Committee on Economic Security (CES)
"Social Security In America"
APPENDIXES
APPENDIX VII
OLD-AGE INSURANCE IN GREAT BRITAIN {1}
In 1932 Great Britain and Northern Ireland were providing old-age pensions
to a total of 2,231,016 persons aged 65 and over under the combined Old-Age
Pensions Act, 1908-24, and under the Widows', Orphans', and Old-Age Contributory
Pensions Act, 1925-32. Of the total old-age pensions, 699,853 were granted
to men and women between 65 and 70 under the "contributory pensions"
scheme; and 1,531,163 to persons over 70 under the noncontributory OldAge
Pensions Acts, 1908-24. Of those over 70 years old receiving noncontributory
pensions, 662,638 were receiving their pensions by virtue of the special
relaxations in qualifications for noncontributory pensions extended to
those who had been in receipt of a contributory pension between the ages
of 65 and 70.{2}
NONCONTRIBUTORY PENSIONS
Under the existing provisions of the noncontributory Old-Age Pensions Acts, 1908-24, Great Britain grants a gratuitous old-age pension of 10s. a week at age 70 to those with annual incomes of less than £49 17s. 6d., exclusive of sick benefits for not more than 3 months and exclusive of unearned annual incomes up to £39. The rate of the pension is graded with the rate of income: The full rate of pension of 10s. a week is granted to those with an annual income of less than £26 5s., and the pension diminishes to a minimum of ls. a week as annual income increases to a maximum of £47 5s. but less than £49 17s. 6d. {3}
In practice, nearly all the pensions are paid at the maximum rate; i. e., in Great Britain and Northern Ireland in 1932 only 26,288 pensions out of the total of 1,531,163 noncontributory pensions paid in that year were at the reduced rate.{4} To beg eligible for a pension, the applicant must have been a British citizen for at least the last 10 years and must have resided in the United Kingdom a minimum period--if a natural-born citizen, not less than 12 years since attaining age of 50 and if a naturalized citizen, not less than 24 years. {5} In addition, the applicant is disqualified from a pension under the following conditions: When detained in an insane asylum; while imprisoned without option of fine; while maintained in a poor-law institution for other than medical aid; and upon conviction for intoxication, under special circumstances.{6} The Minister of Health is the appeal authority; through the Ministry, the act is actually administered by the pension officers of the board of customs and
{1} This report was written by Olga S. Halsey.
{2} Compiled from: Great Britain, Ministry of Labour, Twenty-first Abstract of Labour Statistics of the United Kingdom (1919-33) (H. M. Stationery Office, London, 1934), Cmd. 4625, pp. 170-173.
{3} Hohman, Helen, The Development of Social Insurance and Minimum Wage Legislation in Great Britain (Houghton Mifflin, Boston, 1933), p. 44.
{4} Great Britain, Ministry of Labour, Twenty-first Abstract of Labour Statistics of the United Kingdom (1919-33), p. 173.
{5} Cohen, Percy, The British System of Social Insurance (Phillip Allan, London, 1932), pp. 108, 110.
{6} Great Britain. Old-Age Pensions Act, 1908 (7 Edw. 7, c. 40), as amended, sec. 2.
450
excise (under the exchequer), who act as pension officers for representative local pension committees appointed by the local county and borough councils. The pension officers conduct the necessary investigations, while decisions as to whether statutory conditions are fulfilled rest with the pension committees. {7} The pensions are paid through the local post office-the pensioner is furnished with a book of pension orders, which are cashed at the post office as they become due. {8}
During 25 years' administration the number of pensioners and the annual expenditure have both increased. The number of pensioners has increased in the United Kingdom from 647,494 in 1909 {9} to 1,579,938 in 1933 for Great Britain and Northern Ireland (i. e., the same area minus the Irish Free State) {10} During the same years the expenditure for the same geographical units has increased from £2,026,000 to £41,047,000.{11}
The existing provisions are the result of a number of amending acts which have substantially liberalized the original act of 1908. The rate of pension has been raised from the origins) maximum of 5s. a week to its present maximum of 10s. a week; the maximum income which a person may have and qualify for a pension under the noncontributory act has been increased from £31 10s. to a maximum of £49 17s. 6d.; the method of computing income has been liberalized; the qualiScations regarding British citizenship and length of residence in Great Britain have been made less stringent and the original character qualifications have been made much less severe.{12} In addition, the means test and qualifications as to citizenship and residence have been abolished entirely for those in receipt of an old-age pension under the Contributory Pensions Acts, 1925-32, who transfer to a noncontributory pension at age 70.{13} The removal of these conditions applies to more than 40 percent of the total pensions granted in 1932 in Great Britain and Northern Ireland under the old-age pensions acts, 1908-24, i. e., to 662,638 out of a total of 1,531,163 pensions. {14}
CONTRIBUTORY PENSIONS
The agitation to lower the pensionable age to 65 and to provide a universal pension had its fruition in the old-age pension granted to those between 65 and 70 years of age under the provisions of the Widows', Orphans', and Old-Age Contributory Pensions Act of 1925; at the same time the means test was abolished, together with requirements of nationality and residence for those receiving a noncontributory pension at age 70 after having been in receipt of a contributory pension between ages 65 and 70.
