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In 2002, the British government announced the establishment of a Pensions Commission to assess the state of the country's pension system. In its first report, the Commission confirmed that the nation's pension system is in deep crisis. How come some offer better pension security than that in Britain? How do they cope with similar pressures? In its proposals for extensive reform, the Pensions Commission hopes to plug the holes in the current state system for those (mainly women) with interrupted careers and caring responsibilities. The Commission has three proposals: raising the state pension age to 67, or perhaps 69, by 2050; the creation of a more generous basic state pension by allowing the earnings-related second state pension to evolve into a flat-rate top-up to the present scheme; and the automatic enrolment of all workers into a National Pensions Savings Scheme. This introduction also looks at pension reforms abroad in areas such as Europe, including Germany and Sweden.

Understanding the politics of post-war British pensions in its broadest sense is imperative if we are to understand the nature of the pensions crisis that Britain faces, and essential too if we are to devise effective solutions to address that crisis. This chapter examines the development of Britain's overall system of pensions since the Beveridge Report. After discussing the current crisis of complexity in British pensions, it surveys recent work on path dependence in pensions and then analyses developments in British pensions after the publication of the Beveridge Report in 1942. The Pensions Commission, appointed by the government to review British pensions and to make recommendations on future policy, rightly decided that it must necessarily examine Britain's overall system of pensions provision, not just the crisis in voluntary pensions provision. The phenomenon of sub-system contractual lock-in lay behind the initial post-war shift to, and the subsequent rapid development of, occupational pensions in Britain. This chapter also discusses the Beveridge settlement, the growth of occupational pensions in the 1950s, and the adoption of a state graduated pension.

According to the Pensions Commission in its first report, the state pension system in Britain is among the least generous in the developed world. This reflects the explicit aim of both Conservative and New Labour governments since 1980 to reduce the share of pensions provided by the state and increase that provided by the private sector. This policy has reinforced the gender gap in pensions. Despite recent acknowledgement by the government's pensions minister that women's pensions are ‘a national scandal’, there is no sign of a radical shift in policy which is needed to remedy that situation. This chapter outlines the gender gap in later life income, showing how private pensions shape gender inequality in different ways based on women's marital status. It also examines gender differences in working-age individuals' employment, earnings, and private (occupational or personal) pension scheme membership, focusing on the impact of motherhood on women's position. Moreover, it considers alternative ways of protecting the pension income of carers and assesses the Pensions Commission's 2005 proposals in terms of women's pension needs.

The development of pension provision in Britain since January 1909, when the first public old-age pension was paid, should be celebrated as one of the greatest achievements of collective action in the twentieth century. This chapter examines what has and has not changed in terms of demographic and economic knowledge of pension systems. It then considers the causes and consequences of this delusional consensus and offers some suggestions about how a more responsible set of political and popular attitudes to pensions might be created, beginning with a fundamental reform to the state pension system. The rationale advanced by the Pensions Commission for maintaining much of the complexity of the current state system is the cost and disruption that would be entailed by radical change. This chapter discusses the political economy of pension reform in Britain, focusing on the link between demography and pensions as well as between pensions and economics.

The pension reforms proposed by Lord Turner's Pensions Commission were certainly radical, although perhaps not as radical as they might have been. How well did the government of Britain rise to the challenge posed by the Pensions Commission? In the months leading up to the white paper, a major battle raged in Whitehall. Although interpreted through the prism of conflict between Tony Blair and Gordon Brown, in fact a very familiar and traditional pattern of British pension policy-making was unfolding, with the Treasury fighting to contain spending commitments on pensions over the long term. It was arguably only the potentially expensive prospect of over 70 per cent of pensioners being able to claim means-tested Pension Credit by the middle of the century that has forced a recalibration of the present system. A few details demonstrate how the Commission's recommendations have been modified to secure this end. The most heavily trailed of the white paper's proposals is the relinking of the basic state pension to average earnings rather than prices.

While virtually all European countries with advanced welfare states are worrying about how to cut back their state pension generosity, and sometimes partially succeeding, the United Kingdom faces the opposite problem. It is offering its citizens both inadequate and very varied pensions for the future. The UK began providing state pensions at the beginning of the twentieth century and has been unusual in Europe in developing a large private occupational pensions sector built on and fostering sophisticated financial markets in London. The country relies more on means-testing than any other European country. No one thinking of the UK as conforming to the ‘Beveridge model’ would have expected that. William Beveridge was so adamant that this was not what the British people desired. A different theoretical starting point is needed to explain these dilemmas. It has to take account of the labour market and the particular structure of the trade union movement in the UK and its relationship to the Labour Party. The chapter also considers the role of the Pensions Commission.

In December 2002, the Labour government announced the formation of the Pensions Commission. In 2005, the Commission published comprehensive proposals for pension reform in their second report and it was a remarkable achievement; the proposals gained a broad acceptance from the government and opposition parties, trades unions, employer organisations, the insurance industry, special interest groups and the voluntary sector. In November 2006, the reform packages began to crystallise with the introduction of the first Pensions Bill which eventually became the 2007 Pensions Act. In 2007, the government published the second Pensions Bill, which at the time of writing aims to reform the private and occupational pension system, to take effect from 2012. Although this Bill attracted more controversy, there is again a substantial political and stakeholder consensus for the broad content. All reforms are incremental to the existing system, yet the reform package has the capability to alter the pension landscape dramatically. This chapter discusses the implementation of these reforms to the state pension after the major Turner Commissions on Pensions. It documents the decline of defined benefits in favour of defined contributions schemes, together with the new development of Personal Accounts and an assessment of their likely impact. In conclusion, the chapter suggests that the new pensions structure is a return to the Beveridge flat-rate system. Furthermore, it suggests that low earners and those with intermittent employment records may make ‘bad’ decisions about their pensions due to lack of clear guidance and advice available to this group. This may result in increasing inequalities between public and private pensions provision.

This chapter considers in depth some of the key elements of the new landscape of individualized pensions provision in the UK, reflecting in particular on some of the state’s emerging functions as facilitator, regulator, and provider of defined contribution pensions. It charts how the Pensions Commission’s vision for state-managed defined contribution was subtly marginalized, resulting in an approach which enables and indeed privileges privatized delivery of auto-enrolment, leaving private pensions provision caught between two radically different regulatory regimes, and rendering the state unable to act decisively to protect individual welfare. The chapter also discusses decumulation processes, including the Coalition government’s radical and highly destructive reforms to the annuities market, and the peculiar role played by pensions tax relief—providing a largely ineffective saving incentive, albeit at great expense.

The introduction of auto-enrolment in the UK is a genuinely transformative moment. While the earlier neoliberal ‘revolution’ in wider economic governance encompassed important changes to pensions policy and provision, auto-enrolment encompasses an extensive set of reforms designed to alter how the vast majority of people engage with private pensions provision. However, the flaws in the approach established by the Pensions Commission in the mid-2000s—arising largely from its acceptance of the dominance of defined contribution—have created myriad new challenges for policy-makers, and indeed enabled subsequent elites to reinforce individualized and marketized provision (with inegalitarian outcomes) in a way that severely undermines the Commission’s plan. The chapter explores the hugely flawed imaginary of the individual and rationality encompassed by elite support for defined contribution saving, and the crude behavioural assumptions upon which auto-enrolment is based.