individual decisions – usually resulting from the decisions of (large) individual firms and often due to union bargaining. But even in these cases the coverage very rarely extends beyond 10% of the labor market and is often far lower. Those countries that do have coverage above 10% from purely voluntary occupational pensions (e.g. the UK, Canada, the US) have very active political debates about the need to expand private pension coverage. Therefore, if the answer to the question on the desired coverage level is for something above 10%, then the policy maker will need to do far more than create legislation to allow the sale of pensions with some form of tax‐preferred status and rules that lock in assets until a person reaches a certain age.

Individual voluntary pension provision – or the ‘third pillar’ ‐ is very often structured as a product purchased by individuals from a private provider as a ‘normal’ financial product. Providers are often insurance companies, or dedicated pension fund management companies – and are often themselves part of larger financial services groups. This can be a sensible and important first step in a journey to building all the necessary pillars of pension provision. Albania, for example, founded its third pillar in 2009 at a time when there were certainly not the pre‐conditions for a move to a mass market second pillar, whether via compulsion or auto‐enrollment. Turkey in 2003 is a similar example.

This third pillar model certainly allows pension products to be rapidly and freely available. However, translating availability into coverage can be very tough. These third pillar pensions have a value‐chain that is more akin to the sales of insurance products – relying on a network of sales agents and competition between many vertically‐integrated providers.<sup>4</sup> Interestingly, a new survey by the International Association of Insurance Supervisors (IAIS) and International Organization of Pension Supervisors (IOPS) has shown that around 50% of the value of insurance company life insurance business comes directly from pension markets, where in many cases the large size of the business in the first place is due to a government mandate.<sup>5</sup> Moreover, when a country wants to expand coverage, the market structure of the ‘many firms‐many buyers’ vertically integrated financial group does not translate well to delivering the best outcomes for a mass market product. This need not matter if there is a clear understanding of the issue and a commitment to start a mass market approach using a different market structure. But once the third pillar is well‐established policy makers face the problem of politically influential incumbent providers who may well resist the development of a different approach – particularly one that might break the link between provider and individual customer that can be an important part of improving outcomes as set out below. New approaches can be developed, but the experience of the UK in developing auto‐enrollment reforms shows that even well‐developed proposals by an effective pension commission that generated broad political consensus faced very strong resistance from many incumbents. This led to 2 separate reviews into the proposals made for auto‐enrollment in 2007 and 2010, both of which had the potential to derail or significantly undermine the reforms that have now added an extra 7 million savers (out of some 30

> 4 Insurance provision is almost never compulsory in the way that pension contributions are often mandated or quasi‐ mandated – except for car insurance, some forms of personal liability insurance, and in the case of Turkey mandatory earthquake insurance. Rules set by mortgage lenders can sometimes make home insurance effectively compulsory as well as some form of life cover, but this is not universally the case, and there is typically no check once a mortgage is provided that the cover remains in place.

> 5 IAIS and IOPS 2017 forthcoming.

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