When the first state pension was paid, there was widespread celebration. David Lloyd George, Charles Booth and the other founding fathers were certain that their reforms would end poverty in old age.

Yet 100 years on, 2.5 million pensioners — more than a fifth of all those aged over 65 — still struggle to pay their bills and keep their homes warm.

Much has changed since Lloyd George introduced the weekly allowance of five shillings for men and women aged over 70. “The deserving poor” had to prove that they were of good character and had never turned down paid work. Pensioners lost their allowance if they were found “squandering money on drink”.

These days all people are entitled to state support in their old age but the decision to break the annual uprating of pensions with earnings in 1980 started a decline in its value. The rise in fuel costs has hit the elderly hardest and their income has failed to keep up with gas and electricity bill increases. It was no surprise to campaigners when figures last month showed that the number of pensioners living in poverty had risen to 2.5 million.

And the founding fathers could not have predicted the escalation of means-testing, a necessary evil in 1908 to win support for the new allowance.

The first means-tested applicants did not have to contend with the 15-page form and 20 pages of notes that applicants have to fill out today to get their pension credit, the means-tested top-up for the basic pension.Their complexity means that one third of those eligible for the £1,352 payment do not claim it.

Case study: Queenie Monger, aged 101

It was conceived 100 years ago to “lift the shadow of the workhouse from the homes of the poor”. Yesterday the much maligned state pension was hailed by a group of centegenarians born into families for whom old age all too often meant destitution.

Queenie Monger was born as David Lloyd George was drafting his momentous Pensions Act, and recalled the Dickensian poverty that it helped to eradicate.

“I remember visiting a workhouse. A relation of somebody I worked with was there. She was glad to see us. She was glad to see anybody. There was a straw bed and a wicker chair. Not a lot else,” she said between sips of tea at the Manor Croft care home in Fareham, Hampshire.

“They had meals, but very plain ones. The people there were in there because they had nothing and they couldn't get no help in those days. When you're young, as I was, you don't realise that's the way life is. The pension was a godsend for people like that.”

She recalls her parents telling her how her grandmother was forced to make ends meet. “She had to do all sorts of little jobs before she died. She wouldn't have known what a pension was. It was a hard life.”

Mrs Monger's fellow resident, Mary Cater, also 101, recounted similar experiences.

Brought up in Glasgow, her father, a steel worker, died when she was a child. The ten shillings a week widow's pension afforded to her mother was a stark reminder of the fine buffer between working-class families and the workhouse.

For other families the old age pension - or “the Lloyd George”, as recipients called it - provided that margin, although at a maximum of five shillings, it was thinner still. “That was the toughest time of my life. I must have been 14 - I had all sorts of jobs and I had to hand whatever I earned to my mother.”

Constance Nash adds another story of how the burden of the elderly weighed upon the young - her early working days were spent providing for the invalid lady by whom she was brought up.

Stanley Hayter, from Portchester in Hampshire, was born the same week that the state pension came into existence.

He said: “I first drew my pension 35 years ago. It was a massive help, of course it was. It wasn't easy to make ends meet, so the pension was your means of survival.”

Case study: Rita Young, aged 73

Rita Young is struggling to live off the £146.05 a week that she receives in her pension and pension credits and is angry that elderly people in one of the world's richest countries are not treated better.

“Things are better than a hundred years ago, when only the righteous were entitled to their shilling a week. But it is a disgrace that we have got to go and beg for the pension credit to bring us up to a level still below the poverty line. Our pension does not even bring us up to the level of the lowest-paid in the economy,” she said. Mrs Young, who lives just outside Peterborough, rarely uses her car because of the cost of petrol. Asked what she considers to be a luxury, she said “a bar of chocolate”.

With the rising cost of living - and of energy bills in particular - her social life has borne the brunt of her cost-cutting. Eating out or going to the cinema is no longer a viable option. While she still attends meetings of the University of the Third Age, she cannot afford to attend any events that it hosts. Her studies had to be curtailed when she could not afford the fee to access the national archives.

“It particularly upsets me that I cannot visit my brother, who lives in Northolt. I simply cannot afford the fare. I last saw him in 1991,” she said.

She is angry that the Government is sitting on a large surplus of national insurance contributions, a result of rising wages, which by law it can spend only on pensions or other contributory benefits. “We have honestly paid into this scheme and it is our money. How can they argue we don't need it?”

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