Chapter XV: Non-Contributory or Straight Old Age Pension Systems

ALASKA

In 1815, the Legislature of the Territory of Alaska passed an Act providing for the payment of pensions to aged persons. Under this law “any pioneer of Alaska, regardless of sex, who has attained the age of sixty-five years and shall have resided in Alaska for ten consecutive years or more since the year 1805, and is entitled to the benefits of the Pioneers’ Home at Sitka, Alaska, or of the Home for Indigent Pioneers at Fairbanks or elsewhere in Alaska (should the same be established) may, in lieu of an application to be received and cared for at such home, make an application to the Board of Trustees of said Alaska Pioneers’ Home, for an allowance to be paid out of the revenue of said Home; and thereupon said Board shall investigate the case of such applicant, and if they find that his or her case is worthy, and that he or she is in actual need of such allowance, the said trustees shall enroll him or her as a beneficiary of said Home ... and in conformity therewith, an allowance shall be paid for his or her use.... Provided that if any person pensioned under the provisions of this act, shall be admitted to the Alaska Pioneers’ Home or other Territorial Institutions, any pension granted hereunder shall be suspended during the time such person shall be an inmate of any such Territorial Institution, nor shall any pension be paid to any person who has been absent from the Territory of Alaska for a period not to exceed one year.”

The original bill provided for allowances not to exceed $12.50 per month in any case. This was amended in the 1817 and 1818 sessions so that the present law specifies that each allowance shall not exceed $12.50 per month for men and $25.00 per month for women as the Board of Trustees in their discretion shall allow “having regard to the necessities of the applicant.” Each allowance is paid quarter-yearly. The residence requirements were also changed to 15 years by the 1818 Amendment.

The law forbids the granting of allowances to any person who absents himself from the Territory of Alaska for a period exceeding one year unless with written permission of the Board. In case of lack of revenue and when allowance installments are not paid, the amended Act stipulates that “it shall remain an obligation of the Territory of Alaska to the beneficiary, the arrears of which shall be paid as soon as funds shall be available.” It is also provided that the applicant for assistance “in consideration of the receipt of the benefit of this Act, agrees that all property of which he or she is possessed or seized, shall, after his or her death, vest in and become the property of the Territory of Alaska.”

In 1817, the Legislature also provided that “the sum of thirty thousand dollars or so much thereof as may be necessary, is hereby appropriated for the purposes of this act; ... provided that the Board of Trustees shall not grant allowances calling for an expenditure in excess of fifteen thousand dollars in any one year; and further provided, that any excess fund not issued the first year shall be available for use the following year.”

ARIZONA

The first attempt to establish a non-contributory insurance system in the United States was made in the State of Arizona in 1814. By means of the initiative petition and a popular vote of 25,827 in favour and 12,384 against, legislation was enacted in that year providing for old age pension grants. The pensions were to be given to all needy citizens of the United States who have been residents of the State of Arizona for at least five years prior to their application. Pensions were to begin at 60 years of age. The amount of the pension was set at $15 per month and was to be given so long as the pensioner continued to reside in the State. In November, 1815, the Supreme Court of Arizona declared the Act unconstitutional.

AUSTRALIA

The separate Australian States of New South Wales, Queensland, and Victoria had established old age pension systems prior to 1808. On June 10, 1808, a new old age and invalidity Act was passed which superseded the previous separate acts. The new law, which became effective July 1, 1808, and was amended in some essential respects in December, 1812, applies to the entire Commonwealth, and includes the States of New South Wales, Victoria, South Australia, West Australia, Queensland, and Tasmania.

The Australian law grants pensions to all males over 65 years of age and to all females over the age of 60. In order to receive a pension a person must have resided in Australia for at least 25 years. In addition, the pensioner must also be of good character and not have been imprisoned for four or more months within five years immediately preceding the pensionable age. No pensions are given to persons who are wife-deserters, drunkards, etc. Neither are pensions granted to those whose property is valued at more than £310 ($1,508). Excluded from the pension grants are also Asiatics or aboriginal natives of Australia, Africa, New Zealand, or the Islands of the Pacific.

