The Politics of Organising Private Social Protection – Individualising or Socialising Welfare Responsibility?

Private sources of welfare are increasingly important as public welfare provision retreats; yet the literature is not clear on how private protection is distributed. There are good reasons to expect increasing individualisation of responsibility, but also indications of growing socialisation of protection within private provision. This paper looks at the politics of organising occupational pension security in three countries with very different pension systems – Germany, the Netherlands and the UK. It shows that we can discern two different sets of empirical observations, each presenting a different picture regarding the distributional characteristics of private welfare provision. On the one hand, levels of old age income security in terms of stable employer promises are decreasing. By withdrawing such promises, private pension adequacy now depends more on individual saving and investment decisions. On the other hand, we also observe several reforms which significantly reduce discretion of individual workers and employers. For example, in all three countries, employers enjoy increasingly less discretion with respect to offering occupational benefits and differentiation between workers. Because important pension decisions are increasingly made or shaped at the level of collective bargaining or through regulatory intervention, allocation of private benefits depends less on what individual actors decide and more upon whether a worker falls under such collective agreement or regulation. These two dynamics point in very different directions – both in terms of individualisation and employer involvement in the burden of welfare provision. While the organisation of private pension provision is individualising in some respects, it is socialising in others. To explain these apparently contradicting dynamics, this paper builds on recent advances in the literature on institutional change regarding the multi-dimensionality of political struggles. Actors involved in pension reform have interests both regarding organising welfare provision, as well as regarding organising labour markets. Successful reform depends on achieving consensus across both dimensions. Employers prefer discretion in organising labour markets. Nevertheless, they accept decreasing discretion aimed at addressing social concerns; not because they would do so voluntarily, but in exchange for lower public expenditure and reducing their own expensive and unpredictable pension promises. In conclusion, the dual reform dynamic of individualisation and socialisation needs to be understood as a result of the consensus between different interests across different dimensions.