UK GOVERNMENT PLAN WOULD PRIVATIZE STATE PENSIONS

On Wednesday March 5, the UK government proposed the privatization of state pensions. The Financial Times reported that “the scheme, which bears some similarities to Chile’s restructuring of pensions in 1981,...would be the biggest change to Britain’s welfare state since its foundation in 1945” ( March 6, 1997). In an editorial the same day , “Pensions debate”, the FT says that “at a stroke, Mr. Peter Lilley, the social security secretary, has shifted the terms of the welfare debate in an unexpectedly radical direction” and adds that “Mr. Lilley’s solution has been to borrow and refine the stakeholder pension proposals of Mr. Frank Field, chairman of the social security select committee.”

Under the proposals, the UK would become the first member of the OECD to switch pension provision almost entirely to the private sector. The debate on structural pension reform in the United Kingdom, and possibly Europe, is now wide open.

The International Center for Pension Reform has been advocating pension privatization in the United Kingdom for years. In May 1996, ICPR President, Dr. José Piñera, had the following activities in London:

• Testimony to the Social Security Select Committee of the House of Commons

• Interview with Mr. Peter Lilley, Social Security Secretary

• Conference in London sponsored by The Adam Smith Institute, The Institute of Economic Affairs and the National Association of Pension Funds.

• In September 1996, the Select Committee Chairman, Mr. Frank Field, a Labor MP, headed a delegation of Committee members in a one week visit to Chile to study the Chilean private pension system.

In May 1997, Frank Field was appointed Minister of Social Security by the new Prime Minister, Tony Blair. Four days after his appointment, he had a meeting in London with José Piñera (reported in the Sunday Telegraph by its economics editor, Bill Jamieson)

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