Corporate Document Services; Great Britain. Department for Work and Pensions
Publication year:
2006
Pagination:
135p., bibliog.
Place of publication:
Leeds
... prices (also referred to as rates): how long is a person expected to live in retirement and what return will the annuity provider make on the premium. Annuity providers mostly buy long-term debt instruments to ensure future payments to the pensioners. As a result, annuity prices are sensitive to changes in interest rates.
Annuities convert a stock of wealth into an income that is typically paid out until the buyer of the annuity dies. Consequently, an annuity provides insurance against what is referred to in the literature as longevity risk, or the risk of outliving one’s assets. The return the buyer of the annuity (the annuitant) can expect is higher than that of a typical safe investment as a result of the “risk pooling” by the annuity provider. For this reason, annuities are considered an attractive product for individuals and demand for annuities should therefore be strong. In practice, however, demand for annuities is limited. This phenomenon is referred to as the “annuity puzzle”. There are potentially a number of reasons why this puzzle might occur, such as the wish to leave money to your children, or the fact that the state pension system already offers a high level of “annuitisation” for many. The UK has one of the largest annuities markets in the world. This market mainly consists of the so-called compulsory-purchase market, which are annuities that are bought as part of a pension. In 2004, according to the Association of British Insurers, premiums on new purchased life annuity policies (the voluntary market) were £56.4 million, whereas premiums on new pension annuities (the compulsory market) were £7,478 million. Most individuals buy annuities that provide an income which is constant in nominal terms (“level” annuities), although other annuity products exist, such as annuities that provide an income constant in real terms (“index-linked” annuities). Two factors largely determine annuity prices (also referred to as rates): how long is a person expected to live in retirement and what return will the annuity provider make on the premium. Annuity providers mostly buy long-term debt instruments to ensure future payments to the pensioners. As a result, annuity prices are sensitive to changes in interest rates.
Subject terms:
income, personal pensions, retirement, taxation, economics;
An analysis of how well the benefit, pension and taxation systems meet the needs of individuals throughout their lifetimes. This report uses a new research tool, LOIS (the Lifetime Opportunity and Incentives Simulation programme), to assess the impact of current social policy from cradle to grave. It analyses the strengths and weaknesses of the benefit, pension and taxation systems and how far they are likely to meet the needs of individuals throughout their lifetimes. In this context, the authors reassess specific Government promises, such as those to end child and pensioner poverty. Comparing low- and average-paid model lives, the report: shows how difficult it is for parents to reconcile child poverty against future poverty in old age; develops new ideas about the design of social policy over the lifetime; and reveals the pitfalls of private pensions for the low-paid.
An analysis of how well the benefit, pension and taxation systems meet the needs of individuals throughout their lifetimes. This report uses a new research tool, LOIS (the Lifetime Opportunity and Incentives Simulation programme), to assess the impact of current social policy from cradle to grave. It analyses the strengths and weaknesses of the benefit, pension and taxation systems and how far they are likely to meet the needs of individuals throughout their lifetimes. In this context, the authors reassess specific Government promises, such as those to end child and pensioner poverty. Comparing low- and average-paid model lives, the report: shows how difficult it is for parents to reconcile child poverty against future poverty in old age; develops new ideas about the design of social policy over the lifetime; and reveals the pitfalls of private pensions for the low-paid.
Subject terms:
income, labour market, older people, pensions, retirement, taxation, employment;
Journal of European Social Policy, 7(2), May 1997, pp.101-117.
Publisher:
Sage
In the late 19th and early 20th century, industrialised countries introduced a variety of pension schemes to sustain elderly people. These initial schemes may broadly be classified as 'contributory' or 'assistance-based'. However, over time, there has been a convergence towards dual mandatory systems where the majority receive contributory-based pensions, while the poor depend on tax-financed income-tested assistance schemes. Within this general convergence, however, New Zealand, and to a lesser extent Denmark, represent deviant cases. This article seeks to explain both the common pattern and the deviant cases, and asks whether this difference is likely to persist.
In the late 19th and early 20th century, industrialised countries introduced a variety of pension schemes to sustain elderly people. These initial schemes may broadly be classified as 'contributory' or 'assistance-based'. However, over time, there has been a convergence towards dual mandatory systems where the majority receive contributory-based pensions, while the poor depend on tax-financed income-tested assistance schemes. Within this general convergence, however, New Zealand, and to a lesser extent Denmark, represent deviant cases. This article seeks to explain both the common pattern and the deviant cases, and asks whether this difference is likely to persist.
