In truth, no-one picking up a newspaper over the past couple of months could have been in any doubt that a general election was imminent. And now we have the date confirmed.
The signs have been increasingly obvious. Political parties of every hew were keeping themselves busy, priming favoured journalists and commentators, ensuring they received embargoed press releases outlining myriad policies and helpful explanations outlining why they're so pivotal to their respective party's election success. Now, we've well and truly entered a period of PR platitudes, many of which will be translated into newspaper articles and columns for the delectation of readers, both left- and right-leaning.
Of course, many politicians prefer to appear on television, or online, to provide details of how they and their newly elected colleagues will expedite policy x or y, though they rarely supply details of the costs involved.
If we're being generous, we must cast aside the perennial advice to “never trust a politician's promises,” ostensibly because it's not as though our elected politicians are inherently untrustworthy (remember, we're being generous). Rather, they have a tendency to make well-meaning commitments without knowing just how they can deliver them when in power.
There are numerous examples of contentious legislation which so enrages political opponents that they pledge to repeal or scrap it altogether if elected.
Take the annual pension allowance, the amount that can be added to a private pension each year and still qualify for tax relief. Chancellor Jeremy Hunt raised this last year from £40,000 to £60,000 while scrapping the lifetime allowance of £1,073,100. Granted, this does not affect millions of people, but the Labour Party voted against the tax relief proposals (since implemented) and said it would reinstate the lifetime allowance.
This is not to make a political point: rather, it offers us a glimpse of 'reaction politics', a scenario when legislation, in this case financial, is automatically opposed without a second thought. For many of us, the immediate, reactionary nature of our politics can make financial planning particularly difficult: taking decisions based upon uncertain policies made by an as yet unelected government is less than ideal.
Political PR companies will often employ a subtler, less immediate approach, floating an idea to voters via various media outlets to see if it 'gains traction' among voters.
At the beginning of the year, for instance, an online discussion regarding pension liabilities raised the possibility of giving people 'early access' to their pensions, noting that this is more common in countries where state pensions are higher than in the UK. Higher state retirement payouts ensure that people can often afford to accept a lower pension several years before they reach an 'official' retirement age as there is less risk of income poverty in later life.
Could such arrangements work closer to home? In some cases, I believe the answer is yes.
There's little doubt that the UK's state pension age will continue to rise from the current level of 66; it is scheduled to go up to 67 four years from now and to 68 by 2046. Both dates could be brought forward so that by 2050 the official retirement age could easily be 70 or 71. Given such a scenario, some economists believe people should be given the option to claim a reduced state pension at an earlier age.
Allowing early access would mean that those approaching retirement would be faced with a potentially complex financial calculation; getting their sums wrong could result in a significant monetary shortfall as claimants would have to lock into a lower income for life.
Yet as people are living longer and the annual cost of the state pension continues to soar (to an estimated £153 billion by 2028), there is merit in allowing people to claim their state pensions earlier, not least because those eye-watering projected costs are falling on younger workers. Accordingly, the argument goes, the government should offer people more choice over when they can start claiming: is three years before, at a reduced rate, too early? Could we have some form of sliding scale starting at, say, age 60 when the size of the reduced state pension on offer would be 15% lower?
Legislation which gave people access to a reduced state pension at an earlier age would undoubtedly be popular, but even the maximum UK pension could hardly be called generous. Reducing the pension to allow early retirement could lead to some people struggling, financially-speaking, when they're in their seventies or eighties, a less than satisfactory outcome.
Fortunately, for a sizeable number of older homeowners careering towards retirement and what they hope will be an easier, stress-free life, a solution could be staring them in the face.
Over the last two decades, equity release has developed into a mainstream financial product which enables homeowners aged 55 and above to access a proportion of their property wealth, tax-free. The most popular means of achieving this is to obtain a lifetime mortgage.
A lifetime mortgage enables homeowners to effectively borrow against the value of their property. However, it differs from what might be called a standard mortgage as all monthly repayments are optional. Homeowners may choose to pay a proportion of the interest charged, or pay down a percentage of the capital borrowed; alternatively, they may prefer to pay nothing at all. The full amount, including accrued interest, is only repaid when the last borrower either dies or goes into long-term residential care; this is usually achieved by the sale of the home.
Moreover, if the homeowner selects a lifetime mortgage from a lender that is a member of the industry's governing body, the Equity Release Council, they are given a certain amount of protection. The one offering the greatest peace of mind is the 'no negative equity guarantee'. This means whatever amount is taken via a lifetime mortgage, the homeowner and their ultimate beneficiaries are guaranteed never to owe more than their home's value.
As the official retirement age continues to rise and the prospect of the government granting people early access to their state pension draws near (look out for this nugget when the party manifestos are published), those planning to bid farewell to the daily grind of 9-5 must get their arithmetic right. No-one wants to find themselves short of income as they approach later life, but equity release could bridge a possible shortfall by bolstering homeowners' finances, so enabling them to clock off from work much sooner than they had formerly dreamt.