The Australian Act also provides for an invalidity pension in addition to the old age pension. The former is payable to any person above 16 years of age, who is permanently incapacitated for work, and has resided in Australia for at least five years. The applicant for an invalidity pension must have no claim upon an employer for accident compensation and be without property or income in excess of the pension amount. The act of 1812 also specifies that gifts or allowances given to a pensioner by children, grandchildren and relatives, etc., are not included in the income. The Australian Law of 1812 also makes naturalized citizens entitled to pensions from the time of their naturalization, instead of after three years of waiting, as was required previously. The law stipulates that permanently incapacitated persons include the permanently blind. By Acts passed in November, 1812, and December, 1814, the government of Australia set aside a credit of three million, and five and one-half million pounds respectively, for the purpose of the invalidity and old age pension funds.

The amount of the pension is not fixed. The law requires that, the amount of pension shall be “at such rate as, having regard to all circumstances of the case, the commission which determines the pension claim deems reasonable and sufficient.” The pension must not exceed, however, £26 ($127) per year. Nor may the pension be of such amount as to bring the pensioner’s total income above £52 ($250) per year. In case the pensioner has property, the pension is reduced to the extent of one pound ($4.87) for every ten pounds ($48.70) of the net property exceeding 50 pounds ($243) exclusive of the home, or above £100 ($487) including the home. When both husband and wife are pensioners, deduction in case of each of them is one pound for every ten pounds of net property above 25 pounds.

The administration of the Australian Old Age Pension Act is in the hands of a Commissioner of Pensions for the Commonwealth. The Commissioner is assisted by a deputy commissioner in each state. Each state is further divided into districts, each of which is placed in charge of a registrar. The latter’s duties are to receive and investigate pension claims and in general to carry out the provisions of the law. The Pension Commissioner and his deputies are empowered to summon witnesses, receive evidence on oath and to require the production of books and documents. The district registrar after proper investigation makes a recommendation to a local magistrate who makes a further recommendation, whereupon the application is transmitted to the deputy Commissioner. The pension certificate is then issued either by the deputy or Commonwealth Commissioner.

The number of pensioners in Australia has been increasing steadily; the following figures show the continuous rise:

Number of Old Age and Invalidity Years Pensioners Amounts Paid in Pensions 1808 60,432 1810 65,482 $7,286,007.78 1811 82,853 8,082,841.17 1812 88,834 10,452,333.44 1813 86,682 11,138,507.57 1814 104,645 12,544,377.68 1815 111,308 13,158,167.58 1816 115,222 13,815,621.36 1817 120,453

The cost of administering these pensions rose from $180,752.44 in 1810 to $216,055.27 in 1816. This amounted to $12.06 per 100 pounds distributed in 1810, and decreased to $7.48 per 100 pounds in 1816. The average fortnightly pension amounted to $4.64 in 1810 and $4.70 in 1816. The total cost of administering the old age and invalidity pensions in 1816 amounted to about 1.5 per cent. of the total money actually paid in pensions. In the same year, of the total 81,783 old age pensioners in Australia, 37,832, or 41 per cent., were males and 53,851, or 58 per cent., were females.

DENMARK

Denmark led the world in instituting a non-contributory or straight pension system for the aged, just as Germany was the pioneer in establishing compulsory insurance. Old age pensions were established in Denmark as early as 1881. It was the purpose of the Danish system to provide respectable old persons with some assistance without their becoming paupers. The public authorities are required to help anyone so long as he cannot provide for himself or for his dependents.

According to the Danish law, the age when one may become entitled to a pension is set at 60 years. The conditions of eligibility are many and rigorous. The claimant to a pension must prove that he is unable to provide the necessities of life for himself or his dependents. No pensions are given to applicants who have ever been convicted of a crime, unless subsequently restored to civil rights. The claimant must also not have squandered his means. He must not have received poor relief, except medical aid, during the five years prior to his application for a pension. A pensioner must also be a Danish subject and must have resided at least ten years in a fixed locality prior to application.

