Pension Laws

Pension Laws in the United States

United States Pension Laws and the Pension Laws of Other Countries in 1899 (United States)

The following information about United States Pension Laws and the Pension Laws of Other Countries is from the Cyclopaedia of Political Science, Political Economy, and the Political History of the United States by the Best American and European Writers.

UNITED STATES PENSION LAWS AND THE PENSION LAWS OF OTHER COUNTRIES. A pension is defined by Webster to be an annual allowance of a sum of money to a person by the government in consideration of past services. In theory at least a pension is an arbitrary payment of money by the money-giving power in a country-in this country, congress; in another, the crown or parliament-for what it considers services. A secondary definition, historically the primary one, in Webster, shows us the aspect in which a pension used to be regarded:

An allowance or annual payment considered in the light of a bribe.

The more modern idea is to consider it in the light of a payment on an insurance policy. We will briefly consider how these different ideas about a thing called by the same name arose.

-After a man or set of men have done any signal service to their country, it has in every country and in every age been thought only right and just that the popular appreciation and thanks should be expressed in something more than words. And consequently, after such services have been rendered, whether in peace or war, it seems perfectly proper for the country, by its representatives, to vote a pension or any other reward that may seem fit, whether it is to a class of men, an army or an individual. For instance, in this country, pensions in general have, at least until quite recently, been looked upon as un-American and unrighteous. But after every war of any consequence statutory provision has been made for the payment of pensions and bounties to those who have been wounded in it, or to the families of those who have died in it, and this without objection. Special acts of congress also have at every period of our history been passed, giving pensions where needed and deserved.

-Such pensions as these have been, as we have said, at all times natural and proper. It can be easily understood, that in the old days of monarchical independence and independent bounty, the step from this class of pensions to gifts for what the crown called services-that is, personal service or complaisance rendered or to be rendered-was a very short and easy one. And so a door was opened for a vast amount of corruption and bribery. Salaries had to be paid to those who took up the profession of courtiers, just as to any officers of government. The king was the state, and his personal servants were civil servants, and were to be provided for for life as such. When Neckar assumed the administration of the French finances, the public pension list of France amounted to twenty-seven million livres; the private one had to be kept a secret. Every one knows what a shameful use was made of this privilege in England in the times of Charles II., and how from that time for a long period of history the free use of pensions was the only method by which cabinets and governments in that country could hold their own; members of parliament became civil servants too, and had to have their salaries and provisions for life. Finally, the abuses became so great as to force a reform, and an act was passed forbidding any pensioner or placeman to occupy a seat in parliament. Even now, cabinet officers and holders of offices of emolument under the government, when they accept the position, have to resign their seat in parliament. Finally, the subordinate clerks of government began to claim such provision, and while by a gradual process these arbitrary powers were curtailed in nearly all European countries, the principle of pension giving was enlarged, and subjected to statutory provisions. More and more officers of government and classes of officers were embraced in pension giving systems.

-Mr. Dorman B. Eaton, in his book on the English Civil Service, sketches the rise of the system in England, and we may take his remarks to illustrate the growth of such a system, and his reasoning as to the difference among different kinds of pensions, as an example of the arguments by which the growth has always been aided.

-In 1809 an English statute provided for superannuation allowances to persons in the excise service, reciting, Whereas no provision is made by law for persons employed in the revenue of excise, to the great discouragement of such officers and other persons, and to the manifest injury of the revenue.

In 1810 a law proves a fact already suggested, that the voluntary contributions of those in certain branches of the service had provided a sort of retiring allowance by creating a fund in the nature of an insurance fund. This act is known as 50 Geo. III., ch. 117. The same law also provides for annual statements of persons in the public service, and of their salaries, pensions and allowances. It also establishes a system of superannuation allowances. Other laws from time to time were passed on the subject. In 1859 they were finally revised by 22 Vict., ch. 26, An act to amend the laws concerning superannuation, and other allowances to persons having held civil offices in the public service.

