The Regulatory Welfare State in Pension Markets: Mitigating High Charges for Low-Income Savers in the United Kingdom and Israel

Abstract

How does the rising 'regulatory welfare state' address social policy concerns in pension markets? This study examines this question by comparing the regulatory responses to high charges paid by low-income workers in pension markets in the UK and Israel. In the UK, with the recognition that the market would not cater to low-income workers, the regulatory response was the creation of a publicly operated low-cost pension fund (NEST), a 'public option' within the market. This allowed low-income workers access to a low level of charges, previously reserved for high-income and organised workers. In Israel, regulation sought to empower consumers, while providing minimal social protection by capping pension charges at a relatively high level, thereby leaving most of the responsibility for reducing the charges with the individual saver. By comparing these two cases, the article develops an analytical framework for the study of the regulatory welfare state, making two contributions. First, it highlights different types of regulatory citizenship: minimal regulatory social protection as opposed to a more egalitarian approach. Second, it identifies an overlooked regulatory welfare state strategy: creating 'public option' arrangements, whereby a state-run (but not funded) service operates within the market.

Accountability and hybridity in welfare governance

“…The reasons for these reforms include ideological preferences for smaller government, fiscal pressures to lower the costs of the welfare state, decades-long criticism of welfare bureaucracies as inefficient and paternalistic and attempts to promote social innovation and entrepreneurship. But regardless of motivation, these reforms have been a fertile ground for the proliferation of market and, at times, network forms of welfare governance and the rise of the regulatory state inside the welfare state (Gilbert, 2013;Levi-Faur, 2014;Benish et al, 2017).…”

Regulating social welfare services: Between compliance and learning

“…In recent decades, we have witnessed a major transformation in modern welfare states, with a movement towards the privatisation, decentralisation and commercialisation of social welfare. A new role for government is taking shape, often referred to as the ‘enabling state’ (Gilbert, ), or the ‘regulatory welfare state’ (Benish, Haber, & Eliahou, ; Haber, ; Leisering, ; Levi‐Faur, ). Within this role, instead of directly financing and delivering social welfare goods and services, welfare states increasingly rely on private actors and market‐type arrangements, reshaping the relationships between authorities, private providers and citizens (Ascoli & Ranci, ; Kotkas, ).…”

Welfare through regulatory means: eviction and repossession policies in Singapore

“…The findings suggest the occurrence and significance of social policy aimed at ensuring citizens' access to services provided in the market. This study adds to a growing number of studies which show the prevalence and the variety in the use of this kind of policy in different policy sectors and national settings, including electricity, housing credit, water and pension fees, in the UK, Sweden, Israel and the EU (see for example Haber, 2016;Benish et al, 2016).…”

“…In this research, we place policy aimed at preventing the termination of services due to financial hardship within the context of this literature of welfare through regulation (or 'regulatory welfare'), and focus on the housing credit sector, and specifically on the prevention of housing credit related eviction and repossession. Recent research on this issue has found cross national differences in how access to such services as electricity, water, rail, post and pension fees is regulated in the market (Haber, 2011;Pflieger, 2014;Eckert, 2015;Haber, 2016;Benish, Haber, & Eliahou, 2016).…”