The history of state pensions in the UK: 1948 to 2010

Abstract

This Briefing Note describes state pension provision in the United Kingdom from the inception of the basic state pension in 1948, following the Beveridge Report, to Pensions Act 2007 and the plans of the Conservative/Liberal Democrat coalition government. The main objective is to provide a comprehensive description of the rules that currently determine pension benefits as well as those that have been in place in the past. However, we also provide a brief historical overview of the dilemmas facing policymakers when contemplating pension reforms and a summary of the most recent reforms. The history of the UK pension system is the story of a mainly non-contributory system, periodically tempted by the higher replacement rate of social insurance schemes, but always frightened once the costs become apparent. Recent reforms have tilted the system further in the direction of a universal flat-rate benefit, abandoning any social insurance design. This confirms that the main objective of the UK state pension system is to reduce poverty at old age. These flat-rate pensions will also reduce the reliance of the system on means-tested benefits, somewhat reinforcing the Beveridgean design of the system. Given these clarifications, it is unfortunate that the latest reforms have still sought to maintain much of the complex structure of the pre-existing system instead of reforming and rationalising it. However, once issues of transition have been dealt with, there may yet be scope for simplifying the presentation of the rules. * This paper was funded by the ESRC Centre for the Microeconomic Analysis of Public Policy at the Institute for Fiscal Studies (RES-544-28-5001). The authors would like to thank Carl Emmerson for useful comments on an earlier draft of this Briefing Note and Judith Payne for copy-editing. All remaining errors are the responsibility of the authors.

The economic circumstances of cohorts born between the 1940s and the 1970s

“…30 For a comprehensive history of state pensions policy in the UK, see Bozio, Crawford and Tetlow (2010). 31 We are very grateful to Soumaya Keynes and Gemma Tetlow for their help and advice in producing these calculations.…”

“…This changed the measure of the LEL used to identify qualifying earnings in each year, for cohorts reaching SPA from 2010-11 onwards (and retrospectively affected all the accrued rights of those cohorts). For a detailed discussion of the rules underpinning the original version of SERPS and each of its subsequent incarnations, see section 4.2 of Bozio, Crawford and Tetlow (2010).…”

Is being in paid work beyond state pension age beneficial for health? Evidence from England using a life-course approach

“…These indicators of health are all associated with increased mortality and worsened quality of life, even after related covariates are controlled for. 25 Our initial sample included respondents who had reached the current SPA (65 for men, 60 for women) 29 by wave 3 and who participated in wave 2. This sample was then further restricted to men aged 65-74 and women aged 60-69 at wave 3.…”

Long-run Trends in the Economic Activity of Older People in the UK

“…In what follows we briefly describe the evolving policy context, focussing just on reforms that might be expected to have had impacts on the labour market outcomes of older individuals. The timeline for these reforms is summarised in Table 1.2 but further details in each dimension are given in the subsections below (a fully comprehensive description of state pension reforms over the period 1948 to 2010 can be found in Bozio, et al (2010) while Crawford, et al (2013) discuss more recent changes). …”