The UK pensions crisis and institutional innovation: Beyond corporatism and neoliberalism

With the defeat of the UK Labour government in May 2010, the incoming coalition government of Conservatives and Liberal Democrats contemplated abandoning the National Employee Savings Trust (NEST).2 Conceived by the Labour government’s Pensions Commission (2005), Lord Turner’s expert panel recommended the establishment of NEST as a way of addressing the pensions crisis: the future liabilities associated with government-provided social security, declining occupational pension coverage rates, and the accelerated closure of defined benefit pension schemes in the private sector (Pemberton et al., 2006). In effect, NEST is a state-sponsored pension reserve scheme for working men and women via automatic enrollment at their place of work. Although not mandatory, as is the case in Australia, Canada, and Sweden (Cronqvist and Thaler, 2004), it was designed to encourage private-sector employees to save for their retirement (in the manner suggested by Thaler and Sunstein, 2003). After a review, the coalition government affirmed the previous government’s commitment to NEST (which began in 2012).