Hi, Question 3.1 List the effects that State benefits will have upon the provision or purchase of additional benefits by employers and employees. The answer is: The provision of State benefits may have the following influences: ● raise awareness amongst employees of the importance of certain benefits ● raise employees’ awareness of the need to invest in or purchase top-up benefits ● increase pressure on employers for the need to provide top-up benefits for employees ● conversely, it may introduce moral hazard where individuals rely on State benefits based upon the assumption that “the State will provide” ● reduce levels of additional saving if State benefits are means-tested ● where State benefits are contributory, make individuals less able to provide for themselves or make them feel that they cannot do so. I did not understand the last point mentioned therein.
If State benefits are contributory then the public will have to contribute toward them, probably via taxes. If I'm having to pay taxes to fund State benefits, then I'll have less money available to provide for myself.
