Staying Above the Fray: The Politics of Private Pensions

Governments under pressure to secure population incomes in old age have embraced the promotion of private pensions. Their motives were political as well as financial. Privatisation could be thought of as setting up a form of ‘automatic policy-making’, as individual savings decisions and market-generated returns take the place of political decisions. To the extent that a regulatory framework is needed, its operation could be delegated to specialised agencies. However, the promise of depoliticised management and adjustment has not always been met, and the financial crisis has presented a particular challenge. This paper considers the factors that have pulled governments into making changes in private pension policy, in comparison with cases where they have managed to stay out. The existing literature has thoroughly explored one hypothesis: that interactions between public and private provision pull governments in. This paper focuses on another hypothesis derived from delegation theory: that regulators may develop autonomy and thereby limit and channel political intervention. The determinants of regulatory autonomy, including the potential impact of stresses arising from the financial crisis, are explored through a comparison of several countries in the STARS project, including the Netherlands and the UK. The implications for understanding markets as ‘depoliticising’ institutions are discussed.