Shaping the prospects for adequate pensions: the effect of policy guidelines under the European Semester

Abstract

ABSTRACT This paper depicts the relationship between the EU and pensions by demonstrating the EU’s indirect pressure on pensions – spill-over from the Economic and Monetary Union (EMU) – reflected through economic and fiscal policy coordination mechanism. Concretely, the paper examines how compliance with the fiscal and economic policy guidelines deriving from the European Semester shape prospects for pension adequacy in the euro area countries. Pension adequacy is understood as the ratio of available income in retirement relative to available income during employment. The results point to three empirically relevant economic-fiscal policy models/configurations under which adequate pensions are observed. The models are not universally based on compliance with the policy guidelines under the Semester and they differ in terms of the type of policy which is potentially conducive for adequate pensions. Diversity of the models thus implies that compliance with the guidelines works for some euro area countries whilst for others it does not. Consequently, the shaping prospects or the safeguarding capacity of the Semester’s policy guidelines in terms of adequate pensions are modest. The main method used in the paper is fuzzy-set qualitative comparative analysis (fsQCA).