Will politicians take over decision-making on pensions?
It is clear from the ongoing debate over pensionable age rules that decision-making and power over pensions are set for major changes. “There’s an increasing sense now that the social partners are no longer capable of reaching agreement on pensions policy. This will give increased power to the Government and Parliament,” says Jukka Lassila, head of a research project concerned with the relationship between the Finnish pension system and power. The project is conducted under the umbrella of the Academy of Finland’s Power in Finland Research Programme.
According to Lassila the shift of power from social partners to politicians is not necessarily good news with respect to long-term pensions policy. It is also not right that the rules of earnings-related pensions should change according to the political balance of power.
“If cooperation among the social partners changes in such a way that the employment pension system is unable to take the necessary decisions in the future, then the unfolding situation may well lend itself to a shift in power. In the future, employment and national pension systems may even be integrated into one unified system on which all decisions are made in Parliament.”
The project has examined pension systems not only in Finland but also in other European countries and Canada. According to the research team, the two countries that have been the most successful in securing the financial sustainability of statutory earnings-related pensions are Canada and Sweden. In these countries pension policy decision-making has been limited through mechanisms of automatic adaptation. “New decisions are only needed in exceptional circumstances. This is a lesson we could well learn in Finland, too. Furthermore, Canada does not allow politicians to have a say in pension funds’ investment decisions,” Lassila says.
Due to be completed in the current year, the main focus of the Pension System and Power research project has been on the employment pension system in the private sector. Power has been approached and analysed from economic, legal, socio-political and political science vantage-points. Concerned with pension policy and pension funds as well as their investment policy, the project’s aim has been to find out who wields power in the pension system and on what grounds.
According to Lassila, the Finnish pension system presents an interesting case for power research. “Decisions on pension policy are made by the social partners, statutory pension funds are administered by private business companies and the financial assets involved are very substantial.”
For more information please contact:
Head of Research Project Jukka Lassila, Research Advisor, Research Institute of the Finnish Economy, tel. +358 9 6099 022, +358 50 565 0406, jukka.lassila(at)etla.fi
Power in Finland Research Programme:
Programme Manager Petteri Pietikäinen, Academy of Finland, tel. +358 400 362 808, petteri.pietikainen(at)aka.fi
www.aka.fi/en-gb/A/Science-in-society/Research-programmes/Ongoing > VALTA
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