The allowance is given to all persons who have served in an established capacity in the permanent civil service of the state, whether their remuneration be computed by day pay, weekly wages or annual salary.

There is to be granted to any person who shall have served ten years and upward, and under eleven years, an annual allowance of ten-sixtieths of the annual salary and emoluments of his office; for eleven years, and under twelve years, an annual allowance of eleven-sixtieths of such salary and emoluments; and in like manner a further addition to the annual allowance of one-sixtieth in respect of each additional year of such service, until the completion of a period of service of forty years, when the annual allowance of forty-sixtieths may be granted; and no addition shall be made in respect of any service beyond forty years.

There is then a provision for computing the amount of superannuation to persons holding professional and other special offices not [1021] embraced by the foregoing provisions. There are also provisions for granting allowances at discretion up to a fixed limit in cases of exceptional merit, severe bodily injury, disability in the service, abolition of offices, etc. Where the pensioner is under sixty, evidence of infirmity incapacitating him from discharging his duties, and of the probable permanence of such infirmity, must be given; and, even when these facts are established, he is liable to be required to serve again at any time before the age chosen as a limit. But persons (§12) retain the right to superannuation on transfer to other employment under the crown. All allowances are to be paid free of taxes. The system is made in principle analogous to pensions in military life. On the other hand, a deduction may be made from such allowances against any person when his defaults or demerits in relation to the public service appear to justify such diminution. The act further provides, that no person (save a few especially excepted) shall be deemed to be in the civil service in such a sense as to entitle him to any superannuation or retiring allowance, unless he has been admitted to the civil service with a certificate from the civil service commissioners. This being the act under which pensions are now given in England, it has been rather more fully recited than in Mr. Eaton’s book. Mr.
Eaton further distinguishes between these superannuation allowances and pensions granted by crowns or administrations. Those allowances are really a part of the compensation of the office, of the conditions on which he entered public service, and are not, therefore, given on any theory of a gratuity or of favor. Looked at from the side of the government, they are regarded as presenting an ingenious and just method of receiving a good quality of service at the most reasonable rates; and from the side of the officer, as an inducement to greater economy, at the opening of official life, in order to secure, by reason of what he then forbears to receive, a certain provision for his declining years. The pension proper (in civil life) is a different matter altogether; being the bribe of the crown or administration for political effect, or its favor bestowed upon some person deemed fit for its charity or deserving of its honor, and often irrespective of such person being or having been in the public service. There was an available pension fund apparently in the discretion of the crown for political purposes until 1830, in spite of various statutes. In that year all the pension lists were consolidated. In 1837 Queen Victoria ascended the throne; and, by an act passed in her first parliament, the right of the crown to grant pensions was limited to about six thousand dollars a year (in addition to the previous list), and they can only be granted in that amount to such persons as have just claims on the royal beneficence, or who by their personal services to the crown, by their performance of duties to the public, or by their useful discoveries in science and attainments in literature and the arts, have merited the gracious consideration of their sovereign and the gratitude of their country.

(1 Vict., ch. 11.)

-There are nine classes of civil pensions in England: 1, annuities; 2, compensation allowance; 3, compassionate allowance; 4, hereditary pensions; 5, political pensions; 6, pensions; 7, retiring allowances; 8, special pensions; 9, superannuation allowances: and the amount thus spent was in 1881 over twenty millions. The oldest pension is to the heirs of Sir Thomas Clarges. The date is put at 1673. Nearly a million dollars have been paid to him and his heirs, and over three and a half millions to the duke of Marlborough and his heirs.

-In France, pensions are awarded to civil, military and naval officers, to ecclesiastics, and to those distinguished in literature, science and the arts; also to the widows and children of high officials. In 1874 thirty-six thousand francs were awarded to aged and infirm ecclesiastics. Pensions for long services are given to non-commissioned officers and privates in the army who have served twenty-one years in the infantry, or twenty-four years in the cavalry, or sooner in case of disability from wounds, loss of health, etc.

