Pensions provision in the UK has been undergoing a series of revolutionary changes since the 1980s, driven by public policy. The Thatcher government introduced a series of reforms to undermine collectivist ‘defined benefit’ provision, and promote individualised ‘defined contribution’ provision in its place. The last Labour government sought to roll out defined contribution across the private sector, ultimately embarking on the ‘automatic enrolment’ of millions of workers into privately run schemes.
Part of the problem with ‘defined contribution’ provision is inherent: investment risks are shifted onto the individual, that is, the cog in the pensions machine the least able to shoulder them. Yet the automatic enrolment system is also undermined by problems such as very low employer contribution rates, the exclusion of many low-paid and self-employed workers, and weak governance at scheme-level. Savers are also responsible for converting their pension pots into a regular income when they reach retirement, by choosing an annuity. This is an inherently fraught endeavour, and the mass market for annuities that most auto-enrolees depend upon has been further undermined by the recent ‘pension freedoms’ reform which allows wealthier savers to opt out of annuitisation.
Furthermore, the state pension no longer offers as secure a safety net for those unable to achieve a decent retirement income from pensions saving. The merger of state pension benefits into a single-tier ‘savings platform’ – essentially set at the poverty level – will see young people, in particular, receive significantly lower state pension awards than under the previous system.
As I argue in Pensions Imperilled, however, the retrenchment of the state pension does not mean the state is disappearing from UK pensions provision – far from it. The government-owned National Employment Savings Trust plays a substitutive role, providing private, defined contribution pensions to customers deemed unprofitable by private providers. And pensions tax relief continues to subsidise private pensions provision – with benefits skewed to the highest earners – at a cost of many billions of pounds per year, with no evidence that it serves to incentivise a higher saving rate.
Regrettably, very few of these issues have been contested – or even seriously scrutinised – in our democratic processes or wider political debates. Its complexity and very long-term nature means pensions provision is a low-salience political issue. Pensions should not, however, be of limited interest to political scientists, but alarmingly, pensions issues have received hardly any attention within our discipline recently.
There has only been one paper in Political Studies since 2003 with ‘pension(s)’ in its title or abstract. There has been only one paper in British Journal of Politics and International Relations with ‘pension(s)’ in its title since the journal launched in 1999, and a further two with this word in its abstract. Looking beyond the Political Studies Association stable of journals, British Politics has published two papers with ‘pension(s)’ in their title since launching in 2006 (one by the current author!), with a further paper with this word in its abstract. Policy & Politics has published twelve papers with ‘pension(s)’ in their title since 2003, but only one of these is focused on UK pensions, with a further two including the UK in comparative analysis (there are also two UK-focused papers with this word in their abstract).
There are some literatures which address pensions provision. Political economists in recent years have analysed UK pensions to some extent, principally by identifying the risks involved for individuals in defined contribution saving as an example of ‘financialisation’, and documenting the growing power of the asset management industry in shaping investment by pension funds. Neither literature considers pensions provision as a whole, but rather treats some aspect of provision, effectively in isolation, as a constitutive element of a broader political-economic process.
In mainstream political science, pensions provision tends to be categorised as a subset of welfare provision more generally. But this framing, while understandable, is limiting. Pensions provision is unlike other forms of social security, insofar as it is fundamental to capitalist industrial relations, even when provided by the state, rather than a form of financial support for those less able to participate in the capitalist economy. It also involves financial institutions – among the most powerful actors in any capitalist economy – far more than any other form of welfare.
How can we explain the reticence of our discipline in this regard? A cynical explanation is that most academics employed by UK universities have not been directly affected by the pensions revolution(s). Many of us are in a public sector pension scheme, the Teachers’ Pension Scheme. Many are in the Universities Superannuation Scheme (USS), which is undergoing significant turmoil, engaging UK academics in an ongoing industrial struggle. But it is not the same pensions struggle that most people in the UK are engaged in (whether they know it or not).
Another possibility is the discipline’s hazy understanding of power – a concept which should be political science’s beating heart. We are still circling around the issues discussed by Colin Hay a quarter of a century ago, torn between seeing context-shaping as an expression of power, or the ultimate definition of power. The context in which political science is conducted has itself been shaped by the forces and discourses which underpin UK pensions policy. We accept the notion of population ageing, believing it to align with evidence seen with our own eyes, without questioning whether it is genuinely novel, or interrogating the interests which underpin its promulgation. We understand the low salience of pensions issues as ‘depoliticisation’, because it seems to align with one of the contemporary discipline’s organising concepts. And we accept the welfarist framing of pensions policy at face value, assuming that it represents a rather conventional case of state/market interaction: normatively, we may want the state to provide more, but we recognise that welfare states in practice never do all things for all people, and dismiss pensions reform as just another form of retrenchment.
It is time for political science to take pensions policy more seriously, even if the public probably never will. Ultimately, if our neglect allows the imperilment of UK pensions provision to continue unchecked, millions of people will be significantly worse off in later life. Political science alone is not going to find the answers, but we can at least start asking the right questions.
These questions, in summary, would focus on both the appropriateness of a model of workplace pensions where risks are loaded primarily onto individuals, when employers and the state are much better placed to bear them. We would ask further about the genesis of a political culture in which the exclusion of many groups from even the meagre benefits of auto-enrolment, and indeed from a labour movement who might otherwise have been expected to represent their interests. Above all, it is necessary to consider why the state has been content in recent years to subsidise the private pensions industry, and ultimately create new opportunities for profit within the finance sector, while itself shouldering the burden of providing defined contribution pensions to unprofitable market segments.
A longer version of this article was first published in the Political Quarterly journal.