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Heading for retirement? National Insurance, State Pensions, and the future of the contributory principle in the UK

Hills, John (2004) Heading for retirement? National Insurance, State Pensions, and the future of the contributory principle in the UK. Journal of Social Policy, 33 (3). pp. 347-371. ISSN 0047-2794

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Identification Number: 10.1017/S0047279404007743


This article discusses the implications of the decline of National Insurance in Britain, witnessed by its declining share of social security spending and steady dilution of the ‘contributory principle’ on which it was originally based. This decline is not accidental: under governments of the Left, arguments for inclusion have predominated,non-contributory benefits expanded and contribution conditions softened; under those of the Right, limited resources have been focused on the poorest through means-testing. From this starting point, the strong arguments in principle for social insurance look much weaker. However, there are also reasons why the system has not been swept away, notably the way in which most of it concerns already accrued state pension rights. The effect of currentplans for statepensions is to restore something closer to a flat rate state pension, but with significant complexity. The article suggests a way in which a more transparent system could guarantee a total state pension at a fixed percentage of average earnings. Other National Insurance benefits could either be separated from pensions and absorbed within other working age social security, or the scope of National Insurance could be maintained, but based on a test of participation, not past contributions.

Item Type: Article
Official URL:
Additional Information: © 2004 Cambridge University Press
Divisions: Social Policy
Centre for Analysis of Social Exclusion
Subjects: H Social Sciences > HC Economic History and Conditions
Sets: Departments > Social Policy
Collections > Economists Online
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Research centres and groups > Centre for Analysis of Social Exclusion (CASE)
Date Deposited: 21 Jan 2008
Last Modified: 20 May 2021 00:13

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