This guest blog was contributed by Keith Richards, Chief Executive of the Personal Finance Society
I have been involved in a series of consumer focused strategy meetings which formed part of a Financial Services Commission which was set up to examine how to improve financial resilience in later life – jointly chaired by Tom Wright, CEO of Age UK and Dr Alexander Scott CEO of the Chartered Insurance Institute.
Industry, consumer and regulatory leaders embraced the opportunity to debate and consider solutions to key later life financial challenges which included the dynamics of planning for later life, encouraging savings, changing public perception of industry trust, the development of good value and flexible financial products and increasing access to information and advice.
Posted in Financial Services Commission, Money Matters
Tagged Age UK, Age UK blog, Ageing, ageing population, ageing society, consumers, financial resilience, financial resilience in later life, Keith Richards Personal Finance Society, money matters, older people, pensions, pensions planning, Personal Finance Society, planning for retirement
This guest blog was contributed by Laurence Baxter, Head of Policy and Research at the Chartered Insurance Institute (CII)
Having looked at the next generation of pensioners in the first roundtable entitled Is it too late to save, the Age UK Financial Services Commission then turned its attention on 6 February to the early to middle years of retirement. Hosted by Mercer, leaders from across the financial services industry debated a number of hot topics which are summarised below.
Managing early retirement while considering the longer term
Individuals in the first decade of retirement face the potential for economic, lifestyle and health shocks, underlying the importance of financial resilience for this group. One complexity was the different types of pension pots people have as a result of multiple employers. There is the transition from Defined Benefit to Defined Contribution, so some of pension pots will be final salary schemes while others are money-purchase. Changing patterns of retirement from a single watershed event to more of a process will also be significant.
While early retirement is not without its bends in the road, people in this group still need to be mindful of issues that could arise later in life such as long-term care and how or whether they use home equity.
Margaret (not her real name) has been married for over 30 years. She worked part-time for many years but this work was low paid, and only during teaching terms, so she never built up her record of NI contributions.
During periods of unemployment Margaret did not claim benefits (and therefore credits which would have counted towards her NI record) because her husband was working. Margaret gave up work to look after her husband when he became chronically ill to help him remain working for as long as possible.
They felt they could manage without claiming carer’s benefits (which again would have protected her NI record), but when he did eventually have to give up work as his condition worsened they made sure that he claimed incapacity benefit, purely so that his NI contributions—and therefore, they thought, Margaret’s pension—would be protected.
Margaret’s husband will reach pension age under the present system, with a full contribution record, which they were always promised would also cover Margaret. However at 59 Margaret finds that the pension she had relied upon will no longer exist.
This question was the starting point of Age UK’s first Financial Services Commission summit event on 6th December. It arose from forthcoming Age UK research which suggests that although those coming up to retirement are often seen as a wealthy and resilient generation, all but the most affluent face considerable challenges, and there is a widely prevalent feeling of uncertainty which deters saving.
The Commission – jointly chaired by Tom Wright, CEO of Age UK and Dr Alexander Scott CEO of the Chartered Insurance Institute – was set up to examine how to improve financial resilience in later life.
At the event (hosted by BlackRock, the investment management firm) Tom challenged senior figures from the financial services industry, consumer and regulatory organisations to give their recipe for improving financial resilience among the group approaching retirement. The debate ranged between those who feel we need to build trust in the financial services industry and those who pointed to supply-side failures. So far, so unsurprising. But there was a new mood of optimism and – dare I say it – realism. Continue reading
Posted in Consumers, Financial Services Commission, Money Matters
Tagged Age UK, Age UK blog, Age UK Financial Services Commission, Ageing, ageing population, ageing society, BlackRock Financial Services Commission, coping financially older people, financial resilience, financial resilience in later life, Financial Services Commission, money matters, older people