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2011 | Buch

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The New Regulatory State

Regulating Pensions in Germany and the UK

herausgegeben von: Lutz Leisering

Verlag: Palgrave Macmillan UK

Buchreihe : Transformations of the State

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

Explores the role of governments in creating and regulating private pensions in the UK and Germany since the 1980s. Private pensions have given rise to a new regulatory state in this area. The contributing authors compare pension regulation and utility regulation, while others analyse the regulatory role of the EU.

Inhaltsverzeichnis

Frontmatter

Introduction: Towards a New Regulatory State in Old-Age Security? Exploring the Issues

Abstract

Are we currently witnessing the rise of a new regulatory state in the field of social security? The privatization of public utilities such as gas and water and the general liberalization of markets in European countries has led to extensive regulatory activities by national governments and the European Union (EU) since the 1980s (Majone, 1996). Can the expansion of private pension provision since the 1990s be seen as an extension of the principles of public utility privatization to welfare services and insurance? Or do we find that ‘welfare’ leaves its mark on regulatory policies, so that private welfare markets do not resemble utilities markets, but rather retain some of the characteristic differences in the relationship between the public and private sectors, the style of regulatory policy-making, and the goals pursued? This book inquires into the new regulatory policies and politics of private pensions — their nature, their rise, their limitations, and their repercussions.

Lutz Leisering, Deborah Mabbett

Theories of Social and Economic Regulation

Frontmatter

1. The Transformations of the Regulatory State

Abstract

This chapter recalls the historical origins and different national traditions of regulation, including changes in the views about the nature of the regulatory process over the last two decades. In order to analyse the privatization and regulation of pension regimes, new conceptual and institutional approaches are needed. The public/private mix which is characteristic of pension policies in Europe is foreign to the theory and practice of old-style statutory regulation, but is quite compatible with the new trends discussed in this chapter. The evolution of the regulatory state will, among other considerations, require a revision of normative criteria.

Giandomenico Majone

2. De-Regulation and Re-Regulation of Public Utilities: The New Regulatory State in the European System of Multi-Level Governance

Abstract

‘The degree of change in the ways governance through regulation is exercised can hardly be exaggerated’ (Jordana and Levi-Faur, 2004a, p. 1). This conclusion, drawn by Jacint Jordana and David Levi-Faur in their book on the ‘politics of regulation in the age of governance’, certainly holds for public utilities in Europe. It was in public utilities that the new regulatory state in Europe started its rise with the liberalization and privatization of the British telecommunications sector in the early 1980s. Since then, European countries have witnessed several waves of liberalization and privatization. This trend has included the whole range of public utilities from telecommunications, railways, electricity, and water, which, in most countries for most of the time, have been the exclusive domain of the state (Schneider and Tenbücken, 2004). Hence, the liberalization and privatization of public infrastructures have been among the most significant aspects of a comprehensive transformation of the state and its functions during recent decades (Sørensen, 2004).

Edgar Grande

3. Limits to the Regulated Market: The UK Experiment

Abstract

This chapter examines the shift towards a regulatory welfare state, using evidence from the experience of the UK. The UK can be seen as standing at one end of the range of European responses to globalization. The challenge facing the UK (and many other developed welfare states) during the past quarter century has been how to develop social policies that accommodate economic success in globalized markets with an adequate level of secure provision to meet social needs. From 1979 to 1997, the Conservative government sought to shift the balance towards free market solutions. ‘Public spending is at the heart of Britain’s economic difficulties’, declares the first sentence of the 1979 Public Expenditure White Paper (the annual policy planning document). The outcome was privatization across a range of areas, including pensions, and policies to cut state spending and transfer responsibility to individuals.

Peter Taylor-Gooby

Pension Privatization and Regulation in Britain and Germany

Frontmatter

4. Back to the State? The Public Policies of Private and Public Pensions in Britain

Abstract

Britain, being a liberal or residual welfare state, has always been characterized by a limited role for state pensions and a heavy reliance on private pensions, both occupational and personal.¹ Only in the mid 1970s, flat-rate state pensions were expanded by a substantial earnings-related second tier but this came ‘too late’ to be sustainable (Myles and Pierson, 2001). Since then, contributory state pensions have seen significant cutbacks while private provision has been forcefully promoted. Paradoxically, so I argue, the role of the state in British old-age security has not generally declined in the process, but has actually increased. This finding is similar to the ‘(de-)regulation paradox’ familiar from public utilities (see Chapter 2, in this book). In the case of pensions in Britain, the move towards ‘more state’ extends to four aspects.

