The Old Age Pension
Hereís another pension history lesson for you to read/colour in over the weekend.† Itís interesting, I think, that in its one hundred and first year the Old Age Pension is still being changed to meet the requirements of the future elderly within the constraints of the public purse.
The current Pensions Bill and other recent legislation are making yet more fundamental changes by stopping the Basic State Pension from dropping year by year in relation to average earnings levels; and the even more fundamental change of scrapping the whole idea of the state providing earnings-related pensions and making the State Second Pension (S2P) a flat-rate top up to the basic pension in the future.† Much of this was covered in our Pensions Radio podcast yesterday with Niki Cleal of the PPI.
In effect, our forty-seven year experiment with earnings-related pensions being paid to employees by the state that started back in 1961 is over.† The state has essentially given up on the idea of standing in for employers who donít provide workplace pensions by providing a centrally run scheme.† Thatís why the idea of spreading workplace pensions through auto-enrolment is seen to be necessary.† The ending of a forty-seven year experiment would leave a vacuum otherwise.† A vacuum that canít be filled by our inadequate basic pension.
But today itís the one hundred and one year old experiment that interests me and the way that locally-funded Poor Relief was gradually superseded by centrally-funded non-contributory state pensions.† I thought it was an interesting topic for a pension conversation and included it as the second in my series of Ďpension historyí cartoons for Pensions Week magazine.† I hope you like it:
25 July 2008
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