BridgenMeyer

Private Pensions and Social Inclusion: Does Voluntarism have a future?28th October 2005, London School of Economics 2005: 

Private Pensions and Social Inclusion: Does Voluntarism have a future? 28th October 2005, London School of Economics 2005 It could be you. The risk of social exclusion in the UK pensions lottery Paul Bridgen and Traute Meyer University of Southampton

Slide2: 

Private Pensions and Social Inclusion in Europe 5th Research Framework of the EU. Jan 2003 - October 2005 The Netherlands B. de Vroom, D. Bannink, University of Twente Switzerland G. Bonoli, F. Bertozzi; University of Fribourg UK P. Bridgen T. Meyer, University of Southampton Germany B. Riedmüller, M. Willert, Free University of Berlin Italy P. Calza Bini, S. Turcio; Institute of Research on the Dynamics of Social Security Poland M. Benio; Cracow University of Economics

Bridgen/Meyer Pensions Lottery : 

Bridgen/Meyer Pensions Lottery Main Questions of the Project To what extent can private pension provision achieve aims of social inclusion? To what extent, and in what ways, must governments intervene in the private pensions sector to secure social inclusion objectives? Introduction Main findings UK UK in comparison Policy conclusions

Slide4: 

Methodology Construction of seven illustrative individuals with a life-time income above the social assistance threshold and below 50% average wages suffering typical social risks ( „risk-biographies“). Compilation of regulations governing accrual of public/private pension entitlements as of January 2003. Micro-simulation of public and private pension entitlements for risk biographies accrued between 2003 and 2049. Introduction Main findings UK UK in comparison Policy conclusions Bridgen/Meyer Pensions Lottery

Slide5: 

Introduction Main findings UK UK in comparison Policy conclusions No straightforward causal relationship between the social risks generally accepted as determinants of low income in old age (eg low wages, part-time work, care responsibilities, economic inactivity) and social exclusion. The British system produces some of the highest pensions in our group for some risk-biographies – and some of the lowest. Reason: low level of public pensions and employer voluntarism . Consequence: Quality of protection depends on the type of employer and their pension scheme. Thus, risk- biographies participate in a pension lottery. Main findings from the UK Bridgen/Meyer Pensions Lottery

Slide6: 

Introduction Main findings UK UK in comparison Policy conclusions An arrangement for the distribution of prizes by chance among persons purchasing tickets. (Oxford English Dictionary) An activity or event regarded as having an outcome depending on fate. http://www.thefreedictionary.com/ Lottery Bridgen/Meyer Pensions Lottery

Slide7: 

Introduction Main findings UK UK in comparison Policy conclusions Projected pension levels (in 2050) of an unqualified worker and carer in the retail sector by three types of pension scheme Bridgen/Meyer Pensions Lottery

Slide8: 

Introduction Main findings UK UK in comparison Policy conclusions Projected pension levels of an unqualified blue collar worker in car manufacturing by three types of pension scheme Bridgen/Meyer Pensions Lottery

Slide9: 

Introduction Main findings UK UK in comparison Policy conclusions Projected pension levels of married retail worker/carer and car manufacturing worker by combinations of pension scheme Bridgen/Meyer Pensions Lottery

Slide10: 

Introduction Main findings UK UK in comparison Policy conclusions Projected Pension levels of all risk-biographies in UK, NL, SW in relation to bare inclusion (2050) Bridgen/Meyer Pensions Lottery

Slide11: 

Introduction Main findings UK UK in comparison Policy conclusions Projected pension levels of an unqualified worker and carer in UK, NL, SW by public/occupational scheme Bridgen/Meyer Pensions Lottery

Slide12: 

Introduction Main findings UK UK in comparison Policy conclusions Projected pension levels of unqualified blue collar worker in UK, NL, SW by public/occupational scheme Bridgen/Meyer Pensions Lottery

Slide13: 

Introduction Main findings UK UK in comparison Policy conclusions Non-state pensions contributions of carer and worker in UK, NL, SW required for bare inclusion (40% of average income) Bridgen/Meyer Pensions Lottery

Slide14: 

Introduction Main findings UK UK in comparison Policy conclusions Non-state pensions contributions of unqualified blue-collar worker in UK, NL, SW required for bare inclusion Bridgen/Meyer Pensions Lottery

Slide15: 

Introduction Main findings UK UK in comparison Policy conclusions Conclusion UK Pension outcome in Britain is not necessarily determined by type of social risk, but is largely influenced by type of pension scheme. Access to good schemes for many private sector workers with large employers is a matter of chance. The public sector is (still) an exception. The unequal outcome in this pensions lottery is explained by low public pensions and employer voluntarism. The necessary savings rate of risk-biographies who are not sufficiently protected by public and occupational pensions is unrealistically high for many. Bridgen/Meyer Pensions Lottery

Slide16: 

Introduction Main findings UK UK in comparison Policy conclusions Conclusion UK in comparison The public/occupational pension regimes in The Netherlands and Switzerland protect risk-biographies more reliably against poverty than the British. Pensions are not always as high, but very low entitlements are rare. This is because the state pension is higher and more coercion is exercised over employers; thus access to occupational schemes is much broader. Bridgen/Meyer Pensions Lottery

Slide17: 

Introduction Main findings UK UK in comparison Policy conclusions The Netherlands and Switzerland show that stricter government/trade union regulation of the private sector generate better overall results regarding social inclusion because gaps are avoided better. Bridgen/Meyer Pensions Lottery To what extent can private pension provision achieve aims of social inclusion?

Slide18: 

Introduction Main findings UK UK in comparison Policy conclusions Are voluntarism in private pensions and social inclusion reconcilable aims? Large employers have an inherent interest in providing occupational pensions as a means of human capital management. This voluntarism has protected some British employees well in the past. Despite changes, in the absence of more state compulsion large employers will continue to act as voluntarist social policy players. Small employers do not have this interest. In a voluntarist regime protection gaps in this area are inevitable. Vulnerable individual citizens cannot save enough to make up for protection gaps inherent in voluntarist regime. A voluntarist pension regime can be socially inclusive, if a higher basic state pension cushions the gaps employer/citizen voluntarism inevitably creates. Bridgen/Meyer Pensions Lottery