The state and pensions

Lowe, Jonquil (2024). The state and pensions. In: Ring, Patrick J.; Lowe, Jonquil and Luu, Lien eds. Global Pension Challenges: Pensions, Saving and Retirement in the Twenty-First Century. Contemporary issues in finance. Oxon, UK and New York, USA: Routledge, pp. 74–103.



The state has an interest in pension provision since those without adequate retirement income are likely in any case to fall back on state means-tested support. Simply encouraging private provision is not enough given that sizeable segments of the population are unable and/or unwilling to save through private pensions, thus there is a rationale for the state to be a direct provider of pensions. The design of state pension schemes is varied and the objectives may go beyond simply poverty relief. In particular, while private pension systems are regressive by nature, given the reliance on earnings out of which to save, state pension systems can readily be designed to address issues such as income and gender inequality. Moreover, state systems seem to have much lower running costs than private pension systems, so may be viewed as a more efficient mechanism for sharing GDP with the retired population. State systems may also offer greater stability in the face of economic crises, including the intensifying disruption that climate change is likely to bring.

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