The Widows', Orphans', and Old-Age Contributory Pensions Act of 1925, came into operation in 1928, with contributory old-age pensions payable January 2, 1926. {15} This act combines pensions to widows and orphans with an old-age pen-
{7} Great Britain, Old-Age Pensions Act, 1908, sec. 7.
{8} Cohen, Percy, loc. cit., p. 108.
{9} Great Britain, Ministry of Labour, Eighteenth Abstract of Labour Statistics of the United Kingdom (H.M. Stationery Office, London, 1926), Cmd. 2740, p. 212.
{10} Great Britain, Ministry o! Labour, Twenty-first Abstract of Labour Statistics of the United Kingdom (1919-88), p. 173.
{11} Ibid.
{12} Hohman, Helen, op. cit., pp. 36-44.
{13}Great Britain, Seventh Annual Report of the Ministry of Health, .18E5-f8 (H. M. Stationery Office, London, 1928), Cmd. 2724, p. 126.
{14} Great Britain, Ministry of Labour, Twenty-first Abstract of Labour Statistics of the United Kingdom (1919-33), Cmd. 4625, p. 173.
{15} Great Britain, Seventh Annual Report of the Ministry of Health, 1925-26, Cmd. 2724. pp. 123, 127; Cohen, Percy, op. sit., p. 71.
451
sion for those between 65 and 70. It utilizes the contributory principle, previously adopted for health and unemployment insurance, and continues to distribute the cost between workers, employers, and the national treasury.
The contributory pension act interlocks with health insurance; that is, the scope of the two acts is almost the same, and the contributions for the two forms of insurance are combined in a single stamp. Thus the total number of persons insured in 1933 in England under the contributory pensions acts or for whom contributions were payable totaled 15,876,000 as compared with 15,598,000 insured under health insurance.{16} The funds for pensions and for health insurance are entirely separate, although the administration is unified.{17}
A flat-rate contribution for the combined widows', orphans', and old-age insurance, uniform for all wage and age groups was provided; in the case of men the employer pays 4 1/2d. weekly, while the worker also pays 4 1/2d., or a total of 9d.; for women employees the employer pays 2 1/2d. and the worker herself 2d., or a total of 4 1/2d. The combined weekly contribution of. men for both health insurance and pensions is 1s. 6d. and for women 1s.1d.{18} Upon the introduction of the pension plan, contributions under both health and unemployment insurance were lowered. The net increase in contributions for those coming under all three schemes was 4d. for men and 2d. for women, divided equally between the employer and the worker.{19}
The national exchequer assumed the financial responsibility of pensions at 70 for those qualifying under the relaxed provisions of the contributory pensions act and in addition, for the first 10 years, it made an annual contribution of £4,000,000 to contributory pensions.{20} Exchequer contributions were increased under the 1929 act which liberalized benefit provisions. Under this amending act the exchequer grant begins at £9,000,000 for the year 1930-31 and increases by £1,000,000 a year until 19456, when the exchequer grant will total £21,000,000 a year.{21} During the second 10 years of the plan men's contributions are to be increased by 2d, and women's by 1d., divided equally between employer and worker, with corresponding additional increases during the succeeding 10-year periods beginning January 1, 1946, and January 1, 1956.{22)
The act provides a contributory pension of l0s. a week to insured men and women between the ages of 65 and 70 and to wives between 65 and 70 when their husbands are entitled to a contributory pension. Or, if a wife or widow is over 70 when her husband is entitled to a contributory pension, she becomes eligible for a noncontributory pension, without the application of the tests regarding means, nationality, or residence. The right to sickness and disablement benefits under the health-insurance act and to unemployment benefits cease at age 65 ; under these acts workers' contributions terminate at age 65. Upon reaching 70 all persons in receipt of a contributory pension become eligible for a noncontributory pension, without the application of the means test or that of nationality or of residence.{23} To be eligible for a pension at 65 the insured must have had a certain minimum amount of insurance to his credit; first, 5
{16}Great Britain, Fifteenth Annual Report of the Ministry
of Health, 1933-34; (H. M. Stationery Office, London, 1934),
Cmd. 4664, pp. 358, 363.
