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Pension Reform in Britain

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  • Whitehouse, Edward

Abstract

This paper examines the evolution of the pension system in Britain. In particular, it focuses on the shift from pay-as-you-go, state-run defined-benefit pensions to individual, private-sector, funded defined-contribution accounts. It looks at three issues in this reform: the financing of the transition from pay-as-you-go to funded provision; the fiscal impact of voluntary switching and adverse selection; and the question of the degree to which personal pension accounts were ‘over-sold’ to individuals for whom they were not suitable. The paper examines recent reform proposals and the prospects for reform under the New Labour government. It concludes that the British system has avoided a future financial crisis arising from the demographic transition, but that problems of incentives and retirement-income adequacy remain.

Suggested Citation

  • Whitehouse, Edward, 1998. "Pension Reform in Britain," MPRA Paper 14175, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:14175
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    References listed on IDEAS

    as
    1. Meghir, Costas & Whitehouse, Edward, 1997. "Labour market transitions and retirement of men in the UK," Journal of Econometrics, Elsevier, vol. 79(2), pages 327-354, August.
    2. Richard Disney & Edward Whitehouse, 1992. "Personal pensions and the review of the contracting-out terms," Fiscal Studies, Institute for Fiscal Studies, vol. 13(1), pages 38-53, February.
    3. Richard Disney & Edward Whitehouse, 1994. "What are pension plan entitlements worth in Britain?," IFS Working Papers W94/01, Institute for Fiscal Studies.
    4. Peacock, Alan, 1992. "The Credibility of Economic Advice to Government," Economic Journal, Royal Economic Society, vol. 102(414), pages 1213-1222, September.
    5. R. Hemming & J. A. Kay, 1981. "Contracting out of the state earnings related pension scheme," Fiscal Studies, Institute for Fiscal Studies, vol. 2(3), pages 20-28, November.
    6. Richard Disney & Costas Meghir & Edward Whitehouse, 1994. "Retirement behaviour in Britain," Fiscal Studies, Institute for Fiscal Studies, vol. 15(1), pages 24-43, February.
    7. Richard Disney, 1995. "Occupational pension schemes: prospects and reforms in the UK," Fiscal Studies, Institute for Fiscal Studies, vol. 16(3), pages 19-39, September.
    8. Andrew Dilnot & Paul Johnson, 1993. "Tax expenditures: the case of occupational pensions," Fiscal Studies, Institute for Fiscal Studies, vol. 14(1), pages 42-56, February.
    9. John Creedy & Richard Disney, 1988. "The new pension scheme in Britain," Fiscal Studies, Institute for Fiscal Studies, vol. 9(2), pages 57-71, May.
    10. Alan L. Gustman & Thomas L. Steinmeier, 1989. "The Stampede Toward Defined Contribution Pension Plans: Fact or Fiction?," NBER Working Papers 3086, National Bureau of Economic Research, Inc.
    11. Disney, Richard & Whitehouse, Edward, 1992. "The personal pensions stampede," MPRA Paper 10476, University Library of Munich, Germany.
    12. Richard Disney & Edward Whitehouse, 1991. "How should pensions in the UK be indexed?," Fiscal Studies, Institute for Fiscal Studies, vol. 12(3), pages 47-61, August.
    13. Andrew Dilnot & Richard Disney, 1989. "Pensions Schemes after the 1989 Budget," Fiscal Studies, Institute for Fiscal Studies, vol. 10(3), pages 34-49, August.
    14. repec:bla:econom:v:63:y:1996:i:250:p:213-38 is not listed on IDEAS
    15. Dilnot, Andrew & Disney, Richard & Johnson, Paul & Whitehouse, Edward, 1994. "Pensions policy in the UK: An economic analysis," MPRA Paper 10478, University Library of Munich, Germany.
    16. Richard Disney & Edward Whitehouse, 1994. "Choice of private pension plan and pension benefits in the UK," IFS Working Papers W94/02, Institute for Fiscal Studies.
    17. Edward Whitehouse, 1990. "The abolition of the pensions 'earnings rule'," Fiscal Studies, Institute for Fiscal Studies, vol. 11(3), pages 55-70, August.
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    Citations

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    Cited by:

    1. Whitehouse, Edward, 2000. "Pension reform, financial literacy and public information: a case study of the United Kingdom," MPRA Paper 10323, University Library of Munich, Germany.
    2. Whitehouse, Edward, 2000. "Administrative charges for funded pensions: An international comparison and assessment," MPRA Paper 14172, University Library of Munich, Germany.
    3. Whitehouse, Edward, 2000. "Paying for pensions: An international comparison of administrative charges in funded retirement-income systems," MPRA Paper 14171, University Library of Munich, Germany.
    4. Richard Disney & Robert Palacios & Edward Whitehouse, 1999. "Individual choice of pension arrangement as a pension reform strategy," IFS Working Papers W99/18, Institute for Fiscal Studies.
    5. Palacios, Robert & Whitehouse, Edward, 1998. "The role of choice in the transition to a funded pension system," Social Protection Discussion Papers and Notes 20109, The World Bank.
    6. Whitehouse, Edward, 2001. "Pension systems in 15 countries compared: the value of entitlements," MPRA Paper 14751, University Library of Munich, Germany.
    7. James, Estelle, 1998. "New Models for Old-Age Security: Experiments, Evidence, and Unanswered Questions," The World Bank Research Observer, World Bank, vol. 13(2), pages 271-301, August.
    8. Fabrice Hervé, 2003. "La persistance de la performance des fonds de pension individuels britanniques:une étude empirique sur des fonds investis en actions et des fonds obligataires," Revue Finance Contrôle Stratégie, revues.org, vol. 6(3), pages 41-77, September.
    9. James, Estelle, 1999. "Coverage under old-agesecurity programs and protection for the uninsured - What are the issues?," Policy Research Working Paper Series 2163, The World Bank.
    10. Fabrice Hervé, 2006. "Les fonds de pension protègent-ils les investisseurs des évolutions du marché?," Working Papers CREGO 1060101, Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations.
    11. Disney, Richard & Whitehouse, Edward, 1992. "The personal pensions stampede," MPRA Paper 10476, University Library of Munich, Germany.
    12. Disney, Richard & Whitehouse, Edward, 2001. "Cross-country comparisons of pensioners’ incomes," MPRA Paper 16345, University Library of Munich, Germany.

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    More about this item

    Keywords

    pensions; United Kingdom;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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