In the United States, before 1935, very few workers in the United States worked in jobs covered by pensions. Of those with coverage, many never received any benefits because their benefits were not guaranteed.
The original Social Security Act was passed in 1935. It had two components: a Social Security retirement benefit that applied only to workers and a welfare program for the needy elderly called Old Age Assistance. The welfare program was initially more popular because the benefits were bigger. No Social Security benefits were to be paid until 1942, allowing for a period of partial forward funding. The retirement benefit was initially funded by a 2 percent tax on the first $3000 of payroll earnings,1 percent from employers and 1 percent from workers.
The Social Security system has been reformed many times but it has always sustained the basic concept of social insurance. …