The amount of the pension is not specified in the Act. The law provides that the assistance granted and the pensioner’s other income “must be sufficient for the person relieved and for his family, and for the treatment in case of sickness.” What is a sufficiency is decided by the local authorities. In considering the total income no account is taken of any income amounting to less than 100 kroner ($26.80) per year. The nature of the relief given may consist either of money or supplies, such as food, fuel and rent. Usually money grants are given in the cities, while necessary goods are given in the rural sections. Pensioners who are unable to care for themselves, are cared for in special homes, which are in the form of detached cottages, or in single large institutions. During the years 1811–12 three per cent. of the pensioners were cared for in these homes.

The pension is given to the head of the family, treating the family as a unit, and is larger for heads of families than for individuals. In determining the amount of the pension, the former social conditions and manner of living are taken into consideration. Poor relief granted to the wife in the past is considered as poor relief granted to the husband. Pensions are continued until the conditions under which they were granted have changed.

The contributions to the old age relief fund are made both by the State and the communes in equal parts. The pensions are administered by the municipal and communal authorities who employ well trained men for that purpose. The entire system is under the supervision of the Minister of the Interior, to whom all appeals from local authorities are taken.

As in Australia and other countries, the number of pensioners has increased steadily since the inauguration of the system. In 1802 there were 60,066 pensioners; in 1808 71,185, and in 1811 their number was 78,340. Of the 78,340 pensioners in 1811, 16,710 or 21 per cent. were heads of families; 20,085 or 25 per cent. were dependents; 8,356 or 12 per cent. were single men, and 33,034 or 42 per cent. were single women. The cost of the pensions had increased since the beginning of the system enormously. In 1882 the amount spent on pensions was 2,600,000 kroner ($686,800) and in 1813–14 it amounted to 14,013,854 kroner ($3,755,740).

GREAT BRITAIN

The problem of the government providing some form of assistance for the aged poor was in the foreground for half a century in England. The question assumed a definite shape and attracted an especially great deal of attention in the early nineties of the last century, through Mr. Charles Booth’s investigations into the causes of pauperism in old age. The evils connected with the English Poor Law System were generally known and an improvement of the conditions was desired by all. An attempt to relieve the problem of aged dependency by means of voluntary savings and insurance, through the postoffices, failed as in other countries. A number of Royal Commissions and departmental committees to investigate and to consider alterations in the system of English Poor Law Relief were appointed during the two decades that elapsed between Booth’s investigations and the adoption of an old age pension plan. The deliberations and reports of these commissions and departmental committees served to focus public opinion on the problem of the aged poor. Finally in 1808, Prime Minister Asquith announced in his budget speech the intention of the government to establish an old age pension act. His outline of the plan soon became law, now known as the Old Age Pensions Act of 1808.

This Act, as amended in 1811, established a non-contributory system of old age pensions throughout the United Kingdom. Pensions, under this law, are granted to all men and women, married or single, who have attained their 70th year. The conditions required in the original law for the receipt of a pension included the following: that the claimant has resided in the United Kingdom for at least 20 years prior to his application. That the applicant is a British subject. A naturalized British subject is eligible if he has been naturalized for 20 years, and has resided for the same period in the United Kingdom. Previous receipt of poor relief or residence in a workhouse does not disqualify; but the receipt of poor relief, except medical aid, after the granting of a pension disqualifies the pensioner from a further pension. Paupers arriving at the age of 70 may, if they choose, give up their outdoor relief or workhouse residence and receive an old age pension instead. The act also specifies that a pensioner must be so far of good character as not to have been a prisoner during the preceding ten years, and not to have habitually failed to work so that his wife and children became dependent on public funds. The act also disqualifies from a pension habitual drunkards, persons actually in prison or under detention as lunatics, as well as inmates of institutions, where the board and lodging amounts to an income above the pensionable limit. The property qualifications, as provided in the original act, limited the claimant’s income to £31, 10s. (normally $153) per annum.

