Convergence or divergence? How the financial crisis affected European pensioners

Abstract

The Member States of the European Union entered the financial crisis with very different pension systems. Although the use of standard adequacy measures suggest small impacts from the crisis, alternative measures based on pension wealth estimates indicate stronger effects. Whilst the largest continental systems were left relatively unscathed by the crisis, Mediterranean systems were cut back significantly. This should lead to considerable convergence in system generosity across countries. Despite the cuts, state pensions in the stressed economies should still be generous enough to keep the majority of pensioners out of relative poverty, but this depends on a relatively quick turnaround in labour market performance in these countries.