British Academy: The UK's National Academy for the Humanities and Social Sciences
Why has it all gone wrong? The past, present and future of British pensions
Abstract
The ?Scandal? of Women?s Pensions: How did we get into it?
Professor Pat Thane (Centre for Contemporary British History, University of London)
Alan Johnson, secretary of state for work and pensions, commented in March 2005 on the need for ?radical reform to tackle the scandal of women?s pensions?. This paper discusses how this situation came about. It was as true when pensions were first introduced in Britain in 1908 as it is now that women were a majority of older people and were poorer in old age than men. This was the major reason why British pensions were not established on the insurance model pioneered in Germany, because women could not fit into a scheme requiring regular lifetime earnings and contributions. The first pensions were very low. Minimal pensions which, on their own are not enough to live on, have characterized British state pensions ever since, even when they were absorbed into the national insurance system in 1925 and became universal in 1948. A continuing principle of state policy, to the present, has been that pensions should be low and supplemented by occupational pensions, personal saving or means-tested supplementary benefits. This structure has always disadvantaged a high proportion of women and forced them onto means-tested benefits, because they have been less likely than men to qualify for occupational pensions; when they have done so the pensions have been lower than men?s due to their lower earnings . They have had fewer opportunities for saving earlier in life and are especially disadvantaged if they become separated or divorced. The present ?scandal? is not new. All of these problems have long been recognized, including in the 1942 Beveridge Report, which made recommendations to resolve the disadvantage of divorced and separated women, which the Attlee government rejected. Women?s organizations protested then and since, to no effect. No-one should be surprised that the ?scandal? continues.