Posts by Valerie

Valerie Hartley

For want of a better description, a conflict of interest could best be described as a situation occurring when an individual or organisation is involved in multiple interests, one of which could possibly corrupt the motivation.  Okay….

More generally, a conflict of interest may be defined as any situation in which an individual or organisation, private or governmental, is in a position to exploit a professional or official capacity in some way for their personal or corporate benefit.  Okay…….again………

As a standing agenda item which should always feature early in the governance section of the trustee meeting agenda, conflicts of interest is in itself a minefield.  There are varying types of conflicts of interest with a list that could easily become endless, yet not solely limited to the world of occupational pension schemes. Read more »

Valerie Hartley

Disclosure Regulations

In the early part of 2013, the DWP consulted on proposals to consolidate and simplify the existing Disclosure Regulations which will come into force on 6 April 2014.

The Disclosure Regulations specify information that must be provided by pension schemes, to whom it must be provided, and ultimately ensuring members and others are given a consistent level of information. This also extends to schemes having the certainty of knowing what information they should provide and when to provide this.

The Disclosure regulations have been in force since 1987, and have been amended regularly since inception. There are indeed separate regulations for occupational schemes, personal pension schemes and stakeholder schemes. The intention is that the new regulations will replace and consolidate the existing regulations that apply to occupational and personal pension schemes.  For stakeholder schemes, these will remain within the stakeholder schemes regulations, but will be amended to be the same as that of occupational and personal pension schemes. Read more »

Valerie Hartley

Shopping for an Annuity

Buying a pension annuity is an important one-off decision. It is therefore crucial that people take advantage of extra income if available to them when converting their pension fund savings into an income for life. The only way for annuity purchasers to ensure they are not missing out on extra income is by shopping around to compare annuity rates and income offers. Read more »

Valerie Hartley

When you wake up on Christmas morning, the last thing you would ever expect to be gift wrapped under the Christmas tree would be a pension.  Having said that, if over the coming years you didn’t fund towards a pension, then Christmases after retirement might be pretty much a non-event in terms of what lies beneath the tree not to mention the size of your turkey.

I guess the pension stigma still remains, in so much that funding for your retirement is way down the list of priorities.  Many have yet to give any consideration to a pension, not to mention the on-going bad press surrounding the word ‘pension’.  Read more »

Valerie Hartley

The hallmark of good pension scheme governance is a pension fund whose affairs are managed robustly, seamlessly and effectively, with appropriate controls, free of abuse and with due regard for the law.

Just as medical check-ups make sense for the human body, occupational pension schemes, both Defined Benefit (DB) and Defined Contribution (DC) also need regular Read more »

Valerie Hartley

Recently I read with some interest figures showing that different generations of women are witnessing an altering pension’s landscape, with many of today’s young adults not saving enough for their retirement. Tell us something we don’t know!  As most of us do know, the earlier they start, the better off they could be. However, by turning their backs on saving for a pension young people are increasing their chances of facing poverty in old age.Official figures also show that the number of women aged 22 to 29 in the UK who are signing up for a workplace pension has fallen for four years in a row, marking the most rapid decline of any age group.

It is apparent that people are often waiting for decades after starting work before they consider how to pay for retirement. It has since emerged that experts are now warning that a new scheme to ensure employees get into the savings habit will be insufficient and offer workers a false sense of security.

Latest figures from the Office for National Statistics show that currently more than half of the UK’s single pensioners have a pension income of less than £10,000 per annum, and the UK has an ageing population. By 2034, 23% of the population is projected to be aged 65 and over, up from 15% in 1984. An estimated eight million workers have no pension provision and face having to rely on the state pension and benefits to pay for 20 years or so of retirement.

The Survey shows that less than 40% of men and women aged 22 to 29 contributing to a scheme offered by their employer.  These workers are missing out on a pension provision that is generally the most generous of pension policies, compared to a personal pension plan where there is often no employer contribution.

For today’s 20-somethings, pensions have fallen down the priority list as they face up to more pressing financial concerns. In the past the pension system assumed that women did not need a pension, they needed a husband!!  One woman in particular was quoted in the Press as saying, ‘I am struggling to pay off my debt and so at the moment every penny of my monthly salary is needed for rent, living and debt.  After my debts are cleared I think the focus at my age is to start saving to invest in property. This seems more relevant and urgent than a pension at this point in my life.

