‘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.
