A Stroll Among Pensions

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A pensioner counting coins is desperately trying to make them stretch a month

Those profoundly concerned by right-wing extremist rhetoric are apt to say neo-liberals are trying to take us back to feudal times. They make an ominous point. We feel the lash of neo-liberalism, particularly the vulnerable among us.

Functioning democracy has declined.

If you can stand back for  a minute you will see the UK’s growth has slowed, productivity growth has deteriorated, real wage growth has declined, even that middle-class marker of wealth, house values, has slowed or reversed in some cases, inequality has risen markedly, and except in Scotland, average unemployment has risen. Civil rights, such as the right to organise plebiscites, are challenged daily. It amounts to a disturbing pattern.

Baron bad

In England’s dark ages your local tax demand came from a baron. The baron was generally an unfriendly sort, a man with allegiance to a king and not to commoners. He took taxes and large amounts of your harvested grain stored from your toil for winter food, took livestock too. As a commoner you had no status.

In Scotland the demand for a share of your output came from your clan chief, but he distributed the money among the people of the clan, and you had status and dignity as an individual member of that same clan.

Today’s robber barons are businessmen. They still don’t pay taxes. “I should be allowed to keep what I earn,” they wail. This principle is not applied to Scotland. Democracy is sacrificed on the alter of neo-liberal progress. Scotland isn’t allowed to borrow money, nor amass debts. But we do have safety nets called pensions and welfare.

Pensions and welfare are not devolved matters.

Pensions are supposed to be protected. Criminally, funds are raided on a regular basis – to prop up ailing banks, lost on the stock market, stolen by corporate bosses for personal gain, or shifted to another company to give the impression of profitability.

Changing society by tyranny

We’re in the midst of probably the biggest if not the last neo-liberal push to reconstruct society in their image. Labour and Tory tell us there are few working class left to support, we are mostly comfortable middle-class. They aver we don’t need pensions these days, social security, or a free national health service. The threat of low pension funds is being used to destroy the welfare state which is basically sound.

We’re told the pension system will crash by 2050. Projections that far ahead are meaningless. There is so much that can alter the economy between then and now, including wars.

The new orthodoxy

Tories, privileged people who stop work at around 45 and coast the rest of their days, talk of pensions delivered at 70 not 65. Seventy is a stepping stone to 75. Everywhere is talk of reform. They mean ‘dismantle’.

A recent UK government Green Paper from a Tory committee recommends allowing small or struggling businesses to ‘cut or renegotiate’ staff pensions. A GMB (Union) spokesperson said, “Allowing schemes to break promises on pensions and raid workers’ retirement savings to cover for mistakes in the boardroom will not be music to the ears of employees. However, it will no doubt go down very well with the big business bosses who bankroll the Conservatives.”

Neo-liberals want pensions withdrawn from certain individuals, and after dumping Europe, can’t guarantee British patriots living there will receive their pensions at all.

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A good upright male citizen collecting his pension from the Post Office 1909

When did pensions begin?

Back in the day old age for the masses meant the shame of the workhouse. You were taken off to the knackers yard. Someone realised, if you donated a few pence of your monthly wages to a fund that gained interest, you could get it back on a monthly basis to assist with your old age, non-working days.

A stroll through the development of state pensions is an eye opener, with or without the aid of a Zimmer. For perspective, it should be noted the UK and USA’s Social Security systems – two lands that boast of their wealth – is one of the least generous public pension systems among advanced countries, according to a report by the Organisation for Economic Co-operation and Development.

The first “old age” pension was introduced by a Liberal Government in 1908 not all that different from the Tory-leaning liberals with which you and I are familiar today.

Scot Sir Henry Campbell-Bannerman was a radical: pensions, a united Ireland, free school meals, and free trade were a few of his beliefs. He served three years and then – terminally ill – handed the baton to H.H. Asquith as Prime Minister, (Lloyd George came later) all leading a government in reform mood, but cautious about implementing anything in a universal way. The administration did abolish the Lord’s veto over Commons business, and reduced parliaments from 7 to 5 years. (Theresa May has reduced them to as short or as long as you want.) Reforms were selective.

How much were pensions?

The pension paid five shillings a week, (worth around £14 today) and 7 shillings and 6 pence to married couples. A pension at 70 sounds humane, but the gallows humour at the time of the introduction had the average life expectancy at 47.

Strings attached

The pension was only only available to men aged over 70. (Sound familiar?) You didn’t get one if you were homeless, a drunkard, had been in prison within the previous ten years, had too much furniture,  (IKEA would be shocked!) and earning more than £31. 10s a year, the 10 shillings an arbitrary sum worked up by some faceless bureaucrat.

In other words, you had to pass a character test. To pass the test of  ‘Good Character’ you generally needed to dress well, be clean and tidy, pay attention to bourgeois good manners, and know your place in society. Pretty well, how we judge a man of good character today!

