Two Decades of Pension Reform in the UK: What are the
Implications for Occupational Pension Schemes?
Published: Employee Relations, 22, 2000, 223-245
David Blake (Birkbeck College, London)
The United Kingdom is one of the few countries in Europe that is not
facing a serious pensions crisis. The reasons for this are straightforward:
state pensions (both in terms of the replacement ratio and as a proportion
of average earnings) are amongst the lowest in Europe, the UK has a
long-standing funded private pension sector, its population is ageing less
rapidly than elsewhere in Europe and its governments have, since the beginning
of the 1980s, taken measures to prevent a pension crisis developing. These
measures have involved making systematic cuts in unfunded state pension
provision and increasingly transferring the burden of providing pensions to the
funded private sector, principally on a defined contribution basis.
This paper reviews the policies that have been implemented over the last two
decades: it describes and analyses the defects in the Thatcher-Major governments’
reforms that brought us to the current system, examines and assesses the reforms
of the Blair government, and then identifies the problems that remain unresolved
and how they might be addressed. We end with an examination of the implications
of these reforms for the future of occupational pension schemes.