10 December 2013

State Pension Age Continues Upwards

The Government wants to raise the State Pension Age (SPA) at a faster rate according to the recent Autumn Statement. The increases to ages 66 and 67 are due to go ahead in 2018 and 2026 as planned. The increase to 68 was due to take place in 2046, but the Government wants to bring this forward to 2036. And at the same time it has laid out another set of proposed increases to happen every ten years, until the SPA hits 70 for all those born, probably, after 1990.

Given increases in longevity, and the financial savings generated, the increases in SPA are inevitable. Potentially it means someone born today is unlikely to receive any state pension benefits until at least their 72nd birthday.

It's worth bearing in mind that you don't have to take all your pension benefits at the same time as  you reach SPA. With sufficient pension savings you can take a pension earlier or later. But it does make personal savings ever more important in the retirement planning jigsaw, along with taking financial advice around how and when to take benefits.

Here's a summary of the current situation (with thanks to MGM Advantage)...

When? What? Who?
Previously announced Between 2010 and 2018 Women’s SPA to increase gradually to age 65 Women born between April 1950 and December 1953
Between 2018 and 2020 Everyone’s SPA to increase to age 66 Those born between December 1953 and April 1960
Between 2026 and 2028 All SPA’s increase to age 67 Those born from April 1960 until around the end of the 1960s
Proposals within this autumn statement Mid 2030s All SPA’s increase to age 68 Approximately those born in the 1970s
Late 2040s All SPA’s increase to age 69 Approximately those born in the 1980s
At a later date All SPA’s increase to age 70 and beyond, in line with increases in longevity Likely to be anyone born after 1990

2 December 2013

Banks - Still Unworthy of our Trust

Several more issues have come up over the last couple of weeks which show how banks are still way off being the organisations we need them to be.

First there's the Co-op Bank problems at the top (very sad, when many people saw them as offering a more ethical approach), then there's the allegations about RBS closing down small businesses because they wanted their money back, and finally the news that bankers' bonuses are once again on the rise now that the public's attention is elsewhere.

I suspect that, as Robert Peston points out, RBS will say that they were caught in the middle between the regulator telling them to reduce their outstanding debts (including money lent to small businesses), and the government telling them to lend to more new small businesses. But I can't say that I feel any sympathy when it basically comes down to their earlier reckless lending policies.

And as for bonuses (thanks again to Robert Peston), one wonders what world some people live in, and what it will take to get them to see some sense.

Last July (2012), when commenting on the Barclays LIBOR-fixing scandal I concluded with the following which still applies perfectly. Sometimes it's sad to be right...

I suspect that there are many similar situations in the financial world, and only when something goes publicly wrong or is somehow brought to light will we all be outraged yet again.

What is needed is a responsible and ethical culture. But that needs more than a quick staff training course. It's a question of changing attitudes and culture. And that takes time. The sooner that individual financial institutions have less of an impact on all of our lives the better. They are currently hardly worthy of our trust.

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