ON THIS DAY: 1st January 1909 introduced by Prime Minister Asquith and Chancellor David Lloyd George :
The first state-provided Old Age Pensions can be drawn in the UK.
Pensions are paid at a maximum of five shillings a week for single people and seven and six for married couples payable to people over 70, earning less than £21.10s a year, not in receipt of poor relief and of good character.
Once approved pensions are paid every Friday at the local post office. 490,000 people qualified for pensions but by 1911 this had risen to over one million.
In recognition of the role that Lloyd George played in introducing the old age pension it was for many years also known as ‘the Lloyd George!’.
From the Liberal History website
On this day in 1909, the first state pensions came in - Mark Pack
January 1, 1909 saw the first state pensions come into force in the UK, thanks to David Lloyd George and the Liberal government.
The history of the State Pension
- Pre-20th Century
Prior to the 20th century, state support for old age was limited. ‘Poor Laws’ dating back to the mid-14th century, compelled parishes to care for the needy, including the elderly, and these were gradually superseded by welfare reforms alongside family societies, guilds, and trade unions.
There were some special provisions set up in the military, for instance a pension fund for disabled Royal Navy seamen from 1590. State pensions in a loose sense started appearing in earnest in the 19th Century. However, they were still for certain individuals or narrow groups such as royal favourites, civil servants, clergymen or injured soldiers or sailors.
- 1900 - 1942
The modern state pension began with the introduction of the Old Age Pension in 1909. It was paid from 70, a ripe old age at the time. It required no contributions or work record, although a recipient had to have lived in the UK for 20 years and be of ‘good character’. In addition, it was means tested. To qualify for the full amount, you needed to have an annual income of £21 or less. Those earning between £21 and £31 got a reduced payment on a sliding scale.
The first contributory state pension emerged with the Widows, Orphans and Old Age Contributory Pensions Act 1925. Both employer and employees were required to pay into to the scheme, and it was broader, payable to individuals whose income was below £250 per annum. However, it was only compulsory for low-wage workers. It was more generous, worth twice as much as the Old Age Pension and paid from the lower age of 65.
- 1942 - 1980
In 1942 the Beveridge Report – Social Insurance and Allied Services – proposed a universal state pension to provide a safety net against poverty in old age. Subsequently, The National Insurance Act 1946 introduced the Basic State Pension, with effect from 1948. It was funded by National Insurance contributions paid by all workers, although initially married women were excluded. The State Pension Age was 60 years for women and 65 years for men.
Acknowledging the subsistence level of the Basic State Pension, an additional Graduated Pension Scheme was added in 1961 based on earnings. This was later replaced with SERPS (State Earnings Related Pension Scheme) from 1978 for employees based on a ‘middle-band’ of earnings. Individuals with an occupational pension scheme were able to ‘contract out’ of SERPS and reduce the rate of their national insurance contributions.
- 1980 - today
The 1980 Social Security Act removed the link between the average worker’s earnings and the pension paid.
The 1995 Pensions Act outlined a plan to phase in a higher pension age for women to 65 from 60 between April 2010 and April 2020, so that it was equalised with men. The 2011 Pensions Act accelerated this to completion by November 2018 and provided for the gradual increase to the state pension age for both men and women to increase to 66 years.
SERPS was replaced by The State Second Pension (S2P) in 2002 with the aim of providing additional pension benefits to lower earners and to include certain carers and those with long-term illness or disability.
In 2011, the Conservative and Liberal Democrat coalition government introduced the ‘triple lock’, the commitment whereby the state pension is uprated in line with inflation, wage growth or 2.5% – whichever the highest.
A major overhaul took place in 2016 when the New State Pension replaced the combined Basic State Pension plus additional pension (S2P).
