Article Archive
21 Oct 2011
Taking a SIPP
If you are willing to take more control of your pension, there are good reasons to check out whether taking a SIPP would be the right choice. SIPPs are self-invested personal pension plans that offer more options for investment than standard pensions and they have some tax benefits. The conventional route to retirement saving is to take out a personal pension or join salary-linked or mo...
21 Sep 2011
Rethinking retirement
Changes are needed to ensure that retirees get the best out of their pension funds and their retirement incomes, says one of the UK’s leading insurers. (1) Aviva wants reforms to make the annuity market ‘fit for the future’. It has proposed measures to help retirement savers: • choose the best annuity; • decide whether to seek advice; and • take their pensio...
20 Sep 2011
Home is where the income
Rising prices have encouraged the view that property is a good investment and an alternative to a pension. But releasing equity from your home can be a potential hazardous route to retirement income unless you do your homework. Equity Release' includes home reversion plans and lifetime mortgages. To understand the features and risks, ask for a personalised illustration. If you are considering...
19 Sep 2011
Pension funds in equities
People approaching retirement are caught between falling equity values and rising inflation according to a Daily Express report. (1) Research by Annuity Direct, based on the findings of Professor Paul Sweeting of the University of Kent, found that those retiring in the next 12 months will be worst hit if shares fall further. Bob Bullivant, CEO of Annuity Direct, said: “There is a one in ...
16 Sep 2011
Not as caring as it seems
Proposals for the state to meet more residential care costs so that the elderly do not have to sell their homes may inadvertently lulled self-payers into a false sense of security, says a specialist annuity provider.(1) Chris Horlick, Managing Director of Care at Partnership says there is a significant danger of this from the Dilnot’s proposals. “Self-payers are those who have asse...
15 Sep 2011
Retiring abroad
Spain is still the first choice as a place to retire followed by Australia. Third is the USA and France comes in at number four. But retiring abroad needs careful planning according to pension provider, Standard life. (1) Head of Pensions Policy, John Lawson, warns that many retirees think living abroad will be cheaper but that may not be the case: "Your retirement income could also be su...
14 Sep 2011
Tax free savings come top
British savers look for tax free deals when weighing up savings accounts according to Investor Today. (1) Reporting on latest research from Birmingham Midshires (BM Savings), the investment website says 49 per cent of British savers see tax free savings, such as ISAs, as their first priority when making a choice of accounts. This is particularly true of those aged between 25 and34. (1) A quarte...
13 Sep 2011
Missing out on pension income
UK pensioners have lost £7 billion in retirement income over the past ten years 2000-10) because they have not hunted out the best annuity rates, according to retirement solutions specialist, Partnership. (1) The majority of pensioners – around 70 per cent with pension funds under £40,000 – are still not shopping around for the most competitive rates and using what is k...
12 Sep 2011
Campaign for better banking
Improving the behaviour of banks in the wake of the credit crisis is being urged by several organisations, including the UK’s leading consumer body. (1) Consumer Focus is calling for wide-ranging changes to shake up the retail banking sector. (1) In addition, the Good Banking Forum has been set up to demand real reform, and the European Union’s top financial regulator has set o...
09 Sep 2011
UK is still saving
Despite the economic gloom people are still saving and some, particularly those in the North East, are choosing to save more, according to a survey commissioned by Standard Life. (1) The pension provider wanted to know what impact the government’s austerity measures were having on saving. Its YouGov poll found that 41per cent of Britons saved the same amount of money or more in the p...
08 Sep 2011
When I’m 119!
A steady rise in life expectancy in the UK but your death age may depend on where you live. A girl born now in Moreton Hall, a large private housing estate on the fringe of Bury St Edmunds in Suffolk, could live to 128 reports The Daily Telegraph. (1) A study by the Office for National Statistics looked at data gathered on life expectancy in wards throughout England between 1999 and 2003 and h...
07 Sep 2011
Compulsory annuity shopping
Retirees should be forced to shop around in the annuity market before making a choice, say annuity providers and advisers polled by Xafinity paymaster (1) Pension scheme trustees and pension providers are expected to guide retirees towards the open market option (OMO) when they are deciding on how to use their pension pot for retirement income. According to a press release by Pensions World onl...
06 Sep 2011
Campaign for better banking
Improving the behaviour of banks in the wake of the credit crisis is being urged by several organisations, including the UK’s leading consumer body. (1) Consumer Focus is calling for wide-ranging changes to shake up the retail banking sector. (1) In addition, the Good Banking Forum has been set up to demand real reform, and the European Union’s top financial regulator has set out ...
05 Sep 2011
When I’m 119!
