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MY PENSION, THEIR PENSION,
EVERYBODY’S PENSION!
Lee Clark
Lee Clark is a Chartered Financial Planner, Fellow of the Personal Finance Society and a Member of CSM National Executive.
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Liquidity crunch, falling stock markets, falling interest rates, increasing longevity: all bad news if you are making personal provision towards your retirement and are planning to retire in the near future!
The turbulent financial times we are seeing coupled with the plethora of changes in the Pension landscape over the last 30 years have shown time and time again the need for a meaningful State Pension offering. With more and more people relying on the state to provide the safety net for income in retirement I looked at early reformers and how the state pension offering has evolved over the last 100 years with the impact of Christian Socialist values in the process.
Let’s roll the clock back to the 1890’s and look at the input of those earlier Pension Pioneers. How surprised was I when I discovered that one of the principal protagonists in the campaign to introduce state pension provision was the Reverend Francis Herbert Stead. A name it is fair to say which has been lost to history. Stead was a Congregationalist minister who lived and worked in the community of Browning Hall, Walworth, South London.
Influenced by the theology of Frederick Maurice and earlier Christian Socialists, Stead became committed to serving the needs of poor and working people - and to finding ways in which they could build and experience fellowship, engage in social action and change, and in so doing follow the example of Jesus. He believed that Christianity was essentially social:
Social relations are not, in the teaching of Jesus, secondary, derivative or accidental. They are not a temporary sphere for the conduct of the individual. They are the texture and fibre of the New Life. The very purpose of Jesus was to found a Community - a Community which should fulfil and surpass the noblest dreams of Hebrew prophecy.
Social Christianity, Stead 1924
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To me this is a real fulfillment of the Proverb which captures so beautifully the reason we are called to do what we do and, more importantly, the reason why Stead was such a true man of faith:
Speak up for those who cannot speak for themselves
For the rights of all who are destitute
Speak up and judge fairly
Defend the rights of the poor and needy
Proverbs 31:8-9, NIV
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In 1898 Stead called a meeting at Browning Hall inviting various like-minded individuals. The meeting was attended by amongst others, Charles Booth. Many further meetings followed across the country. Stead advocated a universal non-contributory old age pension at 65 and his work laid the foundations for those early social reforming pioneers in the Labour Party.
In 1902 George Barnes, General Secretary of the Amalgamated Society of Engineers and future leader of the Labour Party, formed the National Committee of Organised Labour for Old Age Pension. The Labour Party Manifesto from 1906 included the campaign line “The aged poor are neglected.” Barnes, campaigned across the country on the issue of social reform and in, the 1906 election, ousted the future Conservative Prime Minster Andrew Bonar Law from his seat.
The Labour Party quickly set about introducing a motion to Parliament advocating the introduction of state funded pensions. In 1908 the Liberal Government of David Lloyd George introduced The Old Age Pensions Act with effect from the 1st of January 1909. Labour MPs at the time including the prominent Christian Socialists George Lansbury, Keir Hardie, Philip Snowden (First Labour Chancellor of The Exchequer) and others campaigned that the Pension introduced was not far reaching enough and that the scheme should not be 'Means Tested' and available at age 60, not age 70.
Interesting the Liberal Government of the day set the bar at 70, when average life expectancy at this time was around 50 years old! No change 100 years later when the leader of the modern day Liberal party still has no understanding of the Basic State Pension! £30 quid a week and all that!
During the third reading of the 1908 Act great debate took place around the “Industry Test” clause. This clause set the criteria for eligibility for a State Pension within the proposed legislation. Snowden in response to this proposal declared to the House of Commons that even the Founder of the Christian faith would have been disqualified under this obnoxious clause. When was the last time we heard reference to the eligibility of Jesus Christ to State Benefits in Modern Britain? And indeed what safety net would be provided to an unemployed carpenter in his 30’s with no fixed abode! Answers on a postcard please?
We had to wait until 1946 for the National Insurance Act which introduced a Basic State Pension for all. Initially paid at £1.30 per week for a single person and £2.10 for a married couple with retirement ages set at 65 for men and 60 for women.
In the Social Security Pension Act of 1975 we have the introduction of the State Earnings Related Pension Scheme (SERPS), the first real improvement in the State Pension offering since 1946.
Barbara Castle, at the time, Secretary of State for Social Services and fierce campaigner for the rights of state pensioners provided the following sensible advice:
| The wealth that we enjoy was earned for us by those who have now retired and we owe it to them to see that they enjoy a fair share in the wealth which we create. |
For me this is very much of the essence of 1 Timothy 5, when Paul lays out his advice concerning Widows, Elders and Slaves and the responsibility of the community to take care of the old.
Then come a dark period in State Pension provision with the election of the “Iron Lady” Thatcher – The Pension Snatcher!
Firstly the 1980 Social Security Act, when Thatcher’s Secretary of State introduced what is probably in my opinion the most devious piece of Pension Legislation on the Statute Book when the link between Pensions and Earnings was broken. From then onwards the increase in State pension payments was linked to prices, which as a general rule increase more slowly then earnings.
Then in 1988 the first of the reductions were made to the accrual basis of SERPS benefits with more educations introduced in 1995 further eroding the State offering. With the famous ticking time bomb of the Social Security Act of 1986 cutting inherited SERPS from April 2000 continual reminders are provided of the Tory slashing of the State Pension Safety net during the 1980’s coming home to roost some 14 years the Act was passed. Slashing Pensions with Stealth!
It is generally agreed that the average pensioner is now £30 per week worse off due to the change in the calculation of increases in Basic Pension and the numbers of individuals financially disadvantaged by the decision to contract out is significant. We have had a disadvantaged generation of pensioners many who ironically served their Nation during its darkest hour and then had their share of the wealth they helped create taken away from them by Tory cost cutting measures in the 1980’s.
It is a shame though we have had to wait until very recently for the restoration of the link between Pensions and Earnings to become effective sometime from 2012 onwards at the earliest.
In The Pensions Act of 2007 it was pleasing to see that the settlement will be fairer and more generous and importantly heralded the arrival of The Personal Accounts Delivery Authority. This is a really positive move to encourage employers, employees and the State to work in partnership to provide an additional safety net.
The impact of Christian organizations on the Pension Landscape can never be under estimated – just consider the level of controversy and debate caused by the decision to provide the Plymouth Brethren with concessions based on their values in recent Finance Acts. Food for thought?
In closing I would like to quote a far more famous member of the Tiree Diaspora then I. “We don’t do God”. Well if men of God had not done Politics and Social Action would we have ever seen the introduction of the State Pension within the UK and the valuable safety net it now provides?
Lee is 37 years old, married to Jo with two children Emma and Oliver, BA (Hons), Banking, Insurance and Risk Management, Fellow of Personal Finance Society, Chartered Financial Planner, member of CSM National Executive. Worked in Financial Services in various roles for 10 years. |
Lee Clark, 18/02/2009 |
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