Reforming the UK Retirement System: Privatization Plus a Safety Net

Introduction

The British retirement income system is perhaps more dependent on private programs than any in the industrialized world. The government provides a modest and uniform “Basic Pension” to career workers, and now to carers and the disabled. But as benefits are indexed to prices, not wages, the Basic Pension is projected to replace a steadily declining share of earnings. The government also has a second tier earnings-related plan. But as most workers “contract out,” they will rely on employer and/or individual “personal pensions” to maintain pre-retirement living standards…