Towards a framework for understanding the recent evolution of pension systems in the European Union

This paper is a review and critique of the pension policy literature that discusses trends in the evolution of pension systems in the European Union over the last three decades, and the determinants of those trends. It is argued here that much of the analysis of recent developments remains at the phenomenal level, rather than presenting a persuasive causal narrative. This problem could perhaps be overcome by adopting a broader framework for understanding pensions and pension systems. The consequences of the changes to pensions across the European Union will be diverse at the household level, but there are reasons to expect particularly adverse effects for women, young people and those with uneven participation in labour markets. In terms of the economy, the expansion of private pension funds is likely to have an effect on the functioning of financial markets and on the balance-sheet behaviour of non-financial corporations that is different to that envisaged by promoters of privatisation.