Issue date: 09 September 2004

ISSUE DATE: 09/09/04

Understanding Pensions by Martin Sullivan published by Routledge

A new text book entitled Understanding Pensions by University of the West of England academic Martin Sullivan provides an informed twist on the media fuelled perception of a crisis in public and private pensions. Rapid population ageing in developed countries – caused by falling birth rates and rising life expectancy – means that the pensions time bomb is ticking ever more loudly. As the number of working age people in the population who must support those of pensionable age declines, state pensions in Britain and elsewhere will become unsustainable. Todays workers will have to rely much more heavily than their predecessors did on private pensions to see them through retirement.

However, Martin Sullivan argues that the real crisis is not with state pensions, but with private pensions. “Five years ago few people challenged the idea that state pensions were in crisis, due to population aging. Five years on, the real crisis appears to be one of private pensions rather than public pensions provision.”

Martin has been researching the subject of pensions for the past six years, partly because he is interested in the subject for its own sake, but partly because of a growing scepticism of the current orthodoxy that state and occupational pensions will be too expensive to continue with because of an ageing population. “My research has lead me to believe that the state pension schemes are sustainable, but private schemes provided by employers and insurance companies are in deep trouble. Consequently, government suggestions that private pension saving can fill the gap left by an increasingly stingy state pension are unrealistic for the majority of the population.”

‘Understanding Pensions’ is aimed at students, financial journalists and pensions industry practitioners. The book is a single reference source that gives the reader an introduction to the unique – often arcane – language, concepts and principles of pensions. An important feature of this text is its extensive glossary of pensions terminology. Martin Sullivan explains, “Much of the language used by pensions professionals and industry analysts is impenetrable to the average man or woman. Terms like longevity risk, defined benefit, pay-as-you-go and moral hazard are not part of the everyday vocabulary of most people. To help bring some clarity to the subject of pensions, I have produced a glossary which explains key technical terms and concepts in a clear and accessible way.

‘Understanding Pensions’, which is part of Routledge’s series on international studies in money and banking, also contains analysis of some of the most notorious pensions scandals, including the Maxwell Affair, the mis-selling of personal pensions, the Equitable Life Fiasco and the collapse of the U.S energy firm Enron. It also analyses questions like ‘why do we need pensions?’ ‘should the state pension age be raised?’ ‘is the current emphasis on means testing to reduce state pension costs and eliminate pensioner poverty the right approach?’ and ‘will the soon to be introduced pension protection fund protect the occupational pension rights of workers whose employer goes bust?’


Editor’s notes

Martin Sullivan is a Senior Lecturer in Economics in the Faculty of Humanities, Languages and Social Sciences at the University of the West of England

He has published articles on pensions economics in two jointly authored texts, but ‘Understanding Pensions’ is his first single-authored work

Martin has also written articles on pensions and saving for news papers and trade magazines and has presented research papers on the topic at a number of international conferences

Understanding Pensions by Martin Sullivan; published by Routledge ISBN 0415273897

Part 1: Pensions: Principles and Practice
1.Pensions and Pension Schemes 2. Public Pensions 3.Changes and Challenges 4.Popoulation Ageing in Britain 5.Occupational Pensions 6. Public Sector Pensions
7. Final Salary Woes 8. Individual Pensions 9. Pensioners’ Incomes

Part 2: Pensions: Issues and Controversies
1.Population Ageing in Perspective 2. Living and Working for Longer 3. Of Ponzi Schemes and Pension Funds 4. Taxing Funded Private Pensions 5.Annuities and Annuitization 6. The Maxwell Affair 7. The Perils of Self Investment 8. Solvency, Accounting and Occupational Scheme Closures 9.A Pension Benefit Guarantee Corporation for the UK 10. The Personal Pension Mis-Selling Scandal 11. The Equitable Life Fiasco 12.Closing the Pensions Saving Gap 13. Simplifying Pensions

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