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Welfare Reform on the Web (February 2001): Pensions - UK

ADMINISTRATIVE FAILURE: INHERITED SERPS

Public Administration Select Committee

London: TSO, 2000 (House of Commons Papers. Session 1999/2000; HC 433)

Committee found that the initial failure to inform up to 20m prospective pensioners of the changes to SERPS introduced by legislation passed in 1986 that halved the entitlements of widows and widowers after the death of their spouse was due to human error. False information was included in official literature up to 1996. They argued that the Labour government's proposal to defer the changes to SERPS until 2002 and compensate individuals claiming personal exposure to misinformation was fraught with administrative difficulty. Officials would have difficulty in deciding whether claimants had been genuinely misled and had suffered financially as a result or were lying to gain compensation. The proposed compensation scheme could be seen as an invitation to fraud.

BROWN'S PENSION PLAN IS JUST A PATCH OVER AN OLD PROBLEM

H. McRae

Independent, Nov 10th 2000, p.22

In his pre-budget statement the chancellor revealed his plans to upgrade the income of the poorest pensioners while holding back the growth in pensions paid to people higher up the scale. This will encourage higher earners to invest for their own future pension provision, and may eventually undermine their support for state funded welfare services, from which they do not benefit.

GOVERNMENT STUMPS UP COST OF SERPS BLUNDER

A. Sparrow

Daily Telegraph, Nov 30th 2000, p.33

Reports proposals for a new three-part compensation scheme for people misled by government about their inherited SERPS entitlement. First, the entitlement of SERPS contributors who have reached retirement age by Oct 5th 2002 will be unchanged. Second, for contributors retiring between Oct 6th 2002 and Oct 5th 2010, the value of the inherited SERPS will vary from 90% to 60%, depending on when they reach retirement age. Third, anyone who can produce documentary evidence that they were misled by the government will be able to get a 100% inherited SERPS entitlement.

(See also Financial Times, Nov 30th 2000, p.1; Independent, Nov 30th 2000, p.8; Times, Nov 30th 2000, p.2; Guardian, Nov 30th 2000, p.5).

IDEAS AND WELFARE: THE CONSERVATIVE TRANSFORMATION OF THE BRITISH PENSION REGIME

H. Araki

Journal of Social Policy, vol.29, 2000, p.599-621

Article traces post-war reforms of the UK state pension scheme introduced by successive Conservative governments. Based on their core principles of freedom and personal responsibility, the Conservatives consistently over time introduced policies that encouraged private over state pension provision. Article attempts to sketch out an explanation for this transformation based on theories of the role of ideas and ideology in the policy process.

PENSIONERS FACE TOUGH MAZE TO GET BENEFITS

S. Womack

Daily Telegraph, Nov 10th 2000, p.15

Article explains how the Pension Credit coming into force in 2003 will work. A pensioner on the £77.00 basic state pension receiving an income or occupational pension of say £20.00 a week, and therefore a weekly income of £97.00, will be raised to the minimum guaranteed income of £100. On top of that they will receive a credit of £12 for saving. The amount of the credit will depend on the amount of savings and other income. The credit will be calculated at £0.60 for every pound of savings income.

(See also Independent, Nov 10th 2000, p.11; Times, Nov 10th 2000, p.17).

PENSIONS AND LONG TERM CARE: BUILDING A NEW SOCIAL CONTRACT

W. Paxton

New Economy, vol.7, 2000, p.239-241

The current generation of pensioners feels that the state has reneged on its promise to provide a decent minimum pension and free access to health and social care. Uprating pensions in line with earnings growth to maintain their value would be popular and affordable in the short term, but not sustainable long term. Article looks at other methods of linking pensions for uprating purposes, and presents a critique of the approach of targeting help on the poorest pensioners favoured by the government.

PENSIONS AND THE LABOUR MARKET: HOW TO HELP THOSE ON LOW LIFETIME INCOMES

P. Meadows

New Economy, vol.7, 2000, p.234-238

Reviews the reformed pension system being put in place by the Labour government, focusing on how it will meet the needs of the low paid, high and middle earners, the self-employed and part-time workers.

REPORT BY THE GOVERNMENT ACTUARY ON THE COST OF UPRATING THE BASIC RETIREMENT PENSION IN LINE WITH THE GENERAL LEVEL OF EARNINGS

Department of Social Security

London: TSO, 2000 (Cm 4920)

The report considers projections of the balance in the National Insurance Fund if the basic retirement pension continues to be uprated in line with prices, or, alternatively, is increased in line with the general level of earnings. Concludes that the balance in the Fund will be falling by March 2006 and that either contribution rates will need to be increased, or a Treasury grant paid into the fund, before 2010 on both the price and earnings uprating basis.

STATEMENT OF INTENT

M. Atkinson

Public Finance, Nov 3rd-9th 2000, p.28-29

Predicts that the Chancellor of the Exchequer will announce a substantial increase in the state pension to placate grey lobby groups and the unions. Indicates that any such increase would be a stop-gap measure until the Pensioners' Credit is introduced in 2003. This will a means-tested benefit aimed at helping the poorest pensioners.

TAX BENEFITS IN NON-STATE PENSIONS

A. Sinfield

European Journal of Social Security, vol.2, 2000, p.137-167

A detailed analysis of pension tax benefits in the UK demonstrates their importance in providing support for private and occupational pensions. It shows how these concealed subsidies favour high earners at the expense of the poor, and underlines the irrationality of not integrating the analysis of tax benefits with social security benefits in policy making. What is presented as a shift between universal social insurance and increased targeting or selectivity offers, in reality, not only a greater role for forms of public assistance, but also for a particular form of the individualisation of the social where the public tax system promotes private alternatives to public spending.