Julian Knight: Now what we need is a rapid move to a citizen's pension
The nettle has been grasped and we're on the way to a fairer state pension system, but let's get there quickly
Sunday 16 October 2011
The Government has done just enough on the age at which women collect their state pension to head off a possible defeat of the Pension Bill.
The changes are, on paper, relatively slight – the date at which the state pension age will rise from 65 to 66 will be pushed back six months to October 2020. This will mean, though, that a cohort of women born in the 1950s will not face a delay of more than 18 months in getting their pension. Some were going to have to wait two years.
All in all, this seems a sensible compromise. There is a real need to get on with the raising of the state pension age if we're going to move to a fairer system which reflects the fact that average life expectancy means you can spend almost as long receiving a state pension as contributing to it.
Raising the state pension age is fairer in another way too. At present, men die on average four years earlier than women, but have to wait five years longer for their state pension – that's nine years. Taken at face value this seems grossly discriminatory against men. Now, of course there are traditionally big differences in the financial position of men and women, which is probably reason enough for this long-standing difference in the state pension age.
But, with a reduction in the number of years to qualify for a state pension – now you only need 30 years' National Insurance contributions, whether you're a man or a woman – and the fact that more women than ever are in the labour market, this state pensions inequality is being addressed rapidly.
Despite the calls from some unions to leave things as they are, it's good to see that the Government is grabbing this particular nettle and getting on with reform. Let's hope we can also see a rapid move to a citizen's pension – which will involve the scrapping of means-tested benefit in favour of a higher basic state pension – and moves on making private pensions much more flexible and attractive to the person in the street.
Fine wines are slipping down
The choice of assets to invest in for above-inflation growth is narrowing all the time. On Friday, it was revealed by Bordeaux Index that the price of fine wine had actually slipped 7.5 per cent in the last quarter, dramatically reversing the trend of the past year or so, which saw investment in wine one of the few stellar performers.
Bordeaux Index put the fall down to buyers choosing to move away from the most tradeable first growths – Lafite, Latour, Margaux, Château Haute-Brion and Mouton Rothschild – to the slightly lower-prestige and hence cheaper vineyards. Reading between the lines, what seems to have happened is that some of the great vineyards, seeing the huge interest from wealthy Chinese buyers, have been ramping up prices and restricting supply. As a result, they have prompted their investors to turn elsewhere. Killing the goose that lays the golden egg springs to mind.
Driving the young off the road
Confused.com says that car insurance quotes in my part of London have risen 13.1 per cent on average over the past year. But that's nothing compared with the pain felt by young drivers who see their premiums now at almost four times the cost of those of a driver of my age. No wonder the Commons Transport Select Committee was recently told that young drivers believe they are being priced off the road. If you're a parent you probably have to cover the costs of your kids' car cover yourself, or place them on your own policy as a named driver. But the technology is there to sort this problem out and deliver more realistic and, frankly, fairer quotes to young drivers – most of whom are responsible.
We have telemetrics to track a driver's speed and times, and help give the insurer as full a picture as possible of any accident risk. There is pay-as-you-go insurance – making it more expensive to go out after dark and on busy roads. And now mycamerawitness has been launched, helping to record a driver's habits, to be scrutinised in the event of an accident and helping cut down on bogus claims.
As I have said before, the insurance industry has to get smart over younger drivers to avoid marginalising a big chunk of the population, and encouraging insurance fraud.
How long for this spokesman?
Finally, after days of vacillation, Labour has unveiled its Pensions spokesman: Gregg McClymont. Gregg who? Well, he's a former political adviser to John Reid and part of the 2010 intake which included his predecessor, Rachel Reeves. He's getting on a bit – at all of 35 – and in the pensions field has an interesting voting record; going against the cross-party concensus on the auto enrolment of individuals into their workplace, or soon to be launched Nest, scheme. He obviously has his own thoughts on pensions and it will be interesting to hear him articulate them. The only question is, will we have the time? The average Labour pensions spokesperson lasts less than 15 months.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
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