Subject terms:
older people, pensions, retirement, social policy, social welfare, taxation, comparative studies;
Public Money and Management, 41(8), 2021, pp.646-655.
Publisher:
Taylor and Francis
Place of publication:
Philadelphia, USA
Policy-makers frequently neglect the ways in which social policies are funded through taxation. This relationship is of critical importance because misalignment can cause social policy failure and tax injustice. This is evident with National Insurance (NI): a tax used primarily to fund the UK’s state pension entitlement. This paper explains how NI is failing women and poorer people, prompting questions of why such a poorly designed, unfair and ineffective tax has persisted for so long in the UK. The paper proposes a radical solution: the payment of a universal basic pension and the abolition of NI, with consequential adjustments in income and corporation taxes to compensate for revenue losses.
Policy-makers frequently neglect the ways in which social policies are funded through taxation. This relationship is of critical importance because misalignment can cause social policy failure and tax injustice. This is evident with National Insurance (NI): a tax used primarily to fund the UK’s state pension entitlement. This paper explains how NI is failing women and poorer people, prompting questions of why such a poorly designed, unfair and ineffective tax has persisted for so long in the UK. The paper proposes a radical solution: the payment of a universal basic pension and the abolition of NI, with consequential adjustments in income and corporation taxes to compensate for revenue losses.
At a time when public finances are constrained and politicians are arguing about when and what to cut, this paper debates the future of public services in Britain. The report claims that to continue to fund the current range of services, reduce child poverty and help the poorest elderly people pay for the costs of climate change will require an additional 4-6% of our GDP over the next twenty years. This would increase the share of national income spent by government to over 45% by 2020 and nearer 47-48% by 2030. Yet public tax receipts have never been higher than 45% and rarely above 40%. So, while in the short run we are faced with a £178 billion gap between tax revenues and public spending, in the long run the situation would be still worse. To meet this additional public spending demand, the author suggests that we: need to think through which demographic, social and income groups are likely to face the greatest needs in the next two decades and which are in a position to make the greatest additional contributions; need to consider what welfare state functions could be done differently – this could be a model of partnership funding in which the cost of services is shared between individuals and the state; need to think creatively about how services work. The paper concludes that even if these recommendations were implemented, by 2028 the Exchequer would still need to raise a sum of 2-4% of GDP through general taxation – just to meet the additional age-related cost drivers.
At a time when public finances are constrained and politicians are arguing about when and what to cut, this paper debates the future of public services in Britain. The report claims that to continue to fund the current range of services, reduce child poverty and help the poorest elderly people pay for the costs of climate change will require an additional 4-6% of our GDP over the next twenty years. This would increase the share of national income spent by government to over 45% by 2020 and nearer 47-48% by 2030. Yet public tax receipts have never been higher than 45% and rarely above 40%. So, while in the short run we are faced with a £178 billion gap between tax revenues and public spending, in the long run the situation would be still worse. To meet this additional public spending demand, the author suggests that we: need to think through which demographic, social and income groups are likely to face the greatest needs in the next two decades and which are in a position to make the greatest additional contributions; need to consider what welfare state functions could be done differently – this could be a model of partnership funding in which the cost of services is shared between individuals and the state; need to think creatively about how services work. The paper concludes that even if these recommendations were implemented, by 2028 the Exchequer would still need to raise a sum of 2-4% of GDP through general taxation – just to meet the additional age-related cost drivers.
Subject terms:
public expenditure, retirement, state retirement pensions, taxation, welfare state, ageing, benefits, demographics, financing;
... benefits means that low-paid families can face high rates of marginal tax for at least 16 years. Families with children also face real dilemmas over their lifetime. Saving for retirement will make families poorer while there are children in the home but improve incomes in retirement. Failing to save for retirement reverses this so that avoiding child poverty may lead to poverty in retirement
In the short-term, policies to counter child and pensioner poverty and to promote work have produced positive results but further improvements will become more and more difficult to achieve. Policy focused on equal access to opportunities for low-paid people can fail because the opportunity is given too late to make a real impact on lifetime poverty or on long periods when savings and work incentives are seriously compromised. A lifetime 'opportunity trap' can exist where it is either too late or too costly to take up an opportunity or where taking it up has either no or only marginal impact on lifetime income profiles. Opportunity traps are heightened by having children - the combination of childcare costs, paying rent for family-sized accommodation, low pay and interactions with in-work benefits means that low-paid families can face high rates of marginal tax for at least 16 years. Families with children also face real dilemmas over their lifetime. Saving for retirement will make families poorer while there are children in the home but improve incomes in retirement. Failing to save for retirement reverses this so that avoiding child poverty may lead to poverty in retirement (the 'lifetime poverty see-saw'). Escaping from opportunity traps is difficult without raising earning capacity. Low-paid people may be able to catch up on one dimension of inequality but it would be very difficult to equalise life chances without combinations of generous pensions and good earnings progression. One-off interventions to raise income up to the average, such as retraining, are potentially more effective in reducing inequalities in life chances and bringing lifetime opportunities up to the average.
