Allowances and the government
There were state allowances of sorts since 1906, although the intention has traditionally been to provide a basic revenue to allow an individual to survive instead of to lead the life to which they would aspire.
State allowances operate on a 'pay as you go ' basis, implying that today's taxpayers effectively pay the allowances of today's pensioners; there are no real investment funds be set aside to providesupply the benefits.
This implies there is always pressure on administration spending on allowances, which must be balanced against other wishes. That issue has been amplified by augmenting survival expectation.
When state annuities were first introduced, the average man would be considered comparatively fortunate to live long enough to draw his annuity; if he did survive to pensionable age, he could expect to draw it for perhaps one or two years. Today's pensioners enjoy a far longer, more healthy and more aspirational retirement, on average drawing their allowance for above 20 to 25 years. In regards to providing state allowances, the government is answerable for establishing annuity legislation, which includes setting out the kinds of pension available, the tax treatment of allowances and, more recently, the advent of auto enrolment into workplace allowances.
The state minimum pension age has increased for most of the public especially if they are younger, i.e. Under 40 years in age. ?Individuals that forecast to step down at 65, might be in for a shock when they finally find out that the standard state allowance age has increased to 68 in some circumstances.
Females have been most affected by this, as historically, their allowance age was 60.
If you have any questions regarding pensions or financial advice, it is always recommended to seek expert fianancial advice from a financial adviser, who can put you on the right path for your financial future.
About the Author:
Early Pension and Early Retirement are key issues looked at by My UK Pension Plan, an online service which connects individuals with Financial Advisers
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