Contents

* Welfare Blocs and Financial Systems
* Box 1: Types of Pension
* From Supplementary to Fundamental
* Financial Markets and Pension Funds
* Box 2: Pension Organisations
* International Pension Flows
* Box 3: Manias, Panics, Risks . . . and Pension Funds
* Pension Dollars
* Box 4: From Eurodollars to Petro-dollars to Pension Dollars
* The Arguments for Private Pensions
* Too Many Old People?
* Box 5: Living Longer—and Shorter
* Box 6: Too Many Old People?
* Not Enough State Money?
* Box 7: Profit and Prejudice
* State Expenditure Too High?
* Box 8: Rates of Return and Welfare
* Expenditure on Public Pensions or Public Subsidy of Private Pensions?
* Box 9: Defined-Benefit versus Defined-Contribution
* Draining or Boosting the Economy?
* Box 10: Pension Funds Change Markets and Assets
* Private Pensions Increase Savings?
* Box 11: Taking "Social" and "Security" out of US Social Security
* State Liberation?
* Box 12: The Pension Penalties of Motherhood
* In Whose Interest?
o • Financial Institutions
* Box 13: Exporting Financial Services—and Insecurity?
o • Government Interests
o • International Government Organisations
o • Corporate Interests
* Box 14: Pension Funds Transform Germany's Economy
o • Labour
o • Academics, Media and Politicians
* Conclusion
* Box 15: "Scandal, Poverty and Privatization": The British Pensions Disaster
* Notes and References

This briefing is largely an edited extract of The Cold War in Welfare: Stock Markets versus Pensions, by Richard Minns, Verso, London, 2001, which has been updated and expanded by Sarah Sexton of The Corner House with the author's permission and approval.

Summary

Many countries now seem preoccupied with ageing: the increasing numbers of older people relative to the declining numbers of younger ones; and increased life expectancies. Far from being a cause for celebration, however, of greatly improved living and working conditions, alarms are raised about "demographic time-bombs", "longevity risks", "generational conflict" -- and pension crises.

One proposed solution is to persuade, even compel, people to save more for their old age by putting their spare money in pension funds run by private financial institutions, which would invest it, primarily in stock markets. These investments, it is claimed, would not only generate enough profits to pay pensions but would also stimulate economic growth.

But more than a decade since this idea was implemented around the world, it has led neither to better pensions for more people, nor to greater economic growth.

The theory persists only because financial, commercial, political and labour interests, backed by the work of academics, support it for their own opportunistic reasons -- to expand stock markets, "liberalise" financial markets or change the role of the state. Pension privatisation is not really about pensions at all, but about furthering these goals.

This briefing outlines the different ways in which countries have financed both social security for older people and economic production. It describes the rise of the private model of pensions and the influence of pension funds on capital flows around the world. It then summarises and critiques the main justifications given for expanding private pension schemes, and analyses the motivations of the groups that perpetuate this model.