From 'National Superannuation' to 'Personal Accounts'

In response to the Pensions Commission’s recommendations for ‘a new pension settlement for the twenty-first century’, the government brought forward plans for a system of ‘personal accounts’ in 2007 that seem likely to offer little more than the inertia selling of low-cost personal pensions via payroll deduction with investment administration (and perhaps collection) undertaken by the private sector. The contrast with fifty years ago, when Britain faced similar pressures, is striking. Then, Labour presented to the British public proposals for a revolutionary system of ‘National Superannuation’ – a state-run scheme embodying redistribution between higher and lower-paid workers and the accumulation of a very large fund that would be directly invested in stock markets, thus building up a very substantial stake in British industry and commerce. The paper explores the differences between Labour’s proposals in 1957 and the scheme it proposes today. It considers why many trade unions opposed the former but generally support the latter, examines the role of the City in each decade, and asks what these differences tell us about the development of postwar social democracy in Britain. It concludes that Old Labour’s scheme was consistent with social democracy in a way that New Labour’s is not, but it asks whether, despite this, today’s scheme might actually prove more effective at delivering a better income for poorer pensioners.