Should the basic state pension be a contributory benefit?

Paul Johnson and Gary Stears

Fiscal Studies, 1996, vol. 17, issue 1, 105-112

Abstract: The basic state retirement pension is payable irrespective of means but it is a contributory benefit, not a universal benefit. Individuals who do not have enough National Insurance contributions when they reach state pension age are not entitled to a full state pension. They may receive a proportion of the pension or just the dependant’s addition to a spouse’s pension. This reflects the fact that the pension system in the UK, and the system of unemployment and sickness benefits, were designed around the contributory principle. As Dilnot, Kay and Morris (1984) pointed out in their comprehensive review of social security policy, ‘The Beveridge report took the contributory principle extremely seriously. Contributions were to be levied on an actuarially calculated basis to reflect the benefits received’. But ‘the retreat from this principle has been comprehensive ... The National Insurance fund was reduced to meaningless accounting and the actuarial link between contributions and benefits abandoned’. In this strong sense, we have never operated a contributory principle.

Date: 1996
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