The history of the State Pension | Charles Stanley
The history of the State Pension | Charles Stanley archived
The Old Age Pensions Act 1908 (8 Edw. 7. c. 40) is an act of Parliament of the United Kingdom of Great Britain and Ireland, passed in 1908. The act is one of the foundations of modern social welfare in both the present-day United Kingdom and the Irish Republic and forms part of the wider social welfare reforms of the Liberal government of 1906–1914.[1]
Successful single claimants over the age of seventy were paid five shillings a week, while couples in which the husband was aged over seventy got seven
shillings and sixpence per week.[2]
History
A royal commission (1893-1895) chaired by Lord Aberdare investigated the viability of old age pensions, but issued an adverse verdict for economic reasons.[3] A second committee (1896-1898) chaired by Lord Rothschild gave an adverse verdict on setting up an old age pension.[3] A 1899 committee reported favorably on establishing old age pensions for those above the age of 65.[3] A number of bills were introduced in Parliament over the period 1900-1907.[3]
The Old Age Pensions Act 1908 was passed in Parliament on May 7, 1908 in H. H. Asquith's budget.[3]
Outline
The act provided for a non-contributory old age pension for people over the age of seventy, with the cost being borne by taxpayers generally. It was enacted in 1908 and was to pay a weekly pension of 5s (7s 6d for married couples) with effect from 1 January 1909. The level of benefit was deliberately set low – the approximate equivalent of £23 for unmarried pensioners and £37 for married pensioners in 21st century terms[4] – to encourage workers to go on making their own provision for retirement.
In order to be eligible, claimants had to be over the age of 70, have been a British subject for 20 years and have resided in Great Britain and Ireland for at least twenty years. It was open to both men and women, both married and single, their "yearly means" not exceeding £31 10s.[5] Only those with a 'good character' could receive the pensions.[5] Others excluded from receiving the new pension were those in receipt of poor relief, those being held in what were then called 'lunatic asylums', those who had served a prison sentence and been released less than ten years before, those convicted of drunkenness (at the discretion of the court), and any person who was guilty of ‘habitual failure to work’, according to ability.[6]
Implementation
The pension was due to be paid from 1 January 1909, and those eligible had to apply to a local pension committee starting in October 1908 set up by the county councils.[5] Forms for applicants were available from the end of September 1908 and had to be returned to the postmaster of the post office that would pay the individual's benefit.[5] The claims were assessed by the pension officers and then sent to the local pension committee for approval.[5]
On 31 December 1908 a total of 596,038 pensions had been granted:[7]
| Rate | England (excluding Monmouthshire) |
Wales (including Monmouthshire) |
Scotland | Ireland |
|---|---|---|---|---|
| 5s | 297,332 | 19,691 | 60,787 | 161,578 |
| 4s | 15,178 | 864 | 1,443 | 3,101 |
| 3s | 14,830 | 805 | 1,488 | 3,131 |
| 2s | 7,185 | 362 | 656 | 1,628 |
| 1s | 4,423 | 234 | 395 | 927 |
| Totals | 338,948 | 21,956 | 64,769 | 170,365 |
Effects
- Initially, most of the recipients of the pension benefit were women. In order to remove any stigma in receiving the benefit, the scheme was administered by the Post Office rather than the existing social welfare agencies such as the parish or Poor Law.
- As Winston Churchill (with David Lloyd George a major social reformer of the era) said of the pension level, "It is not much unless you have not got it".[4]
- Flora Thompson, who helped administer the first Post Office payouts, has movingly recorded the relief and gratitude of the first recipients: "'God bless that Lord George and God bless you, miss!' and there were flowers from their gardens and apples from their trees for the girl who merely handed them the money".[8]
AHP Notes
first company pension schemes were set up in the late seventeenth century in private firms
associated with the government, such as the Bank of England and East India Company. At the Bank
of England the first pension was granted in 1739 and further grants were made on a discretionary
basis. The Bank's Superannuation Fund was established in 1933: prior to that date pensions had been
paid out of the Bank's profits.
