Growing older should be a time for sitting back after a lifetime of work and enjoying the fruits of your labours, without having to worry about whether those fruits will ripen to their full glory or wither and die on the branch. However, the increase in life expectancy coupled with pension and investment problems has tended to result in some rather unfortunate changes.
Currently the official retirement age is 65, but many retire before this – leaving work at 60 is normal for many, and even earlier retirement than this is not uncommon. This means that many can look forward to 25 or 30 years of being worry free masters of their own destiny, especially if during their years of gainful employment they have made adequate provision for their old age, particularly in the form of life insurance or cover for critical illness.
Not all however are in that fortunate category, and the misery of a long period of trying to exist on the miniscule government pension with no relief in sight, is better imagined than experienced. However the avowed intention of raising the retirement age to 68, whilst unfortunately pushing the prospect of retirement into an indeterminate future, could provide an opportunity.
Why shouldn’t this extended period of earning be used to provide funds for protection in your eventual retirement? It sounds obvious doesn’t it? Until you take a look at the ‘small print’ and find that there is an item called the ‘Age 70 Rule’. This restriction makes it impossible to make straightforward contributions to life or protection policies if you have reached the age of 70; instead it becomes necessary to take out investments.
Is there a difference? A fair question! For some obscure reason the existing rules prevent many intermediaries from selling investment products, so they are unable to offer these or protection policies to clients who are over 69 years old. This can and does result in many of the older generation simply not knowing of and therefore not buying such products.
A review is needed, not least in the light of the intended move in the retirement age and an increasingly elderly population. The Financial Services Authority is apparently intending to change the rules, although information is not yet available on what their intentions would be. They are reportedly considering two possibilities – increasing the age for the application of the ruling to 80, or completely removing any age limit.
On the basis that any change should be towards what would be a more accurate risk based option (rather than the ‘black and white’ age criteria), the Association of British Insurers is lobbying for the option of removing any age restriction. This they say would increase the options open to customers.
Bearing in mind the aforementioned increase in population age it would seem that pushing the restriction on a further ten years would merely push the associated problems further into the future without addressing the real problems. An additional factor is the length of mortgages being undertaken – not only has the usually accepted ‘maximum’ mortgage period of 25 years been swept aside, but also many mortgages are being taken out later in life. This financial commitment is an additional worry for the elderly who are likely to be struggling with payments and would have serious problems if anything should interfere with their income.
A rule change would surely hurt no one but would provide greater peace of mind for the older generation, and give them a more secure future.
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