Income in later life

Abstract

In July 1997 Harriet Harman, the new Secretary of State for Social Security in the UK, announced a fundamental and wide-ranging review of all aspects of pension provision. The review comes at a time when trust in the pensions industry is at an all-time low. The reputation of occupational pensions was dealt a severe blow by the Maxwell scandal, and personal pensions have now been revealed as a very bad buy for many of the almost six million people who have signed up for them since 1988. That such pensions were mis-sold has now been formally acknowledged and steps taken to prevent a repetition, but many people are still waiting for their compensation. State provision is also not immune from this crisis of confidence. Since 1980 the basic pension has been indexed to prices rather than to earnings as previously. As a result its value has shrunk to 14% of average male earnings, compared with 21% in 1980, and it is predicted to fall further to a ‘nugatory’ 9% by 2020.