Christian Marschallek

5. New Private Pensions in Germany: A Pension Market or a Branch of the Welfare State? Contested Regulatory Issues

Abstract

The landmark pension reform of 2001 was the starting point for a paradigmatic shift in German old-age security from a single-pillar design to a multi-pillar design (Bönker, 2005; Hinrichs, 2005). Further reforms in 2004 added to the new multi-pillar policy. As a consequence of these reforms, the standard replacement rate of the statutory pension insurance has started to decrease, and will continue to do so in the future, slowly but significantly. At the same time, occupational and personal pensions have been made more attractive. There is no doubt that, compared to the average income mix in old age today, a greater share of the future income mix in old age will stem from funded private pensions. Such reforms are generally referred to as ‘privatization’.

Frank Berner

The Role of the EU

Frontmatter

6. ‘Social Europe’ in Old-Age Security? EU Policies of Public and Private Pensions

Abstract

In the early 1990s, Rainer Pitschas — a scholar in administrative and social law — had a clear vision about an emerging pension policy promoted at the EU level by EU institutions. Pitschas (1993, p. 97) pointed out that the phenomenon of demographic ageing, which affects all European countries, could cause severe social conflicts in mid- or long-term perspectives, and that these conflicts would probably be dealt with by EU institutions: ‘If, by the year 2025, about 17% of Europe’s population will be above 65 years of age, this is most likely to influence the development of a genuine European pension policy’ (translation: UD). In 2002, Eberhard Eichenhofer — another expert in social law — concurred: social protection, so he said, was now a matter covered by EU law; the Charter of Fundamental Freedoms included an individual right to pension provision: ‘This right has to be implemented by community law’ (Eichenhofer, 2002, p. 329; translation: UD). Eichenhofer added that today, traces of social policy were also to be found in other EU policy areas, such as financial policy, monetary policy, or the interpretation of the freedoms guaranteed by the EC Treaty.

Ulrike Davy

7. Policies of the EU towards Occupational Pensions: Limits to Regulation

Abstract

The European Union has only lately and reluctantly become involved in pension policy, and there is not much EU regulation focusing on the social aspects of pensions. Exceptions to this are directives dealing with issues of gender equality and issues related to the free movement of workers. While Davy (Chapter 6 in this book) provides a broad overview of EU pension policy, including the regulation of occupational pensions, this chapter focuses on the debates concerning the formation of the key directive concerning the ‘activities and supervision for institutions of occupational retirement provisions’ (in the remainder: ‘the pension fund directive’), that was adopted in 2003.¹

Markus Haverland

Comparative and Conceptual Perspectives

Frontmatter

8. The Regulatory Politics of Private Pensions in the UK and Germany

Abstract

It is now well-established that privatization brings with it re-regulation, not de-regulation. However, this does not mean that we should expect that the policies once pursued under public ownership will be reintroduced by regulatory means. On the contrary, privatization can be understood as a way of institutionalizing changes in policy. This is particularly evident when privatization is accompanied by the delegation of powers to an independent regulatory authority, as has often happened when public utilities are privatized. Delegation can be a method for institutionalizing the pursuit of distinct regulatory goals, generally weighted towards enhancing efficiency and promoting competition.

Deborah Mabbett

9. The Regulatory Policies of Private Pensions in the UK and Germany: Goals and Instruments of Regulation in a Welfare State Environment

Abstract

The interpretation of the (partial) privatization of social services in European welfare states since the 1990s is controversial. Social critics diagnose a ‘surrender of public responsibility’ (Gilbert, 2002) while reformers see privatization as a better way to achieve welfare ends — ‘welfare ends through market means’, as Taylor-Gooby described the rationale of New Labour policies in the UK (Chapter 3 in this book; see also Taylor-Gooby et al., 2004). Both sides have a point. The critics argue that institutions serving the public good are subjected to market principles and economic interests. Social rights and entitlements give way to opportunities (and risks) in the market, redistributive policies are curtailed in favour of enabling and activating policies, and individual responsibility replaces public responsibility. By contrast, reformers maintain that social ends are upheld; only the instruments use to exert responsibility change. Private providers are seen to meet welfare ends better than state agencies, by delivering welfare goods in a more efficient, cheaper, and more responsive way. In the 2001 pension reform in Germany, reformers indeed referred to welfare ends when introducing a subsidized private pension, the Riester-Rente, with the explicit aim of closing the income gap in old age brought about by reductions in public pensions.

