#07 Paradigm lost

Faced with dramatic aging and stagnant economie, European countries are rethinking the notion of the welfare state

Brigitte Miksa

Seeking a paradigm lost

Future generations will look back at the benefits enjoyed by today’s retirees with amazement.

For the past decade, governments have trimmed state pensions. They have increased the retirement age, redefined eligibility, changed indexation rules, and emphasized capital funding and individual savings in an effort to ensure the stability of systems burdened by demographic changes and increasing life expectancy.

This will hit Europe hard. Europeans tend to value social responsibility, community, solidarity and security in comparison to, say, the more autonomous, self-reliant attitude expressed by Americans. These reforms undermine the sureties Europeans have come to expect from generous cradle-to-grave welfare systems.

Yet this does not mean a return to the work-until-you-drop-life – far from it. With one paradigm lost, Europeans are seeking another by melding traditional approache with an emphasis on greater personal responsibility for retirement.

In effect, this means introducing defined contribution scheme into the occupational system and, in some cases, the social security system. It also means applying the lessons of behavioral finance and grappling with cultural differences in term of savings, investment and risk attitudes to find solutions that strike a medium between European values and system sustainability.

Given that Europe consists of 27 Member State of the European Union plus

political outliers, such as Switzerland, and that each country had a different starting point, you’d expect the results to be divergent. They are. And this is what makes Europe interesting.

Although the project of securing European pension systems is far from complete, as evident in the recent EU Green Paper, the continent is serving as a laboratory on what is possible in terms of securing retirement provision for today’s and future generations.

Not all experiments will be equally successful, but it is possible to learn from the mistakes as well as achievements and see what could be applied elsewhere. In this edition of PROJECT M, we look at exactly these topics.

Yours sincerely,

Brigitte Miksa

#07 Paradigm lost

Faced with dramatic aging and stagnant economie, European countries are rethinking the notion of the welfare state

Brigitte Miksa

#07 Paradigm lost

Faced with dramatic aging and stagnant economie, European countries are rethinking the notion of the welfare state

Brigitte Miksa

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