Introduction

The rhetoric of ‘partnership’ has been prevalent for a long time in the field of pensions in the UK. The ‘partners’ are seen as the state on the one hand, and a mixed group of employers, insurance companies and financial institutions on the other. Use of the term ‘partnership’, however, seems to be largely cosmetic. The relationship could equally well be described as ‘privatisation’ or ‘subcontracting’.

The essence of the UK approach is that the pension provided through state social insurance (or National Insurance), though close to universal, is very low in comparison to other developed countries. Non-state providers are then encouraged by generous tax advantages to ‘fill the gap’ and by further subsidies (in terms of reduced National Insurance contributions) to take over a part of the pension commitments the government would otherwise have carried. The ‘partnership’ has in the past also involved comparatively light regulation of employers and the pension funds themselves (though the tax and National Insurance subsidies have always come with generous helpings of red tape). In recent years, regulation has been considerably tightened, but certain elements are in the process of being relaxed again after complaints from the private pensions providers.

This chapter concentrates on the social welfare issues raised by ‘partnerships’ in pensions, rather than the economic issues. However, there is an equally interesting debate to be had about the way in which the state has worked with (and for) the vast financial power of the pension funds and insurance companies (see Minns, 2001).