A steady rise in life expectancy in the UK but your death age may depend on where you live. A girl born now in Moreton Hall, a large private housing estate on the fringe of Bury St Edmunds in Suffolk, could live to 128 reports The Daily Telegraph. (1) A study by the Office for National Statistics looked at data gathered on life expectancy in wards throughout England between 1999 and 2003 an...
02 Sep 2011
Compulsory annuity shopping
Retirees should be forced to shop around in the annuity market before making a choice, say annuity providers and advisers polled by Xafinity paymaster. (1) Pension scheme trustees and pension providers are expected to guide retirees towards the open market option (OMO) when they are deciding on how to use their pension pot for retirement income. According to a press release by Pensions W...
01 Sep 2011
Retired move into rental property
The squeeze on pensions and living costs is forcing older people to sell their homes and move into rented property. (1) Research by Homelet, the tenant referencing and insurance provider, shows a significant rise in the numbers taking this route to fund retirement. There’s been a 16 per cent increase in the number of people aged between 66 and 70 who have sold up and become tenants over th...
31 Aug 2011
Relying on a handout from the kids
Retirement saving in Britain is now so low that millions of pensioners will be forced to live on handouts from their children. (1) In a ‘wake up’ speech reported in the Daily Mail, Dr Martin Weale, a leading economist at the Bank of England, has warned Britons that their habit of spend now and let tomorrow look after itself needs to be reviewed and fast. (1) Millions are heading...
30 Aug 2011
Families unable to save
The Coalition wants to encourage saving – and all workers will start to be enrolled into workplace pensions starting next year - but fewer than half (48%) of people in low-to-middle income households have anything left in their purse at the end of each month. (1) Research commissioned by the Resolution Foundation from Ipsos MORI found that fewer than three in ten (27%) of the group manag...
29 Aug 2011
Inflation hits older age groups
The 65-74 year old age group is suffering the highest rate of inflation at 5.1 per cent compared with the official headline rate of 4.4 per cent.(1) The reason according to the Alliance Trust Research Centre is partly because this group spends more of its budget on food and food prices are high. Bread and cereal prices are almost 10 per cent higher than a year ago and oil and fat prices have...
26 Aug 2011
British rely on property
More women are signing up for pensions but fewer men seem to be doing so according to new research which shows that 38 per cent of British adults (13.6million people) do not have any pension provision. (1) Baring Asset Management, which commissioned the research, describes this figure as “staggering”. Equally alarming, it says, is that 1.4 million people aged 55 and older do not h...
25 Aug 2011
Should you take the money?
Employers are reducing their pension liabilities by offering staff an incentive to leave traditional pension schemes and move into pension plans where investment risk is shifted to individuals. (1) More than 90,000 members of 83 salary-linked defined benefit (DB) schemes have received an offer in the past three years, according to KPMG. On average one in four of those has taken up the offer of En...
24 Aug 2011
Interest surge for pensions
More than two million people contacted The Pensions Advisory Service (TPAS) last year, a 57 per cent increase on the previous year. (1) In its annual review of activities, the independent body says that more and more people are seeking information and guidance about retirement savings. The expectation of automatic enrolment into workplace pensions – to be phased in from 2012 –helped ...
23 Aug 2011
Ministers urged to cap pension charges
Workers in the private sector must get a better deal from pensions if they are to save enough for retirement, says an Independent commission set up to discover why so many people face poverty in old age. (1) The Workplace Retirement Income Commission headed by Lord McFall, has urged ministers to cap high charges on pension products to encourage saving. It has found that many workers are concerne...
22 Aug 2011
Suspend tax on savings
A campaign has been launched to persuade the government to stop income tax on savers while the Bank of England rate is so low. The low rate means savers are not getting much benefit for being responsible while also being hit by inflation, say the campaigners. (1) The group – Save our Savers – has written to the Chancellor asking for a moratorium on income tax on savings until rate...
19 Aug 2011
The biggest financial decision
The decision you make about your pension at retirement will become the biggest financial decision you will ever make, according to Wealth at work. (1) Rule changes by government should now prompt retirees to find out more about their retirement income options and seek professional advice, says the financial education and wealth management provider. (1) The removal of the default retirement ag...
18 Aug 2011
Be fair to savers
Consumers should not be paying trail commissions on personal pensions unless the independent financial adviser (IFA) who recommended the product provides some form of continuing service. (1) This was the view of Consumer Focus in its evidence to a parliamentary select committee reviewing proposed changes to how IFAs are remunerated. (1) The consumer body says that around 15 per cent of adults...
17 Aug 2011
Warning about will writers
Consumers are being warned about unregulated will writing firms and offers of services which bundle legal help with financial products. (1) In his first annual report, Chief Legal Ombudsman, Adam Sampson, says there are gaps and confusion in what legal services are regulated and what are not. One of the consequences is people they have no redress for poor will writing. (1) “One service ...
