Old age pension reform ascended to the top of political agendas around the world in the final quarter of the twentieth century. In some cases, attention to pension reform was impelled by the haunting specter of deep financial shortfalls attending the retirement of large baby-boom generations; in other cases, governments contended that economic openness had made state-run social insurance programs unviable. In few cases, however, did the nature and depth of subsequent structural pension reforms actually correspond to underlying actuarial imbalances in state pension systems: While some reforms fell short of needed corrections, others went far beyond the functional realignment of pension system revenue and liabilities. Rather, a common theme uniting the diverse changes to old age pension systems in the last quarter century has been the heavy imprint of politics – of the diverse goals of state leaders and compromises with domestic political forces whose consent made way for institutional change.
As such, these reforms present scholars with important puzzles about the effects of both globalization and partisanship. In contrast to the accepted wisdom of early globalization research, pension reforms have been less extensive in the more open and capital-scarce economies, despite their heightened vulnerability to international pressures. And in many cases, left-wing governments not only have failed to resist such measures but they have increasingly taken the lead in privatizing state-sponsored social insurance programs. The consequences are profound: By transforming institutions that once pooled risk and reapportioned income into systems of individual savings and self-insurance, pension privatization has fundamentally rewritten the basic social contract underlying old age income protection and, with it, the very ends of this significant part of the welfare state.