Winning the Pensioners: Labour and Superannuation

Labour once had a realistic and ambitious policy designed to secure an adequate standard of living for all pensioners: National Superannuation.

Much has been made in recent years of Labour’s inability to reach older and retired voters. This is due to a lack of attention to their issues. Recently, Labour has not been brimming with fresh ideas about how to increase security in old age, which has been a major cause of decline with older voters. In the post-war era, by contrast, Labour had a realistic and ambitious policy designed to secure an adequate standard of living for all pensioners: National Superannuation.

National Superannuation was the Labour Party’s pension policy from the 1950s to the 1970s. It first appeared in the 1959 Labour Election manifesto under the heading of ‘Ending Poverty in Old Age’. The Manifesto describes National Superannuation as providing ‘all the advantages of the best kind of private scheme’.

It would be a state-run retirement scheme, funded by a 5 percent employer contribution, a 3 percent employee contribution and a grant from the exchequer equivalent to 2 percent of average national earnings. After it had began full operation, the scheme would provide 50% of their wages to the average retiree, and would operate progressively, guaranteeing up to two-thirds for the poorest.

Labour lost the 1959 election, but it entered government after the 1964 election. The 1964 manifesto, while not mentioning National Superannuation by name, does propose (in the section on Social Security) the establishment of a ‘new wage-related scheme covering retirement, sickness and unemployment’ to be added on to the flat-rate payments of the National Insurance benefits.This section repeats the aim of achieving a 50% income replacement rate.

In the 50s and 60s, Labour had a renewed focus on social policy, inspired by the work of academics like Richard Titmuss. During Labour’s struggle to contain the economic challenges of the 1960s, the ambitious plans proposed for old-age social security had a tough time staying afloat.

In 1965, the government decided to increase the basic pension, and pause moving further on plans for National Superannuation. In 1968 Labour’s newly created Ministry of Social Security was merged with the Ministry of Health to create DHSS, the Department of Health and Social Security. Richard Crossman, long a supporter of National Superannuation, was placed at the helm. He immediately began work on a White Paper on National Superannuation and Social Insurance. 

In 1969 the NSSI White Paper was published. It proposed a scheme of income-replacement old age insurance, to be financed by a ‘tripartite’ scheme of contributions, just as originally proposed. Many social policy scholars had come to the conclusion that one of the major problems with National Insurance was the flat-rate nature of contributions and benefits, which were an obstacle to social justice and a drag on economic growth.

The White Paper contained a scheme which would have guaranteed to retirees 60% of earnings up to about half the average wage, and then 25% above that. This scheme would have finally accomplished Labour’s goal of security in old age for all. While a bill was tabled in 1969, tragedy struck and Labour lost the next election in 1970. During their brief time in office the Conservatives did manage to reform social security- in the opposite direction, encouraging private businesses to set up pension schemes and discouraging state involvement. Though a zombie version of National Superannuation would return in 1978 as the short-lived State Earnings Related Pension Scheme, this would be the last gasp and since then no major party has proposed establishing a new state-run scheme. 

While the large cost of the scheme itself may prove problematic today, it is imperative for Labour to reach out to older voters with an ambitious and pragmatic policy offer. We could learn a lot from National Superannuation.

Louis Welvaert is a student from South London and a Labour Party member and a Branch Secretary. He is a student of the history of the Labour party and the welfare state.

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