The Growing Importance of Personal Pensions in the U.K. Pension System

Akira Komatsubara 

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1. Introduction

Loss of income due to aging, death, injury and illness is a constant risk throughout the humanlife cycle. People generally prepare for this contingency on their own, supplemented with thesafety net provided by the social security system.

The United Kingdom - a nation considered a leader on social security issues - is attemptingto meet the economic demand due to aging and other factors by reducing the role of socialsecurity (public pensions) and encouraging greater private sector activity to fulfill people'sneeds in this area.

Due partly to the public's strong interest in the pension system's role as the primary guaranteedform of income for the aging population, both the government and private sector haveimplemented major institutional changes in the past few decades. Many interesting issueshave been raised in the process.

The operation of a pension system that emphasizes private sector activity is of particular interestto Japan, where the population is aging at an accelerating rate. This paper examines thepublic and private pension situation in the U.K. to glean possible lessons for Japan.

Akira Komatsubara

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