The British pension model is unique and it has failed. The crisis in UK pension provision is worsening and the demise of traditional final salary pensions is throwing the inadequacy of our state pension system into stark relief. The reason Britain has just about the least generous state pension system in the industrialised world is because it has relied on employers shouldering ever-increasing responsibility for old-age income support with generous final salary pension schemes.

Our system of contracting-out encouraged millions of people to swap their state pension rights for private pension promises they were led to believe were guaranteed. However, the regulatory framework to protect these privatised social welfare benefits was inadequate and the costs and risks of private pensions have proved too high to be relied on. Both employers and governments are guilty of raiding these funds, leaving many mature schemes with huge deficits, members with no pension and hampering corporate competitiveness. More appropriate investment policies can help fund these pension promises, but as lifelong employment disappears, average job tenure declines, global competitive pressures intensify and corporate ownership changes frequently, managers cannot justify continuously trying to run down the up escalator in an attempt to provide long-term welfare benefits.