Old Age Pensions by Otto Von Bismark

When you think about old age pensions, you more than likely wonder how they came to be and how retirement benefits were invented. The first pensions were often determined on the life expectancy of the individual.

Otto Von Bismark who was the minister president of Prussia in 1881, announced an idea to the Reichstag which was the government ran society that provided financial support for older members of their society.

The main problem was that Otto Von Bismark was being pushed from socialist groups to help the people of his country so he put up the argument to the Reichstag that individuals that were not able to work due to a disability that occurred at work or by age had a claim for the state to care for them. It took a long eight years for the German government to establish any type of retirement scheme that would provide any type of benefit for any individual that made it to the age of 70, at which time the individual could retire and receive benefits. At this time the life expectancy in Germany was 70, so even though this retirement policy was put into place, most individuals died before they could receive benefits.

In the 1800s in the United States some municipal employees such as teachers, police officers and firefighters mainly in large cities began getting pensions. By 1875, public pensions were offered by the American Express Company. In the 1920s, several different industries in the United States began providing some type of support for their later years including railroads, banks, and oil industries.

In the majority of cases, the retirement age was determined by the economy and most placed retirement age at 65. The US government enacted the Social Security Act in 1935 and add the official age of retirement to be 65. At that time, the life expectancy for men in the United States was around 58 years.