Andy Zanelli, head of retirement planning, AXA Wealth, claims a flat rate pension and a higher retirement age will be good for financial advisers and the economy.
“The new Pension’s Bill, as discussed in the Queen’s Speech, will accelerate two key aspects of retirement planning: the introduction of a flat rate state pension and the state retirement age. The move to a flat rate state pension of around £155 per week from 2016 makes economic sense as it should negate the need for the current complex means-tested benefits system for future retirees. As with any fundamental change to pensions legislation, there will be those who will be better off and some who will not.
“This change gives two key opportunities for financial advisers. First, the ability to base any financial planning on a solid number rather than the complex basic State plus S2P plus SERP’s calculations. This will allow much more specific targeting of when and how the client can achieve their aspirations and goals. Second, is that all clients in the pre-retirement phase are affected by this and need to understand how it will relate to them.
“The move to increase the state retirement age to 67 between 2026 and 2028, with future five yearly reviews, is an exercise that will save the country up to £100 billion in the coming decades. It is hard to see the downside of this change from an economic point of view and it brings the state retirement age into a more modern context when considered alongside increasing longevity. Again there are benefits for financial planners as these changes will force people to review existing financial plans and highlight a need to fund any gaps created if a set retirement age had been in mind.
“The Coalition Government’s measures to reduce the nation’s deficit have far reaching impacts for all members of the UK population. Retirement is an emotional issue for many, but opportunities exist for those who are engaging with financial advisers to plan for and mitigate these effects.”
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