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The Actuary The magazine of the Institute & Faculty of Actuaries

History: Aged, deserving, infirm and poor

Few people will recognise the name Francis Maseres. Those who do probably recall a reference to him in Charles Lamb’s essay The Old Benchers of the Inner Temple, where he is described as ‘Baron Maseres, who walks (or did until very recently) in the costume of the reign of George the Second’. Maseres wrote, under the pseudonym Eumenes, to The Public Advertiser on 22 July 1771, putting forward a proposal to enable workers with spare income to make provisions for old age.

In towns and cities, many workers, in particular household servants and those in the handicraft trades, earned enough in three days to support themselves for one week. They could therefore spend half their time in idleness and pleasure or in drunkenness and debauchery. When these ‘labouring poor’ became sick, infirm or unable to work as a result of old age, they were supported by their parishes under Elizabethan legislation for the relief of the helpless poor. Maseres’ proposal was for churchwardens and overseers of the poor to sell single premium deferred annuities on lives. These annuities would be charged on top of the poor rates of the parish. One example given was for a man of 25 who could purchase an annuity of £3.83 to commence at age 50, for a lump sum of £10. The actuarial basis for Maseres’ figures is given in the article. Maseres repeated his proposal in an extended letter to The Sussex Weekly Advertiser in October of the same year.

Maseres’ proposal was taken up with enthusiasm by a number of people, including Richard Price and Edmund Burke. Benjamin Franklin was another who supported the proposal. A Bill to bring Maseres’ proposal into fruition was passed by the House of Commons with a two-to-one majority in 1773, but the House of Lords threw it out. The Parliamentary Bill and detailed tables are reprinted in Maseres’ Doctrine of Life Annuities, published in 1783. This work explains everything with great simplicity, including the actuarial aspects and, in some respects, it is a model of its kind; its principal drawback is that the explanation takes over 700 pages. From this time on, the question of pensions for old age seems to have been constantly in the public eye.

Subsequent proposals
In 1786, the Reverend John Acland published ‘A Plan for rendering the poor independent of public contribution’. Acland’s plan was to be administered by Friendly Societies and the benefits were secured by weekly contributions. Richard Price, who had drawn up Maseres’ tables, also calculated tables for Acland’s plan. The 50-page Bill for the ‘more effective relief of the poor’ was passed by the House of Commons in 1789, but was rejected by the House of Lords, thus suffering the same fate as Maseres’ proposal. Acland’s plan, which provided deferred annuities vesting at ages 65 or 70, also envisaged payments made for incapacity produced by sickness and accidents. Richard Price calculated the weekly contributions on the basis of some suppositions from his experience of the proportions sick in ‘friendly clubs’ at various ages.

In 1795, a scheme said to have been formulated by Thomas Paine proposed a fund created by a levy of 10% or more if there were no near relations on the value of property at death. This levy would apply to every member of the community and was to fund “a plan for ameliorating the condition of man by creating in every nation a national fund to pay to every person when arrived at the age of 21 years the sum of £15 sterling, to enable him (or her) to begin (sic) the world; and also £10 sterling per annum during life to every person now living of the age of 50 years, and to all others when they arrive at that age, to enable them to live in old age without wretchedness, and go decently out of the world.”

In 1829, the House of Commons Select Committee on Life Annuities (cmd number 284) considered a petition by Cadogan Williams to give the lower classes the opportunity to buy an annuity paid at age 60. Samuel Higham, the comptroller of the national debt, devised the plan, which was to be administered by Trustee Savings Banks. The banks were to use depositors’ money to buy the annuities from the commissioners of the national debt. John Finlaison, later to be the first president of the Institute of Actuaries, drew up the tables of contributions for a benefit of £20 per annum, payable half-yearly.

The Select Committee decided it was too late in the Parliamentary session to contemplate a Bill based on the views they had received, but hoped that the Committee would be reappointed in the next session to frame one. The matter seems to have made no further progress. A variety of schemes were put up for discussion in the second half of the 19th century. Among these was one by Canon Blackley in 1878 that attracted great enthusiasm, with over 400 public meetings. However, uncertainty existed regarding the actuarial conditions of his scheme.

Chamberlain suggested three possible schemes resulting from the work of the Voluntary Committee of the House of Commons in 1891. He said that, in his opinion, “it would not be possible to secure legislative approval for any old-age pension scheme opposed by the Friendly Societies and Trade Unions”. When he gave his evidence in 1893 at the Royal Commission, Charles Booth’s scheme left the impression of being incomplete and requiring too much money to be raised. Frome Wilkinson, R P Hardy FIA, G C T Bartley MP, Dr L C Alexander, Henry C Burnett and others also put suggestions forward.

In August 1889, the UK Parliament published papers relating to the German law passed earlier in May (C-5827). In 1898, the Committee on Old Age Pensions reported (C-8911). In 1899, the Select Committee on Aged Deserving Poor reported (296). One of the major problems faced by all the schemes put forward was that any contributions made by taxpayers had to be affordable, and contributions by future beneficiaries had to be a reasonably small proportion of their earnings. There was much more work done before the passing of the Old Age Pensions Act in 1908.

Schemes on the continent
In Europe in the 19th century, there were also moves towards state old-age pension schemes. In France, there was a project for old-age pensions (Caisse de Retraite pour la Vieillesse), with the primary objective to benefit poor workmen. Deposits were made under a law of 1850, which provided an inalienable right to an annuity. The deposits attracted interest, but the terms were sometimes too favourable to depositors. As a result, the fund became a medium for investment by the middle classes and, in 1884, had to be bailed out by the Government. In 1886, the French Government introduced a National Old Age Pension Fund, also based on deposits. Membership of this fund was voluntary.

In Sardinia, a Bill for the establishment of a ‘Life Pension Fund for Old People’ passed into law in 1859. The turmoil that led to the establishment of Italy as a country meant that the act was not brought into force. King Victor Emanuel II of Sardinia became Victor Emanuel II of Italy, so the idea stayed. In 1877, there were attempts to revive the law of 1859, but these were unsuccessful. In Germany, the introduction of national state sickness insurance in 1884 and state pensions in 1889 gave a further boost to investigations into state pensions.

In New South Wales, J C Nield issued his 1898 ‘Report into Charitable Relief and State Insurance in England and on the Continent’ to the Parliament (Number 10599a). His five-month visit to Europe left him with large numbers of papers to examine. Some 2000 pages, part of the foreign language material, were translated into English. The result is a comprehensive view of the European scene. What Francis Maseres started as an attempt to improve the lives of the working classes in retirement, ended in state old-age pensions.

Trevor Sibbett is an actuary who has taken an interest in the history of actuarial science

A brief biography of Francis Maseres can be found at www.the-actuary.org.uk/853539