A lifetime of change

‘Jubilee Fever’ has hit Britain. Everywhere you turn there is a flurry of red, white and blue, as well as a nostalgic – or otherwise – look back over the Queen’s reign.

Over the last 60 years, Britain has changed enormously. We are (generally) enjoying a much better standard of living - better housing, better food and nutrition, and better medical care. And as a result, people in the UK are living for longer.

Wind back the clock 60 years and there was 6.8m pensioners living in the UK. That has now doubled to 12.4m, making up a staggering 20% of the population. And it isn’t just more people are reaching ‘pensioner age’, the number of ‘very old’ is also increasing fast. There is a staggering 44 times more centenarians now (13,420) than there were 60 years ago (300).

Greater life expectancy is a good reason to get the bunting out. But it’s also worth considering whether our pension system has kept up. Back in 1952, the state pension was £1 12s a week (almost £40 in today’s money).  Today, it’s about to undergo some big changes. As well as pushing back the age people can claim the basic state pension – gradually to age 68 – Steve Webb, the Pensions Minister, also plans to create a flat rate pension of around £150 a week. Whether he can get past the complexities of the UK pension system – such as contracting out – and achieve this without too many people complaining remains to be seen. But he is determined to give it a go.

However, what is becoming obvious is for many is even a basic state pension of £150 is not enough. More people, realising their current financial resources aren’t going to provide enough, are choosing (or being forced) to work past age 65. So it’s becoming imperative to make the most of the private pension savings you have.

Fortunately the retirement market appears to be keeping up with the pace of change. Long gone are the days where the only solution was a conventional annuity. Nowadays we have a myriad of options – including enhanced annuities, drawdown and flexible annuities. But we need to make sure people take advantage of this wealth of choice, and get the advice they need at retirement. Otherwise, the next 60 years will not be looking as rosy for the UK’s pensioners.