Tightropes and Tripwires: New Labours Proposals and Means-Testing in Old Age

31 Pages Posted: 14 Jul 2008

See all articles by Jane Falkingham

Jane Falkingham

University of Southampton - Southampton Statistical Sciences Research Institute (S3RI)

Katherine Rake

affiliation not provided to SSRN

Date Written: April 1999

Abstract

This paper analyses the Government's proposals contained in A New Contract for Welfare: Partnership in Pensions. It examines the position of low paid workers and the potential of the proposals to protect individuals from means-tested old age. The paper identifies that the Green Paper's proposals add up to reinventing a new two-stage basic pension but at proposed levels that could extend means-testing to low paid workers. The paper then models the Green Paper's proposals on lifetime incomes of a hypothetical, low-income individual and their partner. Two key features of the proposed basic pension package are argued as problematic. First, the level of payment, and second, lifetime participation rules that prevent comprehensive coverage or tightropes and tripwires, respectively. The paper identifies potential incentive problems, and problems of sustainability. The authors make several suggestions about changes to the proposals that could meet their concerns.

Suggested Citation

Falkingham, Jane and Rake, Katherine, Tightropes and Tripwires: New Labours Proposals and Means-Testing in Old Age (April 1999). LSE STICERD Research Paper No. CASE023. Available at SSRN: https://ssrn.com/abstract=1158914

Jane Falkingham

University of Southampton - Southampton Statistical Sciences Research Institute (S3RI) ( email )

Southampton SO17 1BJ
United Kingdom

Katherine Rake

affiliation not provided to SSRN

No Address Available

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