The EHRC asks the government to reassess the default retirement age.

by Michael Ormond on February 3, 2010

The EHRC (Equality and Human Rights Commission), has declared that it is time for the government to scrap the default retirement age. They also stated that the government should extend the right to request flexible working to all employees, and consider introducing incentives for flexible employers, especially those over 50.

There is no fixed retirement age for people in the UK, but the law allows firms to force staff to finish work at 65. The government is already taking steps in order to change this rule, which will benefit thousands of workers that wish to keep active past 65, whether because they like their jobs, or simply because they cannot afford to stop working.

While there are other short-term options to access cash such as pension release, keeping on working past the retirement age, is a much more effective solution in the long run, and will also contribute towards a bigger pension when retirement takes place.

Indeed, according to a survey, around 60% said they wanted to continue working but on a part-time basis, while 40% said they would like to stay in their current jobs but with greater flexibility in hours worked.

In case this change takes place, the economy would be the most benefited from it. A research carried by the National Institute of Economic and Social Research suggests that extending working lives by 18 months would earn Britain £15bn.

Those working past State Pension age can choose whether or not to claim their State Pension at the same time as they are working. Also they don’t pay National Insurance, and if they work past 65, the Government takes less from their pay packet in tax.

Regarding this matter, the Commission’s deputy chair, Baroness Margaret Prosser, said: “It is time to move away from systems put in place when people died not long after reaching state pension age.

“Britain has experienced a skills exodus during the recession, and as the economy recovers we face a very real threat of not having enough workers – a problem that is further exacerbated by the skills lost by many older workers being forced to retire at 65,”

“Keeping older Britons healthy and in the workforce also benefits the economy more broadly by decreasing welfare costs and increasing the spending power of older Britons.

“Our research shows that to provide real opportunity to older workers, abolishing the default retirement age needs to be accompanied by a concerted drive by government, employers and agencies to meet the health, caring and work needs of the over-50s to enable them to remain in the workplace. Greater flexibility can help to deliver this.” she said.

Michael Ormond is a Financial Advisor specialising in Pension Release services.

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MPs and charities back campaign to give tax breaks to pensioners.

by Michael Ormond on

The campaign, launched by The Daily Telegraph, calls for a suspension of tax paid by pensioners on savings and dividends to help them through the crisis, and it is backed by a coalition of MPs and charities.

This tax break proposal, urges the Government to take measures to stop the over-65s from being crippled by taxes on the savings and share investments they have built up to see them through retirement.

The dramatic fall in savings income has come at a time when basic needs such as food, water or heating have become more expensive. This has hit elderly people especially hard, because most of their income is spent on these basic costs.

Gordon Lishman, Director General of Age Concern, said: “Many older people who rely on the interest from limited savings to top up their income are being hard hit by the double whammy of interest rate cuts and higher basic food and energy bills.

“This could have a big impact on the ability of those living on modest means to make ends meet.”

What many feel is that people should not be taxed repeatedly. They are taxed when they work, taxed when they save and then taxed again on the savings.”

While there are other options to access extra money such as pension release, remortgaging, or asking for a loan, the fact is that a tax cut on savings income and a tax cut on dividends would make an enormous difference for all those approaching the retirement age and those that have retired already.

The Government itself calculates that more than around 9 million pensioners rely on some form of investment income to supplement their basic state pension with an average income of £51 a week – a sum that elderly people use to boost their basic state pension of just £90.70 a week.

“This is now an urgent problem. There has been this rush to get interest rates down and people are now talking about zero per cent, but that is going to cripple millions of people that have saved.

“We need to remember that saving is vitally important to the economy. We could be heading for the nightmare situation where the interest rate cuts don’t get us out of recession but not helping savers makes the problems even worse.” campaigning Labour MP Frank Field declared.

John Redwood, the former Tory Cabinet minister, added: “This campaign is needed and deserves to succeed. To get out of the mess of over borrowing we need more savers.

“The interest rate cut will, in due course, help the borrowers but hit savers hard. It is high time the Government balanced it up.”

Michael Ormond is a Financial Advisor specialising in Pension Release services.

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