Finally, you got no pension if you were in a lunatic asylum, mentally ill or not, or in receipt of “poor relief”.

From those conditions you begin to perceive where the British right-wing are aiming to take us in the 21st century.

Who dispensed the pension?

A pension application form came from the Post Office, and you also collected your pension from a local post office to avoid you being seen in lowly company, such as community poor house associations. The government cared about personal dignity.

The claims were assessed by the Pension Officers and then sent to the Local Pension Committee for approval.

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Police officers were among the first to be given a pension, women the last

Was the state pension the first pension?

Pensions specific to  categories of trades already existed. Schemes covering civil servants, teachers and police were set up in the 1890s. Railway companies were the first industrialists to offer pensions, followed by Reuters in 1882, WH Smith in 1894 and Colmans in 1899.

For the public in general coverage remained thin, until the 1921 Finance Act introduced tax relief on pension contributions. This was followed, in 1925, by a skeleton contributory state pension scheme for male manual workers who were earning less than £250 a year. It paid a total of 10 shillings weekly (around £15 today) from the age of 65.

The modern compulsory state pension didn’t arrive until 1948. The 1942 Beveridge Report envisaged a social insurance scheme – never implemented – designed not to provide a comfortable income in retirement, but a safety net against destitution. Indeed, that’s been the official attitude ever since: give people just enough to keep them from sleeping on the streets, but not enough they’re rewarded for a lifetime’s service to society. And don’t allow them to think a pension is theirs by right.

In 1993 it emerged that some unscrupulous financial advisers had been mis-selling personal pensions, (a Thatcher reform) to earn fat commissions. This triggered payments of more than £11bn to six million people caught up in a mis-selling scandal.

How were women classed?

It was not until 1940, after the outbreak of the Second World War, that women got a pension with the need of a husband.  The Old Age and Widows’ Pension Act introduced a pensionable age of 60 for unmarried women who paid in, and widows of insured men.

Where are we now with pensions?

Every part of the Welfare State is under attack. We are told over and over again our wealthy nation is, in fact, very poor. We can’t assume there is a counter orthodoxy.

Neo-liberals with wealth and power are inured to the vagaries of a fluctuating economy. They assume the rest of are too. Retired senior citizens are described as unproductive, contribute nothing to the state, a drain on its health service funds. In short, they should be left to crawl under the nearest bush to await death, stoically like an animal.

If you vote Conservative, Labour or Ukip you are asking for your pension to be reduced, and you to keep working until unable to walk. That is to suppose you live that long. Thousands never receive a pension because they die early. Some commit suicide because of the loss of state aid and never reach pensionable age. Some have company related pensions that carry severe penalties if you leave the company.

The Right sees pensions and social security as extremely dangerous to society’s well-being. Caring for the old and the infirm is subversive.

KEY DATES

  • 1880-90s Beginning of occupational pensions
  • 1908 First “old age” pension paid by the Government
  • 1921 Finance Act introduces tax relief for pension contributions
  • 1924 Voluntary contributory pension for those who could afford to save
  • 1948 Modern state pension is introduced under the Beveridge Report
  • 1978 State earnings-linked top-up (Serps) provided
  • 1985 Pension funds made to increase payments to company leavers
  • 1988 Thatcher pension reforms
  • 1989 Barber judgment ruled pension ages must be equal between men and women
  • 1991 Robert Maxwell rips off £400 million pension fund
  • 1993/4 Pensions mis-selling scandal
  • 2004 Pension commission under Lord Turner set up to investigate private pensions
  • 2010 State pension age for women starts to rise from 60 to 65
  • 2012 Auto-enrolment begins for big employers
  • 2012 New universal flat-level pension is announced for all
  • 2014 Budget announces new freedoms to cash in your pension
  • 2015 Freedom and choice regime begins
  • 2016 Sir Philip Green rips off £480 million pension fund
  • 2017 New flat-rate state pension to be launched…..

 

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2 Responses to A Stroll Among Pensions

  1. Mary h r mortimer says:

    Love your definition of English and Scottish tax. Spells out the Scottish attitude.

    The Clan system is in the genes.

    Love all your writings. Have you had anything to say on the recent decision from the legal peeps re Election fraud. You obviously know about ‘not knowing the law, is no excuse’ would love to hear what you have to say. Understand the path they took to come to their conclusion, but is it valid?

  2. Grouse Beater says:

    Welcome, Mary.

    Thank you for dropping by. (I’m in the throes of doing a lot of heavy earth digging creating a Roman garden on Roman archaeological ground, making the most of this great weather; answering letters and e-mails is a great diversion!)

    On the Tory party bending election rules, I touch on it in this weekend’s essay.

    When you ‘own’ the establishment, the establishment will do all it can to protect you. Now and then it will (by guidance) choose a sacrificial lamb to make a public example of, and in keeping with presenting a semblance of democracy, I believe only one MP is to be charged.

    Hoo haar!

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