A very strange place

We don’t want to turn OSCARUK into a travel advice centre, but after the comments on how well older people are treated in the USA – which was part of the inspiration for starting this website in the UK – the latest trip was rather an opposite experience.

Work took me to Dubai. I have a list of countries in my head which I would only visit if someone else was paying, and Dubai was pretty close to the top. Higher up the list would be countries posing a real physical risk, or those with a cuisine based on unusual approaches to cabbage. Dubai is utterly safe, in that there is very little crime in the formal sense, and you just need to take as few taxi trips as possible to avoid the obvious physical risks. Dubai likes having the biggest of anything, so buildings, shopping malls, fountains, even the proposed airport, have to be the world’s biggest. My first taxi driver, weaving along inches away from the variety of huge 4X4s which populate the roads, told me with pride that Dubai had had the world’s biggest car crash – 250 cars on the road to Abu Dhabi, around 50 deaths and hundreds of injuries. Another taxi driver told me that it was 350 cars with 70 deaths. Who’s counting?

Travel apparently becomes even more alarming during Ramadan, this year held during the summer months. After a long day of fasting – non-Muslims are allowed to eat during the day, but not in public, so no picnics – there apparently is a mad scramble of drivers with zero blood sugar trying to get to the special tents set up to provide the after-sunset meals. They eat until 3.30 in the morning, at which time prayers and then fasting take over. I was told that everyone puts on weight during the fast.

Part of the risk during this traffic period derives from an astounding statistic; in Europe, the average age of a buyer of a new Porsche is well into the late forties – an age group popularly known as the menoporsche. In Dubai, the average age is 19. Fill a 10 lane highway with low-blood sugar 19 year olds in Porsches, and stand back.

Or you might prefer the ski slope. With an outside temperature that hit 50 degrees, I felt a visit to the giant ski slope – the world’s biggest etc. – was a good idea. There are few things more bizarre.

I talked with some retired expats now living in Dubai. If infinite shopping and self-indulgence are your thing, there is obviously a lot to be said for the place. Best to ignore the fact that the carbon footprint per person is (of course ) the biggest in the world. Property is in abundant supply, prices are dropping faster than in the UK, so if you want to live in a beige concrete block on an artificial island, in a gated community, this may be the moment to pounce. Around 500,000 people have left in the past year, so finding a flat should be simple.

If you are a married female, the deal is perhaps not so attractive. Most financial activity is in the name of the husband. A will is definitely needed, at risk of the estate being distributed after death according to local laws, in which a woman counts as 50% of a man, and the distribution may go to male relatives rather than to the wife. That is incidentally a point for anyone living out of the UK – Napoleonic law also has a rigid way of disposing of an estate, which certainly applies in both France and Holland.

So, a good place for shopping fanatics with no social conscience. Not recommended for dog lovers, fell walkers, National Trust addicts, or people who drive slowly in Morris Minors.

Your home as a pension?

We have previously discussed ways of using your home as a way of finding extra funding in retirement. Times obviously change, and it now looks as though this may be less useful a route than previously. Falling values of houses means that there may be less capital in the property to use for equity release, or any other similar arrangement. Of course if there is still an existing mortgage on the property, then the available capital will be reduced by more than the fall in the property value – the amount you owe stays the same, the drop in house price impacts on the difference between the mortgage and the full value.

Recent research suggests that over 3 million people in the UK are relying on their home to provide a pension for them. The fall in house values over the last couple of years means that the capital available by this means has reduced by around £29 billion.

While this makes good publicity for pension companies, they do sort of forget to mention what has happened to pension funds over the same two years. If you had money in shares for the last two years, then during the period the FTSE has fallen from around 6500 to around 4700 – depending upon where your house is, you could well have been better off with the house than with the pension fund invested in the stock market.

The other point the pension sellers will make is that your pension will carry on for the rest of your life, whereas a lump sum released from your house will offer very poor returns at present if placed in a savings account. You could buy an annuity – at the moment, £100,000 should buy an annual £6,400 or so for a 60 year old male. This is single life rate, so if you have the misfortune to die at 61, the annuity seller does pretty well out of the deal. You can take a guarantee to ensure that a dependent benefits within a certain number of years, but that will of course reduce the pension paid to you.

Private pensions are, frankly, pretty poor at the moment. What you can buy with a fairly large sum of money pales utterly in comparison with what is seen as necessary for people at the top of our businesses and government. An MP with 13 years’ service will retire with a pension which would take the average earner in the UK 60 years to acquire –and after 20 years service an MP will have a pension of some £30,000 p.a.. The pension which Gordon Brown will enjoy would need something like £1.75 million to buy.

Suddenly, having £200,000 capital from downsizing or equity release doesn’t seem too spectacular. Things would be so much easier if we knew how long we will live.