-In Germany the military pension list was, in 1874, 37,996,878 marks.

-We will now briefly consider the advantages and disadvantages of a pension system, with especial reference to the United States, and then go somewhat into detail concerning the pension laws and system now existing here.

More about Pension Laws in the Cyclopaedia of Political Science, Political Economy, and the Political History of the United States

-In our consideration of the general theory of pensions, we may withdraw one class from discussion. That is the first class we have spoken of: those which, combined with the wish of men to live without working, originated all the other kinds; what are called in France national recompenses, granted by legislative or kingly acts for distinguished services. As we have already said, these have always been granted, whether to armies or individuals, and so long as such are carefully scrutinized, and the merits for which they are given are first weighed in the balance and found worthy, no objection can be raised. They should be given, too, if the primary object should die, only to his dependent relatives, and not to his children after they attain a self-supporting age. It follows from this, that military pensions should be granted after any especial service or war, and with immediate reference thereto. And besides these, if any one enters the government service where there is a pension in existence already, he has a right to demand the pension. That does not affect the question whether such system should be abolished for the future, or the question whether any should ever be introduced.

-Leaving these matters, therefore, out of the question, what we are to discuss is the advisability, or otherwise, of a pension system as a part of the method by which a government agrees to pay its servants, civil or military, for services not yet rendered.

-1. There is an objection in theory to a government’s either creating an insurance fund for the benefit of, or promising to confer a gift on, its agents, civil or military, for future services, by any statutory provision. It is not within the province of government, as that province has been [1022] limited and defined by history and by writers on the subject. A government’s business is to protect its citizens’ rights and to transact the clerical business of the state as a whole. There may be many things the government does now which do not come within this rule; but because it is difficult or not advisable to remove those already there, is no reason why, if the theory be true, still more exceptions should be added to the list. But, it is said, the government may hire a clerk or a soldier at so much a year to do certain duties. Has it not a right to choose its own manner of paying? may it not each year subtract so much from the salary, telling its servant, If you work for me for a certain number of years without conducting yourself so badly as to get turned out, you shall get the proceeds of this investment that is made for you; and if you do get turned out, it will go to others who serve out their time? Or, looking at it in another light, may it not, when the clerk or soldier enters its employ, say, If you work for me for so many years, and I don’t meantime dismiss you, I will at the end give you so much in every future year, and you need do no more work for it?

-It will readily be seen, that here, in a very finely drawn line, comes up the old question as to the powers of a government. Shall a government be strong or weak; paternal and grandmotherly, or not? shall it build and run railroads and telegraph lines, subsidize and regulate industries and arts and society, and institute social reforms? or shall it let all these things arrange themselves, so far as the rights of its citizens remain unimpaired, and confine itself closely to the business as we have defined it? The moment discretion is given a legislature or other governing body, to create and distribute funds for servants who may become invalid; or to confer in the future benefits on other servants if they perform good service; or to make any arrangement other than one of a strictly business nature, whether it be to establish an insurance fund or otherwise; that moment it takes to itself new powers, and these seem to us to be dangerous in their tendency, as liable to abuse. Their utility in fact we will deal with next. There are a great many arguments on both sides of the theory of the government question, and this is not the place to examine them. (See GOVERNMENT INTERVENTION, and other articles.) Each individual looks at it from his own standpoint. Here the writer can only express his personal opinion, that for a government to do anything more than pay its servants so much for so much work on an ordinary business or cash basis, is wrong in theory and outside its proper powers.

-2. Utility. It is admitted, that if it can be proved that any great advantage would accrue to the state by the introduction of such a system, that would in some degree atone for its wrongfulness in theory; but it is submitted that that fact can not be proven, and the balance of evidence tends to prove
the reverse.

