Jessoula, M. (2023). What is to be done on pensions? Move beyond “myths” to address the “pension adequacy trilemma.” La Rivista delle Politiche Sociali. [Link]

Abstract

Twenty years of neoliberal retrenchment reforms (1992-2011) have re-stored pension economic and financial sustainability, letting weak-nesses – both in the short and the medium-long term – on the side of social, and related political, sustainability though. While considering economic and fiscal constraints, the challenge is therefore to re-design a pension system able to solve the «adequacy tri-lemma»: that is the efficient, effective and equitable combination of i) poverty prevention in old age, ii) adequate income maintenance for retired workers, at iii) acceptable and sustainable pensionable ages. However, most reform proposals currently circulating in the public debate are framed within the rigid NDC (Notional Defined Contribution) framework, which does not seem effective in de-activating the trade-offs generated between the three dimensions of the trilemma. Three decades after the «major reforms» of the 1990s and in a structural context which has been completely transformed, it thus seems necessary to move beyond the «5 myths» which have long constrained the public debate on pensions in Italy, de facto reducing the menu of available reform alternatives. Beyond «myths», in a country that cannot afford generalized increases in pension expenditure, the key pension parameters – ie eligibility con-ditions, benefit formulas, financing methods – should actually be re-designed in accordance with the principle of equity, or social justice.