Pension reform is high on the political agenda in the United Kingdom as in many other countries, but for many people the issues are nigh on impenetrable. For the uninitiated, Michael Hill's book promises to be an accessible guide to the issues. The book starts with a brief history of pension provision in the UK, considers issues in assessing the adequacy of pension coverage, presents alternative models of pension provision and discusses the inter-relationship between pension and retirement, before turning to the ageing population and options for reform. The book succeeds in being accessible to anyone with little or no background knowledge and would be suitable for students or general readers. It is non-technical and jargon-free. It also provides a sensible antidote to the often-simplistic coverage of pensions in the mass media. Hill points out that media reports about the ‘ticking demographic time bomb’ ignore the fact that employment rates among older workers and women matter, as well as the age structure of the population. He also argues that pre-funding of pensions is not a panacea, although this has been said many times before by among others Nick Barr and Peter Diamond. The desirability of funding is neither unchallengeable, as he asserts, nor unchallenged. He also emphasises the distinction between the age at which people retire and the age at which people draw their pension. Simply raising the age of eligibility for the state pension from 65 to 68 years will not necessarily mean everyone working for three more years.

The book, however, fails to provide a comprehensive introduction to the subject. One of its main problems is that, other than the subject of pensions, it lacks a unifying theme – such as would come from an analytical approach (e.g. economics) or a central question (e.g. problems with the UK pension system and options for reform). The individual chapters are not well integrated and the coverage of many issues is patchy, e.g. there is little discussion of risk. In many cases, the complexity of issues is highlighted but little explicated. The chapter on adequacy, for example, does a reasonable job in setting out some of the conceptual and measurement issues that arise in calculating replacement rates, but makes no attempt to resolve them. The chapter on demography is similar. All too often, Hill asserts that a particular issue is ‘complicated’, as if this makes it impossible to do any concrete analysis or reach a firm conclusion. Yet, it is possible and indeed necessary to go further than this, as shown by the recent reports of the Pensions Commission chaired by Lord Turner.Footnote ¹ For anyone wanting a really useful introduction to the UK pensions system, these are much better places to start.

I also take issue with Hill's criticism of the dominant ‘economic perspective that not only treats both needs and contributions to society as secondary considerations but … uses micro- rather than macro-economic assumptions that individualise issues’ (pp. 173–4). Debates about pensions cannot take place free of cost considerations. Hill is in favour of a citizenship pension, to which everyone would be entitled irrespective of whether or not they had contributed. This has many merits, including properly recognising the contribution of carers, but without considering the cost, the case is considerably weakened. Nor do I see how the individual perspective can be ignored when state provision of pensions has important consequences for individuals' decisions about saving, consumption and working. The link between retirement and pensions, to which Hill devotes a chapter, is largely about individual responses to the incentives created by pension systems. The recent concern in the UK about the extension of means-testing is about the undermining of individuals' incentives to save, and the creation of inequality between those who have saved for their retirement and those who have not. Hill argues that there is an ideological fault line between views of pensions as delayed reward to labour and providers of an adequate income in old age – and that policy has been dominated by the former view. However, the introduction of the Minimum Income Guarantee and the Pension Credit – and indeed Beveridge's original decision to give pensions to retired people without contributions – have been motivated by concern about pensioners' incomes. It is less an ideological fault line than an inevitable tension in trying to design pension policy that both meets the needs of today's pensioners while preserving incentives for work and saving.