Expense turns to investment: How the welfare state supports EU migrants’ economic achievements

Welfare support for European Union migrants to the UK has often been presented as a “burden”. However, evidence that migrants are strongly work-focussed suggests greater attention should be given to the welfare state’s social investment role. This briefing investigates the degree to which the UK’s welfare state helps EU migrants enhance their economic activity. How have policy changes post-2014 affected this situation? What would happen if the UK left the EU

Free movement? The impact of legislation, benefit generosity and wages on the pensions of European migrants

European economic integration has always involved a commitment to the free movement of labour, services and capital. However, the development by European institutions of specific rights with respect to labour mobility has been slow. This paper explores this issue from the perspective of pension rights, among the most long-lasting for citizens. It shows that the literature on this topic has focussed mainly on EU regulations; their scope and limitations. The paper argues that, while important, this work has led to the neglect of a more fundamental issue: the potential impact on mobility of the relative generosity of pension schemes and large national wealth variations, an increasingly salient issue since the expansion of the EU into Eastern and Central Europe. Thus, on the basis of a detailed review of dominant intra-EU migratory patterns, the paper investigates the impact on pension rights of movement between Beveridgean and Bismarckian pension systems and between countries of substantially different wealth. It shows that lower income workers who move from Beveridgean to Bismarckian countries would be most at risk of pension losses. However, such movement is unusual: instead the majority of intra-European migrants move from Bismarckian systems of low generosity in the poorer east to Beveridgean and more generous Bismarckian in the richer west. Workers who make this move are more likely to experience pension gains than losses. For them, free movement is achieved.<br/

Towards a ‘balanced’ approach to pensions reform? Individuals, the state and employers in the restructuring of post-retirement income in the UK

This paper tests the feasibility of individual saving as a solution to the pensions crisis and, heeding the Pensions Commission’s call for a ‘balanced’ approach to the UK’s problems, investigates the effect on individual savings rates of changes in state and occupational provision: ie the re-introduction of the Basic State Pension earnings link and a return to an average pension contribution of 8% for those employers currently providing occupational pensions. The paper is based on a series of micro-simulations of the pension entitlements of a selection of illustrative ‘risk biographies’, which are founded upon a critique of similar calculations undertaken by the DWP and Pensions Commission.The paper shows that:1. The introduction of typical risks (eg care responsibilities, unemployment, early retirement) to individual life biographies, and the use of an adequacy standard based on relative poverty, significantly increases the rate of saving required to secure an adequate income in retirement in comparison with the savings rates outlined by the DWP and Pensions Commission.2. A relatively small change in the current policies of the state and some employers has the potential to make the prospect of an increased reliance on individual savings a more feasible prospect.3. Greater intervention by the state and/or employers would nevertheless be required to cater for those with greater periods out of the workforce and/or working in sectors uncovered by occupational provision

When do benevolent employers change their mind? Explaining the retrenchment of defined-benefit pensions in Britain

This paper explores the politics of welfare retrenchment, but differs from much of the current literature in this area by focusing not on the decisions of politicians but those of private sector employers. In countries with a large private welfare sector, employers are major social policy players with a significant influence on the generosity of welfare provision, but the rationale behind their actions is not well understood. To explore these issues, a case study is used of the recent fundamental change in UK occupational pension provision, involving a rapid shift from defined-benefit to defined-contribution pensions. The paper shows by means of a micro-simulation of the relative performance of defined-benefit, defined-contribution and state pensions that this shift represents a significant retrenchment. It suggests, using historical material, interview data and insights from behavioural economics, that existing explanations for this change, while valuable, have important gaps because they are based on too narrow a conceptualization of business motives. In this regard, the paper highlights the importance of herd behaviour

Business, regulation and welfare politics in liberal capitalism

Concerted support from business organisations for increased state welfare provision is unexpected in liberal capitalism, but in Britain this occurred prior to recent major reforms of pensions. Using Mares' micro-theory of employer behaviour and studies of public/private mixes, this article shows that three umbrella organisations of employers and insurers supported higher state pensions because incremental state regulation of non-state provision over many decades and threats about even greater compulsion in the private sector had significantly reduced company control while increasing their costs. As a result, a higher state pension appeared more attractive to all business actors than further regulation of the private sphere. On this basis, we suggest that state regulation should be incorporated more firmly into theories of institutional development and interest formation in liberal regimes

The poverty risks of migrants who retire in their host country: evidence from the first post-war wave of migration into Europe

Migrants’ social rights have received increased academic and political attention over the last decade, not least because of the significant increase in migration within and into the European Economic Area (EEA) over this period. Academic, political and media attention has focused on the immediate social policy challenges these movements pose to destination countries with less consideration given to the longer-term impact of migration. Indeed, with regard particularly to intra-European Union migration, the assumption is widespread that migrants will return home, if not before retirement then certainly at that stage. Evidence from earlier migrations suggests this is mistaken. Against this background, it is important to know the likely financial situation migrants will face when they retire. This chapter investigates the financial situation of a sample of retired migrants from the first wave of post-war migration to the EEA by using the first wave of the SHARE dataset

Open for the childless skilled only: the poverty risks of migrant workers with children under the UK points-based immigration system

Post-Brexit, UK migration rules treat ‘EU- and non-EU citizens equally’. Thus, a much larger number of working migrants have less access to social rights than before. This article compares how the different welfare entitlements for working migrants and non-migrants affect the incomes of 21 hypothetical households; some workers are single, some have a child. Using micro-simulation, we assess the risk of poverty and the extent of inequality for migrants and non-migrants. We show that the system excludes new migrants from the social contract which defines the rights of UK citizens as working parents, leading to significant poverty risks and inequality

The politics of occupational pension reform in Britain and the Netherlands: the power of market discipline in liberal and corporatist regimes

The politics of occupational pension reform has attracted less attention than state pension retrenchment. Yet, in countries with large occupational welfare sectors changes in company provision can be equally important for welfare system generosity. This paper compares recent occupational pension developments in the Netherlands and Britain, exemplars of coordinated and liberal capitalism. The paper argues that despite regime-typical differences in the nature and process of change, recent developments have also been remarkably similar. In both countries retrenchment and individualisation has left most citizens at risk of being less well off in retirement. Corporatist governance in the Netherlands has not challenged the overall orientation of this process, but has merely distributed the costs of retrenchment more fairly than liberal Britain. Instead, the constraints of the globalised financial market directed change: exposure to market discipline, reinforced by national policy actors and international market regulators, made occupational provision vulnerable to retrenchment regardless of regime type. Thus, the significance for levels of social protection of differences between liberal and corporatist governance models of occupational pensions may have been overrated

The impact of the new public and private pension settlements in Britain and Germany on citizen's income in old age

This chapter uses policy simulation to illustrate the scale and nature of the institutional changes made to the German and British pension systems by reforms undertaken in the first decade of the new century. The projected outcomes of the new systems for a range of hypothetical biographies in both countries are compared with those of the systems they replaced. The chapter argues that the results of these simulations are consistent neither with the predictions of the gloablisation thesis nor regime theory. There is no evidence of institutional convergence on the basis of a ‘race to the bottom’, but nor have the two systems remained constrained by regime logic. In fact, Britain’s reform is strongly social democratic in orientation, with Germany’s strongly liberal. In the short-term these developments might generate some convergence of pension levels as German citizens spend more of their working life under the new less generous state system while Britain’s gradually gain the benefits of recent reforms. However, when analysis focuses purely on the nature of current public/private pension institutions as revealed by their projected outcomes the German system is shown to be more consistent with an ideal typical liberal regime than Britain’s