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Privatising Pensions in the UK : How to Restore Contracting Out
Author(s) -
Booth Philip,
Niemietz Kristian
Publication year - 2014
Publication title -
economic affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.24
H-Index - 18
eISSN - 1468-0270
pISSN - 0265-0665
DOI - 10.1111/ecaf.12065
Subject(s) - pension , private pension , state (computer science) , government (linguistics) , politics , social security , business , conservative government , pension system , economics , law and economics , economic policy , finance , public administration , market economy , political science , law , computer science , linguistics , philosophy , algorithm
For much of the post‐war period in the UK , individuals were allowed to use private pension provision to replace part of their state pension. This system was supported by all political parties but it has been eroded since the 1990s. The opportunity to ‘contract out’ of the state pension is finally being abolished by the current Conservative/Liberal Democrat coalition government. This paper proposes a new method of allowing people to contract out of the state pension system, calculates appropriate rebates of social security taxes and discusses the potential risks of adopting the proposals.