PENSIoN CoNCEPTS
1.2 SIR WILLIAM BEvERIDGE’S PENSION CONCEPT .1 Biography.1 Biography
William Henry Beveridge, the First Baron Beveridge – born on 5 March 1879 in the city of Rangpur26 in the Eastern Bengal, then on the territory of the British India; a British economist, lawyer, and social reformer; known as the author of the so-called Beveridge Report of 1942, whose proper title was Social Insurance and Allied Services27, which after World War II became the foundation of labour policy of the Welfare State, in which the crucial factor was the public health insurance system called the National Health Service28.
William Beveridge was born in the family of a British colonial clerk in India. On graduation from Charterhouse School in Great Britain, and then Balliol College at Oxford, he obtained a baccalaureate degree in law.
Then he developed interest in social problems and started publishing
Ratajczak J. (00), p. .
Börsch-Supan A. H. and Wilke Ch. B. (006), p. 5.
The Bavarian chemists’ fund was established as the first one (Bayerische Apothekerversorgung). Cf.: 75 Jahre Bayerische Apothekerversorgung (000), http://www.
abv.de/download/beckstein.pdf, accessed December 00.
Börsch-Supan A. H. and Wilke Ch. B. (006), p. 5.
5 Schmähl W. (005), p. 5.
6 At present, this city is located in Bangladesh.
Beveridge W. ().
8 Wielka Encyklopedia PWN (00), v. , p. 50.
articles on unemployment in the Morning Post. His crowning achievement was his work of 1908 entitled Unemployment: A Problem of Industry.
In 1909 Beveridge was appointed a director of Labour Exchanges, and next he participated in conceptual work on creating National Insurance Act of 1911. During World War I, he was in charge of mobilization and supplies of the army. After the war he was ennobled and became a lord. In 1919, recommended by the socialist Fabian Society, he obtained the post of the headmaster of the London School of Economics and Political Science (LSE).
Until the end of his life, Lord Beveridge was under a significant influence of Fabian ideas. In 1924 he published the thesis Insurance for All, in 1928 British Food Control, and in 1936 Planning under Socialism, and Other Addresses.
In 1937 Beveridge graduated from University College in Oxford, where he was appointed a professor in the same year. In 1941 the British government commissioned Beveridge to prepare a report answering the question what form the social insurance system should assume after the war.
In the report submitted to the Parliament in 1942, Beveridge stipulated that all those employed would pay a weekly fee called national insurance.
In return, they were to get from the state financing of the risk of disease, unemployment, old age and widowhood. Beveridge claimed that this system was supposed to provide for a minimum standard of living for everybody. He said that the state duty was to fight the five Giant Evils:
want, disease, ignorance, squalor and idleness. These all was expected to contribute to the welfare state. The climax of the Fabian project was the National Health Service (NHS), whose responsibility was to secure medical care and necessary rehabilitation to all citizens.
In 1944 Beveridge drew up the next report, this time concerning unemployment, entitled Full Employment in a Free Society, in which he pondered on the possibility to attain full employment in the British economy, understood as the unemployment rate not higher than 3%. In the report he advocated applying Keynes’ ideas of state interventionism with reference to job creation and production control.
In 1945 Beveridge, who joined the Liberal Party29, was elected to the House of Commons. In 1946 he became Baron Beveridge in Tuggal in the County of Northumberland, and the potential leader of the Liberal Party to the House of Lords from this County. In the subsequent years, the Labour Prime Minister Attlee announced introduction in Great Britain of the Welfare State according to Beveridge’s recommendations. Beveridge’s last work was Pillars of Security published in 1948.
Sir William Beveridge died childless on 16 March 1963 and was buried in Throckington.
1.2.2 Historic background
The British pension system dates back to the beginning of the 17th c., when in 1601 the Elizabethan law on relieving the poor was introduced30, which obliged parishes to take care of the poor. The first occupational pension system for civil servants was created in 1810, yet it concerned only those who had become disabled. The pension system, which covered all civil servants with at least 45 years in employment, was established in 183431. It granted non-contributory pensions to civil servants in the amount of 1/60 of the last remuneration for each year of service32. The first occupational pension schemes for blue-collar workers were created in the middle of the 19th c.33. 1897 brought the first legislation on accident insurance34. The Pension Act of 1908 introduced the first state pensions for all the poor with the annual income of 31 pounds who turned 7035, and were defined as those in need. This morality test concerned three elements: 1) not receiving aid pursuant to the relief act in the last 10
The party was at that time liberal only by name, and its ideology was social-liberal. In 88 it merged with its close ideological ally, i.e. the Social Democratic Party, into the Liberal Democratic Party.
0 Wiśniewski J. (005), p. 6.
Schulze I., Moran M. (00b), p. 60.
Czajka Z. (00), p. .
Schulze I., Moran M. (00b), p. 60.
Social Security Programs Throughout the World: Europe, 2006 (006), p. .
5 Schulze I., Moran M. (00b), p. 5.
years, 2) not being imprisoned, and 3) being employed. Pensions were non-contributory, fully tax-financed36. In 1911 the first legislation on health and unemployment insurance was enacted37. 1925 was the year of passing the act on contributory pensions for widows, orphans, and the elderly, which provided for contribution-financed pension benefits for those aged between 65 and 7038. The pensions were paid weekly in the fixed amount of 10 shillings for a single person and 1 pound for married persons. Those over 70 were still receiving pension under the law of 1908. In 1936 as much as 6,544 employers offered occupational pension schemes with over 1.6 million participating employees39. However, in 1938, only 18% of the working population received additional company pension40. The act of 1940 decreased the retirement age for women from 65 to 60 years of age41, and introduced a new pension benefit in the form of a supplementary pension. The solutions adopted in Britain resulted in a wide diversity of benefits for the diseased, disabled, unemployed, and elderly. There were three different benefits for the unemployed, and three kinds of pensions. There were separate regulations for the blind, the disabled, and the civilians wounded in bomb attacks during the war.
Benefits and pensions were of different values, and seven ministries were in charge of them. The system was receiving constant criticism from trade unions. In this situation, in 1940 Ernest Bevin, the Minister for Labour, asked Sir William Beveridge to scrutinize the British social insurance system and recommend changes. A year later the British government formally commissioned Beveridge to write a report on the future of the social insurance system after World War II.
6 Czajka Z. (00), p. .
Social Security Programs Throughout the World: Europe, 2006 (006), pp. and .
8 Żukowski M. (00), p. 08.
Schulze I., Moran M. (00b), p. 60.
0 Czajka Z. (00), p. 00.
Schulze I., Moran M. (00b), p. 5.
1.2.3 Main elements of the pension concept
The Beveridge’s model proposed in 1942, as far as pensions were concerned, stipulated charging a fixed weekly contribution from each working person, and paying pension benefits also on a weekly basis and of a fixed value to every person who reached the age required by law and had insufficient resources to provide for him- or herself. The contribution thus took on the character of a tax charged from all those in employment, while the pension was more of a benefit for those in need.
1.2.4 Implementation and development
The assumptions of the Beveridge’s model were enforced between 1945 and 1948. As early as in 1945 the first legislation on family benefits was introduced42, and in 1946 – on accidents at work and pensions43. Basic State Pension (BSP) was financed by contribution of the value fixed for each insurance group. Employees were grouped according to age, sex, marital status, and professional position. Contributions were transferred to the National Insurance Fund (NIF), which from the very beginning took on the pay-as-you-go formula44. Pension value was fixed at a weekly amount of 24 shillings. In 1948 the National Health Service was established along with the act on social insurance.