The deaths in the last few days of First World War veterans Henry Allingham and Harry Patch are extreme reminders that the uncertainties about retirement include its duration.
Allingham, born in 1896, retired in 1960. Harry Patch, born two years later, retired in 1963. It is pretty amazing, really, that either of them lived much beyond their teens. Allingham was at Great Yarmouth and experienced the first aerial raid on Britain when a Zeppelin bombed it by mistake. He was at the Battle of Jutland in 1916 and, as a founder member of the Royal Flying Corps, was on the Western Front. Patch fought at Passchendaele where mere survival was a feat. Both were already in their 40s by the start of the Second World War. Allingham saw W G Grace play cricket.
Retirement used to have a fairly fixed pattern. Men retired at 65, women at 60. Actuarial tables provided a reasonably good indicator of the interval between retirement and death, with women in general outliving men. Relative financial stability meant that pension predictions largely held good. The range of activities which pensioners engaged in was limited – the popular perception was that they dug their gardens, knitted clothes for their grand-children, played Bingo and sat on deck chairs at the seaside wrapped in blankets, drawing their pensions until, after a decent and reasonably predictable interval, death carried them off. It had the same degree of certainty, so it seemed, as Grace scoring runs or the Titanic reaching New York (which it failed to do in the year that Henry Allingham reached 16).
All these apparent certainties have gone. The years of prosperity saw people retiring in their 50s, confident that their pensions would see them through a retirement which, as medical science increased longevity, could be as long as their working lives had been. Recession has seen the reverse – people compelled to stay at work because their pensions are inadequate. Pension values have been slashed by a combination of market conditions, poor management, bad investment decisions and the deliberate acts of Gordon Brown who, as Chancellor of the Exchequer, promised to protect pensioners (a considerable voting force) whilst simultaneously raiding pension funds by the abolition of Advanced Corporation Tax relief in 1997. From 2010, the state pensionable age for women rises to 65, the same as that for men, in line with EU equality requirements.
Pensioners’ activities have moved well away from the former stereotypes. They go on activity holidays, use computers, work for charity, and take up a range of activities far removed from the garden and knitting. Politicians court the grey vote, businesses devote marketing resources to the silver pound and the Internet is awash with silver surfers. Sexual health clinics have a new generation of customers, with diseases once thought more appropriate to their grand-daughters.
Planning for a retirement of uncertain length, fluctuating income and so many more opportunities, is increasingly difficult, particularly when you factor in the overlapping (and potentially competing) objectives of funding long-term health care, supporting children and grandchildren and minimising the Inheritance Tax which will arise on death. Recent newspaper articles suggest that the government’s plans for pensions flexibility, which took effect on “A Day”, 6 April 2006, are being undermined by the stratagems of pensions providers who penalise those who seek to exercise their right to transfer their funds to other companies. Inheritance Tax became a pawn in the cynical games played by politicians when, in October 2007, the Shadow Chancellor proposed a hike in the IHT ceiling which was immediately countered by Labour with a smaller and (typically) more complex scheme more aimed at attracting headlines than actually benefiting significant numbers of people. The Conservatives have since sent out contradictory messages about their plans for IHT which leave us in doubt as to what, if any, policy they have for it.
Henry Allingham was 39 when Ambrose Appelbe founded the firm which bears his name in 1935. As well as our work in specialist areas such as divorce, tax and property, we have long experience of giving general financial advice, in particular to those in or facing retirement. Felix Appelbe, Helen Freely and Lucie Sleeman have passed the examination set by the national association Solicitors for the Elderly. We advise on wills, Lasting Powers of Attorney and other matters which, although relevant at any age, become more pressing as you get older. Feel free to contact any of the people named above on 020 7242 7000.
There are not many outright exemptions from Inheritance Tax but one arises where the deceased dies as a result of injuries received on active service. It seems unlikely that the severe injuries which Harry Patch received in the Great War played any part in his death over 90 years later. The estates of people wounded in more recent wars, however, may well be able to claim the benefit of the exemption if medical evidence shows that the injuries were the cause of death.
