UK vs. Germany, I.
Part I. An AI-related pension decision; Bismarck and Beveridge; styles of authority; the future of two systems?
I shifted my UK pension out of equities recently. It took a few clicks. Then, co-incidentally, I read Stuart Kirk’s column on doing something similar.
And it is in those moments of ubiquitous consensus that something inside me snaps — as it did at the apogee of sustainable investing when I gave “that speech” (Google it). I know not why. Stuart Kirk, FT.
This reminded me how far we have come since Stuart Kirk’s ESG moment in 2022. Whether or not you agreed with him is beside the point. He was prescient in seeing a change in the ‘narrative landscape.’
Do you remember when ESG sat near the centre of every business discussion? Today it’s AI. It sucks in all the attention and generates the leading stories.
The irony is that many of the criticisms Kirk levelled at ESG, the pressure to conform, thematic momentum, narrative treated as destiny, apply more neatly to AI now than they ever applied to ESG.
Anyway, I decided that a modest pension, accumulated over roughly ten years working in the UK and which has gained in the recent stock market runs, needs a breather from ‘growth’ that I do not understand. It is now parked in some short-term money market funds.
I like this flexibility, the opportunity to make my own decisions on pension allocation. After three years back in Germany that feels refreshing and I began writing down some notes about the UK compared to Germany, my experiences, how systems differ.
I want to try and connect an uncomfortable feeling about AI-growth with a reflection on differences in ‘how things work’ in Germany vs. the UK. How entangled is the development of “AI” with the future of the energy system in the two countries? If there is an AI bubble and if it pops at some point, how would the effects be similar or different?
What follows is a set of thoughts on two countries that I call ‘home.’
Different countries solve similar problems in different ways. Anthropologists and institutional theorists argue that national systems reflect long-standing habits of coordination: assumptions about who should carry risk, how rules should be enforced, and where complexity ought to sit. While these patterns are not necessarily ‘designed’, they accumulate over time and result in different ways of doing things.
The differences in pensions and tax between the UK and Germany are not administrative quirks. They are structural signatures, patterns we might uncover and then use to understand how the two countries organise their energy. That might help us to get a sense how the respective energy systems will develop in relation to AI. Perhaps that will ultimately help us to feel comfortable re-investing in equities.
1. Two Systems
1.1 Pensions: Bismarck and Beveridge
The UK’s pension architecture is a compact mechanism: auto-enrolment, employer contributions, tax relief handled automatically. You end up with a private pension you can adjust yourself, as I did when shifting out of equities. Private accumulation, one might say, is the central principle.
In Germany, the statutory pension (gesetzliche Rentenversicherung) is the centre. Occupational and private arrangements exist, but they orbit the state scheme. Germany treats retirement as a statutory social insurance contract, in contrast to the UK, which treats it as an ecosystem where the state provides a floor and individuals build on top.
One system updates a Bismarckian insurance logic; the other keeps layering political guarantees onto a Beveridge-style minimum. Each reveals a deep instinct about who carries (longevity) risks.
