Flying Under the Radar

Abstract

This paper discusses the forces driving variation in the success of state pension system retrenchment. Two case studies are presented: the United Kingdom’s largely successful effort in 1986, and Germany’s less than stellar effort in 2001. After examining the general impact of institutional effects, ideology, path dependency, and demographic pressures on retrenchment, the importance of these factors in each country is discussed. These two countries are particularly enlightening due to their prototypical natures and opposing democratic traditions. One objective of this paper is to explain an unexpected outcome: the successful retrenchment produced in a low-pressure environment in the U.K., and ineffective reform in Germany in a high-pressure environment. This discussion frames the factors that determine successful retrenchment as such: whether a government has the ‘will,’ or motive, to retrench, whether it has the capability to do so, and whether it has the awareness and acumen to implement low-visibility strategies. I find that low-visibilities are extremely important to success in this area, and due to the nature of pension policy, the implications of this conclusion may be applicable to other policy-making challenges.