Privatization and after: time, complexity and governance in the world of funded pensions

Summary Externalities consequent on pension privatization have returned to haunt governments: externalities revealed in falling asset returns, rising administrative costs and increasingly intermittent contributions that reflect more intermittent employment. This article reviews the regulatory complexities following the promotion of personal private pensions, identifies the governance problems these entail and suggests a few measures to restore public confidence and trust. It draws our attention to the political as well as market-based risks implicit in new systems by showing how governments have adapted commercial pension provision to serve social ends and to safeguard the public finances in more ways than one. The conclusions identify solutions to issues that need urgent attention, notably the opaque nature of annuity markets, the provision of independent monitoring and information capacity and a possible reconstruction of retirement itself.