Is it the case that the only people in their 20s who think about pensions are those who sell them?  Pensions Minister Steve Webb expressed his concern that complications, as well as poor awareness of the pension system, has turned many young people away from thinking about how they will fund for old age. Most young people starting in a job do not get around to thinking about pensions for years because when young you think you will live forever and a pension is something for your granny. Other people assume that their home will be their pension.

No-one is expecting 20-somethings to become pension geeks, but what we do want is to demystify it, make it simple and ask the question, what sort of standard of living do you want when you are old?.  A new system that will automatically enrol people into a workplace pension scheme will get young people into a savings habit and it will also tackle the dividing line between pension provisions depending on people’s choice of career. At present, workplace pension scheme take-up is more than 90% in public sector jobs such as public administration, defence and social security, compared with just 6% in shorter-term accommodation and catering work.

Some people argue that an entire change of culture is needed to make pensions affordable.  We are all expected to live longer, not such a great prospect if we are all going to be poorer. It doesn’t need to be that way but people do need to rethink the way they approach later life. Perhaps this could mean working part-time during pension years? Who knows, but one thing for sure is that without adequate savings many people may no longer have the choice other than to stay at work.

Valerie Hartley

I recently came across some bizarre yet interesting reading from a study carried out at end of last year which looked at geographical differences in mortality. The study looked at how mortality varied by postcode.

The study highlights the worst, or “shortest lived”, towns, and the best or “longest lived” towns. The differences are such that some of the shortest lived towns should probably carry a Government health warning!

The study, carried out by Towers Watson ranked localities across the UK. A score of ten, the UK average, means that actuaries expect ten in every thousand males aged 65 to die in the next 12 months. The higher the score, the more deaths expected. The study showed that the ten ‘shortest-lived’ towns are as follows:-

Town Mortality Rating
Kilbirnie, Ayrshire 15.4
Bootle, Merseyside 15.3
Lochgelly, Fife 15.3
Kyle, Ross-shire 15.1
Queenborough, Kent 15.1
Arisaig, Inverness-shire 14.8
Castlederg, Co Tyrone 14.8
Cumnock, Ayrshire 14.8
Mayport, Cumbria 14.8
Sanquar, Dumfriesshire 14.8

Kilbirnie, the least healthy place in the UK to live, has a mortality rating of 15.4%. Its population of approximately 8,000 people are served by no fewer than 3 firms of Funeral Directors!! This means that there are more firms of Funeral Directors than Banks or Grocery Stores in the town. Sorry to break this news to you, Kilbirnie residents!

What this means is that a 65 year old Kilbirnie male will live on average a further 17 years – 3 years fewer than the national average and 8 years fewer than people in postcode areas identified as the longest-lived postcodes; or to put it another way a male aged 65 living in Kilbirnie is more than twice as likely to die within the next 12 months than a person living in one of the healthier towns. Grim?

At the other end of the spectrum, the ten ‘longest-lived’ towns are as follows:-

Town Mortality Rating
Montacute, Somerset 6.4
Brockenhurst, Hampshire 6.7
Aldeburgh, Suffolk 6.8
Church Stretton, Shropshire 6.8
Colyton, Devon 6.9
Lyme Regis, Dorset 6.9
Lymington, Hampshire 6.9
Budleigh Salterton, Devon 7
Hinton St George, Somerset 7
Verwood, Dorset 7

If you take Montactute as an example, a male aged 65 can expect to live 25 more years! As unbelievable as it may seem, residents have been known to live in the town to a grand old age of 106! Whether this is a good thing or not, is a question for the residents of Montacute.

Obviously Kilbirnie, the place itself, is not the cause of these excess deaths. It’s clear that there are other factors which such as the populations general health & wellbeing, lifestyle, diet, perhaps education, occupation (stress) and wealth/poverty but to name a few.

Equally, there is nothing magical about a certain postcode that ensures longer life. However, the Mortality Map, does show a clear North-South split with people in Scotland and the industrial North East and North West of England tending to be shorter-lived, whereas people in East Anglia, the South East and South West, with exception of Cornwall, generally living longer.

Research suggests that mortality is linked to socio-economic factors rather than geography – the old industrial heartlands having a higher proportion of the population in “lower” socio-economic groups.

However the significance to individuals is that many pension providers, notably L&G, Aviva and Prudential, take into account postcode location when pricing annuities.

Therefore if you are a resident of Montacute looking to purchase an annuity you are going to get a much poorer deal than the average because of your postcode. Perhaps it’s time to check out a move to Kilbirnie in search of a better annuity rate!

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