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Austerity, ageing and the financialisation of pensions policy in the UK


This article offers a detailed analysis of the recent history of pensions policy in the United Kingdom, culminating in two apparent ‘revolutions’ in policy now underway: the introduction of ‘automatic enrolment’ into private pensions, and proposals for a new ‘single-tier’ state pension. These reforms are considered exemplary of the ‘financialisation’ of UK welfare provision – typified in pensions policy by the notion that individuals must take personal responsibility for their own long-term financial security, and engage intimately with the financial services industry to do so. As such, the reforms represent the continuation of pensions policy between the Labour and coalition governments, despite the coalition government’s novel rhetorical commitment to austerity. In fact, the pensions revolutions will actually cost the state significantly more than current arrangements, yet the importance of fears about population ageing means that the government is both able to marshal the imagery of austerity to justify financialisation, but is also required to partly conceal the increased expenditure this requires. The article shows therefore how the financialisation agenda in pensions policy was evident before the financial crisis, but has evolved to both take advantage, and mitigate the constraints, of a post-crisis political climate.

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    Earnings indexation immediately added more than £400 million to the annual cost of the basic state pension. In practice this extra spending has not materialised owing to sluggish earnings growth, but over the long term we can expect the additional spending resulting from earnings indexation to grow significantly as earnings growth typically outpaces inflation (especially inflation measured in CPI terms), and earnings indexation will from 2016 apply to the whole state pension award under the ‘single tier’ system (as discussed in the second section).


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The author is extremely grateful to Adam White and Richard Berry for comments on an earlier draft of this article, and to three anonymous reviewers for generous comments and many thoughtful suggestions, although the usual disclaimers apply.

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Berry, C. Austerity, ageing and the financialisation of pensions policy in the UK. Br Polit 11, 2–25 (2016). https://doi.org/10.1057/bp.2014.19

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  • pensions
  • finance
  • saving
  • financialisation
  • austerity
  • ageing society