This article asks why the EU member states were able to agree on an EU pension fund directive in 2003 whereas they had failed to do so in a previous attempt (1991). The main argument is that a single pension market was a desirable project before 2003, but bargaining inefficiencies prevented its realisation. This is because bargaining over integration in this sector requires credible signalling between Bismarckian and Beveridgean pension regimes. The co-ordination of divergent welfare and financial regimes depends on the ability of governments to send costly signals that only a limited range of outcomes are considered legitimate in their home state. In turn, the capacity to signal and the costs of bluffing hinge on international pressure for pension reform (Economic and Monetary Union) and the magnitude of changes governments have to make to their respective welfare finance arrangements.
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