Golden days are drifting further into the future

Latest department for work and pensions figures suggest that by the mid-2030s the retirement age could be 68, and by the 2060s may reach 70, thanks to increasing lifespans.

So we will be back to where we started. The Old Age Pensions Act of 1908 provided a pension of five shillings a week (25p, or about £27 in today’s values) for those over 70 whose annual means did not exceed £31.50 (about £3,390 today).

Since then state pensions have been chopped and changed as politicians have juggled to make the best of a model that has always had flaws and has proved nightmarishly expensive.

The new flat rate pension will address many of the criticisms. But what should we make of the rising retirement age?

For many, retirement age is a matter of choice. I suspect that applies to you and most of your clients, for whom the state pension will be a nice but inessential top-up to private savings.

Some will stop work earlier because of ill health.

Those who rely on the state pension and are forced to work to retirement age are probably those in the lowest-paid jobs. Statistics suggest they will probably live shorter lives than their better-off counterparts, and be less able to enjoy the state pension.

Analysis by the Equality Trust published last year suggests there was an 18-year life expectancy gap between those living in Richmond in South West London and those living in Tower Hamlets, East London.

After enforced retirement was outlawed, the employment levels for the 65-plus age group rose from 874,000 to 1.1m between 2011 and 2014. What we do not know is whether these people are working through love of their job, to earn a bit of ‘pin money’ or because they need to work to pay the bills.

What these rising state pension age figures should do, though, is to focus minds among those in their 20s and 30s.

Rising state pension age figures should focus minds among those in their 20s and 30s

For years the ages of 60 and 65 were set in stone. Now the state pension seems more of an ephemeral prospect.

Reaction to that should be for young future pensioners to start building more realistic pension prospects of their own. But whether this happens remains to be seen.

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Buy-to-let perks must go

The need to tackle the imbalance in the low-end housing market becomes more pressing with each new set of figures.

While growth in the buy-to-let sector continues, first-time buyer activity is declining year-on-year, according to the Council of Mortgage Lenders.

First-time buyers accounted for £3.3bn of loans in April – an 8 per cent decline on a year ago.

Buy-to-let loans for house purchase are up 22 per cent year-on-year to £1.1bn, while buy-to-let remortgaging increased by a staggering 40 per cent to £1.4bn.

My criticisms of the tax relief on interest for buy-to-let mortgages has provoked some response from those arguing that this is a legitimate business relief.

In most cases it is nothing of the sort. It is an investment not a business. There is no trade going on here except with a single tenant.

There is little risk under current circumstances.

It is used by many as an alternative to a pension, which makes it all the more worrying that the lifetime allowance is to be reduced to £1m, leaving more potential pension money looking for an alternative home.

The other worrying aspect is that once a home is bought as a rental property it can be removed from the housing market for a long time, reducing turnover in the first-time buyer bracket.

Incentives were all very well when buy-to-let was a fledgling market with uncertain risks. But tax relief on mortgage interest can no longer be justified.

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Pension transfers take too long

How can it take 93 days to transfer a pension? That is the worst transfer time experienced by Nutmeg in the past three months.

The dubious honour goes to UBS. But Lloyds, HSBC, Virgin Money and Zurich Assurance all managed to clock up 50 days or more.

All right, something may go wrong with paperwork, but these figures – albeit from one provider – do point to something being shockingly wrong with the administration at times.

Given that some investors are now being forced to transfer their money in order to enjoy the new pension freedoms, perhaps it is time for transfer times to be published throughout the industry.

Tony Hazell writes for the Daily Mail’s Money Mail section. He can be contacted at t.hazell@gmail.com