Explaining trends towards universal coverage in market-heavy pension systems
Market-heavy pension systems, in which low or moderate state benefits are topped up by private welfare arrangements, have long been expected not only to create dualisms, but also to fuel patterns of politics that perpetuate and even increase such dualisms over time. The starting point of this research is the observation that while some market-heavy pension systems indeed remain dualised in the post-industrial context, others have become more universal, either through changes to the structure of the state pension or through regulation to extend the coverage of private pensions.
My research objective is to explain the universalising changes that have occurred. I show that the very institutional features that are usually expected to lead to further dualisation, namely a reliance on market-based arrangements, the prevalence of targeting and limited earnings replacement, contribute to bringing about universalising reforms. In particular, I show how under certain conditions these institutional features help structure the policy preferences of key political actors such that those actors usually associated with the extension of state provision embrace market means, while those associated with private provision push for the expansion of the state pension.
I use fuzzy-set Qualitative Comparative Analysis (fsQCA) of nine market-heavy pension systems over the three decades since 1980 to map the combinations of causal conditions under which universalising reforms have occurred. In addition, I present case outlines linking the institutional conditions to the reform outcomes via the policy preferences of key political actors. In doing so I provide a causal logic that reinforces the results of the fsQCA and offers a substantial explanation for the introduction of universalising reform in some market-heavy systems, as well as for the absence of such reform in others.