Politics and Pensions in Post-war Britain

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Abstract

* A notable feature of the current pensions debate is a persistent failure to look back as well as forward, to consider the roots of the pensions crisis as well as possible solutions to it. But we cannot hope completely to understand the present crisis, let alone devise effective solutions to it, without understanding its history. * There are important lessons to be drawn from the development of British pensions over the past 60 years. * A history of repeated 'reforms' to the UK's overall system of pensions suggests that further reform is possible. * However, each attempt at reform faced the problem that long-term contracts between workers and their pension provider (public or private) meant that any break would incur substantial financial and/or political transition costs. * Politicians, faced with the prospect of incurring such short-term costs, preferred to achieve change that would incur costs only in the long-term. * This combination of long-term contracts and short-term political horizons encouraged governments to achieve 'reform' not by replacing an existing element within the system but by creating a new sub-system, or by allowing a new sub-system to emerge. * British pensions therefore embodied a systemic tendency towards growing complexity in the system as a whole, and this contributed to decreasing system efficiency. * In the present context, history suggests that change is again likely to be achieved by adding a new element to the system, thus incurring a further increase in the level of system complexity. * In addition, the failure of Labour's 1957 proposal for a PAYE based 'national superannuation' scheme with funds invested in the stock market does not augur well for the Pensions Commission's current proposal for a National Pensions Savings Scheme.
Translated title of the contributionPolitics and Pensions in Postwar Britain
Original languageEnglish
PublisherHistory & Policy
Publication statusPublished - 2006

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