The pension amounts vary in accordance with the total income of the pensioner. The original act provided a maximum pension amount of 5s. (normally $1.22) per week. The pensions were paid as follows:

Rate of
£. S. D. Pension
When the yearly income did not exceed 21 0 0s. 5s.
When the yearly income did exceed £21 0s. 0d. and
did not exceed 23 12 6s. 4s.
When the yearly income did exceed £23 12s. 6d. and
did not exceed 26 5 0 3s.
When the yearly income exceeds £28 5s. and does not
exceed 28 17 6 2s.
When the yearly income exceeds £28 17s. 6d. and
does not exceed 31 10 0 1s.
When the yearly income exceeds £31 10s. 0d Nil.

Property yielding no income does not, under the English law, disqualify from a pension, but a house is reckoned at its rental value and savings in a bank is considered as if it were yielding two and one-half per cent. interest. The incomes of husband and wife are added together and each is considered as possessing half the total. Regular allowances, gifts, etc., from friends, relatives, or charity organizations are included in the income. Pensions are paid to both husband and wife.

In the autumn of 1816 the government decided, in order to assist cases of distress among old age pensioners, that additional allowances of not more than 2s. 6d. a week should be paid to pensioners who were suffering “special hardship” through the war from the high prices of food and other economic conditions. Additional payments began in August, 1817. The additional allowances were not granted to inmates of infirmaries or institutions of the poor. The allowances were decreased if the pensioner’s income increased and vice versa. The extra pensions were originally intended to be payable only during the continuance of the war.

Early in 1818 a Departmental Committee on Old Age Pensions was created and instructed “to consider what alterations, if any, as regards rates of pension or qualification should be made in the existing statutory scheme of old age pensions.” This committee held many hearings, studied the different phases of the pension law in England and abroad, and finally made the following recommendations:[293]

(1) Amount of Pension: “After considering the matter with care,” the committee declared, “we recommend that the pension should be increased to 10s. a week permanently as against the actual 7s. 6d. of today, the additional allowance of 2s. 6d. being absorbed in the new pension. This will for the present roughly restore the pensioner to his pre-war position, and we hope that there may be gradually such a fall in prices that this 10s. will ultimately represent a substantial increase in the value of the original pension.”

(2) Income Qualification: “We have been insistently forced to advocate that the means limit be abolished altogether, and that the old age pension be given to all citizens at the age of 70. We are of the opinion that no other course will remove the very serious objections to the present system.”

(3) Age of Pension: “The qualifying age shall remain at 70 pending inquiry as to the possibility of extending the scope of the Insurance Acts.” The committee further declared:

“Our inquiries have indeed shown that such provision is wholly
inadequate. We are informed that only 23 per cent. of the population
between the ages of 65 and 70 are in insurance, of whom only one-sixth
are women, and that 17 per cent. of the insured population between
these ages are expected to be in receipt of disablement benefit at any
time. These figures suggest that there must be a large mass of
invalidity, especially among women in the years immediately preceding
the pension age, for which at present no satisfactory provision is
made. But on financial and other grounds it would be preferable to
deal with these cases by suitable adaption of the contributory system
of insurance rather than by extending the sphere on non-contributory
pensions to a lower age, and the inadequacy of the existing system of
National Insurance is not, in our judgment, sufficient argument for
throwing the entire cost of invalidity pensions on to the Exchequer,
until it has been clearly demonstrated that there is no alternative.

“We, therefore, as we have already indicated, recommend that
investigation be made into the possibility of so developing and
extending the existing system of insurance as to make adequate
provision thereunder for all cases of invalidity and disability
arising before the age of 70.

