In his Emergency Budget earlier this month, Chancellor George Osborne hinted at the impact of an ageing society on public finances. Whilst his speech wasn’t explicit about demographic change being a cause of some of the fiscal challenges we face, he described the cost of public service pensions being one of the greatest long term pressures facing our nation’s finances.
Monthly Archives: June 2010
The Cost of an Ageing Population will “Dwarf” the Financial Crisis
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Working into your 70s (as long as you’re healthy enough)
The coalition government has announced that the state pension age (SPA) will rise to 66 for men by 2016, around ten years sooner than the previous government, which had proposed raising the SPA to 66 by 2024 and to 68 by 2046. The change goes against the grain of gender equality in the UK pensions system, and undermines Iain Duncan Smith’s commitment to link SPA to longevity increases. This move reintroduces a later male SPA, despite the fact that women live significantly longer than men (life expectancy is currently 77.4 years for men and 81.6 years for women).
The Economic Consequences of Low Fertility in Europe
The latest edition of the European Journal of Population (1) explores the Economic Consequences of Low Fertility in Europe.
“See you in the mud”, Festivals of the Future
The week of the Glastonbury festival tends to coincide with Wimbledon. This year it sees a clash with the World Cup as well. This is also the time of the year when employer organisations express concern about how much money businesses will lose as a result of people taking a day off to enjoy the sun and sport.
The Return of Purchased Life Annuities?
This is Money reported this week that purchased life annuities (PLAs) are on their way back[1]. Concerned about low interest rates, many savers find that buying an annuity, even if their capital is not held as pensions saving, represents a viable way to secure a decent income in retirement. Interest rates on cash savings are an important framing point for advisers and consumers. The longer that rates stay low, the more attractive returns on PLAs will appear. ILC-UK has been making the case for PLAs for a while. We published a report on the issue, authored by Jackie Wells, in October 2009, which argued that around 1.3 million people could benefit from a PLA – despite the fact that less than 160,000 PLAs are in force, and that new business in 2008 amounted to less than 1000 sales[2]. If the report of increased sales is reflected across the market, interest in PLAs is now growing. With better information and advice, PLAs could be a viable option for many more people. Another ILC-UK report on the future of retirement, published today, argues that we need as much flexibility as possible in the financial products available to people approaching retirement[3]. Clearly, PLAs could be a vital part of this landscape going forward, enabling people with regular savings to purchase annuities.
Incentivising New Retirement Housing
New figures obtained by ILC-UK from NHBC (National House-Building Council) reveal that the private sector started building 3,235 retirement/sheltered homes in 2006 (England). This figure fell dramatically to 2,602 in 2007, 1,499 in 2008 and just 313 in 2009. The statistics also reveal that only 4 regions in 2009 saw new build – East Midlands (52), Eastern (26), South West (114) and South East (121).
Assisted Living Technologies for Older and Disabled People in 2030
A new report by Plum for Ofcom looks at “Assisted Living Technologies for Older and Disabled People in 2030”(1).
Saving Britain
AEGON UK and the Association of Independent Financial Advisers have come together to explore some of the behavioural nudges which could help move the UK towards a culture of saving.