Pensions 101: The History of Public Pensions

January 9, 2018

“Let’s start at the very beginning

A very good place to start…”

OK, we’ll just stop right there. Not only because that song is pretty much impossible to forget once it’s in your head (so, whatever you do, don’t click this link), but because we’re not here to reminisce about heartwarming musicals from our childhood. Instead, we’re here to talk about pensions.

Stop! Don’t click away just yet. We promise to [try to] make this the most interesting blog you’ve read on the U.S. public pension system. And to do that, we’ve got to “…start at the very beginning.”

Did you know that the concept of a pension plan (also known as a direct benefit plan) is old—like, really, really old? It’s true; historians credit the Roman Empire with conceiving the idea of an income that continued after work service by offering pensions to retired soldiers during the first century B.C. Supposedly, in 13 B.C., Augustus Caesar (he was adopted son to another Caesar you might be more familiar with) was worried that his retired soldiers might want to revolt against him. His solution: If a soldier completed 25 years of service, he would earn in one lump sum the equivalent of 13 times his annual salary. While the intention of the pension in Augustus’ age was to dissuade veteran soldiers from overthrowing him, the concept stuck—and so began a long tradition of pensions for military service.

Military pensions in the U.S. specifically can be traced back to the Revolutionary War. There, too, soldiers who managed to survive the war were rewarded by the Continental Congress with income for the rest of their lives. Pensions were again offered by the federal government during the Civil War (and would come to serve as the basis for the Social Security system decades later—more on that topic in an upcoming series), and have existed in one form or another for every U.S. war since.


Believe it or not, there is a pension from the Civil War era that’s still being paid out. No joke.

Mose Triplett, a soldier in the Union Army, received a pension upon concluding his service in the war. In 1924, following the death of his first wife, Mose married a second woman who was in her 20s (it was a bit Heffner-esque, as good ol’ Mose was 78 at the time). Together they had several children, one of whom, Irene, is still alive today. As of May 2017, Irene Triplett is 90 years old, and collecting $73.13 every month from the pension plan established during the Civil War.

True story.

While pensions for military service have been around for the past 2,000 years, pensions for public servants—teachers, firefighters, police officers, and other civilians—are a more recent development. In fact, public pensions like the one here at Colorado PERA are just over 150 years old.

The first public pension plan in the U.S. was established in New York City in 1857 with the intention of providing police officers (and in 1866, firefighters) injured in the line of duty a lump sum payment. However, it wasn’t until 1878, when the plan was restructured to provide instead a lifetime benefit to police officers at age 55 after 21 years of service, that the public pension plan we know and love today was truly born.

The adoption of public pensions spread like wildfire (double entendre for all you Game of Thrones fans out there) during the Progressive Era, with six states establishing teacher pension plans during the 1910s, and one state (Massachusetts) becoming the first to extend pension benefits to general state employees in 1911. The passage of the Federal Employees Retirement Act in 1920 created a comprehensive pension system for federal civil service workers, and served as a catalyst for broader adoption of public pensions by state and local governments—including our very own Colorado PERA, which would be established in 1931.

And the rest, as they say, is history.

You don’t need us to tell you that the U.S. pension system—and pension plans themselves—is/are a complicated topic to wrap your head around. That’s why, over the course of this month, we’ll be breaking the whole darn thing down into bite-size pieces that [we hope] will be a little easier to digest. The next installment: what exactly is a pension plan, and how does it operate?

For now, though…that’s all, folks!