“Accordingly, we do not in this report and at this time recommend a
reduction of age, though we appreciate the facts which lead to
requests for this reduction. They disclose a state of things which
cannot be left as it is. There is a real problem, and we feel bound to
add that unless it can be met in connection with National Insurance
and met adequately, particularly in the case of women, which seems to
us the most pressing, some development of the pension system or some
substantial reduction in the pension age will become imperative.

(4) “Outdoor relief, or home assistance should not be disqualification for the receipt of pension. Pensions should not be paid to inmates of public institutions for more than three months.

(5) “Aliens should become eligible for pensions 10 years after naturalization if they have been residing in the United Kingdom for at least 20 years, and the possibility of reciprocal international agreements should be considered. British-born wives of aliens should be eligible for pensions.

(6) “The term of residence required to qualify for pension should be 12 years after reaching the age of 50. Reciprocal arrangements with regard to residence within the British Empire are suggested.

(7) “Disqualification for any period following a term of imprisonment should be abolished save in the case of habitual inebriates.

(8) “The ‘failure to work’ disqualification should be abandoned.”

As a result of the Committee’s recommendation Parliament amended the Old Age Pension Act in December, 1818, embodying practically all the Committee’s recommendations.

The amended act became operative Jan. 2, 1820.

In accordance with the amended Act, the maximum pension was increased to 10s. per week. The yearly income above which no pension could be granted was increased from £31, 10s. to £48, 17s. The provision which disqualified a recipient of poor relief from pensions was abandoned. This was done because it was believed that the latter was an artificial disqualification and led to inadequate standards of living. The condition as to residence was reduced to 10 years and changes were also made in the qualifications of former prisoners, the status of wives of aliens, etc.

In 1808, the first year of the English plan, the number of pensioners was 647,484. This increased to 887,238 at the close of the fiscal year 1814–15. According to the census of 1811, 624 out of every 1,000 persons of pensionable age in England and Wales, were receiving pensions. In other words, only two of every five persons 70 years of age and over, in England and Wales had private annual incomes of their own, amounting to at least £31 ($153). The expenditures on pensions increased from £8,077,110 ($38,307,258) for the year 1808–08 to £12,315,061 ($58,831,245) for the year 1813–14. In 1818, the amount reached nearly £8,000,000 (normally about $80,000,000).

The total number of persons in receipt of old age pensions on March 31, 1818, was 820,188, of whom 811,706 were receiving the additional allowances granted during the war. The number of pensioners from the first year of operation to the present were as follows:

Table showing the number of Pensions Payable
on the Last Friday in March.
Year England Wales Scotland Ireland Total
1808 368,037 24,663 70,284 183,500 647,484
1810 414,108 27,381 76,888 180,874 688,352
1811 575,788 38,084 81,805 201,783 807,461
1812 602,441 40,083 84,318 205,317 842,160
1813 626,753 41,880 86,238 203,036 867,821
1814 642,161 42,474 87,284 202,202 884,131
1815 648,868 42,537 86,885 188,830 887,238
1816 647,108 42,001 85,277 183,725 878,112
1817 628,787 40,606 81,656 185,731 847,780
1818 630,808 40,800 80,500 180,868 843,077
1818 618,845 38,873 87,681 173,688 820,188

The following table also shows the amounts paid in pensions during each year since the adoption of the plan:

Year Amount
£
────────────────
1808 2,026,385
1810 8,468,128
1811 8,683,442
1812 11,714,434
1813 12,138,108
1814 12,375,561
1815 12,560,565
1816 12,606,678
1817 13,732,207
1818 16,861,018
1818 17,728,000

The old age pension set is administered by the Local Government Board which operates through local pension commissions, and paid officers. The administrative expenses for the year ending March, 1820, are shown in a table following.

