Premium
THE EARNINGS‐RELATED STATE PENSION, INDEXATION AND LIFETIME REDISTRIBUTION IN THE U.K.
Author(s) -
Creedy John,
Disney Richard,
Whitehouse Edward
Publication year - 1993
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/j.1475-4991.1993.tb00459.x
Subject(s) - pension , economics , earnings , redistribution (election) , indexation , revenue , neutrality , labour economics , monetary economics , finance , monetary policy , epistemology , politics , political science , law , philosophy
The redistributive impact of the U.K. state pension scheme is examined. Benefit‐cost ratios are calculated using individual lifetime earnings profiles constructed for a cohort of men drawn from cross‐section data. The scheme is investigated at maturity and revenue neutrality is imposed in order to isolate the intra‐generationally redisiributive effects of the pension scheme. The results suggest that differences in returns to the pension scheme are driven by differential mortality, which outweigh the redistributive effect of the two‐tier benefit structure. Various reforms of the pension scheme are then simulated, and solved for revenue neutrality. The results suggest that a great deal of care is needed in formulating reforms if redistributive objectives are to be achieved.