Some years ago, the industry tried to explain to the Treasury how absurd the rules on Alternatively Secured Pensions (the ability to draw an income directly from the pension fund after age 75) were and that the government would secure a larger income by allowing "drawdown" (the unsecured pension option available prior to age 75) to be used long-term, without the restrictions they were just about to impose. Needless to say, we were ignored.

In some respects it is understandable that the government wants to keep drawdown in line with the personal pension regime which finishes at age 75 (except for those using ASP).

What is inconsistent with this ‘timescale for retirement’ is that the pension regulator is now reported as saying that state retirement age could rise even further than its current target of 68 by 2044 – which affects anyone under age 33 now.

Does this matter?
He is only talking about the state pension, not personal pensions. But if people cannot access what could represent a significant part of their retirement income until as late as age 70, this will make planning more complicated. In addition, the fact that 70 is only five years before the personal pension regime effectively gives way to the need for annuity purchase means that the entire pension regime makes less sense.

In fact, we are reaching the stage where we should be lobbying the government to extend the entire pension regime to at least 85, allowing people to:

• Continue making contributions;
• Continue drawing benefits directly from the fund, including tax free cash; and
• Defer annuity purchase or ASP until then.

This would more than repair the ‘squeezing’ effect of the increased age at which benefits can be taken, as well as recognise that many people will end up working longer than they may originally have intended, simply because we can no longer afford to pay the state pension at 60 for women and 65 for men.

What can we do?
The vast majority of people would probably prefer to retire earlier, rather than later; it is only financial imperatives that makes working longer a necessity. This means that planning to make good any shortfall is essential.

What about pensions for women?
A related issue, which may have received less attention than it merits, is that women reaching 60 within the next decade will receive their state pension later than planned. Yet recent data from Scottish Widows (quoted in the Times 30th June) suggests that just 47% of women are actively planning for retirement. In fact, the number of women aged 50 and over who said they are not saving at all for retirement has increased from 14% to 22% since last year.

The old concept that women could rely on a husband’s pension is not only out of date socially, but also represents a high-risk strategy, given the proportion of marriages that end in divorce (pension splitting notwithstanding).

This means that there is a massive need for women to consider their pension plans now.

As ever, when it comes to looking after our retirement planning and investments, vigilance and professional advice are essential. If you are wondering what to do contact Robert Bruce Associates for individual assistance.

NOTHING IN THIS ARTICLE SHOULD BE TAKEN AS GIVING INDIVIDUAL FINANCIAL ADVICE.