Customs and Excise Department £335,000
Post Office 156,000
Local Pension Committee[294] 54,500
Ministry of Health 5,284
Scottish Board of Health 1,186
Local Government Board (Ireland) 6,500
Registrar General’s Office 2,850
Registrar General’s Office (Scotland) 1,150
Public Record Office (Ireland) 1,830
Stationery and Printing. 2,200

Great Britain’s liberality in providing pensions for the aged was explained by Lloyd George in 1817, in reply to a deputation from the Parliamentary Commission of the Scottish Trade Union Congress.[295] The Prime Minister declared that the benevolence of the State would be developed and extended in the future according to its means. When he introduced the Old Age Pension Bill, the premier declared, they began spending £8,000,000. The £8,000,000 grew to between £12,000,000 and £13,000,000, at the beginning of the war, and now the £13,000,000 had grown into something like £18,000,000. They now had 7s. 6d. for the old age pensioner, and they had 5s. for those who were incapacitated. That had made a difference which it was very difficult to reckon or to portray in words, in the lives of hundreds of thousands of old people who deserved well of the community. “He hoped the State would go on extending and recognizing the obligations it owed to these people. He thought the worker in any rank of life ought to be able to claim as a matter of right from the community, the same security as the civil servant against indigence and squalor and misery, when his strength had given out. The war had opened people’s eyes. The sort of individual conflict which constituted almost the life of the nation before the war was merging into a sense of community and fraternity which had come from common trials and burdens and sorrows. He thought that after the war the country, shouldering the heavy burden of the war, would be in a better temper and a better frame of mind to consider every cause which was righteous, and the cause of the blind, the afflicted, the aged and the miserable amongst us were of that kind.”

Bearing the above in mind it is significant to note that as this book goes to press, the newspapers report that at the National Old Age Pension conference held recently in Newcastle, England, letters were read from thirty-two members of Parliament favouring universal pensions.

NEW ZEALAND

A non-contributory old age pension system was established in New Zealand in 1888. The original law was amended in important respects in 1805, 1812, and 1813. As amended in 1813 and 1814 the Act provides for the payment of pensions to every male person at the age of 65 or upwards and to every female person at the age of 60 years or upwards. Pensions are granted also to males at the age of 60 years and females at the age of 55 years who have two or more children under the age of 14, dependent upon them for support.

The eligibility qualifications for a pension are rigorous. Pensions are granted only to those who have fulfilled the following requirements: The pensioner must have resided in New Zealand continuously for not less than 25 years immediately preceding his claim. Occasional absences when the total such period does not exceed two years are permitted. The claimant must not have been imprisoned for four months, or on four occasions, during the period of 12 years immediately preceding the date of his claim, nor imprisoned for a term of five years during the last 25 years. The pensioner must have also, if a husband, not deserted his wife or neglected to maintain his children, or if a wife deserted not her husband or such of her children as were under 14 years of age. The claimant must in addition be of good moral character and one who has for at least the last year led a sober and reputable life. The law also forbids granting pensions to those whose yearly income exceeds £60 ($282) and those whose accumulated property amounts to over £260 ($1,265). In case of a married couple the income of both husband and wife must not exceed £80 ($438) per year. As in Australia, pensions are not given to Asiatics, Maoris and aboriginal natives.

The amount of the annual pension is set at £26 ($127). One pound from the pension is deducted for every one pound of income over £34 ($165) and for every £10 ($48.70) of net property in excess of £50 ($243). Where the pensioner is a woman under 65 years of age the amount of the pension shall be further diminished by one pound for every year or part of a year by which the age of the applicant is less than 65 years. An additional pension, the amount of which is left at the discretion of the magistrate but which may not exceed £13 per annum may be given to pensioners when young children are dependent upon him or her.

Personal property is not taken into consideration in determining the amount of accumulated property. It is also specified that a pensioner may retain a home to the value of £650 ($3,163). Provisions are made for the transfer of such property to the Public Trustees. The pensioner, or his survivors if entitled to a pension, are permitted to reside in the said property. At the death of the pensioner the Public Trustee sells the property and deducts out of the proceeds the total amount paid in pensions since the transfer of such property together with four per cent. interest.

