Retirement round-up for May 2016

Bringing together topical stories in the news


Happy 90th birthday, your majesty

Unless you’ve been enjoying a short break on Mars, you’re unlikely to have missed the fact that the Queen celebrated her 90th birthday on 21 April. While reaching 90 is certainly something to be celebrated, the Office of National Statistics have reminded us that Her Majesty is part of a growing cohort of people aged 90 and over in the UK.

In 1984 there were 187,000 people aged 90 and over living in the UK. This population has since tripled to over 550,000 in 2014. Happily, this is a much more frequently celebrated milestone than it used to be.

It’s worth reflecting on another royal reminder of our increasing life expectancy. In 1917, King George V began the tradition of sending a congratulatory telegram to people reaching their 100th birthday. In that year he sent 24 telegrams. In comparison, last year the Queen is estimated to have sent over 10,000. 

You can use Aviva’s free online tool to help you estimate your own life expectancy. It doesn’t come with any kind of guarantee, of course, but the tool is a useful way to start thinking about how many years you might spend in retirement. It could be longer than you thought! 

Finally, a very happy birthday to you too, if you’re celebrating this month.

 

Rising interest rates – forgotten, but not gone

The Bank of England base rate has now been held at 0.5% for over 80 months in a row. That’s right… eight zero!

The last time we saw a shift in this rate was March 2009, when it was cut from 1% to today’s level of 0.5%.

Many of us can recall a time when mortgage holders would wait nervously for the Bank’s monthly decision. This now feels like a distant memory. But it’s important to bear in mind that  at some time interest rates will rise again – although right now it’s all too easy for homeowners to forget how much impact this could have on their finances. 

Be prepared

This is perhaps most important for the many thousands of first-time-buyers that have entered the property market since March 2009. For them, base rate movements are an unknown experience. This is over a period when the average price of a first-time-buyer’s property has risen from £166,000 in 2009 to £204,000 in 2015. 

Being prepared for any future rise in rates is good planning for all mortgage holders. Aviva’s free online budget planner allows you to manage your monthly budget, including any mortgage payments. You can use this tool to understand the impact that rising mortgage rates could have on your monthly spending plans. It’s worth taking a look at the Budget planner for yourself. 

 

More than 200,000 enjoy a taste of freedom

New figures have been published showing how the new pension freedoms are settling. As a reminder, since April 2015 pension savers have been given much greater freedom in what they can do with their pension savings from the age of 55 onwards.

Her Majesty’s Revenue and Customs (HMRC) have reported that 232,000 savers aged 55 or over took flexible payments from their pensions during the past year. This equates to a daily average of 636 recipients. There was a spike of activity when the new freedoms were introduced: within the first three month 84,000 savers took a flexible payment. In the first three months of 2016, this had reduced to 74,000. 

Two million people get Pension Wise

To help savers make the most of these new freedoms, a new government service called Pension Wise was launched. This service offers free information about the new flexibilities. 

Over the past year, the online Pension Wise service has been accessed two million times; it has hosted 36,000 face-to-face guidance sessions; and it has provided telephone guidance 18,000 times. You can visit the Pension Wise website to find out more about this free service. 

You can also watch a short Aviva video about the new pension freedoms. 

 

Who is the typical ISA shopper?

Phrases such as ‘festive season’ and even ‘silly season’ are pretty widely understood, but have you ever heard of ‘ISA season’? 

In financial circles, the months of January to April are often referred to in this way. ISA season is the time during the run up to the end of the tax year when we see a rush of people investing in individual savings accounts. 

Recent government figures show the continued popularity of these saving options. In the year 2014/15, nearly 13 million ISAs were opened and a massive £78bn was invested. 

The figures also allow us to identify the typical ISA buyer. According to Aviva’s analysis, the typical buyer is a 49-year-old woman, living in London, on an annual income of £28,000. Think Sharon from EastEnders, perhaps – though we’re only too well aware that there aren’t 13 million Sharons out there!  

If you’d like some general information about ISAs and how you can use them to put money aside tax-efficiently, watch Aviva’s short video

 

Do you speak pension?

Pensions can seem like a foreign language. Terms like ‘decumulation’, ‘flexi-access drawdown’, ‘annuity’ and ‘benefit crystallisation’ can be alien to many, if not most. This is far from helpful at a time when savers are being encouraged to take advantage of new freedoms at retirement.

The pensions industry recognises this, so a plan has been launched to encourage the use of less jargon and plainer English. Led by the Association of British Insurers, the plan is available for everyone to view and comment upon.  Take a look at the plan for yourself and find contact details for your feedback. 

You can also view Aviva’s range of videos to help demystify pensions and retirement. 

 

 

AR01685  05/2016

 

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