When Do Benevolent Capitalists Change Their Mind? Explaining the Retrenchment of Defined‐benefit Pensions in Britain

This paper explores the politics of welfare retrenchment, but differs from much of the current literature in this area by focusing not on the decisions of politicians but those of private sector employers. In countries with a large private welfare sector, employers are major social policy players with a significant influence on the generosity of welfare provision, but the rationale behind their actions is not well understood. To explore these issues, a case study is used of the recent fundamental change in UK occupational pension provision, involving a rapid shift from defined‐benefit to defined‐contribution pensions. The paper shows by means of a micro‐simulation of the relative performance of defined‐benefit, defined‐contribution and state pensions that this shift represents a significant retrenchment. It suggests, using historical material, interview data and insights from behavioural economics, that existing explanations for this change, while valuable, have important gaps because they are based on too narrow a conceptualization of business motives. In this regard, the paper highlights the importance of herd behaviour.     

Denmark: Universal or Not So Universal Welfare State

This article questions whether or not Denmark is still a universal welfare state. It does so by first offering a comparative‐based analysis of the Nordic countries on central welfare state parameters. Second, the article utilizes a case‐based analysis in respect of three core areas of the Danish welfare state—pensions, unemployment and early retirement benefit—to assess the distinctiveness of the Danish model. The article concludes that, notwithstanding the Danish model is more mixed today than it used to be, it continues to be distinct in areas such as equality, full employment, a high level of spending on social security and an active labour market policy.     

Christian democracy, social democracy and the paradoxes of earnings-related social security

This article compares the retirement policies of Belgium and Sweden in order to reveal the different incentive structures built into the pensions systems prevailing in countries that are taken to represent different approaches to welfare capitalism. It addresses the question of why in a Christian Democratic welfare state that is said to grant pensions rights on the basis of merit and past work performance one can find extremely low labour-force participation rates among elderly workers, while in a Social Democratic welfare state that is supposed to grant pension rights relatively independent of past labour-market performance, one can find quite high participation rates amongst that section of the labour force. This apparent paradox is explained in terms of the different purposes of the early-retirement schemes in the two countries: in Belgium they were primarily part of a strategy to combat (youth) unemployment, in Sweden they had more to do with reforms that sought to accomplish a 'humanisation of work' by softening the abrupt transition from work into retirement.     

The interaction of pillars in multi‐pillar pension systems: A comparison of Canada,Denmark, Netherlands and Sweden

Canada, Denmark, the Netherlands and Sweden have advanced multi‐pillar pension systems. Using micro‐simulations, this article presents a close examination of the interaction of pillars in these countries. The relative importance and the role of the different pension pillars vary from country to country, and according to age, income, gender and socio‐economic dimensions as well as between generations. A further area of investigation is the mitigation capacity of the four pension systems. On the one hand, adverse labour careers lead to lower life‐time earnings and lower private pension accruals. On the other hand, these effects are mitigated through the design of pillars and their interaction. Mitigation is important to income security and stability in retirement and to post‐retirement income distribution. However, mitigation mechanisms come at the cost of incentives. Moreover, in many countries, the generosity of public benefits is set to decrease – increasing the importance of private pensions. This will shift risk and uncertainty from employers and pension institutions to individuals. Thus, risks and uncertainties related to private pensions will become more important, raising questions about the division of responsibilities between public and private pensions, and about the potential of mitigating such risk through pillar interaction. These concerns are further reinforced by labour market changes. Although a pension system free of distortions is inconceivable, this article seeks to contribute to addressing how mitigation should be designed, and how mitigation and risk sharing should be balanced against incentives, challenges which are as much political as technical.     

Gender and proposed Auto‐enrolment in the Republic of Ireland: Lessons from the UK

