Page 45 - Phonebox Magazine 2013

Finance Matters
Radical overhaul of State Pensions announced
The State Pension was first introduced by Lloyd George in 1908 and provided between 1s and 5s a week but only to those who attained the grand old age of 70. Since then the benefits provided and the associated costs have increased enormously and along with this has come greater complexity.
Recently, the Coalition Government outlined proposals to considerably simplify State Pensions, in a 108 page White Paper. The two key proposals are a new weekly flat rate of £144 (in today's money and increasing in line with average earnings) and a full qualification period of 35 years (an increase from the current period of 30 years). Another important change sees the Self Employed receiving the same benefits as Employed workers for the first time.
The State Second Pension is to be scrapped and there will be a cut off point of April 2017. If you qualify for the State Pension before this date you will remain under the current regime but all those qualifying after this date will be under the new regime. The White Paper also confirmed the increase in State Retirement age to 66 by
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...in a recent survey by Age UK, it estimated the the effect of inflation on those over 55 was higher than the rest of the population?
The index, known as Silver RPI, shows that over 55’s have seen an 18% rise in living costs between September 2008 and September 2011 – almost 5% more than the general population. This means that they are now, on average, £978 a year worse off than official measures recognise.
If you are concerned about the real return on your savings or the level of income you receive, why not contact Advison and see how we may be able to help you. Remember, initial meetings are always without cost or obligation.
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2020 and 67 between 2026 and 2028. Following this, there will be a review every 5 years.
As with most changes of this magnitude there will be winners and losers. It is likely the winners will be married couples, women who have taken time off for child care, low earners and the Self Employed. It is likely to be detrimental to older employees who have built up benefits under the SERPS and State Second Pension regime. Some of those retiring before the 2017 cut off date will also lose out due to remaining under the current regime.
It is important to remember that this is only a White Paper at this stage and, therefore, there may be changes to the proposals before they become law.
If you would like to discuss your current financial arrangements or have questions concerning the changes, then please call us. Remember, initial meetings are free and we are happy to come to see you in the comfort of your own home. See our advert below.
Phonebox Magazine 45