Between Competition and Cooperation: Financial Incumbents and Challengers in German Pension Politics

It has long been overlooked that factions of finance such as banks and insurers can have opposing policy interests. This paper is concerned with the preferences and strategies of private financial actors in the context of private prefunded pensions. To capture the “tug of war” among these actors, this paper identifies their different financial business models (insurance- and investment-orientation), political roles (financial incumbents and challengers), and levels at which infighting may occur (political and product-market level). For the German case, it shows that product-market competition among financial incumbents and challengers over retirement savings products only turned into competition politics during the 1990s, when shifting political winds provided an opening to insert path-shaping instruments in line with the program of finance capitalism. Financial actors’ preferences are not a derivative of economic or functional incentives, but socially embedded in that they are crucially shaped by interactions with their competitors and the political environment. The analysis disentangles the complex web of competition, cooperation, and ownership among factions of finance and discerns their genuine preferences from those strategically adjusted to context. This sheds doubt on functionalist explanations of (pension) financialization and enhances our understanding of how financial actors form and pursue their preferences.