It was planned that state pensions be paid from a National Insurance Fund based on contributions from workers, employers and the state. Because of the expense, William Beveridge envisaged the introduction of the measure over 20 years, with means tested supplements to support pensioners during the period of implementation. The 1944 White Paper, 'Social Insurance', recommended the immediate payment of retirement pensions at 20 shillings a week for single people, and 35 shillings for joint claimants. Shortly after Labour came to power in 1945, it decided in favour of immediate implementation, resisting calls from within the party for increased payments.
The new state pension scheme was introduced through the National Insurance Act of 1946. Although it was intended that pensions would eventually be funded though national insurance payments, the scheme was not founded upon actuarial principles. The inflation of the 1940s rapidly undermined the purchasing power of the state pension. Increasingly, pensions were supplemented by means tested national assistance.
Due to the ever increasing number of pensioners, the Treasury resisted calls for pension increases to be funded out of the National Insurance Fund surplus. The National Insurance Act of 1951, however, increased pensions by four shillings per week. The question of funding the difference between the state pension and subsistence by national assistance payments became the major problem of pensions policy under subsequent governments.