Pensions in the United Kingdom
[6] After the Second World War, the National Insurance Act 1946 completed universal coverage of social security.
6. c. 29) formally abolished the poor law, and gave a minimum income to those not paying National Insurance.
In November 2023, The Trussell Trust calculated that a single adult in the UK in 2023 needs at least £29,500 a year to have an acceptable standard of living, up from £25,000 in 2022.
On 14 November 2024, Rachel Reeves announced plans to merge pension funds into megafunds to unlock up to £80 billion for investment and boost the UK's economic growth.
The reform, set to manage £500 billion by 2030, drew inspiration from similar initiatives in Australia and Canada.
While business leaders welcomed the proposal, they expressed concerns about the government's recent budget and its impact on confidence in the UK economy, which has struggled since the 2008 financial crisis.
This Act brought forward the increase, so that state pension age for both men and women began rising from 65 in December 2018 and reached 66 in October 2020.
This was a consequence of the judgment of the Supreme Court in Houldsworth v Bridge Trustees and Secretary of State for Work and Pensions.
This option was introduced with SERPS in 1978 and is only available to those who have made alternative pension arrangements through Personal or Occupational schemes.
[12] Research based on ONS labour market data has found that partly due to the equalisation of the state pension age, women are driving employment growth in the UK and that the number of females over 65 working doubled in the 10 years between 2009 and 2019.
[13] Employers were required to initiate automatic enrolment into their workplace according to set staging dates based on the number of employees in the company.
In such an arrangement, the employee was typically promised a pension of a fixed proportion of their salary in the period leading up to retirement or as an average of earnings over their career.
The Pension Protection Fund was set up to act as a safety net in case a scheme was unable to pay the defined benefits it was committed to.
Contributions are typically invested during an individual's working life, and then used to purchase a pension at or following retirement.
The generic term personal pension is used to refer to arrangements established since the rules were liberalised in the 1980s (earlier arrangements are usually called retirement annuity contracts), but can be subdivided into other types (such as the self-invested personal pension, where the member is allowed to direct what their contributions should be invested in).
Perpetual pensions were freely granted either to favourites or as a reward for political services from the time of Charles II onwards.
This act did not affect the hereditary revenues of Ireland and Scotland, and many persons were quartered, as they had been before the act, on the Irish and Scottish revenues who could not be provided for in England for example, the Duke of St Albans, illegitimate son of Charles II, had an Irish pension of £800 a year (equivalent to £160,347 in 2023); Catherine Sedley, mistress of James II, had an Irish pension of £5,000 a year; the Duchess of Kendal and the Countess of Darlington, respectively mistress and half-sister of George I, had pensions of the united annual value of £5,000 (equivalent to £596,135 in 2023), while Madame de Wallmoden, a mistress of George II, had a pension of £3,000 (equivalent to £548,983 in 2023).
In 1887 Charles Bradlaugh MP protested strongly against the payment of perpetual pensions, and as a result a committee of the House of Commons inquired into the subject.
[27] An appendix to the report contains a detailed list of all hereditary pensions, payments and allowances in existence in 1881, with an explanation of the origin in each case and the ground of the original grant; there are also shown the pensions, etc., redeemed from time to time, and the terms upon which the redemption took place.
The nature of some of these pensions may be gathered from the following examples: All these pensions were for services rendered, and although justifiable from that point of view, a preferable policy is pursued in the 20th century, by Parliament voting a lump sum, as in the cases of Lord Kitchener in 1902 (£50,000) and Lord Cromer in 1907 (£50,000).
Charles II granted the office of Receiver-General and Controller of the Seals of the Court of Kings Bench and Common Pleas to the Duke of Grafton.
To the Duke of Richmond and his heirs was granted in 1676 a duty of one shilling per ton of all coals exported from the Tyne for consumption in England.
The Duke of Hamilton, as hereditary keeper of the palace of Holyrood House, received a perpetual pension of £45,105 and the descendants of the heritable usher of Scotland drew a salary of £242/10/-.
The conclusions of the committee were that pensions allowances and payments should not in future be granted in perpetuity, on the ground that such grants should be limited to the persons actually rendering the service, and that such reward should be defrayed by the generation benefited; that offices with salaries and without duties, or with merely nominal duties, ought to be abolished; that all existing perpetual pensions and payments and all hereditary offices should be abolished: that where no service or merely nominal service is rendered by the holder of an hereditary office or the original grantee of a pension, the pension or payment should in no case continue beyond the life of the present holder and that in all cases the method of commutation ought to ensure a real and substantial saving to the nation (the existing rate, about 27 years purchase, being considered by the committee to be too high).
[citation needed] These are pensions granted by the sovereign from the Civil List upon the recommendation of the First Lord of the Treasury.
Historically the Lord Chancellor of Great Britain, however short a time he may have held office, received a pension of half his salary.
Bishops, deans, canons or incumbent who are incapacitated by age or infirmity from the discharge of their ecclesiastical duties may receive pensions which are a charged upon the revenues of the see or cure vacated.
Navy pensions were first instituted by William III of England in 1693 and regularly established by an order in council of Queen Anne in 1700.
In the Navy estimates for 1908–1909 the amount required for halfpay and retired-pay was £868,800, and for pensions, gratuities and compassionate allowances £1,334,600, a total of £2,203,400.
[34] One key feature of the current scheme (dating from 2015) is that members pay no employee contribution, with the pension being entirely funded from the public purse.
