The Pension Timeline

This month marks 107 years since the passing of the Old Age Pensions Act, and 106 years since it took effect. Of course, pensions today are very different to a century ago, but some of the most radical changes have been implemented in the last few years. We take a brief look at the history of pensions in the UK:


1908  The Old Age Pensions Act introduced a pension of between 10p and 25p per week to people aged 70 or over. This came into effect on January 1 1909, which is known as Pensions Day. The pension was only provided to people earning under £31 a year, had been a UK resident for no less than 20 years and had worked their entire lives. It also came with a more peculiar stipulation: only those of "good character" could receive the pension.

The Finance Act introduced tax relief on pension contributions. This means the income tax that would normally be deducted is also added to the pension, boosting the overall size of the fund.


The Contributory Pensions Act created a contributory State Pension of 50p a week, from the age of 65, for people earning up to £250 a year.

1946 The National Insurance Act implemented a State Pension for everybody, on a contributory basis, at a rate of £1.30 a week for single people and £2.10 for married couples. Taking effect from 1948, men were eligible at 65, while women could receive it from 60.
1947 This Finance Act limited the tax-free lump sum to 25% of the fund size, which is the same proportion still allowed.
1959 The National Insurance Act introduced the Graduated Pension, which was a top-up State Pension scheme based on earnings.
1975 The Social Security Pensions Act created SERPS, which is the State Earnings Related Pension Scheme. This replaced graduated pensions, and workers were allowed to give up part or all of their SERPS, which lowered their National Insurance contributions.
1980 The Social Security Act removed the link between a person's average earnings and the increases in the State Pension.
1995 The Pensions Act implemented regulatory and compensation schemes in response to the Maxwell scandal at the start of the decade, in which hundreds of millions of pounds from pension funds had been used to finance business operations.
1997 The 20% tax credit traditionally applied to dividends from British companies was removed.
1999 The Minimum Income Guarantee was introduced, providing income support for the poorest pensioners.
2001 Stakeholder pensions - the low-cost pension scheme - was introduced. This was designed to help low and average earners, and to assist women in saving for retirement.
2002 SERPS were replaced with the State Second Pension Scheme, to help lower earners as SERPS were based on average earnings over a career.
2004 The Pensions Act aimed to improve the running of pension schemes and introduced the Pensions Regulator, which was allowed to intervene if it thought majority shareholders, directors or employers were not sufficiently supporting the pension scheme. The Act also included the Pension Protection Fund to offer benefits for pension scheme members whose scheme had been wound-up.
2006 A-Day. So called because it took effect in April, its proper name is "pension simplification" and brought in changes including the ability for people to save money into personal and company pension schemes concurrently. A further change was allowing people to save up to 100% of their income (capped at £215,000) each tax year, receiving tax relief at their marginal rate. A-Day also removed the rule that forced people to buy an annuity by their 75th birthday, but funds that were not in an annuity would be included in inheritance tax.
2010 The State Pension Age started to change for women, beginning its increase from 60 to eventually be 65 in line with men.
2011 Triple Lock introduced, meaning the State Pension increases by the highest of inflation, average earnings or 2.5%.
2012 Auto-enrolment. Phasing in between 2012 and 2017 depending on the size of the company, auto-enrolment automatically adds employees earning over £10,000 to a company pension. Employees can opt out, and opt in if they are below the earnings threshold.
2014 Pension freedoms. A raft of changes were made, including: income drawdown being available for everybody from 2015; an entire defined contribution pension fund can be withdrawn in one lump sum, subject to marginal rates of tax; no death tax applied on pensions to people who die before the age of 75 and only the recipient's marginal rate applied to withdrawals if the holder died after 75; free guidance will be available to everyone approaching retirement; and the age at which a private pension can be accessed will increase to 57 from 2028 and will then stay 10 years below the State Pension.

Have you been impacted by pension changes over the years? Let us know with a comment below.

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The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article. For our latest information and news, please see our articles section:

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