16 Aug 2011
Debate needed on care
A major debate is now needed on how care should be funded, says a leading annuity provider. (1) The call comes following an intergenerational study of people aged from 18 to 65 by Partnership. The company wanted to discover how different age groups reacted to the funding of care for the elderly. (1) It found that 45 per cent of young people favoured government funding of care until the conseq...
15 Aug 2011
Starting early with money worries
Money worries start early. Almost two-thirds of young people surveyed by pfeg (Personal Finance Education group) said they were worried about not having enough money in the future. They did not believe that college or university would help them to get a job. (1) One thousand 12-16 year olds in England were surveyed by the independent charity which provides resources for financial education in ...
14 Aug 2011
Spend and regret
Pensioners are worried about money and one in ten either regrets taking their tax-free lump sum from their pension pot or questions whether it was the right thing to do. (1) Research by Prudential found that nearly eight out of ten (79%) took the tax-free cash from their company or private pensions when they retired. More than half (52%) put some of it into a savings account and 26 per cent in...
13 Aug 2011
Pensioners over paying the taxman
Pensioners may be paying more tax than they need to, says an accountancy and investment management group. (1) Smith & Williamson’s warn that pensioners are more likely to receive the wrong PAYE tax codes than other taxpayers. This means that they are over paying or under paying the taxman. (1) Around 5.6 million pensioners pay tax according to the Office of Tax Simplification and ma...
12 Aug 2011
The problem with trust
Consumers who are buying investment products tend to trust advisers but are often unaware of potential conflicts of interest, say researchers who looked at how 6000 people across Europe made decisions about pensions and other retail financial products. (1) Although purchases are usually triggered by personal circumstances rather than marketing, only around 33 per cent of buyers compared produc...
09 Aug 2011
Retirement options
Members of a workplace money purchase (or defined contribution) pension scheme can start to take income from their fund at age 55 and go on working if the scheme’s rules allow it. Retirement is more flexible than it was in the past and there are several ways to take retirement income. The Money Advice Service publishes information on retirement options but warns that some, such as incom...
08 Aug 2011
Simpler pension could boost saving
A simpler state pension could tempt millions more young people to save for retirement, says the National Association of Pension Funds (NAPF). (1) A Populus survey for the association found that nearly half (47%) of the 18-34 year olds polled said they would save more for their old age if they knew how much to expect from a state pension. A significant majority said that it was difficult to pla...
07 Aug 2011
‘Stick with it’ savers lose out
Savers are missing out on £12billion in interest each year because they do not hunt for the best savings accounts, says Which? (1) The consumer body’s research has revealed that only 4 in 10 savers have changed their main savings account in the past five years. Another 30 per cent considered it but didn’t actually do it. Those who did switch did so mostly to get a better rate...
06 Aug 2011
Pension transfers
Pension transfers can be complicated and so it makes sense to get advice from a professional before making decisions. But potential ‘switchers’ also have to make sure that the advisers they are consulting are up to standard. The Financial Services Authority (FSA) has been working to improve the quality of pension switching advice but says there is still room for improvement. Some ...
05 Aug 2011
Review of equity markets
The Government has launched an urgent independent review of investment in UK equity markets. The aim is to support the long-term interests of companies and their underlying beneficiaries such as members of pension funds. (1) The review was announced by Business Secretary, Vince Cable, who praised the insurance industry for its innovation. The industry is responsible for investments of more tha...
04 Aug 2011
Women will have to work longer
Government plans for pension reform will lead to an extra two years at work for women in a particular age cohort. Protests and campaigns to change the mind of ministers have not worked. (1) Pensions Secretary, Iain Duncan Smith has offered ‘transitional arrangements’ to help the women cope with a steep rise in the age at which they will qualify for the Basic State Pension but that&...
02 Aug 2011
Fewer problems with financial services
Fewer consumers are reporting problems with financial firms, according to the Financial Services Authority (FSA). Its Consumer Awareness Survey found that 8 per cent of respondents experienced a problem in the past 12 months compared with 12% in the last quarter of 2010. The problems included unsatisfactory handling of complaints, difficulty getting through to someone on the phone and staff be...
01 Aug 2011
Unlocking your pension
Beware offers to ‘unlock’ tax free pension savings, says the Financial Services Authority (FSA). The regulator has issued a warning to be wary of schemes promoted through mailshot or internet that tempt you to dip into your retirement savings before the age of 55. (1) The schemes should be treated with ‘extreme caution’ according to the FSA because normally you can only...
29 Jul 2011
Compulsory annuity shopping
The UK is not prepared for retirement. Nearly half (49%) of workers are not saving enough and one in five people are not making any provision for retirement. (1) Nevertheless they want, on average, £24,300 a year to live comfortably in retirement, says Scottish Widows in its seventh annual pensions report. An extra £58 a month into the pension pot would get them somewhere near to...
