the ‘open’ market.

It would be another example of taking the gain now, and leaving a higher cost the next generation; pretty typical of Irish policy from the outset (2002) of the crisis.

The Ir Times did itself no credit with the way it reported the proposal.

@ JR

I am fully aware of that. I am simply setting the balance of advantage between

(i) continuing a clearly artificial arrangement dictated by the country’s incapacity to fund the bail-out of the bank in question, agreed with considerable reluctance by governments unwilling to make their own taxpayers pay and with doubts as to its legality against

(ii) improvement in market sentiment which prompts private investors to take on the risk (at a profit to the CB) and agreement by the same governments to allow us to take further advantage of this improvement to pay them back early (as shareholders in the IMF) and reduce the cost of the most onerous loan in the bailout package and with it, possibly, other bilateral loans.

It seems a no-brainer to me.

Alternatively we can collectively listen to radio talk-show discussion and confuse it with serious policy debate.


I would defer to Karl Whelan on this issue, because it seem to me that there several issues that you don’t wish to acknowledge here.

1. Private investors taking on the risk (at a profit to the CB).
But you forget to mention the net cost to the State!

2.”………..agreed with considerable reluctance by governments unwilling to make their own taxpayers pay and with doubts as to its legality against ”
The ECB doesn’t like the deal they dictated, firstly to keep Anglo alive at Irish expense with ELA and then a promissory note payable by the Irish State, and then the conversion of those PNs into an arrangement (presumably nodded through/’noted’) by the ECB, in order to ensure this country’s stability.
Now the ECB, whose initial action dictated the necessity for the deal, (by insisting on keeping dead banks open) wants to welch on that deal, and stick it to this country again!!

The Irish govt should, tomorrow, reissue the bonds based on current market rates, with the same schedule.

No more Mr Roll-Over. The ECB should be told to take a hike.


nobody else claimed, as you say “that the majority view is always correct”.

How you want to construe out of your displeasure with one majority decision of the Irish Supreme Court 30 years ago,

your false claim, that there is anything wrong with the German Bundesverfassungsgericht today,

that “judicial restraint does not seem to have much weight in Germany, whether with former or acting judges of the constitutional court.”

that remains a mystery to me.

@ francis

If you wish to quote me, please do so correctly. What I said was “I would like to think that the majority view is always correct” but the record shows that this is often not the case and gave you an example in Ireland’s case with which I am familiar. I happen to agree strongly with the views of the two dissenting German judges and I am willing to wager that the outcome of any subsequent judgement by the constitutional court will be the same as previous judgments i.e. further restrictions on the freedom of action of the German government but no really radical decision such as stating that a breach of the constitution has taken place.

@ JR

I did not mention the cost to the state as I did not see the need to, this being the fundamental background to the entire saga. What is at issue is reducing that cost which I cannot see as anything other than a good news story. Doing the sums is beyond my technical capacity but I am assuming that this is not the case for those taking the decisions and we will (i) come out financially ahead and (ii) fully rejoin the ranks of countries participating normally in the international bond markets.


whether the ommission of “I think” changed the intent in any nocticable degree, every reader can judge for himself.

But your claim was not just disagreement in one particular case, but a very general slander of all Germany.

Read your sentence carefully.

That you take issue with the former judge Di Fabio just telling you the obvious, that the recent acts of the ECB will trigger more lawsuits just shows your attitude, that Germany should just silently observe the breaking of “no bail out” treaty.

That will not happen.

The Swedes were the leaders in Pension policies at the height of their prosperity in the sixties and seventies. The Swedish consensus at that time was that for a defined benefit pension, retiring at age 65 (max 35 X 2 = 70%) with a cap of 35 years work paying 2% per year service based on the average of the last 5 or 6 years gross pay. Spouses at the time of retirement would be entitled to 50% on the death of the contributor.
Defined benefit deductions required were deemed to be 17% of gross pay with the employer and employee paying 8.5% of gross pay each.

In practice 17% deductions led to surpluses in pension plans which were removed to the benefit of the employer periodically. The reasoning being that surpluses and deficits were the responsibility of the employer, you cannot have a legally binding case to guarantee payout without the balancing

The Swedish model has been widely adopted in the developed countries.

I should add that most developed countries have a mandatory universal Old Age Pension plan that all employees and independent contractors up to a ceiling of about half to 2/3 the average wage in industry contribute to. This typically provides about 25% of work income in retirement (known as the floor). At the moment the big debate is that private sector pensions and individual pension funds are being eaten alive by fees. In a nutshell the management fees are higher than the return on investment.

Needless to say the private and public sector pension plans have to be seen as fair and equitable. If the private sector descends into defined contribution hell while the public enjoys defined benefit heaven it will not be long before everybody is in defined contribution hell. It is for this reason that the debate in pensions now is around reducing management fees and increasing the basic universal government administered (OAP) pension plans from 25% to 50% of work income in retirement.
Like everything in life there is no free ride and there are pension plan deductions from wages. Higher pensions would ride on top of the basic mandatory and universal plan.