The introduction of “soft” compulsion in the form of Auto‐enrolment into non‐state pensions has been seen as a key policy response to the challenges presented by an ageing population and concerns about under‐saving for retirement in the UK. Since its introduction in 2012, amongst eligible employees in the private sector, pension participation had risen by over 31 percentage points to 73% of eligible employees in 2016. Despite these trends, Auto‐enrolment in the UK has not been without criticism, particularly in terms of its exclusion of certain groups, including carers, amongst whom females are over‐represented. The Republic of Ireland (ROI) has recently announced its intention to implement an Auto‐enrolment pension scheme. As such, this article examines the UK's experience of rolling out Auto‐enrolment policy and considers lessons that could be learned by the ROI from the UK in its pursuit of Auto‐enrolment, with a particular focus on women's pensions. Initially it outlines the current Irish pension system, the gendered nature of pensions, and the proposed Auto‐enrolment system in ROI. Then it discusses the UK's experience of Auto‐enrolment, with a particular focus on gender, before examining the lessons the ROI can learn from the UK's Auto‐enrolment policy in relation to women and pensions. Finally, it concludes that Auto‐enrolment alone will not resolve the gendered nature of pensions in the ROI and calls for a gender‐based assessment of the proposed policy of Auto‐enrolment in the ROI.     

Promoting a higher retirement age: A prospect‐theoretical approach

Demographic ageing and the necessity of raising the retirement age is one of the most frequently debated topics among European welfare policy experts. This study used prospect theory as developed in behavioural economics to explain public attitudes towards pension reforms. It argues that, in line with prospect theory, negative incentives are more useful in changing people's attitudes in favour of a higher statutory retirement age than are positive incentives. Therefore, in the case of increasing life expectancy, defined‐contribution schemes that apply actuarial formulae linking the level of starting monthly pension benefits to life expectancy are more useful in promoting a higher retirement age than conventional defined‐benefit schemes, which typically do not forge an automatic connection between longevity and starting pensions. The implications of prospect theory for attitudes towards pension reforms were tested using Eurobarometer survey data collected in 2004 and 2009 in the Czech Republic, Poland and Slovakia.     

Envisioning the Third Sector's Welfare Role: Critical Discourse Analysis of ‘Post‐Devolution’ Public Policy in the UK 1998–2012

Welfare state theory has struggled to come to terms with the role of the third sector. It has often categorized welfare states in terms of the pattern of interplay between state social policies and the structure of the labour market. Moreover, it has frequently offered an exclusive focus on state policy – thereby failing to substantially recognize the role of the formally organized third sector. This study offers a corrective view. Against the backdrop of the international shift to multi‐level governance, it analyses the policy discourse of third sector involvement in welfare governance following devolution in the UK. It reveals the changing and contrasting ways in which post‐devolution territorial politics envisions the sector's role as a welfare provider. The mixed methods analysis compares policy framing and the structural narratives associated with the development of the third sector across the four constituent polities of the UK since 1998. The findings reveal how devolution has introduced a new spatial policy dynamic. Whilst there are elements of continuity between polities – such as the increasing salience of the third sector in welfare provision – policy narratives also provide evidence of the territorialization of third sector policy. From a methodological standpoint, this underlines the distinctive and complementary role discourse‐based analysis can play in understanding contemporary patterns and processes shaping welfare governance.     

FINLAND

The durability of all institutions during this last decade of the twentieth century has been tested by the economic recession. Repercussions have hit the Finnish pension system from two directions - problems in financing, and the need to cut costs in the public sector. However, in the long run, the question of securing pensions is a matter of will. In recent years, some major amendments to laws have been made successfully, including a higher age limit for early retirement, lower levels of disability and early retirement pensions and diminished index adjustments of old-age pensions. These amendments give even more reason to believe that the main contributors to the pension system have the capacity and the will to secure the Finnish employment pension system.     

Charity or Entitlement? Generational Habitus and the Welfare State among Older People in North‐east England

Current UK policies aimed at reducing pensioner poverty involve targeting those in greatest need by supplementing their incomes with means-tested welfare benefits. It is believed that such policies provide more resources for those in greatest need. However, non-uptake of state welfare benefits by many older UK citizens exacerbates the widening income gap between the richest and poorest pensioners. We examine the underlying beliefs and discourses among those currently in retirement who lived through a time when welfare programmes had more of a putative abstract universalism than is now the case. Based on the narratives of people aged over 60 in North-east England, we show how the collective forces of structure and individual practice in relation to welfare accumulate over a lifetime and influence the ways in which people interact with the welfare system in later life. We find that the reasons for the apparent lack of agency among older people in relation to claiming benefit entitlements are linked to the particular social, economic and political circumstances which have prevailed at various points prior to and since the inception of the UK welfare state. We argue that the failure of some older citizens to operate as citizen consumers can be conceptualized in terms of a generational welfare 'habitus', the consequences of which are likely to exacerbate inequalities in later life.     

