Playing fair

Posted on: 22 March 2016 by Steve Wanless

Steve Wanless finds British Summer Time has a greater effect on our blood pressure than pension warnings or The Budget.

Pensions budget 2016

Pensions, yet again, are likely to grab the headlines at this year’s budget (March 16th) – just as they have been dominating the financial pages and beyond for the past few weeks.

With the prospect of today’s youngsters working beyond the age of 70 before reaching state pension age, those offering specialist guidance, such as Independent Financial Advisers (IFAs), hope the chancellor’s changes make long-term sense.

The Labour Party has just published a two-year review – The Independent Review of Retirement Income (IRRI). It has recommended that the amount being paid into pension plans by workers should double.

Currently, the average worker puts just 4.7% of pay into his pension – with most employers making a further contribution of less than 4%.

“To get a decent-sized pension pot for retirement, it is necessary to make adequate pension contributions – something in the order of 15% of pensionable salary,” recommended the report.

State pension age review

At the same time as this Labour report was published, the Tory government confirmed there will be yet another review of the state pension age. This review will be delivered next May (2017) and will consider what the state retirement age should be from April 2028.

It is small wonder we increasingly worry about what provisions to make for our retirement. The fact we might live for two, 12, 22 or 32 years after finishing work doesn’t make planning any easier.

We can’t do much about that, but what really makes pension saving a real lottery is the constant changing and tinkering of regulations and structure by various governments, who often see our pension pots as an extension of the public purse.

Governments try to justify this because pension savings receive tax relief on the way in and pay tax on the way out. To encourage us to save for the future, we are offered these and other inducements, such as the 25% tax-free lump sum from our final pension pot.

Now it appears as if some of these “generous” tax breaks could be removed or reduced, especially for higher-rate tax-payers. Just how drastic and revolutionary future pension saving is about to become only the chancellor, George Osborne, knows at the moment.

The baby boom effect

While today’s youngsters may worry about what life is going to be like in 50 years’ time, there is some good news from the National Survey for Health and Development (NSHD).

The NSHD has been following the lives of 3,000 people since they were born in 1946. That’s when the official “baby boom” started, running through to 1964.

Most “boomers” have benefited from major social changes, such as the National Health Service, free education and final salary pensions.

Those handling the study are researchers at the MCR Unit for Lifelong Health and Ageing at University College, London. These latest findings challenge assumptions that have always linked happiness with good physical health.

Those approaching seventy reported they felt cheerful, confident, optimistic, useful and relaxed, despite most reporting at least one common chronic disease. That confirmed a recent report by the Office of National Statistics (ONS) that found the 65-75 age-group were happy and satisfied compared to most other ages.

This 70-plus generation is getting a lot of attention at the moment, perhaps because of those benefits of being a “baby boomer” or having come through the second World War safely.

Nationwide Savings commissioned research into the lifestyle and memories of 2,000 70-79-year-olds; in many ways it gives a snapshot of those who enjoyed the swinging sixties and the liberating seventies.

No surprises at the choice of favourite films, tv shows and bands – “The Great Escape” and “Schindlers List”; “The Two Ronnies”, “Only Fools and Horses” and “Fawlty Towers”; and Queen, Abba, Elvis and the Beatles. 

Yet, one of the most interesting aspects of this research was that one-third of those asked were still working, so the reality or prospect of working beyond 70 is nothing new and already a reality.

So is still having a mortgage. The average mortgage debt outstanding was £27,000, while the average income was £21,617.

Body clock or the Budget?

While the contents of the budget can cause pulse rates and blood pressure to shoot up, it is another annual occasion in the March that appears to have potentially a greater impact on your health.

The answer – the change to British summer time and the clocks going forward!

A study of more than 15,000 people found that the rate of stroke admissions was 8% higher in the two days after the clocks went forward, compared with the weeks either side of the event.

For those over 65 the rate was 20% higher, while there was a 25% increase for those with cancer.

Past studies have shown that changing people’s body clock, in particular through jet lag, can increase the chance of a stroke (which occurs when the blood supply is cut off to part of the brain – normally because of a clot).

Yet most of us will be more concerned about Osborne’s budget than British summer time – although the lighter evenings are always a welcomed relief.

More defining financial changes are definitely on the way – and their implications will go well beyond the chancellor’s lunchtime speech and could last for decades.

For a free, no obligation initial chat about your individual finances, call us on 0800 0112825, e-mail or take a look at our website

The value of shares and investments can go down as well as up. Your home may be repossessed if you do not keep up repayments on your mortgage. 

Worldwide Financial Planning Ltd who are authorised and regulated by the Financial Conduct Authority.  'The FCA does not regulate Credit Cards, Will Writing and some forms of mortgage and Inheritance Tax Planning.'

Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made.

All information is based on our understanding of current tax practices, which are subject to change.
For the purposes of mortgage Worldwide Financial Planning is a credit broker and not a lender.

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