Look up Canada Pension Plan and Canada Pension Plan Investment Board. Look at management fees.

My Sept 28th link contained a mention of the Piketty and Glienicker Gruppe. The Glienicker Group is composed of 11 German economists. One should never overlook the unified opinion of 11 German economists. There are English and French links embedded.


wiki/Tilläggspension says “government-run pension system in Sweden, paid to wage labourers on retirement. It was originally enacted on 1 January 1960” says it is all the fault of Bismarck and the evil Imperial Germany, how else can it ever be :
” The introduction of comprehensive social insurance in Germany took place between 1883 and 1891. Health insurance was introduced in 1883 and accident insurance in 1884. The law on pension insurance was adopted in 1889 and came into force in 1891. Pension insurance provided so-called disability pensions and old-age pensions.

That was of course all evil, because it let to “PENSIONS AND FERTILITY
BACK TO THE ROOTS The introduction of Bismarck’s pension scheme and
the European fertility decline”

The good part of it was introduced, how else could it be, by an english economist , 1st Baron Beveridge KCB, Director of the London School of Economics, Master of University College, Oxford.

Master of University College, Oxford. … member of the Eugenics Society

Beveridge, … Liberal Party, was elected to the House of Commons ….
… on the first day of Operation Turncoat on 30 July 1944. : – )

establishment of a National Health Service in 1948 (=german 1883 + a mere 65 years)

The good english wiki/Old-Age_Pensions_Act_1908 in constrast encouraged fertility and savings because of “The level of benefit was deliberately set low to encourage workers”

Little has changed, the premium moved up from 17% to 18.5%.
The floor is still in place with an income ceiling. On top of the floor the income based preferred pension is now administered by a gov’t agency since 2010. I am not sure of this but it now appears that the private sector has been shut out of the higher income based plans that existed prior to Jan1 2010.

In Ireland with the economy weakened the gov’t should confine itself to basic OAP of not more than 50%. The private sector can weigh in above 50%. Individuals are free to invest privately and to buy annuities on retirement. Gov’ts have the problem of supporting the poverty stricken 65+ by either making contributions mandatory to cover a pension at the poverty line or handing out a Guaranteed income supplement not supported by contributions (coming out of General Revenue). Defining poverty is tricky but 25% of employment income is considered to be too low and 50% is considered to be high.

The Swedes have had a decade of right of centre government I am surprised that they expanded the state’s role in Pensions. It is quite possible that they saw it as a contribute now because we will be paying later whether you contribute or not.

@ Mickey Hickey

There are innumerable ways of constructing pension entitlements. What matters are the underlying principles. The Swedes have them about right, including abolishing the distinction between the “public” and “private” sectors. They were aided in this by the tradition of executive agencies with less than 5,000 civil servants in a limited number of departments of central government (an idea, incidentally, promoted for Ireland in the Devlin Report all of half a century ago).

There is zero chance of any such similar development in Ireland because of the lack of the necessary social cohesion and intellectual rigour to bring it about.

I know that Bismarck was without a shadow of doubt the leader in government provided pensions. The reason I picked Sweden was because I was involved in Pension negotiations where we looked at UK, France, Germany and Sweden. My particular interest was having iron clad guarantees that the pensions would be paid. Sweden at that time had very high contribution rates compared to other countries as well as payroll deductions which clearly identified “50% of a contribution to a pension plan by an employee”. How deficits and surpluses in the plan were dealt with was clearly laid out. Sweden had a thriving economy which made the Swedish model an easy sell. Comparatively speaking Sweden has declined in much the same way that the US has declined. It is interesting to see that their Pension Plans have stood the test of time and right wing government.
There were statisticians, mathematicians, Human Resources specialists, Executives and Union Leaders on the committee. Canadians have a talent for reaching decisions that stand up to scrutiny with an emphasis on what is fair, reasonable and affordable by all parties.

I know little about German pensions now but at that time 90% payout looked high while 70% max looked reasonable. The other issue was to have an actual stand alone pension fund with not over reliance on general revenue and political decisions. Having said that, Germans are content with their pension plans as I have not heard any complaints.


the German pension system is very straight forward.

each employer / employee pay into the sytem each 10% of gross salary, up to a limit of a little above 2 x median.

For your payment you collect “points”

When you retire, you get payments strictly proportional to your accumulated points.

And how much that is, is just what the pension system collects at that point in time divided by the points of those entitled.

No capital accumulated, no slightest pretense of inflation adjustments.

and those 90 / 70% are long history, even before Agenda 2010 page 127, net pension replacement is

German 58% for median is 14 % below OECD median of 72%

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