Journal of Social Policy, 33(3), July 2004, pp.347-371.
Publisher:
Cambridge University Press
Place of publication:
Cambridge
This article discusses the implications of the decline of National Insurance in Britain, witnessed by its declining share of social security spending and steady dilution of the ‘contributory principle’ on which it was originally based. This decline is not accidental: under governments of the Left, arguments for inclusion have predominated, non-contributory benefits expanded and contribution conditions softened; under those of the Right, limited resources have been focused on the poorest through means-testing. From this starting point, the strong arguments in principle for social insurance look much weaker. However, there are also reasons why the system has not been swept away, notably the way in which most of it concerns already accrued state pension rights. The effect of current plans for state pensions is to restore something closer to a flat rate state pension, but with significant complexity. The article suggests a way in which a more transparent system could guarantee a total state pension at a fixed percentage of average earnings. Other National Insurance benefits could either be separated from pensions and absorbed within other working age social security, or the scope of National Insurance could be maintained, but based on a test of participation, not past contributions.
This article discusses the implications of the decline of National Insurance in Britain, witnessed by its declining share of social security spending and steady dilution of the ‘contributory principle’ on which it was originally based. This decline is not accidental: under governments of the Left, arguments for inclusion have predominated, non-contributory benefits expanded and contribution conditions softened; under those of the Right, limited resources have been focused on the poorest through means-testing. From this starting point, the strong arguments in principle for social insurance look much weaker. However, there are also reasons why the system has not been swept away, notably the way in which most of it concerns already accrued state pension rights. The effect of current plans for state pensions is to restore something closer to a flat rate state pension, but with significant complexity. The article suggests a way in which a more transparent system could guarantee a total state pension at a fixed percentage of average earnings. Other National Insurance benefits could either be separated from pensions and absorbed within other working age social security, or the scope of National Insurance could be maintained, but based on a test of participation, not past contributions.
Subject terms:
income, pensions, planning, retirement, social policy, taxation, economics, employment;
This pamphlet offers an analysis and rebuttal of the arguments currently being used to allow for the decline of the state pension. The government insists that it cannot afford to increase the provision of the state National Insurance pension system which they control, and, as the latest Green Paper' on pensions shows, prefers to concentrate their efforts on propping up the private insurance sector in spite of increasing evidence of its unreliability. These arguments are repeated so often by government and the media that they have become a mythology that has clouded the pension debate. This mythology is based upon the mistaken assumptions that occupational pensions and the financial market are secure and open to all of us; that those who cannot afford to pay the necessary premiums will be content with means-tested income support.
This pamphlet offers an analysis and rebuttal of the arguments currently being used to allow for the decline of the state pension. The government insists that it cannot afford to increase the provision of the state National Insurance pension system which they control, and, as the latest Green Paper' on pensions shows, prefers to concentrate their efforts on propping up the private insurance sector in spite of increasing evidence of its unreliability. These arguments are repeated so often by government and the media that they have become a mythology that has clouded the pension debate. This mythology is based upon the mistaken assumptions that occupational pensions and the financial market are secure and open to all of us; that those who cannot afford to pay the necessary premiums will be content with means-tested income support.
Subject terms:
pensions, policy formulation, retirement, taxation, benefits, central government, economics, eligibility criteria, government policy;
In this document the National Association of Pension Funds calls for a single citizen's pension to replace the basic state pension, the state second pension, minimum income guarantee and pension credits. The new pension would equal 22% of national average earnings - about £100 per week and rise with earnings.
In this document the National Association of Pension Funds calls for a single citizen's pension to replace the basic state pension, the state second pension, minimum income guarantee and pension credits. The new pension would equal 22% of national average earnings - about £100 per week and rise with earnings.
Employers’ case studies were divided into three distinct groups: employers considering flexible retirement, employers who have changed their retirement age in some way, and employers who have implemented a range of flexible working practices in addition to changing their retirement age.
Employers’ case studies were divided into three distinct groups: employers considering flexible retirement, employers who have changed their retirement age in some way, and employers who have implemented a range of flexible working practices in addition to changing their retirement age.
Subject terms:
income, policy, retirement, taxation, workload, ageing, case studies, employment, flexible working, government departments;