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The Actuary The magazine of the Institute & Faculty of Actuaries

100 years of state pensions

1 August 2008 marked the centenary of state pension provision in the UK. The 1908 Pensions Act gave men and women of good character and aged over 70 a non-contributory means-tested benefit of five shillings per week. This was approximately 25% of the average wage at the time according to a presentation by the University and College Union (UCU) at the 2008 National Pensioners’ Convention.

Prior to the Act, the elderly relied on their own capital, their families and, where these were not sufficient, charity such as “Parish relief”. Some of the worst off faced a future in the workhouse. Today’s state pension has come a long way. Contributions-based and no longer means-tested, the current basic provision stands at £90.70 a week. This is now paid to men from age 65 and to women from age 60. According to the UCU the 2008 basic state pension currently equates to only 15% of average earnings. However, it should be noted that a variety of concessions, tax credits and other subsidies are available to UK pensioners in 2008.

Further details on the history of the UK state pension can be found at: www.direct.gov.uk

Pensions book planned
In January 2009, the Profession’s Ageing Population Group plans to publish a book to mark the centenary of the introduction of state pension legislation.