Introduction

As we discussed in Chapter One, although both the UK and the US are commonly designated as having liberal welfare states, their pension systems have differed considerably. US state pensions are modest by international standards but are dominated by the notion of being an earned entitlement that reflects previous wages and work effort. The safety net of means-tested benefits for older people on low incomes is correspondingly weak. In the UK, a more paternalistic attitude to retirement incomes has been dominant. State pension provision has been very lacking in generosity but is geared more towards an analysis of social need, rather than an earned entitlement. Means-tested benefits have become an important source of income for many older people, particularly those without significant occupational pension income.

In this chapter, we examine how changes to retirement incomes in both countries have increased the need for individuals to work beyond age 65. In terms of making sense of these changes, it is first necessary to go back to the original guiding principles of state pension provision, namely, self-reliance in the US and paternalism in the UK. After this, the chapter then examines changes to retirement incomes in a number of areas that have increased the need to work past 65. In both countries, this includes increases in the state pension age, a withdrawal/reduction of social assistance benefits available at or before 65, and a decline in defined benefit (DB) occupational pensions. Throughout the chapter, it is clear that change needs to be understood as part of an incremental process, as per the arguments of Streeck and Thelen (2005). Policymakers have been crucial in constructing, and then reconstructing, the institutions that influence work in retirement transitions. In this light, policies to extend working lives in the ‘liberal’ UK and US cannot be viewed merely as market outcomes or the result of endogenous factors such as population ageing.

The roots of state pension provision

The roots of UK pensions

In order to understand changing state pension provision in the UK today, we need to recognise that the pensions that emerged were influenced by a concern for the social needs of older people (Rimlinger, 1971: 229; Thane, 2006: 79).