Beyond the distinction between public and private: hybrid welfare production in German old-age security

Abstract

"Normally, when pension schemes are described, classified and compared, the categories of "public" and "private" are of primary importance. However, the distinction between "public" and "private" in the context of old-age security has recently been questioned for two reasons. First, most pension schemes can not unambiguously be classified as either "public" or "private". Consequently, the idea of an institutional welfare mix and the well-known pillar-metaphor with its clear-cut division between "public pillars" and "private pillars" are obviously too simplistic to convey the empirical diversity in old-age security. And second, recent pension reforms in Western-European welfare states have intensified the state regulation of what is conventionally called private pensions. The pension reform of 2001 in Germany is a good example of such public policy on "private" pensions and its consequences: Tax-financed subsidies for and regulation of occupational pensions and personal saving blur both the distinction between occupational and personal pensions as well as the distinction between "public" and "private". The emerging pension schemes are not only public-private mixes, but are genuinely hybrid. Applying the distinction between ‘public’ and ‘private’ to these schemes would be a serious misinterpretation of their essence and an underestimation of their complexity. Arguments about whether a particular scheme is predominantly "public" or "private" are ultimately political conflicts about the realm and extension of the state. This paper therefore pleads to leave the distinction between "public" and "private" to the political debate. New concepts and terminology are needed for the social scientific analysis of old-age security." (author's abstract)