A single-tier pension: what does it really mean? - The Institute For ...
A single-tier pension: what does it really mean? - The Institute For ...
A single-tier pension: what does it really mean? - The Institute For ...
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A <strong>single</strong>-<strong>tier</strong> <strong>pension</strong>: <strong>what</strong> <strong>does</strong> <strong>it</strong> <strong>really</strong> <strong>mean</strong>?<br />
men and 28% of women (compared w<strong>it</strong>h the 3% of men and 14% of women<br />
shown in Table 4.2).<br />
<strong>The</strong>refore, <strong>it</strong> is largely individuals’ past contracting-out behaviour that <strong>mean</strong>s<br />
that they are below the full <strong>single</strong>-<strong>tier</strong> amount in 2016. Ignoring past contractingout<br />
behaviour reduces the proportion of individuals ent<strong>it</strong>led to less than the full<br />
<strong>single</strong>-<strong>tier</strong> amount from 69% to 14%.<br />
Although the presence of contracting out <strong>does</strong> hamper the overall message of<br />
simplic<strong>it</strong>y, in that fewer people than one might expect will receive exactly the full<br />
<strong>single</strong>-<strong>tier</strong> <strong>pension</strong> amount from the state, this is a necessary complex<strong>it</strong>y of the<br />
trans<strong>it</strong>ion process. It would have been very generous to a group of individuals<br />
Figure 4.4. Distribution of accrued state <strong>pension</strong> income at SPA under<br />
current system and under proposed rules – assuming no contracting out<br />
A. Current system<br />
Cumulative percentage of individuals<br />
100%<br />
90%<br />
80%<br />
70%<br />
60%<br />
50%<br />
40%<br />
Full BSP<br />
Single-<strong>tier</strong><br />
amount<br />
30%<br />
20%<br />
10%<br />
0%<br />
All<br />
Men<br />
Women<br />
50 75 100 125 150 175 200 225 250 275 300<br />
B. Single-<strong>tier</strong> <strong>pension</strong><br />
Cumulative percentage of individuals<br />
100%<br />
90%<br />
80%<br />
70%<br />
60%<br />
50%<br />
40%<br />
Pension income at SPA (£ per week, 2013–14 earnings terms)<br />
Single-<strong>tier</strong><br />
amount<br />
30%<br />
20%<br />
10%<br />
0%<br />
All<br />
Men<br />
Women<br />
50 75 100 125 150 175 200 225 250 275 300<br />
Pension income at SPA (£ per week, 2013–14 earnings terms)<br />
Note: Assumes individuals had never contracted out of SERPS or S2P.<br />
Source: Authors’ calculations using English Long<strong>it</strong>udinal Study of Ageing and National Insurance<br />
administrative data.<br />
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