Lutz Leisering

Conclusion: Identifying the New Regulatory State

Frontmatter

10. Varieties of Market Regulation: Comparing the New Pension Regulation to the Regulation of Public Utilities

Abstract

Older traditions of thinking about regulation exist in several countries. In the more recent history of public policy it was public utilities and their privatization in European countries since the 1980s which triggered studies of regulatory politics and policies (see Chapters 1 and Chapter 2 in this book). In Anglo-Saxon societies, regulation was seen as a functional equivalent to nationalization and state ownership, which dominated in Continental Europe. Sectoral regulation by a regulator was the model particularly pronounced in the United States (Chapter 1 in this book). The idea of regulation is to enhance the control capacity of governments by delegating powers to markets and regulators while still securing legitimacy. Thus, regulation is akin to market liberalism, but to a variety which acknowledges the coordinative requirements of markets.

Lutz Leisering

11. Transformations of the State: Comparing the New Regulatory State to the Post-War Provider State

Abstract

The modern nation state is facing the double challenge of privatization and globalization (Leibfried and Zürn, 2006). The global pension fund capitalism links the two challenges. Some observers claim that the nation state is declining, but scholars increasingly emphasize the resilience, and even the transformation and new expansion, of the nation state. This book is published in the series from the Collaborative Research Centre 597 in Bremen (financed by the German Research Council, Deutsche Forschungsgemeinschaft, DFG) whose title — ‘Transformations of the State’ — indicates the approach taken. The Collaborative Research Centre 700 ‘Governance in Areas of Limited Statehood’, Berlin, attends to related issues with regard to non-Western countries, with the guiding perspective that even in areas of limited statehood, the ‘shadow of the state’ or the ‘shadow of hierarchy’ can be discerned. Similarly, there has been talk about the decline of the welfare state. Paul Pierson was the first major scholar to challenge this view by postulating a ‘new politics of the welfare state’ (for a comprehensive presentation, see Pierson, 2001). Levy (2006a) has collected evidence for ‘new state activities in the age of liberalization’ covering various policy areas, not only welfare and utilities. The analysis of the ‘new regulatory state’ in this book underpins the ‘transformation’ and ‘expansion’ strand of the debate rather than the assumption of decline (see also the Afterword, in this book).

Lutz Leisering

12. Varieties of the New Regulatory State: Comparing the UK and Germany

Abstract

The UK and Germany differ in many respects: the two countries have been juxtaposed as specimens of a liberal market economy and a coordinated market economy respectively; as a liberal and a conservative-corporatist welfare regime; as a majoritarian democracy and a consensus democracy; with regard to pensions, as a Beveridge model (with a flat-rate basic pension) and as a Bismarck model (with earnings-related, contribution-based social insurance); and, more recently, as a ‘private pension veteran’ and a ‘private pension newcomer’. Do the UK and Germany equally embody two types of regulatory regime? Theoretical expectations are not entirely clear. From a functionalist point of view, we could expect more extensive regulation of pension markets in the UK since private pensions have a much bigger role to play. From a political perspective, however, we could expect less intensive regulation in the UK due to the tradition of market liberalism. Finally, from an institutionalist point of view, the institutional traditions of the two countries may have created developmental ‘paths’ which would shape the formation of the new regulatory state. In this chapter, we first compare the regulatory policies and arrangements in the two countries, identifying differences as well as similarities.

Lutz Leisering

Afterword: Rethinking the Nation State

Abstract

The move towards marketization in old-age security is not just the outcome of ‘neoliberal’ thinking, but reflects wider changes in society during the post-war decades. This includes cultural changes like individualization and consumerism, economic prosperity spreading to broader sections of society, and new social problems, particularly the ageing of the population. The growing regulatory activity of the state is not just a response to marketization, but also to those wider socioeconomic and cultural changes. Levy (2006, pp. 13–22) lists a similar range of ‘sources of contemporary state activism’ to counter claims that the (nation) state is retreating. Most of the contributions to this book focus on the national level of politics, confirming the activism of nation states highlighted by Levy. But in an age of Europeanization and globalization, supra- and transnational forces gain weight. Three contributors to this book enquire into the role of the European Union: Davy, Haverland, and Grande, the latter investigating the EU as part of a multi-level regulatory regime in public utilities.

Lutz Leisering

Backmatter

Titel: The New Regulatory State
herausgegeben von: Lutz Leisering
Verlag: Palgrave Macmillan UK
Electronic ISBN: 978-0-230-34350-4
Print ISBN: 978-1-349-32296-1
DOI: https://doi.org/10.1057/9780230343504