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History of Pensions -
USA 1880s
to the early 1900s, Pensions caught on across the United
States in churches, banks and railroads. In 1875, American
Express Co. established the first employer-paid pension in
private business. An exemption from World War II wage
controls and then the growth of unions in the 1940s led to
expansion of the benefits. In the United States pensions
in various forms have been given to veterans of all wars
since the Revolution; military pensions are now covered
by the Servicemen's and Veterans' Survivor Benefits Act
(1957). Retired servicemen and servicewomen receive,
after 20 years of service, 50% of their base pay at time
of retirement, with automatic increases as indicated by
the Consumer Price Index. Civil-service pensions were
developed later in the United States than in W Europe.
Old-age pension plans were drawn up by cities for
certain groups of public employees?firefighters, police
officers, and teachers?which provided for compulsory
contributions from the employee. Pensions for federal
employees were authorized in 1920.
The idea of extending such protection to all citizens
also appeared earlier in Europe (notably in Germany)
than in the United States, where it was a 20th-century
development. Many corporations and groups
(such as labour unions, professional associations, and
colleges) had made provision for pensions before the
social security legislation was passed in 1935, and many
groups now have pension plans that supplement social
security.
Until the 1940s, pension plans in private industry were
set up primarily on the initiative of the employer. As
workers gained the right to submit pension plans to
collective bargaining, the number of people covered in
the United States by pensions grew from 4.1 million in
1940 to 65.6 million in 1999, about 44% of all workers.
With more than $6.9 trillion in assets in 1997 (up from
only $2.4 billion in 1940), these plans exert a major
impact on the economy because the money is invested in
stocks, bonds, and real estate. At the same time, the
financial health of pension plans can be adversely
affected by drops in the value of their investments, as
happened after the late 1990s stock market bubble burst.
The Employee Retirement Income Security Act (1974)
established regulations to protect pensions from
mismanagement and created a federal agency, the Pension
Benefit Guarantee Corporation, to insure them.
During the 1990s there was a shift in the type of
pension plan that employees were covered by. The number
of people covered by defined benefit pension plans
levelled off as companies attempted to reduce costs by
forcing employees to contribute to their own plans, such
as 401(k) plans (defined contribution plans), or by
terminating the plans. Under a defined-contribution
plan, contributions are made to an account for an
individual employee, but no specific income is
guaranteed at retirement. In a 401(k) plan, the most
common type of defined contribution plan, income that
would have been paid to the employee is deposited
pre-tax in an account and invested; it may be matched to
some degree by a contribution from the employer. Such
plans also differ from traditional defined benefit plans
in that the contributions are voluntary, and as a result
employees are only covered if they choose to contribute
to an account. Under a 401(k) plan employees also may be
allowed some degree of control over how the
contributions are invested. "Today's cost of tomorrow's
Pensions" by R. Tyson published by the US Steel
Corporation,
(HD7/441)
1930 "The social philosophy of Pensions" by H.S.
Pritchett in 1930 (HD7/135).
1951 The Acton Society Trust
published "The miners' pension"
(HD7/B114).
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History
of Pensions 
