Abstract

Today, private pension provision, that is saving which will produce a predictable retirement income, is by far the largest financial asset of British households. Indeed it represents more than half of all household financial wealth. Yet as university staff are all too aware, the system is faltering. This presentation will study what may have been the first successful funded pension in the world – the Scottish Ministers’ Widows’ Fund. It is often overlooked in financial histories. It was established in 1743, and lasted for 250 years.

The presentation will describe how the fund came about, and the techniques its promoters used, including the calculation of liabilities, (e.g. the first use of life tables), the management of moral hazard, the investment strategy, the administrative system, the governance and the management of costs etc. It will also look at how it was able to overcome the difficulties which had undermined earlier initiatives. And it will touch on the lessons we might learn for the design of pension funds today if we are to maximize the value of Britain’s greatest financial asset, and the enormous benefits which might accrue if we did.