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The abolition of SERPS?
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In its second term, the Thatcher government hoped to solve the 'early leaver problem' in collective occupational pensions by effectively replacing this part of the United Kingdom’s ‘second tier’ of pension arrangements with individualised personal pensions. As policy developed, though, this idea was expanded to embrace total reform of the ‘second tier’ through the outright abolition of the State Earnings-Related Pension Scheme (SERPS). In doing so, the government intended a dramatic break with the consensus reached only during the late 1970s. This chapter explores the roots of the plan to abolish SERPS, in the process tracing its two principal motivations: the desire to contain unfunded state spending on pensioners, a fear deepened by a growing awareness that SERPS could be a 'demographic time bomb', timed to detonate in the early decades of the twenty-first century; and the hope that, through privatisation, its former members would be imbued with the 'vigorous virtues' of thrift and entrepreneurialism. The chapter examines how this proposal became government policy in the 1985 Green Paper on the reform of social security, even though it was opposed by the great majority of those giving evidence to Norman Fowler's Inquiry into Provision for Retirement (IPR). In doing so, it highlights the pivotal role of the No. 10 Policy Unit and John Redwood in persuading Margaret Thatcher to back those pushing for radical neoliberal reform.

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A neoliberal revolution?

Thatcherism and the reform of British pensions

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