The Politics of Parliamentary Pensions in Western Democracies

Name: The Politics of Parliamentary Pensions in Western Democracies
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Author: Anna Caroline Warfelmann
ISBN: 978-3-653-96750-0

Warfelmann, Anna Caroline

The Politics of Parliamentary Pensions in Western Democracies

Understanding MPs’ Self-Imposed Cutbacks

by Anna Caroline Warfelmann (Author)

History & Political Science

Summary

The author takes a close look at the politics of parliamentary pensions in Australia, Austria, Canada, and Germany and enlightens the reasons of self-imposed cuts by Members of Parliament. Members of Parliament in western democracies have been under growing pressure since they legislated first retrenchments of national social security systems. They are in a special situation because they have to decide about their own financial situation as well. Thus, it is surprising that they cut their own pension benefits in recent years. The book shows that the self-imposed cuts by Members of Parliament were related to public pension reforms but, in general, were less substantial.

Excerpt

Cover
Title
Copyright
About the author(s)/editor(s)
About the book
This eBook can be cited
Acknowledgements
Table of Contents
Figures and Tables
1 Introduction
1.1 Guiding Idea of the Study
1.2 Brief Overview of the Study
2 The Professionalization of Politics
2.1 Parliamentarians Today: Professional Politicians
2.2 Living ‘Off’ Politics: Paying Parliamentarians
2.2.1 Emergence and Institutionalization of Political Pay
2.2.2 Use and Significance of Parliamentary Remuneration
2.2.3 Representatives’ Income: Structure and Amount
2.3 Living ‘Off’ Politics After Legislative Service
2.4 The Design of Parliamentary Pension Schemes
2.5 Implications for Analyzing Parliamentary Pension Politics
3 Analytical Framework
3.1 Theoretical Approaches
3.1.1 Sociology of Professions: Being Special – Deserving Privileges
3.1.2 Responsiveness: Establishing a Balance to Voters
3.1.3 Principal-Agent: Self-Serving MPs versus Voters’ Interests
3.1.4 Welfare State Theory: Retrenchment as Credit Claiming
3.2 Explaining the Self-Sacrificing Decisions of Parliamentarians
4 Research Design and Methods
4.1 Research Design: Multiple Case Study Design
4.1.1 Case Study as a Research Strategy
4.1.2 Case Study Research Design
4.2 Case Selection
4.3 Data Collection
4.4 Data Analysis
4.4.1 Process-Tracing
4.4.2 Content Analysis
5 Reforming Parliamentary Pensions. Evidence from Germany: Gradual Decline
5.1 Introduction
5.1.1 Public Old-Age Pensions and the German Welfare State
5.1.2 Members of the Bundestag and Their Income Package
5.2 The German Parliamentary Pension Scheme
5.2.1 Historical Overview
5.2.2 Key Features of the PPS
5.3 Reforms to the Public and Parliamentary Pension Schemes
5.3.1 Reforms to the Public Pension Scheme
5.3.2 Reforms to the Parliamentary Pension Scheme
5.3.2.1 Major Alterations to the Parliamentary Pension Scheme
5.3.2.2 The Dimensions of Parliamentary Pension Cutbacks
5.4 Reforming Parliamentary Pensions in Germany: Explanatory Factors and Arguments
5.4.1 Policy Making Background: Why Was a Change Proposed at All?
5.4.2 Chronological Proximity and Content-based Links between Public and Parliamentary Reforms
5.4.3 How do Members of Parliament Explain Their Own Pension Cutbacks? MPs’ Arguments and Strategies in Parliament
5.4.4 Position of Opposition and Alternative Reform Options
5.4.5 Role of the Federal Constitutional Court
5.4.6 Role of the German Association of Taxpayers and Political Pundits
5.5 Conclusion
6 Reforming Parliamentary Pensions. Evidence from Austria: MPs Becoming Equal
6.1 Introduction
6.1.1 Old-Age Pensions and the Austrian Welfare State
6.1.2 Members of the National Council and Their Income Package
6.2 The Parliamentary Pension Scheme in Austria
6.2.1 Historical Overview
6.2.2 Key Features of the Terminating Parliamentary Pension Scheme (Alt-Politikerpension)
6.3 Reforms to the Public and Parliamentary Pension Schemes
6.3.1 Reforms to the Public Pension Scheme
6.3.2 Reforms to the Parliamentary Pension Scheme
6.3.2.1 1997: Termination of the Parliamentary Pension Scheme (Alt-Politikerpension)
6.3.2.2 2003: Pensionssicherungsreform of the Alt-Politikerpension
6.3.2.3 2005: Harmonization of All Pension Schemes
6.3.2.4 The Dimensions of Parliamentary Pension Cutbacks
6.4 Reforming Parliamentary Pensions in Austria: Explanatory Factors and Arguments
6.4.1 Policy Making Background: Why Was a Change Proposed at All?
6.4.2 Chronological Proximity and Content-based Links between Public and Parliamentary Reforms
6.4.3 How do Members of Parliament Explain Their Own Pension Cutbacks? MPs’ Arguments and Strategies in Parliament
6.4.4 The Role of the Parliamentary Opposition
6.5 Conclusion
7 Reforming Parliamentary Pensions. Evidence from Australia: Aligning MPs and Government Employees
7.1 Introduction
7.1.1 Public Old-Age Pensions and the Australian Welfare State
7.1.2 Members of the House of Representatives and Their Income Package
7.2 The Australian Parliamentary Pension Scheme
7.2.1 Historical Overview
7.2.2 Key Features of the Terminating PCSS
7.3 Reforms to the Public and the Parliamentary Pension Schemes
7.3.1 Reforms to the Public Pension Scheme
7.3.2 Reforms to the Parliamentary Pension Scheme
7.4 Reforming Parliamentary Pensions in Australia: Explanatory Factors and Arguments
7.4.1 Policy Making Background: Why Was a Change Proposed at All?
7.4.2 Chronological Proximity and Content-based Links between Public and Parliamentary Reforms
7.4.3 How do Members of Parliament Explain Their Own Pension Cutbacks? MPs’ Arguments and Strategies in Parliament
7.5 Conclusion
8 Reforming Parliamentary Pensions. Evidence from Canada: ‘Notional Cutbacks’
8.1 Introduction
8.1.1 Public Old-Age Pensions and the Canadian Welfare State
8.1.2 Members of the House of Commons and Their Income Package
8.2 The Parliamentary Pension Scheme in Canada
8.2.1 Historical Overview
8.2.2 Key Features of the Parliamentary Pension Plan
8.3 Reforms to the Public and the Parliamentary Pension Schemes
8.3.1 Reforms to the Public Pension Scheme
8.3.2 Reforms to the Parliamentary Pension Scheme
8.3.2.1 Major Parliamentary Pension Reforms
8.3.2.2 The Dimensions of Parliamentary Pension Cutbacks
8.4 Reforming Parliamentary Pensions in Canada: Explanatory Factors and Arguments
8.4.1 Policy Making Background: Why Was a Change Proposed at All?
8.4.2 Chronological Proximity and Content-based Links between Public and Parliamentary Reforms
8.4.3 How do Members of Parliament Explain Their Own Pension Cutbacks? MPs’ Arguments and Strategies in Parliament
8.4.4 Parliamentary Opposition: The Role of the Reform Party
8.4.5 Watchdogs: The Role of the Canadian Taxpayers Federation and the National Citizens Coalition
8.5 Conclusion
9 The Politics of Parliamentary Pensions in Australia, Austria, Canada, and Germany
9.1 Comparing Parliamentary Pension Politics
9.1.1 History and Type of Parliamentary Pension Schemes
9.1.2 Parliamentary Pension Reforms
9.1.3 Current Arrangement of Parliamentary Pension Schemes
9.2 Explaining Parliamentary Pension Cutbacks
9.2.1 The Driving Forces Behind Parliamentary Pension Cutbacks
9.2.2 Legislation of Parliamentary Pension Cutbacks
9.2.3 MPs’ Arguments and Strategies in Parliament
9.2.4 Consideration of Theoretical Implications
10 Conclusion
References

