Retirement Benefits in Continental Europe

Synopsis

The majority of the paper is devoted to a comparison of the three principal methods which are used in Europe for the funding of private pension plans, namely: the pay-as-you-go system, book reserves and segregated pre-funding. In the commentary which follows the description of these methods, the author suggests that the book reserve system, when tied to solvency insurance, has several advantages over the other two funding methods.

The paper is also concerned with three other aspects of the provision of retirement pensions in continental European countries. These are : the size of the retirement pensions ; the age at which these retirement pensions commence ; and the methods of removing the adverse effects of inflation on such pensions. In describing the very different pension practices in each of the various European countries, the paper highlights those aspects of a country's pension provision which merit further investigation. The paper then concludes with the view that we, in the U.K., have a considerable amount to gain from a study of pension practices in Europe and that this may eventually help us to solve some of our problems.