Introduction

Twenty years ago, the British pension system relied upon three separate but interrelated pillars – the Basic State Pension (BSP), occupational pensions, and personal saving and investment. If praised for its resilience, more recently the system is believed by many to be unable to deliver on its (collective) promise; some commentators believe the UK pension system is not fit for purpose. Rising real incomes, combined with higher levels of income inequality have, in effect, discounted the value of the Basic State Pension for lower income retirees. Private sector occupational pensions have withered and died, leaving legacy schemes teetering on bankruptcy (Clark, 2006). Replacement schemes are less lucrative, and shift the risks associated with pension saving and investment to participants. Notorious instances of ‘mis-selling’ by the financial services industry have further diminished public confidence in pension saving products that rely upon commercial providers (Thoresen Review, 2008).

The apparent fragility of the system is commonly interpreted through the lens of neo-liberalism (Langley, 2008). Invoked are a sequence of events or tendencies: the breakdown of the Bretton Woods agreement; the Thatcher years; financial market deregulation in the mid-1980s; and global economic and financial integration. Among the various narratives told about the rise of neo-liberalism are three key beliefs with regard to the stability of inherited institutions like pension systems. First, neoliberalism has undercut social solidarity, replacing equitability between generations and social classes with deference to the individual (Preda, 2004). Second, the price of maintaining inherited institutions has been rendered transparent, and integrated into the ‘value’ attributed to the public and private organisations that sponsor these institutions. Third, the value of any institution is relative compared to other ways of organising society (at home, across Europe, and around the world) (Clark, 2003).

Lord Turner's Report (Pensions Commission, 2004; 2005) on the British pension crisis and the pathway to resolution was a comprehensive response to the problems apparent in each component of the British pension system. Maintaining and enhancing the value of the Basic State Pension (Pillar 1) was linked to the establishment of a state-sponsored workplace pension savings scheme (Pillar 2) and a commitment to better regulate the financial services industry, especially in relation to consumer savings products.