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Towards a new pension settlement? Recent pension reform in the UK

Debora Price

in Social Policy Review 20

Published by Policy Press

Published in print June 2008 | ISBN: 9781847420763
Published online March 2012 | e-ISBN: 9781447303473 | DOI: http://dx.doi.org/10.1332/policypress/9781847420763.003.0004
Towards a new pension settlement? Recent pension reform in the UK

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In December 2002, the Labour government announced the formation of the Pensions Commission. In 2005, the Commission published comprehensive proposals for pension reform in their second report and it was a remarkable achievement; the proposals gained a broad acceptance from the government and opposition parties, trades unions, employer organisations, the insurance industry, special interest groups and the voluntary sector. In November 2006, the reform packages began to crystallise with the introduction of the first Pensions Bill which eventually became the 2007 Pensions Act. In 2007, the government published the second Pensions Bill, which at the time of writing aims to reform the private and occupational pension system, to take effect from 2012. Although this Bill attracted more controversy, there is again a substantial political and stakeholder consensus for the broad content. All reforms are incremental to the existing system, yet the reform package has the capability to alter the pension landscape dramatically. This chapter discusses the implementation of these reforms to the state pension after the major Turner Commissions on Pensions. It documents the decline of defined benefits in favour of defined contributions schemes, together with the new development of Personal Accounts and an assessment of their likely impact. In conclusion, the chapter suggests that the new pensions structure is a return to the Beveridge flat-rate system. Furthermore, it suggests that low earners and those with intermittent employment records may make ‘bad’ decisions about their pensions due to lack of clear guidance and advice available to this group. This may result in increasing inequalities between public and private pensions provision.

Keywords: Labour government; Pensions Commission; pension reform; Pensions Bill; 2007 Pensions Act; private pension system; occupational pension system; state pension; Personal Accounts

Chapter.  7336 words. 

Subjects: Social Research and Statistics

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