-To put the question broadly, do public servants perform better work for the public if they have a pension in prospect? They ought not to; if a man undertakes to do work for so much, he should do his work honestly and completely, no doubt. It is therefore not the duty of government to try and get them to work harder by promise of a higher, even if it be a deferred, reward. But, as Gen. Washington said to a committee of Congress, Jan. 29, 1778, in urging the adoption of a half-pay system for the army, A small knowledge of human nature will convince us that with far the greater part of mankind interest is the governing principle, and that almost every man is more or less under its influence. * * Few men are capable of making a continual sacrifice of all views of private interest or advantage to the common good. It is in vain to exclaim against the depravity of human nature on this account: the fact is so; the experience of every age and nation has proved it; and we must, in a great measure, change the constitution of man before we can make it otherwise. No institution not built on the presumptive truth of these maxims can succeed.

Mr. Eaton has taken, as the motto for his book on civil service, already quoted from, a saying of John Locke’s:

I think every one, according to the way Providence has placed him in, is bound to labor for the public good so far as he is able.

We may notice the different ways of looking at a thing which a practical and a theoretical statesman have, and pass on to the point we wish to make, which is rather, can the public get better servants by giving so much annual salary and a pension at the end of a certain period, or by giving a higher annual salary and no pension? For no pension fund can be instituted on sound principles if the salaries are to be as high as if there were no pensions. In France, a few years since, the amount derived from the pension fund was only one-third of the amount of pensions to be paid, proving the existence of a vicious system.

-The advantages of the system are very well put by Mr. Worthington C. Ford:

In the administration of government, there is employed a large number of public servants, servants of many grades, who give their time and energies to the performance of their duties. As a rule, and the exceptions are to be found only in the higher positions, the salary these servants receive is their only resource. Let the government be overthrown, or let the offices be abolished, and these men are thrown upon the world to obtain their living in other occupations through what ever capacity they have developed in the public employ. Nor are these the only chances of hardship that they must fear. Sickness and infirmity may come upon them and render them incapable of performing any task whatever. They have the alternative then of becoming a burden on their relations or a charge upon the state or locality it which they reside. In order to prevent this, and in consideration of long and faithful service, most governments have instituted a system of pensions This is all the more necessary where the salary of public employés is somewhat lower than those that can be obtained in other walks of life. It [1023] might be added that this is rarely the case, and it is certainly not so in the United States, where, through a variety of causes, many of which were intended to have but a temporary effect, the salaries of public servants are very much higher than those obtained for the same kind of labor in trade and industry.

In theory nothing could be more just than such a system. As the right to a pension is generally guarded by some restrictions, such as age, time of service, position in the civil service, special disability, etc., it is practically a premium offered to such as will perform the necessary conditions, and so insures a better class of public officers. It encourages a strict performance of duty on the part of the employé, and inspires him to discharge the functions of his office to the best of his ability in order that he may in the end secure this reward. It holds out to him the promise of a competence in his old age or in the event of any infirmity that might make him unfit for labor, and gives him the encouragement that after his death his family will not be left wholly in want. He more cheerfully gives the best of his years to toil and fatigue when conscious that the benefits derived from his labor will not end with his death or incapacity. A pension is not, in such cases, a charitable donation, nor a gift bestowed without any return. It is, as I have said, rather an insurance fund; a gift, if you please, but one that is earned by honest toil and by a devotion to the employer’s interest.

But Mr. Ford adds:

The expediency or necessity of civil pensions has never been recognized in this country. The pay is good, and there is always an abundance of applications for positions. The introduction of civil service rules has made the occupants of positions more certain of retaining them during good behavior, and has thus given a reason even for reducing salaries. * * Whenever a special case of hardship occurs in the civil service it is usually treated by a special enactment of congress.

148 The three general objects which, we are told, are gained by a pension fund are therefore: 1, increased happiness on both sides; 2, economy-smaller wages are given, and the balance accumulated, but it is not every one who comes to get his pension, and therefore by the pensions of so many is the government a gainer; 3, [1024] permanency in office, by increasing the value of the salary and office as time goes on. All of these points are involved in the general question of utility.

