UK Social Crises: Challenges of Social Security and State Pension

What are the consequences of the Conservative social security missteps? What are the results of the Covid-19 pandemic on social security in the UK? What are the challenges faced by retirees in the UK?

While the British government has been struggling to keep society going with austerity measures and huge social cuts, the coronavirus outbreak has imposed new burdens in 2020. Many areas are suffering from economic pressures caused by the pandemic. Among all, social security and pension schemes need more attention from the United Kingdom’s government to avoid future disasters.

Brexit and the Pandemic exposed the ugly face of poverty and social insecurity in the United Kingdom. Over the past year, while the UK has been undergoing Covid-19 pandemic and getting ready to leave the European Union, millions of people who have been struggling hard for many years to stay afloat, have been somewhat noticed more. The situation serves as a wakeup call for an equal society, in Britain. It also sounds the alarm to support more vulnerable people now, before they are too many that cannot be helped.

The UK social security system has not been able to cope with protecting people, and more people will likely become poor, homeless or hungry. The coronavirus further exposed existing social crises in society, such as underfunded public services, insecure jobs, food poverty, and housing problems, which can worsen in the future and impose huge hardships on people.

The UK has a weak social security system which cannot protect people

Due to a decade of austerity policies imposed after the 2008 economic recession, UK society has been divided between the rich and the poor. In fact, austerity measures created a social gap in the United Kingdom and harmed the welfare state. Although it seems that the government has tried to continue funding the National Health Service, millions of people lack health care and there have been budget cuts in, practically all social sectors such as the police, courts, housing, roads, etc. Throughout all these years, local governments suffered cuts, too.

Austerity measures changed the UK to become more like the United States, where millions have lost their job loss and face social insecurity unlike European countries where people enjoy more safety. During the austerity period, requests for food banks doubled and the number of people signing for benefits, increased. The number of children in need of food aid rose dramatically, while two-thirds of these children have at least one parent who with a job.

The Conservatives’ austerity policy increased the divide between rich and poor.

While the Conservatives have been selling their austerity policies to others, this has been affecting safety and security in society. Murder, robbery, and crime rates surged over the past decade. Many police officers express that fewer number of police officers plus cutbacks are the reasons behind the crime surge. Some experts add that cuts to social services and the rise of social inequalities are other major reasons for a spike in crime during the austerity period.

Several social institutes responsible for social pathologies were closed or downsized due to austerity policies and their responsibilities were transferred to the police, now with fewer officers. When the Conservative administration hailed the end of the austerity decade in 2019, Prime Minister Boris Johnson promised the recruitment of twenty thousand more police officers; but in order to reduce crime, society needs investments in the social services and education as well.

During the Covid-19 pandemic, the Human Rights Watch has warned of a redesigned algorithm by the government for social security that threatens the rights of people and impoverishes them even further. This algorithm will make people hungrier and more indebted; socioeconomic inequalities will hit the country and people will experience huge income losses coupled with the pandemic. The government set up a flawed automated algorithm to decide how much money should be paid to people for their rent and food, but it will push people to the brink of poverty.

During this time, the Department for Work and Pensions which is responsible for welfare and pension in Britain, has had difficulties in paying weekly wages and monthly salaries; hence they there are a longer waiting period and people have to borrow money to meet their basic needs.

The UK Government’s pandemic strategy threatens the rights of people

The UK welfare system is facing several challenges one of which is the pension system. There are two state pensions in the UK. One is the basic state pension and the other is the state second pension which replaced the earnings-related pension scheme. Retirees can claim the state pension when they get to the state pension age. But since there are problems funding the pension system, the pension age has been gradually increasing.

Until 2018, the state pension age was 65; but it was raised to 66 in 2020 and is due to rise to 67 in 2028. The state pension age will rise to 68 by 2030 or 2038. In order to plan for a better retirement, people join private schemes and contribute more to the trustees. Also, to receive full benefits, one needs 35 qualifying years of National Insurance contributions.

The British government has a state pension structure, according to which those who worked in the country and paid National Insurance based on their incomes and in accordance with pension rules will receive consistent payments during their retirement period. But the coronavirus pandemic has created a complicated pension challenge for retirement. This health shock lowered economic growth and made it difficult for people to save money for their retirements.

The outbreak will continue to put pressures on the state of pension for the foreseeable future, such as slow growth, low interest rates on pension funds and insurance companies, low revenues and an ageing population. Covid-19 forced huge business closures in the UK and exerted pressure on the country’s pension schemes. Companies have encountered financial difficulties, many employees struggle with economic hardships, and pension trustees face funding issues.

The pandemic complicated the UK pension challenges

In recent years, the UK pension strategy has placed more burdens on individuals who now must take responsibility for their retirement. They have to accept risks related to their retirements; sadly, the devastating impact of coronavirus has exposed their vulnerability to key global issues.

Low interest rates on pension fund impact benefits for those who want to request retirement in the UK. Data indicates that the impact of the pandemic on the stock market has lowered the medium pension fund value by more than 15 per cent in the first quarter of 2020, which is the worst record so far and, even lower than the 2008 global financial crisis. Therefore, the sectors affected by the decline may think about reducing benefit payments to lower than what was already anticipated.

The UK pension strategy puts burden on individuals to protect their retirements

the coronavirus outbreak and withdrawal from the European Union placed such huge economic pressures on the UK that it exposed the dark face of social inequality. The number of vulnerable people already facing social security challenges and inequalities is increasing manifold. Wrong policies by the government have put society on the verge of poverty and spiked crime and insecurity. Retirement age has increased and many are being forced to pay more contributions and work longer years to be able to use their benefits.

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