Poverty,Government Policy and Public Opinion in Britain and Israel: A Comparative Analysis

What are the effects of public opinion on social welfare policies? To what extent is increased financial strain associated with stronger support for anti‐poverty policies? This article tests welfare state theory by comparing poverty, government policy and public opinion on poverty in the UK and Israel, based on rich and detailed comparable survey data on the conditions of the poor in both countries. The results show that, despite similar levels of income poverty and inequality, the poor have a considerably lower standard of living in Israel than the UK. There is considerably greater public support for the poor in Israel but limited government action to end poverty, whereas in the UK there is more limited public support for the poor but significant government action on poverty and exclusion. In both countries there appears to be only a limited connection between social solidarity with the poor and the political elite's rhetoric and action.     

Public response to welfare policy retrenchment: The importance of trust in implementing agencies. The case of early retirement in Sweden 1999–2010

There is a long-standing argument that citizensapos; trust in the state needs to be recurrently reproduced for policies to endure and that this also includes trust in its separate policy agencies. Such trust is likely to be more important for costlier policies, as, for example, social insurance schemes. The article explores whether short-term changes in welfare programme generosity affect peopleapos;s trust in the agency implementing the programme. Using the example of early retirement in the encompassing welfare state of Sweden, we study a decade of significant reform (1999–2010), during which the inflow to early retirement diminished greatly, as did citizensapos; trust in the implementing Swedish Social Insurance Agency (SSIA). We conclude that citizensapos; trust is higher when implementation is more generous. Indeed, a third of the drop in citizensapos; trust in the SSIA over the period can be explained by declining levels of generosity in early retirement, with people politically to the left responding with lower trust. Theoretically, we suggest, first, that trust in implementing institutions can function as feedback to policy and, second, that there is a basic relationship between more generous policy outcome and higher trust in encompassing welfare states such as Sweden.     

Updating the Debate on Intergenerational Fairness in Pension Reform

This article examines the arguments involved in claims about the fairness or unfairness of government policies that would require current working generations to bear the full impact of their lower fertility on the costs of retirement pensions. The analysis is set in the context of a wider review of debate on the role of the idea of generational fairness in assessing options for reform under conditions of population ageing. The article considers three questions: whether generational fairness poses a serious problem for pay‐as‐you‐go pension schemes; whether it is reasonable to assess the generational fairness of pension policy in isolation from other kinds of generational transfer; and whether there is a good case for redistribution from future generations in favour of the baby boom generation.     

Narrowing of Public Responsibility in Finland, 1990–2010

Public responsibility in Finland has narrowed in the last 20 years while the sphere of the private sector has been increased. The economic crisis of the early 1990s was not the cause, but an accelerator of public sector/welfare state retrenchment in Finland. Based on which, it was easy for the advocates of neo‐liberal reforms to argue that the changes were a must. The welfare state programmes however, are popular among the Finnish population and therefore large one‐time cutbacks have not been possible beyond the immediate aftermath of the economic crisis. This article looks into three different methods through which the Finnish welfare state has been gradually cut since then: (1) by not raising income transfers along with the rising cost of living and wages; (2) by reducing funding of public services; and, on the other side of the coin (3) through regular tax cuts contracting the revenue side. Welfare state retrenchment in Finland has therefore been achieved in a subtle fashion through slow gradual weakening of social programmes on one hand, and through cuts in revenue on the other that have left proportionally more in the hands of the wealthier. These combined movements have resulted in a drastic reversal in the trend in income inequality in Finland.     

The distributive impact of private pensions in the context of the institutional designs of public pension systems across OECD countries

Income inequality has been increasing across the developed world for the last few decades. The welfare state has played an important role in reducing income inequality, but it has now entered into an era of transformation. The shift from public to private pension schemes is one of the main policy instruments in this shift. An increase in private pensions is expected to create an increase in income inequality. Therefore, using data from OECD SOCX, this study examined how the effect of private pensions on income inequality might be changed by the institutional design of public pension systems. The results suggest that the effect of private pensions differs when the institutional design of the public pension system is considered. An increase in private pensions is related to an increase in income inequality when the public pension has a low level of coverage and a high level of earnings‐relatedness.     

