The Effect of Demographic Factors and Indexation on the Long term Financing of the State Earnings-Related Pension Scheme.

Abstract

In September 1974 Barbara Castle published her proposals for a new earnings-related State pension scheme in her White Paper “Better Pensions”. This followed a succession of attempts by previous Secretaries of State for Social Services to change State pension arrangements radically. Unlike the ill-fated Crossman and Joseph schemes, however, the Castle scheme succeeded both in reaching the statute book and in coming into operation. A Bill was introduced in February 1975 and on 7 August 1975 the Social Security Pensions Act 1975 received the Royal Assent. The State earnings-related pension scheme (SERPS) came into operation on 6 April 1978. It provided State pensions related to earnings, but also offered to employers with good occupational pension schemes the possibility of ‘contracting-out’ and providing equivalent or better earnings-related benefits through their own scheme.