Can We Afford to Grow Old? A Look at the UK Pension Scheme Analytical Essay

Can We Afford to Grow Old? A Look at the UK Pension Scheme
A review and analysis of the affordability and sustainability of pension funding in the UK.
# 153858 | 4,091 words | 15 sources | APA | 2014 | GB
Published on Apr 29, 2014 in Economics (Macro) , Economics (National) , Economics (General)

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This paper explores the sustainability, affordability and efficiency of the current UK pension scheme and the ever growing problems arising with an ageing population. The paper draws on ideas from other research papers as well as original ideas and solutions. The paper also provides both statistical and theoretical analysis of the ageing population in the UK, as well as a brief history of the UK pension scheme.

The UK State Pension
What are the Financial Costs of Pension Schemes?
What are the Non-Financial Costs of Pension Schemes?
What are the Benefits of Pension Schemes?
What are the Inherent Problems in the Current UK System?
What are the Possible Solutions to the Problem?

From the Paper:

"Whilst there are obvious financial costs associated with State pensions, there are often more subtle non-financial costs caused by State pension schemes. As previously mentioned, NIC cause labour distortions, which can be seen as one of the negative effects of the collection scheme.
"Like income tax, NIC can be seen as a tax on earnings. The brunt of this burden is borne by the employee or employer dependant on the relative price elasticity's. Due to this people may be discouraged from working as much, or for as long, as they would have worked before. This is considered a problem because it appears the surplus value of an employee grows, the higher the wage and training of the employee (Acemoglu and Pischke 1999). Therefore, those who qualify for NIC will have distortions and creating a disincentive to work. Whilst those who do not qualify, the low income workers, will not have these distortions as a disincentive to work. The more productive workers will therefore be discouraged by NIC whist the least productive will not be affected."

Sample of Sources Used:

  • Acemoglu, Daron. Pischke, J rn-Steffen. (1999). Beyond Becker: Training In Imperfect Labour Markets. The Economic Journal, 109 F112-F1427
  • Barr, Nicholas. Reforming Pensions: Myths, Truths and Policy Choices [Online]. London: LSE Research Online. (2002) Available at: Accessed: April 2013.
  • Ben-Porath, Yorman. (1970). The Production of Human Capital Over Time. National Bureau of Economic Research. 129-154 0-870-14218-6. Available at: Accessed: April 2013.
  • Bovenberg, Blans. Koijen, Ralph. Nijman, Theo. Teulings, Coen. Saving and Investing Over the Life Cycle and the Role of the Collective Pension Funds. De Economist 155:347-415 (2007).
  • Bozio, Antoine. Crawford, Rowena. Tetlow, Gemma.(2010) The history of State pensions in the UK: 1948 to 2010. Institute for Fiscal Studies 2010.

Cite this Analytical Essay:

APA Format

Can We Afford to Grow Old? A Look at the UK Pension Scheme (2014, April 29) Retrieved May 28, 2023, from

MLA Format

"Can We Afford to Grow Old? A Look at the UK Pension Scheme" 29 April 2014. Web. 28 May. 2023. <>