Pension privatisation and the financialisation of retirement provision

Privatisation is often at the centre of debates on welfare state reform in general, and of studies of changes in systems of retirement provision in particular. It therefore somehow comes as a surprise that only few attempts have been undertaken to define what exactly is involved in this form of institutional change. One of the problems seems to be that privatisation can mean a lot of things, or at least that it entails a number of quite different aspects, that only to some extent overlap with one another: (1) responsibility in provision; (2) possibilities of exit from statutory plans; (3) the transfer of the administration and management of schemes from public bodies acting in a unitary non-competitive administrative environment towards private sector actors acting in a more fragmented competitive market based environment; and (4) the financialisation of retirement risks that shift contingencies associated with retirement from the collective to the individual, not only involving a re-commodification that boosts the importance of a record of labour market participation as a precondition for pension entitlements, but also an increase of the reliance on financial markets to secure the resources necessary to pay for the liabilities that arise out of these entitlements. After devising a compound index of privatisation that seeks to tap into these different aspects and that is used to categorise OECD countries, the paper focuses on how differences in the governance and regulation of private pension institutions in a selected number of countries has varied consequences for the financialisation of everyday life of pension plan participants.