Pensions, policy drift and old-age poverty in Western Europe and North America

This paper addresses patterns, trends, and “pockets” of old-age poverty in Western Europe and North America since 2000, with a focus on five of the more financially resilient countries: Sweden, Germany, the Netherlands, Canada and the United States. Despite major public pension retrenchment initiatives in several of these countries, increases in both the breadth and depth of old-age poverty have been limited in most of these countries. Increases in old-age poverty that did occur were largely “collateral damage” from across-the board cutbacks in pension replacement rates and eligibility that were not adequately compensated for by increases in means-tested or minimum pensions. Poor retirees have only rarely been targeted directly for retrenchment in these countries. The most consistent pattern in the case studies is the role of policy drift--the production of different old-age poverty outcomes as the social and fiscal context within which government programs operate change, but policies do not. It is the limited positive power of poor retirees (their inability to get policy changes enacted that favor them) rather than their negative power (inability to block changes that hurt them) that has been more important as a driver of increased old-age poverty where it has occurred.