“The Privatization and Marketization of Pensions in Europe: A Double Transformation Facing the Crisis

In response to the demographic challenges and fiscal constraints, many European welfare
states have moved toward the privatization and marketization of pensions in order to
improve their financial sustainability. The privatization of retirement income responsibility
has led to a shift from dominantly public pensions to a multipillar architecture with growing
private pillars composed of personal, firm‐based or collectively negotiated pension
arrangements. At the same time, marketization has led to the introduction and expansion of
prefunded pension savings based on financial investments as well as stronger reliance of
market‐logic principles in the remaining public pay‐as‐you‐go pensions. However, there are
also important cross‐national variations in the speed, scope, and structural outcome of the
privatization and marketization of European pension systems. Liberal market economies, but
also some coordinated market economies (the Netherlands and Switzerland) as well as the
Nordic countries have embraced multipillar strategies earlier and more widely, while the  
Bismarckian pensions systems and the post‐socialist transition countries of Eastern Europe
have been belated converts. The recent financial market and economic crisis, however,
indicates that the double transformation may entail short‐term problems and long‐term
uncertainties about the social and political sustainability of these privatized and marketized
multipillar strategies.