More information about United States Pension Laws and the Pension Laws of Other Countries

-In reply to this argument let us quote Mr. Bentham, when discussing his proposition, that such pensions are needless, and therefore given in waste. In his Constitutional Code, under the head Finance, he says:

Labor applied directly to a man’s own use, or indirectly in exchange for an equivalent given by an individual in return for it, is one source of subsistence: labor employed for an equivalent in the service of government, that is, of the public at large, is another source. In the first case, generally speaking, no such allowance of reward, after service has ceased, has place. In the case of him whose subsistence is derived from dealings with the public at large, as in the case of a wholesale or a retail trader, a master manufacturer, an artisan, or a manufacturer, it is impossible. In the case of habitual service rendered by contract to an individual there is no custom for it. The case of incapacity produced by age or disease is a case equally open to expectancy in both instances. From the time of his embarking in his profit-seeking occupation a man makes for all such contingencies such provision as his means enable him, and his prudence disposes him, to make. For the securing to individuals any such extraordinary supply at the expense of the public there is, if there be any difference, less demand in the case of an occupation pursued by the rendering of service to the public for hire, than in the case of him whose subsistence as above is derived from commercial dealings with individuals. In the case of a public functionary a man’s income is completely certain; certain as to its existence, certain as to its quantity. In the other case it is altogether uncertain in both respects.

-Another objection is, that there is a tendency, under a promise of pensions and rewards, in government servants to endeavor to secure the approbation of their immediate superiors in ways outside the duties of their office for a long enough time or in a sufficiently intense degree for them to obtain the reward. And vice versa in the case of the superiors toward their inferiors and superiors both. It is to their interest to remain together for the given time, and as long as they approve of each othe
r reciprocally they are certain of their pension. This gives rise to a class and privileged feeling among the employés, which in turn causes an inattention to and carelessness of the interests of private individuals, more noticeable, and perhaps largely on this account, in the public offices in Great Britain than here, where the government servants have been, if anything, too independent of their official superiors and too dependent on extra-official protection. Mr. Eaton urges, as a reason in its favor in his book, that the provision it makes for old age and misfortunes, besides promoting a better feeling in the service toward the state, and making effective discipline easier, actually enables the state to purchase the services of its officers at a less cost to the public treasury. The allowances for special merit and the deductions for bad conduct are based on records kept in the departments, and they are considered to have a salutary influence (analogous to promotions, prize money and brevet rank in the naval and military service) in stimulating honorable exertions in the public interest.

This is our objection put in another way. It creates an esprit du corps among the young people in a circumlocution office like that in an army. The longer the clerks are there the more they become, superiors and inferiors, knit together in interests as against the outside world. An official class, or even aristocracy, is created.

-If a pension is to be obtained at the end of a term of years, the nearer that end comes the harder and more ungrateful it becomes for a superior to dismiss an inferior, often in disregard of the wishes of his own superiors, especially in countries where a free press and a popular assembly give the inferior opportunity for revenge and retaliation. In other words, it may tend to permanence in office, but the permanence is not of a healthy kind, and is not so dependent merely on good work as it would otherwise be.

-Again, it is to be remembered that the people filling the positions go into them at their own request and wish, and they give so much work for so much money. When they first enter, if they find themselves underpaid they may resign, and go into another business. In every country there are more applicants for government positions than there are positions for them to occupy. It is not necessary, therefore, that any more favorable pay should be given to such employés than to those in another occupation. Nor is there any reason on account of the nature of the work. And in this country, at any rate, the clerks in the public offices would strongly object to any pension fund being instituted if their salary should be lowered in consequence. Most American clerks are quite capable of investing their surplus income themselves, and they would say that they did not need to have the government, and the government had no right to, do it for them.

