The retrenchment of public pension provision in the liberal world of welfare during the age of austerity—and its unexpected reversal, 1980–2017

Abstract

AbstractPension system adaption during the “age of austerity” since 1980 is expected to vary between industrialized countries broadly in line with their membership of conservative, liberal, or social democratic worlds of welfare. Empirical testing on the liberal world focuses on the later period and differs in its conclusions. This paper is based on a systematic study of the scale, nature, and trajectory of change in six liberal pension systems between 1980 and 2017 using expenditure, economic, demographic, and social rights data. These data are analysed using a framework developed through critical engagement with Pierson's three welfare state change criteria and the welfare state “dependent variable problem.” The paper finds a significant retrenchment of public pension provision in most liberal welfare states after 1980 but largely during the first half of the period. This has been partly reversed in most countries since the mid‐1990s, though the scale of this reversal varies between countries. The recent rise of the state in liberal systems has been noted by some commentators, but to be properly understood, the paper argues, it must be considered in the context of the significant retrenchment, which preceded it. There is a scope especially for research on the broader social context of recent reforms, particularly how middle‐income groups were affected by retrenchment and how recent reforms have mitigated this.