{17} Cohen, Percy, loc. cit., p. 91.
{18} Cohen, Percy, loc. cit., p. 60.
{19} Great Britain, Seventh Annual Report of the Ministry of Health, 1925-26, Cmd. 2724, p. 124.
{20} Cohen, Percy, loc. cit., p. 93.
{21} Ibid., p. 94.
{22} Ibid., pp. 92-93.
{23} Great Britain, Seventh Annual Report of the Ministry of Health, 1925-26, Cmd. 2742, p. 125 ; Cohen, Percy, op. cit., p. 75.
452
years' continuous insurance prior to reaching age 65 ; second, 104 contributions must have been paid since his last reentry into insurance; and finally, an average of 39 contributions in each of 3 years prior to the sixty-fifth birthday. Under amending acts this last condition is waived in the case of those who have had a record of 10 years' continuous insurance prior to attaining the age of 581/4 years. In effect, persons with 10 years' continuous insurance before they reach 581/4 years are continued in insurance, even though they may be continuously unemployed until reaching the age of 65.{24}
The insurance is administered through a central administration of the Ministry of Health, with some assistance from the local authorities, while pensions are paid through the local post office. All claims for pensions are made in the first instance to the Ministry of Health.{25}
The amending act of 1929 further liberalized the provisions: Wives between 65 and 70 whose husbands had passed 70 when pensions were first payable under the act became entitled to a pension between 65 and 70; residence qualifications were repealed and pensions were made payable in any part of the British Empire and workers might retain their insurance in any part of the empire.{26} Steps have been taken to keep unemployed workers insured or to facilitate their return to insurance.{27}
During the few years' operation the number of pensioners has increased; pensioners in Great Britain and Northern Ireland between 65 and 70 have increased from 544,242 in 1928 to 669,853 in 1932: those in receipt of a pension at 70, free from all restrictions as to means, nationality, etc., have increased from 298,161 in 1928 to 662,638 in 1932 and to 765,246 in 1933. {28} This increase in persons over 70 receiving pensions under the special provisions of the Widows', Orphans', and Old-Age Contributory Pensions Act has been accompanied by a decrease in the numbers receiving a pension under the normal provisions of the noncontributory Old-Age Pensions Act; i.e., a decline from 1,112,869 in 1926 and 868,525 in 1932 to 814,692 in 1933. The net effect, however, has been to increase by approximately 40 percent those receiving noncontributory pensions; i. e., an increase from 1,112,869 in 1926 to 1,531,163 in 1932 and to 1,579,938 in 1933.{29} Expenditures for pensions of those between 65 and 70 have increased in England from £2,703,000 in 1928 (the first year effective) to £15,547,000 in 1932 and to £16,381,000 in 1934.{30}
{24} Great Britain, Widows', Orphans', and Old-Age Contributory Pensions
Act, 1925, sec. 8; Eleventh Annual Report of the Ministry of Health,
1929-30, Cmd. 3667, p. 188; Fourteenth Annual Report of the Ministry
of Health., 1932-33, Cmd. 4372, p. 208 ; Cohen, Percy, loc.
cit., pp. 72, 75.
{25} Great Britain, Seventh Annual Report of the Ministry of Health, 1925-26, Cmd. 274, p. 127.
{26} Great Britain, Eleventh Annual Report of the Ministry of Health, 1929-30 (H. M. Stationery Office, London, 1930), Cmd. 3667, pp. 187, 188; Cohen, Percy, loc. cit., pp. 55, 89, 90.
{27} Great Britain, Fourteenth Annual Report of the Ministry of Health, 1932-33 (H. M. Stationery Office, London, 1933), Cmd. 4372, pp. 208, 217.
{28} Great Britain, Ministry of Labour, Twenty-first Abstract of Labour Statistics of the United Kingdom (1919-33), Cmd. 4625, pp. 171, 173.
{29} Ibid., p. 173.
{30} Great Britain, Fifteenth Annual Report of the Ministry of Health, 1933-34 (H.M. Stationery Office, London, 1934), Cmd. 4664, p. 353.