A single-tier pension: what does it really mean? - The Institute For ...

Contents
Executive Summary 1
1. Introduction 4
2. Current State Pension System 5
2.1 Current accrual under the existing state pension system 5
2.2 Historic pension legislation and its continuing implications 9
2.3 Pension income received under the current system 14
3. Proposed Reforms 15
3.1 The proposed single-tier pension 15
3.2 Ending derived and inherited pensions 18
3.3 Ending contracting out 18
3.4 Transition issues 19
3.5 Changes to means-tested benefits 22
4. Short-Run Effect of the Proposed Reforms on Pensioner Incomes 25
4.1 Data 25
4.2 Comparing state pension income at SPA under the proposed and 27
4.2 current systems
4.3 Gains and losses over the whole of retirement 41
4.4 Interaction with means-tested benefits 43
4.5 Summary 47
5. Long-Run Effect of the Proposed Reforms on Pensioner Incomes 48
5.1 How would the level of state pension income received at state 48
5.1 pension age compare?
5.2 How would state pension income evolve through retirement under 51
5.2 the two systems?
5.3 The self-employed 54
5.4 How does the proposed system affect who would qualify for means- 55
5.4 tested benefits and what they would receive?
5.5 Summary 61
6. Wider implications of the proposed reforms 62
6.1 A long and circular road 62
6.2 Reducing the long-run costs of state pensions 65
6.3 Future political risk 66
6.4 Greater need for private saving 66
7. Conclusions 68
References 70