The U.K. pension system is traditionally seen as offering a good example to other countries, having features such as low social security pension expenditure and a high coverage of well-financed voluntary private schemes. But recent developments suggest that the model has shown weaknesses. The most pressing current issue is underfunding of defined benefit occupational schemes following the bear market; but there is also the ongoing crisis of mis-selling of personal pensions and the failure of the Equitable Life insurance company. In this paper we seek to investigate whether there is indeed a crisis and what the locus of the difficulty is. We find that there are important longer-term weaknesses of the U.K. system as well as these current difficulties, focusing on social security and private pensions. Pitfalls faced by U.K. policymakers offer important lessons to other countries seeking to set up or expand private pension provision. The Geneva Papers on Risk and Insurance (2004) 29, 343–370. doi:10.1111/j.1468-0440.2004.00292.x
