If we are moving towards contributions-based welfare, why are we abolishing SERPS?

There is much current UK debate about making ‘work pay’, and I and others have commented on the lack of ethics if that means lowering benefits rather than raising wages. And part of this trend in lowering benefits has been to propose that payments in future should be linked to the person’s previous National Insurance contributions.

OK, but then why are we abolishing SERPS (the Second Earnings Related Pension Scheme)? The name has been changed over the years, but SERPS did what it said on the tin. It was also very progressive, using contributions from the ‘best 30’ years which helped women who had had career breaks.

The recent ‘improvements’ in the state pension arrangements have answered the problem of the disincentive where some people were losing some of their state pension because they have savings.

However, the money for this change has been taken by phasing out the state second pension, the current name for SERPS. So in the future, a benefit related to contributions is to be abolished. It really would be better to be planing these things more consistently.

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