Maintaining Value of Social Security Benefits During Inflation: Foreign Experience

IX THE LATE 1950’s most mdustrml natmns had begun to mtroduee plans for pellodlc adjustment of pensions so that they could keep up ~lth nnge and pr,ce changes Imtmlly, RZ~CS rose more rapldly than prices Recently, honever, accelerated mflstlon hns brought o shift m this pattern, and prices have risen more rapldly than nages Earher the Intent had been to alloa retmees to msmtam the standard of lwnfi that they had durmg them norkmg hves (by adjustmg of pixe Indexes) or to benefit from an expnndmg economy (by ndjustmg pensions to wage mdexes) -The accelerated mflatlon of the 1970’s has brought \>lth It n need to find \~ays to hmlt benefit mcrenses and thus mamtam the finnncml balance of the socxd meurnnce system In all the developed countrq benefit nd]ustments ape reqwed by lam and therefore cannot be stopped The amount of the nd]ustmcnt may &her be lmnted or can be spread over several years lncrensmgly, ndllsory groups are bang asked to evalunte ndjustments from an oversll economic standpomt and t,o suggest whether and to xhnt extent hrmtatmns should be nnposed The benefit ad@ment mechnmsms and problems of eight mdustnnl countries, prnnnr~ly smce 19130, are exammed here The countries-Au&m, France, the Federal Repubhc of Germany, the Netherlands, Saeden, Swltzerlnnd, the Umted Kmgdom, and the Umted States-were selected on the besls of the wde range of methods they