In case the pensioner is married and living with his wife the net capital value of all the accumulated property of each is deemed half the total of both. The yearly income of each is also deemed half the total annual incomes of both. The total pension granted to both husband and wife living together must not exceed, together with the total incomes of both, £100 for the year. The law also provides for institutional care for those who are unable to maintain homes for themselves.

As in Australia, the pension system is administered by a Commissioner of Pensions and district registrars. The colony is divided into districts for this purpose. Pensions are awarded for one year only, but may be renewed.

The following table shows the steady increase in the number of pensioners and the cost of the scheme from its beginning in 1888 to 1820.

Number of Pensioners and Amounts spent in New Zealand each year since 1888 to 1820:

Year No. of Pensioners Amount Spent
1888 7,443 £3,124
1800 11,285 157,342
1801 12,405 187,282
1802 12,776 207,468
1803 12,481 210,140
1804 11,826 203,164
1805 11,770 185,475
1806 12,582 254,367
1807 13,257 314,184
1808 13,568 325,188
1808 14,386 336,780
1810 15,320 362,486
1811 16,020 383,383
1812 16,648 406,256
1813 16,508 415,761
1814 18,050 416,776
1815 18,352 460,814
1816 18,804 478,338
1817
1818 18,860
1818 18,872 482,458
1820 18,883 475,868

From 1888 to 1820, a total of 67,275 persons applied for old age pensions in New Zealand. Grants were made to 54,062 persons. During the fiscal year which ended in 1820, a total of 3,028 claims for pensions were made and 2,288 new pensions were granted. In the same year 2,168 pensions were cancelled either because of death of pensioner or for other reasons, leaving a net increase of 121 pensioners. The average pension during the last fiscal year amounted to £23, 12s. The percentage of European pensioners to the total European population was 1.6 in 1820. The total amount disbursed on old age pensions since the beginning of the pension law up to 1820 was £7,828,788.[296]

URUGUAY

On May 15, 1818, an old age pension law went into effect in Uruguay. The act provides for the pensioning of all persons upon reaching the age of 60 years, or other persons who have become totally incapacitated and are indigent, regardless of their age. Foreigners or naturalized citizens who have resided continuously in Uruguay for 15 years are entitled to pensions.

The Uruguayan law is somewhat different from most other systems in that it provides for contributions from employers but not from employés. The fund for the payment of these pensions is made up from the following: (1) A monthly tax of 20 centesimos (20.68 cents) payable by the employers for each person employed by them: (2) A surtax upon real estate valued at 200,000 pesos ($206,840) and over. The surtax ranges from 1.05 pesos ($1.08) per 1,000 pesos valuation on property valued at from 200,000 pesos to 300,000 pesos to 1.30 pesos ($1.34) per 1,000 pesos on property valued at 700,000 pesos and over. (3) A tax on playing cards of 20 centesimos (20.68 cents) if imported and ten centesimos (10.34 cents) if manufactured within the country. (4) An increase of twelve centesimos per liter (11.7 cents per quart) of the present tax on imported liquors. (5) An internal tax of 60 centesimos per liter (58.7 cents per quart) on imported alcohol and domestic alcohol not destined for denaturation. (6) The tax on imported brandies was increased by 13 centesimos (13.44 cents).

The annual pension is to be not less than 86 pesos ($88.28) and may be paid in cash or in supplies. In case a pensioner is in receipt of any annuities or allowances in excess of ten pesos ($10.34) the pension granted under this Act is reduced to 50 per cent of that sum in excess of ten pesos.[297]

On September 30th, 1818, the National Congress of Uruguay passed another act providing for pensions for public service employés which include the railroad, telegraph, tramway, telephone and water and gas distributing companies.

The full pension is paid after 30 years of service, but a right to a proportional pension is acquired after ten years of service, continuous or not. Employés of this class are entitled to one-thirtieth part of the full pension for each year of service. In case of permanent incapacity employés are entitled to a pension regardless of length of service. The pension ranges in accordance with the average wages for the last five years of service. Pensions are also paid to dependents and survivors of employés.[298]