Short history of the economic development and accounting treatment of pension plans

              Larry Kreiser CLEVELAND STATE UNIVERSITY
A SHORT HISTORY OF THE ECONOMIC DEVELOPMENT AND ACCOUNTING TREATMENT OF PENSION PLANS
Pension plans have recently received considerable publicity in financial and accounting periodicals, and in general circulation magazines and newspapers. Comments about Social Security and the taxation of private pension plans, as well as comments on ac-counting for the cost of pensions, have appeared on a regular basis. Considering this frequent discussion about pension plans, one might wonder about the economic conditions which have laid the ground-work for the current interest in pensions. The purpose of this paper is to provide a short history of the economic conditions which have led to the development and expansion of pension plans. Accounting for the cost of pension plans is also considered from a historical perspective.
Providing for Old Age Before the Industrial Revolution
Before the Industrial Revolution, most people provided for old age through their own initiative. Agriculture was the main occupation. If a person's health was good, he continued to work until he died. If he became incapacitated, his children provided for him. If there was need for aid outside the family unit, the Church was the pro-vider of the last resort. Public aid to the needy aged did not be-come generally available until the sixteenth century when the first English Poor Law was enacted. Under the Poor Law, the old age poor were granted limited help but only when there were no relatives capable of providing support.
Economic Changes Caused by the Industrial Revolution
The Industrial Revolution changed employment opportunities available to workers. The demand for agricultural workers lessened; thus, an increasing supply of laborers became available for indus-trial positions. The occupational shift away from agriculture caused