How the notion of retirement for workers took root

Dec 29, 2013, 6:39 AM

WASHINGTON (AP) – Work until you die _ or until you can’t work anymore.

Until the late 19th century, that was the old-age plan for the bulk of the world’s workers.

Only in 1889 did German Chancellor Otto von Bismarck introduce modern pensions. Bismarck wasn’t really motivated by compassion for the plight of the working class. He wanted to pre-empt a growing socialist movement in Germany before it grew any more powerful.

The idea of providing financial security for the aged gradually caught on and expanded in Europe, the United States and other advanced economies. Now, as life expectancy reaches lengths Bismarck couldn’t have imagined and retirement lasts two or three decades, these countries are struggling with government pension plans they can no longer afford.

The pension Bismarck offered was the first to be widely available. But it was hardly the world’s first.

In 13 B.C., the Roman Emperor Augustus began paying pensions to Roman Legionnaires who had served 20 years. The troops’ pensions were financed at first by regular taxes, then by a 5 percent inheritance tax, according to a 2009 history by Frank Eich, an economist now with the International Monetary Fund.

In the 16th century, Britain and several European countries offered pensions to their troops, starting with officers and gradually expanding to enlisted men. The first civilian public servant known to have received a pension was an official with the London port authority. In 1684, he was paid half his working income _ deducted from the pay of his replacement.

Thomas Paine, the Revolutionary War firebrand famous for his essay Common Sense, called for a 10 percent inheritance tax. Part of the tax was to be used to pay benefits to everyone age 50 and older to “guard against poverty in old age,” according to a history by the Social Security Administration.

The idea went nowhere.

After the Civil War, the U.S. government paid pensions to disabled or impoverished Union veterans or to the widows of the dead. Southern states paid pensions to disabled Confederate veterans. The Civil War pensions became a basis for Social Security decades later.

When farming dominated the economy, most men worked as long as their health held out. As they aged, though, they often cut their hours and turned the most physically demanding chores over to sons or hired hands. In 1880, when half of Americans worked on a farm, 78 percent of American men worked past age 65.

As factories began to replace farms in economic importance, skeptics wondered whether old folks could understand and work with the new machines. One of the giants of American medicine, Johns Hopkins Hospital co-founder William Osler, in 1905 decried the “uselessness” of men older than 60 and said they should leave the workforce.

Growing prosperity also meant more people could afford to stop working late in life.

In 1875, American Express offered America’s first employer-provided retirement plan. Five years later, the Baltimore and Ohio Railroad introduced the first retirement plan, financed jointly by contributions from an employer and its workers.

From there, private pension plans grew. In the United States, the plans received a boost during World War II, when the government imposed wage freezes. That led some companies to offer pensions and other benefits to attract scarce workers.

The United States created Social Security in 1935 and added Medicare health benefits for the elderly in 1965. In the 1980s, many countries lowered the age at which people could retire and collect full benefits. This step was part of an effort to clear older workers out of the labor force to make way for the young.

Now, governments are reversing those policies and raising retirement ages to prevent aging populations from breaking their budgets. And older people, who now enjoy better health, are working longer again: In the United States, 18.6 percent of people 65 and older were working or looking for work as of November. That was up from a record-low 10.4 percent in January 1985, according to Labor Department figures dating to 1948.

(Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

United States News

FILE - In this Sept. 30, 2019, file photo, Seminole County Tax Collector Joel Greenberg talks to th...
Associated Press

Gaetz friend to be sentenced on sex crimes, other counts

ORLANDO, Fla. (AP) — A former Florida tax collector whose arrest led to a federal probe into U.S. Rep. Matt Gaetz has cooperated in investigations of two dozen people for sex trafficking and other crimes, but it may not be enough to spare him a long time in prison when he is sentenced Thursday. Joel […]
7 hours ago
FILE - Russian Foreign Minister Sergey Lavrov speaks during a meeting with governors and heads of R...
Associated Press

Russian FM: US, NATO directly involved in Ukraine conflict

MOSCOW (AP) — Russia’s foreign minister on Thursday accused the West of becoming directly involved in the conflict in Ukraine by supplying it with weapons and training its soldiers. Sergey Lavrov also said that Russia’s strikes on Ukrainian energy facilities and other key infrastructure that have left millions without power, heating and water were intended […]
7 hours ago
This aerial image courtesy of Hawaii Dept. of Land and Natural Resources shows lava flows on Mauna ...
Associated Press

Prayers? Bombs? Hawaii history shows stopping lava not easy

HONOLULU (AP) — Prayer. Bombs. Walls. Over the decades, people have tried all of them to stanch the flow of lava from Hawaii’s volcanoes as it lumbered toward roads, homes and infrastructure. Now Mauna Loa — the world’s largest active volcano — is erupting again, and lava is slowly approaching a major thoroughfare connecting the […]
7 hours ago
Britain's Prince William and Kate, Princess of Wales, watch the NBA basketball game between the Bos...
Associated Press

Racism row erupts as William and Kate visit Boston

LONDON (AP) — Prince William’s office said “racism has no place in our society” as he sought to prevent the backlash over his godmother’s treatment of a Black advocate for survivors of domestic abuse from overshadowing his trip to the United States. Lady Susan Hussey, 83, resigned Wednesday as an honorary member of the royal […]
7 hours ago
Associated Press

Iran’s national soccer team receives subdued welcome home

BAGHDAD (AP) — Iran’s national soccer team received a subdued welcome home after its World Cup defeat against the United States, a match played against the backdrop of ongoing anti-government protests in Iran. The players returned to Iran late Wednesday, a day their 1-0 loss. Anti-government protesters, considering the team a symbol of the regime, […]
7 hours ago
A woman uses her phone in front of monitors showing Japan's Nikkei 225 index at a securities firm w...
Associated Press

Asian shares gain after Fed chair signals slower rate hikes

BANGKOK (AP) — Shares advanced in Europe and Asia on Thursday after a rally on Wall Street spurred by the Federal Reserve chair’s comments on easing the pace of interest rate hikes to tame inflation. Signs that China may be shifting its approach to containing COVID-19 outbreaks to focus more on vaccinations, while some cities […]
1 day ago

Sponsored Articles

(Photo via MLB's Arizona Fall League / Twitter)...
Arizona Fall League

Top prospects to watch at this year’s Arizona Fall League

One of the most exciting elements of the MLB offseason is the Arizona Fall League, which began its 30th season Monday.
Children’s Cancer Network

Children’s Cancer Network celebrates cancer-fighting superheroes, raises funds during September’s Childhood Cancer Awareness Month

Jace Hyduchak was like most other kids in his kindergarten class: He loved to play basketball, dress up like his favorite superheroes and jump as high as his pint-sized body would take him on his backyard trampoline.
Day & Night Air Conditioning, Heating and Plumbing

Ways to prevent clogged drains and what to do if you’re too late

While there are a variety of ways to prevent clogged drains, it's equally as important to know what to do when you're already too late.
How the notion of retirement for workers took root