Railway Pensions
The following railway companies operated pension schemes in the second half of the 19th century:
• London and North Western (founded 1853)
• Great Western (founded 1865/6)
London and South Western (founded c.1868)
• Midland (founded 1870)
• Caledonian, Lancashire and Yorkshire (founded 1870)
• Railway Clearing System Superannuation Fund (founded 1870)
• London, Brighton and South Coast (founded 1872)
• Great Northern (founded 1874/5)
• Great Eastern (founded 1879)
• North Eastern (founded 1881)
• North British (founded 1883)
• Glasgow and South Western (founded c. 1898)
1890s
The 1890s saw other public sector employees being granted pensions modelled on the civil service
scheme, including teachers, the police (1890) and poor law officials (1896). A uniform pension scheme
for local government staff was established in 1922.
Old Age Pensions Act 1908 - Wikipedia
The act provided for a non-contributory old age pension for people over the age of seventy, with the cost being borne by taxpayers generally. It was enacted in 1908 and was to pay a weekly pension of 5s (7s 6d for married couples) with effect from 1 January 1909. The level of benefit was deliberately set low – the approximate equivalent of £23 for unmarried pensioners and £37 for married pensioners in 21st century terms[4] – to encourage workers to go on making their own provision for retirement.
The history of the State Pension
- Pre-20th Century
Prior to the 20th century, state support for old age was limited. ‘Poor Laws’ dating back to the mid-14th century, compelled parishes to care for the needy, including the elderly, and these were gradually superseded by welfare reforms alongside family societies, guilds, and trade unions.
There were some special provisions set up in the military, for instance a pension fund for disabled Royal Navy seamen from 1590. State pensions in a loose sense started appearing in earnest in the 19th Century. However, they were still for certain individuals or narrow groups such as royal favourites, civil servants, clergymen or injured soldiers or sailors.
- 1900 - 1942
The modern state pension began with the introduction of the Old Age Pension in 1909. It was paid from 70, a ripe old age at the time. It required no contributions or work record, although a recipient had to have lived in the UK for 20 years and be of ‘good character’. In addition, it was means tested. To qualify for the full amount, you needed to have an annual income of £21 or less. Those earning between £21 and £31 got a reduced payment on a sliding scale.
The first contributory state pension emerged with the Widows, Orphans and Old Age Contributory Pensions Act 1925. Both employer and employees were required to pay into to the scheme, and it was broader, payable to individuals whose income was below £250 per annum. However, it was only compulsory for low-wage workers. It was more generous, worth twice as much as the Old Age Pension and paid from the lower age of 65.
- 1942 - 1980
In 1942 the Beveridge Report – Social Insurance and Allied Services – proposed a universal state pension to provide a safety net against poverty in old age. Subsequently, The National Insurance Act 1946 introduced the Basic State Pension, with effect from 1948. It was funded by National Insurance contributions paid by all workers, although initially married women were excluded. The State Pension Age was 60 years for women and 65 years for men.
Acknowledging the subsistence level of the Basic State Pension, an additional Graduated Pension Scheme was added in 1961 based on earnings. This was later replaced with SERPS (State Earnings Related Pension Scheme) from 1978 for employees based on a ‘middle-band’ of earnings. Individuals with an occupational pension scheme were able to ‘contract out’ of SERPS and reduce the rate of their national insurance contributions.
- 1980 - today
The 1980 Social Security Act removed the link between the average worker’s earnings and the pension paid.
The 1995 Pensions Act outlined a plan to phase in a higher pension age for women to 65 from 60 between April 2010 and April 2020, so that it was equalised with men. The 2011 Pensions Act accelerated this to completion by November 2018 and provided for the gradual increase to the state pension age for both men and women to increase to 66 years.
SERPS was replaced by The State Second Pension (S2P) in 2002 with the aim of providing additional pension benefits to lower earners and to include certain carers and those with long-term illness or disability.
In 2011, the Conservative and Liberal Democrat coalition government introduced the ‘triple lock’, the commitment whereby the state pension is uprated in line with inflation, wage growth or 2.5% – whichever the highest.
A major overhaul took place in 2016 when the New State Pension replaced the combined Basic State Pension plus additional pension (S2P).
The history of the State Pension | Charles Stanley
The history of the State Pension | Charles Stanley archived