Social Expenditure, Pension Systems, and Neoliberalism

The neo-liberal tide of privatisation targeted public pension schemes quite some time ago. While decreasing the role of the State as such is part and parcel of this ideology, another as-pect of privatising basic needs does not seem to have received appropriate attention. Govern-ment intervention and trade union strife for higher income have created high levels of rela-tively wide-spread wealth, which could profitably be tapped by private business. This is simi-lar to state property such as railways whose privatisation offers golden business opportunities. The necessity to provide for old age and outright fear of misery during this stage of one's life are powerful incentives to provide financially, even if fees and charges for doing so are rela-tively high – elasticity of demand will be low. Naturally, private pension schemes are likely to remain a comparatively marginal fac-tor- of interest mainly to a relatively small layer of the well heeled- if and as long as public schemes offer relatively good levels of income for most people. By contrast, if public schemes were abolished altogether, a huge market would be opened to private business. Re-ducing or abolishing public systems allow private firms to tap this promising market more profitably. Re-channelling parts of mandatory contributions into private funds could strike