Individual Accounts for Social Security Reform: Lessons From the United Kingdom

Blake, David; Turner, John
September 2007
Benefits Quarterly;2007 Third Quarter, Vol. 23 Issue 3, p56
Academic Journal
To consider a Social Security reform approach that creates substantially new structures such as voluntary carve-out accounts, it is important to apply what we already know about the functioning of pension systems and their effects on workers rather than analyzing an idealized form of the proposed system. This article describes the United Kingdom's experience with voluntary carve-out accounts, including the system's numerous difficulties. Among the many problems are "mis-selling," high administrative costs and fundamental difficulty determining the appropriate offset between the reduction in the worker's payment to Social Security and the reduction in that person's Social Security benefits.


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