Portability and Preservation of Pension Rights in the United Kingdom

121 Pages Posted: 18 Jun 2020

See all articles by David P. Blake

David P. Blake

City, University of London

J. Michael Orszag

affiliation not provided to SSRN

Date Written: June 1, 1997

Abstract

This study examines pensions portability and the preservation of pensions rights in the U.K. We review the economic theory underlying pension schemes and the arguments for and against more pensions portability. We show that the effect of current laws and actuarial practice is to penalize young early leavers heavily, so that they can lose up to 30% of the pension that they might have expected when they retire. We propose a policy to reduce this early leaver penalty according to a sliding scale that involves determining transfer values for younger workers on the basis of actual contributions paid rather than on notional accrued benefits, but with accrued benefits having a more significant weight in calculating the transfer values of older early leavers. The effects of the various actuarial valuation methods and assumptions used as well as the discretion allowed to actuaries are discussed in detail. We also compare the position of early leavers in the U.S., Canada, the Netherlands, and Japan.

JEL Classification: G22

Suggested Citation

Blake, David P. and Orszag, J. Michael, Portability and Preservation of Pension Rights in the United Kingdom (June 1, 1997). Available at SSRN: https://ssrn.com/abstract=3610385 or http://dx.doi.org/10.2139/ssrn.3610385

David P. Blake (Contact Author)

City, University of London ( email )

106 Bunhill Row
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HOME PAGE: http://www.pensions-institute.org/

J. Michael Orszag

affiliation not provided to SSRN

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