Intergenerational Pension Conflicts: Perspectives from Life-Course Theory and the Theory of Justice

Populations around the globe are ageing. This demographic shift changes societies. For example, it raises questions about the financial sustainability of pension schemes. Pay-as-you-go financed pension schemes redistribute from younger to older generations, using the pension contributions paid by today’s workers to finance the pension benefits of today’s pensioners. This redistribution becomes challenging when populations age, because the contributions and benefits do not match. Reforms may be necessary, either increasing the pension contributions, lowering the pension benefits, or changing both. Intergenerational conflicts about this topic may - and do - arise. Intergenerational conflicts are disagreements between younger and older people. In this case, the disagreement is about who should foot the bill in the pension reform, subordinating their needs to that of the other generation. This presentation takes a fresh look at intergenerational pension conflicts. To do this, it utilizes life-course theory and Rawls’ theory of justice. Life-course theory underlines that people age every day. The young people of today will be old in a few decades. Thus, any position towards old age that young people take today will turn into a position towards themselves in due time. This circumstance puts younger generations into a peculiar situation in intergenerational conflicts: they have to consider the interests of both generations at the same time. John Rawls developed a theory of justice, defining fair solutions. He argued that a solution is fair, if a person who is unaware on which side of the negotiation they may end up would accept it. Therefore, younger people may strive for such a fair solution of intergenerational pension conflicts, whereas older people are not bound by the same logic. This presentation develops this line of argumentation and reviews previous research to assess empirical evidence on it. Findings suggest that the theory of justice be modified in two ways. First, it is not only about whether oneself may end up on either side of the solution – it also is about whether anyone one cares about may end up on either side of the solution. This modification seems necessary, because research on older voters showed that older people also consider their children’s and grandchildren’s interests when making a voting decision. Second, it is not only about whether one can end up on either side of the solution– it is also about how close in time one is to either side of the solution. This modification seems necessary, because youths often don’t participate in discussions on pension reforms because they cannot yet see their own connection to this topic. Once both modifications are introduced, the theory of justice can help to explain how intergenerational pension conflicts play out. In doing so, it advances our understanding of work and retirement, pension reforms, public support for pension reforms, and the theoretical basis underpinning these topics.