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Figures and Tables

List of Figures

Figure 2.1:	Base Monthly Parliamentary Allowances Compared with Average Income in EU Countries in € at PPPs (2003)
Figure 5.1:	Monthly (Base) Parliamentary Remuneration in Germany in €
Figure 5.2:	Fictional Monthly Parliamentary Pension Benefits According to Different Regulations in Germany for 2015
Figure 5.3:	Annual Old-Age Pension for MPs in Comparison to Standard Public Pension and Average Civil Servant Pension in Germany
Figure 6.1:	Monthly Parliamentary Allowances Before and After Reform in Austria in 1997
Figure 6.2:	Annual Old-Age Pension for MPs in Comparison to Average Public Pension and Average Civil Servant’s Pension in Austria
Figure 7.1:	Annual Old-Age Pension Benefits for MPs in Comparison to Mean Income for Persons Aged 65 and Over in Australia in AUS$
Figure 7.2:	Level of Employer’s Support to Superannuation Pension Plans in Australia
Figure 8.1:	Design of Public Pension Scheme in Canada
Figure 8.2:	Annual Seniors’ Median Income by Income Source in Canada for 2011
Figure 8.3:	Parliamentary Remuneration for Members of Parliament in Canada Between 1990 and 2014 (in CAN$)
Figure 8.4:	Fictional Annual Parliamentary Pension Benefits According to Different Regulations in Canada for 2014
Figure 8.5:	Parliamentary Pension Benefits and Impact of the 2001 Pay Increase in Canada
Figure 8.6:	Distribution of Annual Pension Allowances for Former MPs in Canada as of 31 March 2013
Figure 8.7:	Annual Old-Age Pension for MPs in Comparison to Other Pension Plans in Canada
Figure 9.1:	Annual (Base) Remuneration of MPs in Four OECD Countries in US Dollars at PPPs (2015) ← XIII \| XIV →
Figure 9.2:	Annual Old-Age Pension for MPs in Four OECD Countries in US Dollars at PPPs (2015)
Figure 9.3:	Parliamentary Pension Benefits According to the Number of Years in Office in Four OECD Countries in US-Dollars at PPPs (2015)

List of Tables

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1 Introduction

The privileges politicians enjoy are a recurring topic of domestic political conflicts and discussions. Hood and Peters stress that politicians’ remuneration goes, “as close as any issue can do to the heart of the relationship between rulers and the ruled” (Hood & Peters 1994: 1). In particular, the remuneration and compensation of both active and retired parliamentarians seem to be at the core of all debates dealing with MPs’ privileges. Historically, there have always been disagreements about parliamentary remuneration and as Eschenburg points out, malicious exaggerations of these benefits have tended to characterize the conflict about political pay since the very beginning, when it was first introduced in Classical Athens (Eschenburg 1959: 17).

