Brief History Of UK Pensions
Pre 1908, provision was patchy, based on charity or ‘poor laws’ which could see old people sent to workhouses.
1908 Pensions Act introduced first general old age pension paying a non-contributory amount of between 10p and 25p a week, from age 70, on a means-tested basis from January 1 1909 – “Pensions Day”. Pension only given to those of ‘good character’ but was administered by Post Office to help remove stigma of getting ‘poor relief’
1925 Contributory Pensions Act – set up a contributory State scheme for manual workers and others earning up to £250 a year. The pension was 50p a week from age 65.
1946 National Insurance Act – introduced contributory State pension for all. Initially pensions were £1.30 a week for a single person and £2.10 for a married couple. Paid from age 65 for men and 60 for women, effective from 1948.
1959 National Insurance Act – introduced a top-up state pensions scheme, based on earnings and known as the graduated pension. Covered earnings between £9 and £15 a week.
1975 Social Security Pensions Act – set up the State Earnings related Pension Scheme (Serps). Introduced in 1978, the scheme replaced graduated pensions. Rules for contracting out were also introduced, whereby workers with adequate private provision can give up all or part of the benefits of Serps. In return they pay lower National Insurance contributions.
1980 Social Security Act – Link between state pension increases and average earnings broken by Margaret Thatcher’s Conservative government. Pensions index linked – increased in line with inflation
1999 Introduction of Minimum Income Guarantee (Mig), income support for poorest pensioners. Helped to reduce relative poverty but also adds a disincentive for private sector provision.
2003 Introduction of the Pension Credit, which will bring half a million pensioners into means-testing.
Possible Changes to UK Pensions
- Raising of retirement Age
- Working life and pensions
- State pensions and inequality
- Demographic time bomb