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KMID : 1001320140410040253
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Social Welfare Policy
2014 Volume.41 No. 4 p.253 ~ p.281
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Reconceptualization and Measurement of the Public Pension System Sustainability
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Yoo Hee-Won
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Abstract
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The purpose of this research is to expand the concept of sustainability which has been defined narrowly in the financial aspect to the extensive concept that includes the adequacy of income in later life, and based on this, to newly diagnose the true nature of crisis that the public pension system faces. To achieve this purpose, “the Sustainability Index” which means the balanced outcome between the adequacy and the fiscal stability was calculated by utilizing the Fuzzy-Set ideal type analysis and the long-term sustainability of the public pension system operated by major welfare states was measured. The results of the analysis showed that Sweden, Spain, Norway, Finland had a relatively high level of sustainability. On the other hand, it was found that those countries with high adequacy but low fiscal stability (Italy, France, Belgium, Austria) and the countries with high fiiscal stability but low adequacy (the U.K., Denmark, Switzerland, Germany) had the sustainable index lower than the whole average. These results of the analysis have the implications that the crisis that public pension system faces can be diagnosed differently from the existing ways and the corresponding measures can be taken by using the new concept of sustainability that reflects both the adequacy and the fiscal stability. Particularly, under the recent circumstances where fiscal stability measures are emphasized on the basis of hurting the adequacy, they will provide an opportunity to reconsider what the exact strategy to guarantee the sustainability of the system is. For example, under the concept of sustainability that leans too much toward the fiscal stability, it can be thought that only the countries with the problem of fiscal imbalances can face the crisis, but under the analysis of this research, the countries that are low either in adequacy or in fiscal stability are all evaluated to lack the sustainability. Accordingly, it is possible to establish the strategy that not only the countries with low fiscal stability but also the countries with low adequacy should make efforts to achieve the respective country’s outcomes that have not yet been satisfied.
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KEYWORD
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sustainability, adequacy, fiscal stability, Fuzzy-Set ideal type analysis
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