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EDITIONS
Monday, 9 December, 2002, 11:35 GMT
History of pensions: A brief guide
Sir William Beveridge, Margaret Thatcher and David Lloyd George
Beveridge, Thatcher and Lloyd George have left their mark on pensions
A brief guide to the history of pensions in the United Kingdom:

  • 1670s First organised pension scheme for Royal Navy Officers

  • 1908 Old Age 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". This was introduced during the Liberal government of David Lloyd-George. Sir William Beveridge, father of the welfare state, was an adviser.

  • 1921 Finance Act - tax relief granted to pension schemes satisfying certain conditions.

  • 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.

  • 1942 Sir William Beveridge publishes his "Social Insurance and Allied Services" report with state welfare proposals.

  • 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.

  • 1947 Finance Act - limited the maximum amount of tax relief on pensions, and the proportion that could be taken as a lump sum.

  • 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. If the link with earnings had not been broken, a basic state pension for a single pensioner would worth about 30 a week more.

  • 1986 Financial Services Act - set out terms and conditions under which investment business could be conducted. Changes to contracting out.

  • 1991/2 Maxwell scandal. Mirror newspaper proprietor Robert Maxwell had used about 460m from his group's pension funds to finance business dealings.

  • 1995 Pensions Act - response to Maxwell, which set up regulatory and compensation schemes.

  • 1997 Removed tax credits for pension funds on company dividends.

  • 1999 Introduction of Minimum Income Guarantee (Mig), income support for poorest pensioners.

  • 2001 Introduction of stakeholder pensions, a low-cost pensions scheme aimed at people on low to average earnings and helping women save for old age.

  • 2002 British pensioner Annette Carson, who lives in South Africa, failed in her legal challenge against the UK government to have her pension uprated with inflation. The case has implications for thousands of British ex-pat pensioners worldwide.

  • 2002 Switch from Serps to the State Second Pension scheme.

  • 2003 Introduction of the Pension Credit, which will bring half a million pensioners into means-testing.

Based on information from the National Association of Pension Funds (NAPF).


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05 Aug 02 | Inside Money
05 Aug 02 | Inside Money
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