The Politics of Choice in Occupational Pensions
Sweden, the Netherlands and Denmark are ideal cases for analysing the politics of individual choice in pension provision because they represent the introduction of several kinds of choices into both public and private schemes. Sweden introduced mandatory individual accounts as part of its major public pension reform in 1998. Participants choose from more than 600 funds for the portion of their pension contribution that is earmarked for the individual account. The Netherlands has expanded individual choice in private occupational pensions by allowing participants to choose a flexible retirement age (with correspondingly higher or lower pension), to receive a higher pension in return for higher contributions, and to swap survivor benefits for a higher individual pension. In Denmark, mandatory private occupational schemes now offer participants a wide range of choices in terms of benefit levels and investment products.
The paper analyses the political processes that led to the introduction of these individual choices. In Sweden, individual choice in mandatory accounts was highly contested. Individual accounts and individual choice were the centerpiece of the pension reform for the non-socialist parties, wheras the Social Democratic Party strongly opposed them. The Social Democrats accepted individual choice as part of larger compromise. In contrast, Danish and Dutch occupational pension schemes have introduced individual choice without much controversy. The paper explains this difference by emphasising how policy legacies in the public and private social policy-making areas shaped outcomes.