PENSIONS FOR OLD

Evening Star, Issue 21881, 19 November 1934, Page 7

PENSIONS FOR OLD

THE EUROPEAN SYSTEM AMERICANS TO ADOPT IT THE OLD “ NEW DEAL " A remark made by an old friend from the Roosevelt Administration, whom i encountered while waiting in a queue outside the House of Commons, introduced the subject of old age pension, writes Richard L. Strout, in the ‘ Christian Science Monitor.’ “ Old age pensions?” said my friend —an economist whose name is not unfamiliar in Washington—“ Old age pensions ? Now that is one more new deal item that they have had over here for years and years! No, 1 won’t speak for quotation. I’m on a holiday. But just make a note of it. See if it wasn’t adopted, say, twenty-five' years ago. You know there seems to be a lag of just about twenty-five years before this type of social legislation crosses the Atlantic.”

“ Then they do have old age pensions in Europe?” I asked. “Have them? Yes! But look up tha't date. It’s the difference between the New Deal and the European—ah—‘Old’ Deall”

I have looked it up. My text says: “ Since Great Britain practises both the non-contributory as well as the contributory old age pension system, its experience is worth citing. A non-con-tribntory pension system was first established in Great Britain in 1908, and seventy years of age was set as the pensionable age. . ..” That was in 1908. Add twenty-five years to 1908 and it comes to 1933. President Roosevelt has indicated that he would ask for a national old age pension system from the next Congress, meeting in 1935. Well, my friend is out by only two years, if this goes through! That it will go through there seems little doubt. It is part of the “ New ” Deal, that Seems so old (in some respects) when you write, as I am doing, from London. As a matter of fact, Germany inaugurated the first contributory pension system in 1889, and Denmark the first non-contributory plan as far back as 1891. NOT NEEDED. It should be said at once, however, in defence of the United States, that there has not existed the need (until recently) in America for much of the social legislation that has been evolved in the Old World; and, furthermore, that, although the United States is among the last of the great countries to approach the matter of old age pensions, it is apt to be among the most generous, if and when a national scheme is adopted. Although the Federal Government does not participate as a contributor, the direction is indicated by the National Railway Labour Act, passed by the last session of Congress, which imposed a contributory pension retirement system on every road in the country, established generous returns, and pointed the way for similar steps which may be followed in other basic industries.

At the same time the Dill-Conuery Bill, introduced in the last Congress, and certain to be revived in the next, provides for a system of Federal aid, up to one-third of the expenditures of the twenty-seven individual States now paying old age pensions in some form. This would proVide a national scheme of the kind to which Mr Roosevelt is committed..

Up to the present, however, America has adopted no national old age pension system, nor included its population in the 600,000,000 people (or half, the civilised globe) now estimated to. be under pension systems of one sort or another. As Air Abraham Epstein, the executive secretary of the Association for Old Age Security, puts it: “ China, India, and the United States ..remain the only large countries without any national system of old age security.” Clmia, India, and the United States —surely that is unusual company for the United States to be in! As a matter of fact twenty-seven of the fortyeight States have anticipated action by the Federal Government, and altogether some 120,000 persons in America are now receiving benefits under State laws with average pension in 1933 of about 20dol a month. GOVERNMENTAL ANNUITIES. This should be compared with some 1,600,000 pensioners in Great Britain, which has a population only about one•third that of the United States, Payments varv from a shilling to 10s a week, depending on personal means of the recipient. As long ago as 1833 England proposed to .sell cheap Governmental annuities to its population to take care of the problem of penniless old age. A good many other nations have tried the same plan, first and last. Most of theni have ultimately abandoned it. The trouble is that the people who, most need annuities—the poor and' the profligate—do not buy them, .either because they can’t or are too careless. So they come on the bounty of the State anyway. Indeed, it has been found repeatedly that, wise as foresight is, unless compulsion is applied few citizens will make adequate provision against such social emergencies. . . The next big step that Great Britain took was to adopt a universal old age protection scheme of the so-called “non-contributory” type, introduced by Denmark. This simply meant that the State stood ready to make ceftain payments to deserving and necessitous old people after a given age. In the case of England this was seventy years. It was a straight system of Government old age grants adopted in 1908. A number of the Scandinavian countries and English-speaking dominions followed the same path, while, on the other hand, Germany and most other countries of Continental Europe followed the contributory system. There is just one major difficulty with so-called “ non-contributory ” old age pavments —they cost a groat deal of money. This cost the State, of epurse, has to shoulder alone. The recipient, who gets the money, and the employer pay nothing. , To get around this difficulty Great Britain finally, in 1925. switched over to the “ contributory ” system, and both methods are now in operation _m this country. The latter will eventually supplant the former under present plans. ENGLAND'S EXPERIENCE. England's long experience is of extraordinary interest. The now British scheme resembles real insurance. Ivory workers in tbe lower-paid brackets sixteen years of ago or more, except non-manual workers whose earnings exceed £250 a year, is required to make regular payments to the central

