Pensions have been around for hundreds of years. In 1670 The Royal Navy introduced a pension scheme for officers. However, it’s during the last 100 years that we’ve seen the biggest changes in the UK. Here’s a brief history of Pensions in the UK.
1908 – Lloyd George’s Old Age Pension Act was passed and formed part of the Social Welfare System. Half a million eligible people over the age of 70 and earning less than 12 shillings per week, received a weekly income of 5s per week or 7s 6d for married couples.
1921 – The Finance Act introduced tax relief to pension contributions in line with savings and life insurance.
1925 – The National Insurance Act was introduced as contributory insurance against sickness and unemployment but was extended into the Contributions Pension Act. Aimed mainly at lower-income workers (those earning below £250 per year), they were required to pay contributions five years before reaching 65 to receive a pension of 50p per week.
1947 – The Finance Act was a measure to cap the amount of tax-free entitlement to 25% of the pension fund size.
1948 – The National Insurance Act introduced a contributory State Pension for all. Paid from the age of 65 for men and 60 for women.
1959 – The Graduated Pension Scheme was introduced. Extra National Insurance contributions could be paid to top up the basic State Pension.
1975 – The Graduated Pension Scheme was replaced by SERPS (State Earnings-related Pension Scheme). Everyone would receive 25% of their earnings above a lower earnings threshold.
1980 – Workers with Private pensions could opt out of SERPS and pay lower contributions.
The Social Security Act was also introduced to remove the link between average earnings and the State Pension. An initiative led by Margaret Thatcher’s Conservative government.
1986 – The Social Security Act led to cutbacks in SERPS and paved the way for the Personal Pension Scheme.
1995 – The Pensions Act of 1995 aimed at equalising the future pension age of men and women to 65.
1991 – The Robert Maxwell scandal, where the newspaper owner used 460 million of his group’s pension fund to finance business affairs.
1995 – A regulatory and compensation scheme was set up in response to the Maxwell scandal.
1999 – Introduction of Stakeholders Pensions. A new kind of Defined Contribution pension scheme aimed at low earners to encourage long-term saving for retirement.
2002 – SERPS was replaced with State Second Pension Scheme.
2004 – The Pensions Regulator was formed to protect the members of workplace pension schemes.
2010 – Triple Lock was introduced. A system to guarantee that the State Pension rises yearly by a minimum of either 2.5%, the rate of inflation or the average earning growth, whichever is higher.
2012 to 2017 – Auto Enrolment was introduced. A new pension’s legislation where employers are required to enrol all employees earning over 10000 into a company pension.