“For forty years, British governments have sporadically pursued the chimera of private schemes replacing state provision,” said Professor Noel Whiteside, University of Warwick, Zurich Financial Services Fellow. “This strategy must be abandoned and a permanent negotiated settlement between public and private obligations put in place, to restore confidence.” Her remarks come from a conference on Friday 8th March organised by pensions researchers from the University of Warwick and Oxford.
Professor Whiteside went on to say that “Informed discussion on alternative strategies is in short supply. We can only hope that our government is prepared to admit that current policy is unsustainable and to look for different policies and other remedies.”
British pensions are in a mess. The IPPR report published last week joins a growing chorus of demands for New Labour to reconsider its pension strategy. The March 8th workshop entitled "Pension security in the twenty-first century: redrawing the public-private divide" was co-sponsored by the ESRC and Zurich Financial Services and focused attention on how responsibility between public and private sectors might be properly defined. The event brought together European and American experts to discuss the lessons for British policy to be gleaned from overseas experience.
Discussion at the workshop centred on how other countries address the financial and political pressures stemming from demographic change. The researchers noted that in the United States, the possibility of privatising all pension security, the product of booming equity markets in the 1980s and 1990s, is now in abeyance following recent market uncertainties. In the Netherlands, compulsory membership of funded pension schemes has existed since the 1950s. This offers one of the most viable and secure pension futures in the world – as well as the largest pension funds in continental Europe.
"Although recent market trends make their future today appear uncertain," said Professor Gordon Clark of Oxford University, the workshop’s co-organiser, "pension funds still have more resources to devote to old age security than most governments."
The researchers also noted that aside from the issue of old age security, European governments are increasingly turning to funded schemes for other reasons. Pension funds are major players in global investment. Many European leaders believe that American advantage in the development of new technologies is partly explained by US companies’ access to venture capital supplied by pension funds. Ergo, if funded schemes take off in Europe, this will stimulate competitiveness and the knowledge-based economy that the European Commission is so keen to promote.
For further information please contact:
Professor Noel Whiteside
Professor of Comparative Public Policy
University of Warwick,
Zurich Financial Services Fellow
Tel: 024 76 523173 or 01993 772871