This topic is a rather sensitive political issue that occasionally resurfaces on the political agenda in representative democracies – where constituents elect representatives who decide on their behalf, as well as for themselves. According to popular opinion, the ‘political class’ is primarily interested in making decisions based on their own interests that will line their own pockets, regardless of the social problems currently at hand. Consequently, the privileges MPs receive (either subjectively perceived by the public or indeed real) contribute to the public’s low level of trust in their representatives. An international survey that measured people’s degree of trust in different professions corroborates this trend. Among nearly 20 occupational groups, politicians are the occupational group consistently given the lowest trust ratings in recent years in 15 EU countries, as well as in the USA, Brazil, Colombia, and India (GfK Custom Research 2010; see also GfK Custom Research 2011; GfK Custom Research 2014). However, the line between “justified prejudice and unreasonable blame” is often left out of discussions about parliamentarians’ privileges (Neisser & Wögerbauer 1991: 325).¹ Nevertheless, it is clear that the relationship between the rulers and the ruled is tense in many parts of the world.

Today, fallout from the 2008 world financial crisis and the financial challenges facing national social security systems are compelling politicians to implement cuts and to reduce social security benefits – particularly public pension benefits. At the same time, headlines such as “Gold-plated MP pensions are now platinum” (Edmonton Sun (Canada) 4 December 2003) signal people’s discontent and dissatisfaction with the remuneration of their officials throughout OECD countries. ← 1 | 2 → Discussions in the popular press tend to emphasize the generosity of parliamentarians’ pensions and contrast them with public pension reforms, as these reforms generally entail reductions in benefits. As Hinrichs notes, “public pension reforms regularly harmed (future) beneficiaries” (Hinrichs 2000: 353) and by the end of the 1990s, “almost all of the OECD countries had gone through at least one major reform” (Myles & Pierson 2001: 305).² All industrial states faced similar pressures to implement reforms; the demographic pressures associated with increasing life expectancy and falling birth rates are a challenge for every social security system. Recent reforms to public pension schemes in OECD countries include raising the retirement age, introducing incentives to get people to work longer such as stricter eligibility criteria for early retirement, as well as implementing a larger pension benefit decline for early retirees and a larger benefit increase for later retirement. Furthermore, public pension reforms link pension benefit levels to life expectancy, the expansion of private pensions, and a shift from defined benefits to defined contributions (OECD 2011b; OECD 2013a). As a consequence, public pension retirees are facing lower (public) pension benefit levels, are encouraged to save privately, and thus are becoming responsible for accumulating an adequate income during old-age themselves. Additionally, citizens are exposed to greater risks, because increasing amounts of the pension income are fully-funded.

In representative democracies, MPs do not only decide whether to implement reforms to public pension schemes, which generally entail cutbacks for public pension beneficiaries as previously mentioned. MPs also have the right to set their own pay and pension levels, just as they would in other parliamentary affairs. My interest in parliamentary pension schemes (PPS) developed from the fact that MPs occupy a privileged position. Parliamentarians are the only occupational group that independently determines their own pay. As such, MPs are in the unique position to amend their own pension scheme and to alter their own level of pension benefit. To be clear, MPs make these decisions on their own – and do not have to delegate the authority to someone else. As a consequence of this autonomy, however, MPs are under significant pressure to be seen as legitimate (Hoffmann & Hinrichs 2006). Therefore, the focus of this study is on the remuneration of former members of parliament. As will be shown, compensation both during and after legislative service plays a vital role in representative democracies with professionalized parliaments. ← 2 | 3 →

Details

Pages: XVI, 294
Year: 2015
ISBN (PDF): 9783653054453
ISBN (ePUB): 9783653967500
ISBN (MOBI): 9783653967494
ISBN (Hardcover): 9783631662786
DOI: 10.3726/978-3-653-05445-3
Language: English
Publication date: 2015 (June)
Keywords: MPs' Pensions Parliament Politics MPs' Allowances
Published: Frankfurt am Main, Berlin, Bern, Bruxelles, New York, Oxford, Wien, 2015. XVI, 294 pp., 36 tables, 18 graphs

Biographical notes

Anna Caroline Warfelmann (Author)

Anna Caroline Warfelmann studied Political Science and Social Policy at the University of Bremen before she completed her PhD at the Bremen International Graduate School of Social Sciences. She is specialising in the field of welfare state research. Her focus is on reforms of old-age pension schemes.

The Politics of Parliamentary Pensions in Western Democracies

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