THE HISTORY OF THE LOCAL GOVERNMENT PENSION SCHEME
What was Superannuation?
Throughout much of the history of local government pension arrangements, the term ‘superannuation’ was used to describe the pension paid to retired local government employees. Superannuation is defined as ‘payments made to obtain a pension granted to a superannuated person’ and a superannuated person is ‘someone who is sent into retirement with a pension’. Therefore, in effect, superannuation is an old word for pension.
In order to find the roots of the Local Government Pension Scheme (LGPS), it is necessary to go back to 1844. In that year, a scheme was developed which wanted to introduce compulsory deductions from salary, with a separate fund being created, for the London Poor Law Commissioners.
However, this proposed scheme never reached the statute books because the officers concerned were not prepared to accept compulsory salary deductions for pension purposes.
In 1864 the Superannuation (Union Officers) Act introduced the provision of superannuation allowances for officers of unions and parishes who became disabled by infirmity or age and were unable to discharge the duties of their office. Employers had an option as to whether or not they would adopt such a scheme.
The Act did not, however, require the contributions to be paid into a separate fund. Instead they were paid to the fund from which officers’ salaries were paid.
It was not until the Poor Law Officer Superannuation Act of 1896 that relevant employers were required to provide superannuation allowances for poor law officers and ‘servants’ (a ‘servant’ was the term used to describe a manual worker) providing that they paid a contribution of 2% toward such an allowance. Contributions were still, however, paid into the fund from which salaries and wages were paid.
The Acts of 1864 and 1896 determined many of the principles that are applied to the LGPS today.