Welfare through Work: An Audit of Occupational Social Provision at the Turn of the New Century

Occupational welfare has been a relatively neglected area in both theoretical and empirical studies of the welfare state despite its importance to overall levels of social provision. Surprisingly, there has not yet been a comprehensive examination of British occupational social provision, as opposed to non‐wage benefits more generally or specific provision such as pensions, housing or childcare. This neglect can be explained both by the perception that occupational welfare plays a relatively insignificant role in contemporary welfare states and by a general lack of clarity regarding its definition and scope, factors which have added to the difficulties surrounding its conceptualization and measurement. Despite the lack of attention it has received, however, recent pressures have propelled the issue higher up the social policy agenda, increasing the need for a clearer conception of what constitutes occupational social provision and a more comprehensive assessment of its contemporary significance. This paper seeks to shed some light on to these areas by drawing on comparative and UK data in order to carry out an audit of occupational social provision.     

From quasi‐markets to public–private networks: Employers' engagement in public employment services

This article explores the implications of creating a role for private‐sector partners in public employment services (PES), rather than creating quasi‐markets. It focuses on how the engagement of employers in public–private networks with local government can enhance employment opportunities for disadvantaged welfare recipients but may require a further shift in local public services. The theory relates to contractual arrangements versus network modes of public–private partnerships. Based on surveys among employers and welfare recipients, and interviews with politicians, managers, and frontline workers in five Dutch municipalities, the article provides detailed evidence on innovative and promising cases of public–private networks in employment services. It shows that, under certain conditions, vulnerable jobseekers are better served by a network involving employers than by the standard supply‐driven approach that predominates in quasi‐markets. It also reveals that public and private partners have yet to fully embrace the implications of the network approach for their respective roles. The article contributes to the theoretical debate on public–private partnerships in the context of PES, reflecting on public–private networks as a policy design that could help improve employment opportunities for disadvantaged jobseekers.     

But is it ‘Fair'? The UK Coalition Government, ‘Fairness’ and the ‘Reform’ of Public Sector Pensions

The article analyses arguments for reform of public sector pension schemes by the UK Coalition government on the grounds that existing provision is ‘unfair’. Three dimensions of ‘fairness’ are discussed. That between public and private sector provision; between the costs to public sector employees and other taxpayers; and between members of public sector schemes. The article argues that there are serious weaknesses in the Coalition position on each of these dimensions of ‘fairness’. It suggests that these weaknesses are rooted in the discussion of public sector pensions in isolation from the overall pattern of occupational pension provision in the UK and that a more satisfactory analysis requires reference to principles of distributive justice.     

A Bedrock of Support? Trends in Welfare State Attitudes in Sweden, 1981–2010

This article reports findings about Swedes' attitudes towards the welfare state from 1981 to 2010, building on data from the Swedish Welfare State Surveys. Attitudes towards social spending, willingness to pay taxes, attitudes towards collective financing and public organization, suspicion about welfare abuse, and trust in the task performance of the welfare state are tracked. Overall, there is a large degree of stability in attitudes, and where change is registered, it tends to go in the direction of increasing support. More people state their willingness to pay higher taxes for welfare policy purposes; more people want collective financing of welfare policies; and fewer people perceive extensive welfare abuse in 2010 than was the case in previous surveys. Class patterns change so that the salaried and the self‐employed become more similar to workers in their attitudes. Hence, the unprecedented election loss of the Swedish Social Democrats in 2010, and the rise of the Moderates (conservatives) as the dominant party cannot be explained by changing attitudes towards the welfare state. Nor can any corrosive effects from increased marketization of the Swedish welfare state on public support for welfare policies be detected.     

The Role of Non‐profit Organizations in the Mixed Economy of Welfare‐to‐Work in the UK and Australia

This article charts the development of welfare‐to‐work policies and compares and contrasts the traditions of delivery in the UK and Australia. We find that in the UK, employment services and social security benefit administration have been dominated by the central state, traditionally affording a key role to civil servants as direct delivery agents. However, in federal Australia, mixed economies of welfare‐to‐work operate in the different states, there is a far greater role for social services and non‐profit organizations are firmly established as key providers of frontline employment services. Since the late 1990s, UK welfare reforms have been gradually following the Australian lead in contracting non‐state actors as delivery agents. As this trend seems set to continue and intensify, we examine the Australian experience in order to reflect on the role of non‐profits in policy reform.