-Again, it causes poor work in a great many cases. Many men will cling on after their time for usefulness is entirely over, merely to get their pension, or a larger one than they would get if they were to then retire. This often happens in England, although the commissioners do their best to prevent it. We have in this country recently had an example in a very high place, where a justice of the United States supreme court, long past any ability to do any work, insisted on keeping his place until his pension should accrue, and so doing a great injury to the business interests of the country.

-In this country it is very doubtful whether any salaries could be lowered for such a purpose, and so there would be very little economy. The salaries of the United States judges were not lowered when pensions [1025] were extended to them. Besides, if our other suggestions are true, if the service became less effective on account of such a system, it would be poor economy to introduce it just to gain a few lapsed pensions. The making money out of its employés in such a way by the government in this country would only create disgust and disaffection on the part of the employés; and, through them, of the public.

-Again, there are computed to be over one hundred thousand civil servants in the employ of the national government in this country, besides the ordinary employés, messengers and lower servants employed about a government office and building, numbering perhaps as many more. This fact alone ought to be enough to deter any one from making any attempt to introduce such a system here.

-The principle suggested by its advocates is to institute a pension fund, like any insurance fund.

The average life of the persons who are to share in the benefits of the fund should be accurately determined, in order to learn how large a proportion of the total number will be able to perform all the requirements, and be able in the end to obtain their portion. This involves a determination of the death rate, the probability of life. From these data may be found the actual sum that must be set aside each year in order that the pensions falling due may be met. If, to take a simple example, it is found that the average number of persons entitled to a pension of say $500 each year is three, at least $1,500 must annually be obtained from the pension fund. If such a system were instituted here it would probably be carried on much as the naval pension fund is. The secretary of the navy, as trustee, invests so much of the fund then in the United States treasury as may not be required for the payment of the naval pensions for the then current fiscal year, together with the interest of the preceding year, and he gets 3 per cent. on it. Under section 4759 the privateersman fund is maintained. Two per cent. on the net amount after deducting all charges and expenditures of the prize money arising from captured vessels and cargoes, and on the net amount of the salvage of vessels and cargoes recaptured by the private armed vessels of the United States, shall be secured and paid to the collector or chief officer of the customs at the port where such vessel comes, or with the United States consul or agent, if out of the United States. And the moneys arising thereupon are pledged by the government of the United States as a fund for the support and maintenance of the widows and orphans of such persons as may be slain or wounded, etc., on board of the private armed vessels of the United States, in any engagement with the enemy. The secretary of the navy is trustee to assign and distribute this fund according to law. (Rev. Stat., secs. 4753, 4754.)

-The history of pension legislation in the United States forms a most interesting and curious chapter, and in no other nation has the principle of rewarding military and naval service been carried to such a limit as by congress. Early in the revolution it was seen that the discipline of the troops depended much upon the characters of the officers placed over them; so congress recommended to the several states that they should use their utmost endeavors to appoint in the service men of honor and of known abilities. On Oct. 7, 1776, as an encouragement for men of that class to enlist as commissioned officers, their monthly pay was increased, and somewhat later it was resolved that those who should continue in the service till the end of the war should receive half pay for seven years from the establishment of peace. This applied only to military service, and was more in the nature of a bounty than a pension, still it contained the germs of a pension system. Meantime, however, owing to the difficulties which arose from the inability of congress to fulfill its obligations save in a greatly depreciated paper currency, it became evident that few officers could remain, even if willing, in active service till the end of the war, without making great personal sacrifices. And, although Washington prepared a scheme of half pay and pensionary establishments, and strongly urged upon congress the necessity of making some provisions, the matter dragged, opposed by some as tending to create a standi
ng army, and by others, because they thought the states should be first consulted. The result was a compromise measure. All military officers, commissioned by congress, who should continue in the service during the war, and not holding any office of profit in the states, should be entitled to receive half pay for seven years after the war, provided that this gratuity should extend to no offic


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