Pension Crisis in the United Kingdom

By

ACKNOWLEDGEMENT

I would like to thank my supervisor for supporting me throughout my project and giving his valuable suggestions. Finally thanks to all my friends and family for their utmost support and inspiration.

DECLARATION

I, (Your name), would like to declare that all contents included in this dissertation stand for my individual work without any aid, & this dissertation has not been submitted for any examination at academic as well as professional level previously. It also represents my own views & not essentially the ones associated with university.

Signed __________________ Date _________________

TABLE OF CONTENTS

ACKNOWLEDGEMENTii

DECLARATIONiii

LITERATURE REVIEWv

Theoretical Frameworkv

Overview of U.K Pension Systemv

Participation Decision of Employees in State Second Pensionvii

Occupational Pensionvii

DC Personal Pension Plan in the United Kingdomviii

Personal Pension Planix

Third Tier of U.K Pension Systemx

Comparing Occupation Pension and Personal Pension Schemesxi

Pension Plan for Widow or Widowerxii

Examination of Pension Trend in the United Kingdomxii

U.K Current Economyxiii

Current Pension Crises in the United Kingdomxiv

Past Literature on Pension Policiesxiv

Evidence from Other Countriesxvi

Public Vs Private Pension Debatesxvii

Debt Level of Graduating Studentsxviii

Summaryxviii

REFERENCES20

LITERATURE REVIEW

Theoretical Framework

The current study is based on the ongoing pension crisis and its impact on various aspects of the economic conditions of the United Kingdom. The pension crisis in the United Kingdom has been discussed by the government authorities on large extent. This pension crisis that is going on in other parts of the world as well has mainly occurred due to the economic downturn in the past years. The study includes different aspects of the U.K Pension scheme that mainly covers the current U.K economy and pension crisis in it, private and public pension debates, occupational and personal pensions, the impact of pension crisis on graduating students etc. Different past studies on the Pension schemes have been carried out that takes into account the pension plans and the participation of employees in it.

Overview of U.K Pension System

Pension is a way to protect retirees against risks, such as those caused by demotion, layoff and bad economic times. This section reviews the structure of the UK pension system. The UK pension system consists of three tiers. The first two are mandatory, and the third is voluntary. The first tier is a government administered pension scheme which is called the Basic State Pension (BSP). It is a flat rate pension paid to retired workers who made the required National Insurance contributions (NICs) during qualifying years. Individuals who do not have other resources of income may receive mean-tested benefits from pensioners. The means-tested benefit relates to income level, meaning pension receivers have to reach a certain minimum income level to receive income support from the pensioner. State pension starts at the state pension age currently 65 for men born on or before 5 April 1950 and 60 for women born on or before 5 April 1959. What one gets from the state depends on the qualifying years one paid NICs to the state (Clark, 2002, 71).

Table 1: Schema of U.K Pension Scheme

Source: Disney et al (2001)

The second tier mandatory pension is to provide an extra pension besides ...