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Steve Bee: Are advisers ready for the real baby boomers?

Contrary to popular belief, we have not yet seen the real wave of post-War babies reach their 60s – and millions have deferred DB pension wealth

Something significant is about to happen that will affect all those involved in the giving of advice in the UK from 2020 onwards.

In the five decades following the 1960s, this country went through a unique period in pension history, which saw many millions of employees accrue vast amounts of assets in defined benefit pension schemes.

That is something that will never happen again.

Indeed, we have since seen the somewhat inevitable shift to defined contribution schemes, at the same time as legislation has come about which severely limits the amounts both employers and employees can save into pension arrangements.

There has also been an unfortunate trend in employers drastically reducing their pension contributions on switching from DB to DC provision.

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However, those that have already accrued DB pension assets – assets that, for many ordinary people, may be their most significant financial asset, worth more than even the houses they have spent their lives purchasing – now have some big decisions to make thanks to the introduction of the pension freedoms.

Put simply, millions now find they have additional rights and options relating to these assets.

Something else is happening, too. In the years following the Second World War, there was an increase in the level of births – known widely as the baby boom.

But contrary to popular belief, the baby boom that occurred in the US between 1945 and 1960 was not replicated in the UK. Indeed, short of a slight increase in UK birth rates in 1946 and 1947, there was actually not much unusual about them in the late 1940s or the 1950s.

That is not to say we did not experience our own post-war baby boom – we did. But it did not happen until the 1960s. And when will those baby boomers reach their 60s? In the 2020s, of course.

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With such a large number of people reaching their 60s at the same time as millions of them with deferred DB pension wealth are granted more options with regard to it, there is going to be one big increase in the demand for complex advice.

Advisers will not be able to offer holistic advice without taking account of the various new options they now have regarding what, for many, will be a significant lifetime asset.

This is something that needs to be taken more seriously by both our industry and by those in government before the real baby boomer wave hits in the next few years.

Steve Bee is director at Jargonfree Benefits


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. The above article has completely missed the Baby Boomer point, The USA had one due to thousands of returning men from War, and after having been on the front line for so long spread happiness to all!!! however, as the Last Great war had finished, of those who returned, many did not, there were far to many ladies so a lot emigrated to the US and Canada, those who remained had children at the same arte as before, what has happened is that we have not been “Sent Off” to war by those who felt we should be seen as “Volunteer’s”, “Your County Needs You” comes to mind!!, so with the reduction in War Dead far more of us have been allowed to live our normal length of life, ie seventy to eighty years of age, its got nothing about living longer, its just “more” of us have not suffered death in war

  2. There is a very good chart on the Office of National Statistics site that shows the number of live births in England and Wales. This peaked at 881,026 in 1947. They will now be 71. Births then declined to 667,811 in 1955. They will now be 63. The numbers then rose to reach a peak of 875,972 in 1964, just short of the 1947 peak. It then declined steadily until 1977 with recorded birth of 569,259.

    The 1964 cohort would have come to working age in the early to mid 80’s when the concept of “jobs for life” was disappearing. I’m not therefore sure if they will the same pension asset as the immediate post war cohort. Plus they would have entered employment when employers could not make membership of the pension scheme a condition of employment. I wonder how many chose not to join?

  3. The issue is not are advisers ready, but will regulation be up to speed and the PI insurers willing to cover the unknown.

    We are already seeing the vast majority of Pension Specialists pulling their advice, many cannot get insurance as the insurers run for cover. Most just do not want to be caught in the cross fire. The MP’s and regulator are playing the same old games, making sure the finger always points away from them and to advisers and other parties.

    When will we as a profession come together and state enough is enough. We cannot work and advise with no clear rules. Guidance is the regulators get out of jail card and it is working so well for them.

    This is to me is what regulation looks and sounds like.

    “I know you believe you understand what you think I said, BUT, I’m not sure you release that what you heard is NOT what I meant”.

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