State Pension age review

In March 2016, John Cridland CBE, the former Director General of the Confederation of British Industry (CBI) was appointed by the government to lead an independent review of the State Pension age.

The State Pension age for both men and women is set to increase to 67 by April 2028. The review was tasked with looking beyond the existing timetable. The results of the review have now been published in an 130 page report. The Pensions Act 2014 introduced a review of State Pension age to be conducted at least once every 6 years. This is the first of these reviews.

The report recommends a further increase in the State Pension age to 68 over a two year period starting in 2037 and ending in 2039. The report also recommends that the State Pension age should not increase more than one year in any ten year period, assuming that there are no exceptional changes to the data.

The report cited some interesting background information to the need for these increases based on longer life expectancy and an aging population. We are told that‘…. in 1917 King George V sent the first telegrams to those celebrating their 100th birthday. 24 were sent that year. In 2016 around 6,000 people will have received a card from Her Majesty the Queen. In 2050, we expect over 56,000 people to reach this milestone’. A baby girl born this year could be expected to live to be 94 years and a boy to be 91.

Other recommendations put forward in the report included:

  • Introducing more flexibility within a universal State Pension age
  • Removing the pension triple lock guarantees
  • Supporting those working past State Pension age
  • Contribution of older workers as trainers
  • Automatic Enrolment Review focused on the self-employed

In March of this year, John Cridland CBE, the former Director General of the Confederation of British Industry (CBI) was appointed by the government to lead an independent review of the state pension age.

The state pension age for both men and women is set to increase to 67 by April 2028. The review is looking beyond the existing timetable to April 2028. The results of the review are expected to be published in May 2017 after the government has considered the recommendations. The Pensions Act 2014 introduced a review of State Pension age to be conducted at least once every 6 years. This is the first of these reviews.

An interim report has now been published. In the interim report, Mr Cridland considers different options for what retirement might look like beyond 2028, taking into account changes in life expectancy and wider changes in society.

In particular, the report looks at the following three areas:

  • Affordability: Examining the ratio of pensioners to working age people and spending on pensions as a proportion of GDP.
  • Fairness: Looking at whether outcomes are fair between and within different generations of pensioners, for instance men in routine jobs have 6 years difference in life expectancy at birth to men in professional jobs.
  • Fuller Working Lives: Looking at why people drop out of the labour market early and how government and industry might mitigate this. The report cites the fact that 1.2 million people work over the age of 65 but a significant proportion of people also drop out of the labour market early due to ill health and other factors.

Commenting on the report, Mr Cridland said:

‘The review continues to gather evidence to inform its recommendations and the views of the public will form a key part of that data. I want to encourage as many people as possible to respond to the consultation and really hope to stimulate wider discussion.’


Case Studies

The Tax Man

Minimise the stress of an investigation and make use of our extensive experience in securing best outcome for our clients

Business Valuation in Distress

Take advantage of our impartial and rigorous due diligence procedures

FD in The Cupboard

Our innovative ideas are here to improve your business performance and secure appropriate and cost effective funding

The Tax Man

The Tax Man

A new client was introduced to us via a recommendation with whom we arranged to meet on a regular basis in order to determine a number of changes that we felt were needed to their business structure. The client was at the time operating as a husband and wife partnership. The business was flourishing and had a number of large contracts with big organisations.

At the start of the process they were still heavily immersed in their day to day operations so we can get a full flavour for their ambitions, aspirations and growth plans. We quickly recognised there were sufficient tax savings which can be achieved by changing the structure from a partnership to a corporate entity. We carried out a business valuation and disposed of the goodwill from the old to the new business. Unfortunately, as often is the case with efficient tax planning, HMRC got involved and disputed our valuation.

An HMRC investigation can be a very stressful time for any client, even for those best prepared. However, our client had minimal input in the HMRC communication as we dealt with this professionally behind the scene. As an added benefit, our client could rest on the security that all work was covered by insurance and therefore all costs and time in dealing with this enquiry were covered by the fee protection policy we had put in place.

The initial approach taken by HMRC was very aggressive and they tried to present an argument that there was no goodwill in the business. We challenged HMRC’s view that the goodwill was worthless. After lengthy correspondence and numerous telephone calls, HMRC agreed 100% with our original valuation, which preserved our original tax saving plan for the client. Tax savings on this case where in the region of £75K at the outset, with ongoing savings of £6,000 per annum. We are pleased to add another happy client to our portfolio.

Business Valuation in Distress

Business Valuation in Distress

Selling a business is never an easy process, but when disputes arise, the need for a reliable third party due diligence process is even greater.

Tearle & Carver have extensive understanding of the requirements for remaining objective when managing a potentially difficult company buyout. In one such case, we were approached by the courts to act as independent accountant for an acrimonious business sale in which one partner was exiting the business and selling shares to the other. Given the circumstances, both sides had totally polar views of what their business was worth.

After arranging an initial meeting with the company, we were thorough in ensuring we completed due diligence, validating the figures in the accounting records, carrying out adjustments where appropriate, and drafting a set of reliable management figures within the framework required by the court.

A draft version of the report detailing our findings and conclusions was submitted to both parties, giving them the opportunity to voice any queries or concerns and ensure all relevant factors had been taken into account.

Through this process, we were able to submit a final report to the courts that was both binding and acceptable to both parties, effectively resolving what could otherwise have been a time consuming and costly process for all sides.

FD in The Cupboard

FD in The Cupboard

For smaller companies, it is often not possible or cost effective to pay for a full-time Financial Director.
Many of our clients therefore make use of Tearle & Carver’s extensive expertise to provide the services of an FD as and when required.

In this case, we were approached by the management team of an organisation looking to acquire the existing business via an MBO (Management buy out). Their business plan had proved ineffective for securing funding, and what they needed was financial expertise from someone with a developed understanding of the company’s internal workings.

Tearle & Carver helped deliver the solution our clients were looking through utilising our bank contacts in order to make the MBO viable, while also building a robust business plan and preparing our client for the rigorous vetting process. To help with cash flow issues, we introduced factoring which led to improved cash flow management.

We advised on the appropriate business valuation and structure, and continued to prepare monthly accounts to track profgress once the management were fully in command of all the information they needed to move their business forward.

In order to best assist these clients through the crucial first year of ownership, we attended board meetings on a regular basis, a service that we continue to provide to date.

With our continually developing understanding of their business, this client is able to remain confident that Tearle & Carver can provide any financial support they may need, now and in the future.