fund. A worker wi)l,'let us say, contribute about 4Jd a week to the system.- A woman, on the other hand, contributes approximately 2d weekly. When the worker—under this contributory scheme —reaches sixty-five he is allowed a, I pension bf £26 a year without any investigation of his means. There is a good deal more to.it than that, but those are, the essentials. The weekly sum paid in by the worker is duplicated by the employer, and, the Government also pays a share. Some 17,000,000 workers are now under one or the other of these twin phases of old-age protection. _ The old type of 1908, with the straight Governmental grants to dependants after seventy years, plus a “means test ; and the . new type of 1925, providing contributions and a fixed premium at sixty-five, are partially co-ordinated, so that older persons who have contributed for a few years under the compulsory insurance plan are retired at sixty-five under certain conditions. That, in . brief, andstripped of. all complicating details, is the English system. The chief points about it are that it is on a national basis, and that it is compulsory. Statistics, of course, are a bore, and talk of pensions necessarily requires statistics, but behind all these figures are ilesh-and-blood human beings, old and sometimes friendless, who face the almshouse unless they receive some slight assistance to keep them going. t , . It has frequently been argued in America that the United States is too prosperous to require any such arrangement ; the amounts accorded indigent old people in Europe (in England it may amount to only a shilling a week) are held up to ridicule. But. these same arguments have not appealed to Australia, New Zealand, : and Canada, where living standards are certainly close to , those in the United States and where ;o\d age pensions have universally been put into effect. CANADIAN PAYMENTS.

Jn Canada, for example, the accented standard of payment, is 20 dollars a month. • Certainly this amount, paid to a man or woman of good character after a lifetime of worthy labour Joes not seem, overly luxurious. " But on the other hand, it is certainly not so low as to justify radical attack. The budgets of elderly folk, it must be remembered, are quite different from ordinary family budgets. .• ' The cost argument has frequently been raised against an old age pension system for America,, as proposed ; m tke' New Deal. The Administration s answer to this, presumably, is that if a little country like Denmark, with 3,500,000 people, can carry 100,000 such pensioners on its rolls, it would seem extraordinary if the United States could not undertake the plan. _ In some • cases there is economic advantage in such a system, also. Twenty dollars a month is the average ipayment made by the twenty-seven American States in 1923 which had adopted old age pension ; but this is only about half the cost of average maintenance m a country poorhouse, so that most students of the matter believe both in the superiority and economy of this programme over institutional care. ' . In Australia, a youny country with high-living standards, 150,000 old age pensioners are included pa a population of about 6,500,000. About 80 per cent, of the aged receive some help from such legislation in Great Britain. Universal experience indicates that a large fraction of the aged in any country need and accept these modest pensions. Can anybody doubt that, where enacted, old age pensions have reduced the sum total of human anxiety and hardship, of fear’ and humiliation, besides materially reducing the' economic burden imposed on the younger- workers of supporting the older generation?