Pension financialisation – here to stay?

Financial markets are playing an ever-greater role in people’s daily lives, a phenomenon referred to as “financialisation”.  Through pension reform, for example, governments have plugged gaps in public pension systems by encouraging private retirement savings, often incentivising investment in financial market instruments. 

Exploring the effects of the 2008 financial crisis on this development, Hertie School Professor of Public Policy Anke Hassel is guest editor of and contributor to Volume 26 of the Journal of European Public Policy, dedicated to “The political economy of pension financialisation:  public policy responses to the crisis”, together with Tobias Wiß of the Johannes Kepler University in Linz.

In their introductory article with Marek Naczyk of the University of Oxford, the authors argue that, “Even though pension funds in almost all OECD countries lost massively during the 2007/08 financial crisis, there is no general reversal of financialisation and no general trend towards greater public provision.” They go on to say that governments’ responses to such risks were widely varied – there was both expansion and correction of financialisation. 

“If financialisation and pre-funded private pensions are now a fact of post-industrial societies, the challenge is to work towards a governance system that can minimise risk exposure, maximise returns for the insured and ensure proper supervision of the financial services industries,” they conclude.

In a separate article, “Insuring individuals ... and politicians: financial services providers, stock market risk and the politics of private pension guarantees in Germany”, Hassell and Naczyk explore the political dynamics behind the development of Germany's private pension system.

The research is part of the Hertie School project State, Risk and Society (STARS), supported by the German Federal Ministry of Education and Research (BMBF).

Explore this issue of the journal and the articles online.