28 Jul 2011
Financial Planning reaps rewards
Planning your financial future reaps rewards, according to research published by HSBC. And those who plan and seek professional advice amass much greater levels of financial wealth than non-advice seekers. The bank found that on average those who have financial plans have accumulated nearly two-and-a-half times (245%) more in their retirement plans and three times more in non-retirement asset...
27 Jul 2011
Banks told to improve complaint handling
Companies selling financial services have been told to improve customer complaint handling. The announcement followed the imposition of a £3.5 million fine on the Bank of Scotland for mishandling complaints about several of its investment plans. The Financial Services Authority (FSA) has published new rules aimed at driving up standards within the industry. The rules include: • Abo...
26 Jul 2011
Missing out on pension income
UK pensioners have lost £7 billion in retirement income over the past ten years 2000-10) because they have not hunted out the best annuity rates, according to retirement solutions specialist, Partnership. (1) The majority of pensioners – around 70 per cent with pension funds under £40,000 – are still not shopping around for the most competitive rates and using what...
26 Jul 2011
Thousands tricked by loan offers
1. Thousands of people are being tricked out of large sums of money by rogue loan finders and debt management firms, says the Citizens Advice Bureau. 2. The charity has asked the Office of Fair Trading to investigate and has called for a ban on cold calls offering credit or debt management services and up-front fees. In its evidence to the consumer watchdog, the CAB says that the recession ha...
25 Jul 2011
Holding onto the house
1. We do not expect family to take on the burden of caring for us when elderly. Most people will be happy to contribute to the cost of their long-term care, they told the government’s Commission on Funding of Care and Support 2. But some preliminary views from economist, Andrew Dilnot, who heads the commission are that no one should lose their home to pay for residential care. He may re...
24 Jul 2011
What about tax?
Retirement annuities are subject to normal income tax through PAYE (Pay As You Earn) but there are some special tax rules and reliefs that apply to pensions and retirement income. For instance, there is tax relief on the contributions you make to a pension. If you have a personal pension the tax office will refund the tax you paid before your contributions were added to your pension fund. The...
23 Jul 2011
A lump sum annuity
The typical way to buy annuities is to take the accumulated pension contributions in your pension funds, plus the earnings from the investment, and ‘sell’ what is left in the pension pot, after you have taken your tax-free lump sum, to an insurer in exchange for an income for the rest of your life. This is a standard lifetime annuity. It is also possible to buy an annuity with n...
22 Jul 2011
Young want to save for retirement
British 25-35 year olds want to save for a pension but saving for a house comes first. (1) According to FT Adviser, Fidelity International polled 2000 in the age group and found that 60 per cent do accept that saving for retirement is their own responsibility, but the majority were more concerned about other financial pressures such as saving for a house or paying off debts. (1) Four in ten appr...
21 Jul 2011
Europeans rely on state pensions
Seven out of ten Europeans who are only a decade away from retirement still hope the state will keep them in retirement, says new research from Aviva. (1) Europeans have high expectations of a long and comfortable retirement says the report but 25 per cent of those only 10 years from retirement are cutting the amount of money they save or have stopped saving altogether. Fifty six per cent of t...
20 Jul 2011
Calculating types
Online annuity calculators are useful for working out how much retirement income you can get from your pension fund over varying periods of time and by varying types of annuity. For instance you may want to check how much a pension pot of £50,000 would convert into income just for you – a single-life annuity - for a period of 15-20 years or how much income it could give you until yo...
19 Jul 2011
The Annuity Market
The market for annuities, like any other market, has a wide variety of deals. Choosing the right one matters because you cannot change your mind when the annuity is bought and it can make a significant difference to your income for the rest of your life. The advice from the Pensions Regulator is to shop around – don’t just accept what is offered by your pension scheme provider. If ...
18 Jul 2011
Lifetime Annuity choices
Lifetime Annuities convert your pension fund into an income for the rest of your life. They can also pay out after your death to any dependents. Plus, enhanced lifetime annuities pay more if you have medical conditions such as diabetes or cancer or if you smoke. The annuity is bought with what is left in your pension pot after you have taken your tax free sum or you can choose to convert the ...
17 Jul 2011
Income for life
People approaching retirement are advised to start thinking about how to convert their pension fund into retirement income at least four months before they have to do so. This applies to anyone with a money purchase scheme (also known as occupational defined contribution scheme, personal pension or stakeholder pension). Taking benefits from your pension is usually possible from age 55 but tha...
16 Jul 2011
New savings account needed for low incomes
1. Individual Savings Accounts (ISAs) have failed to boost saving and most of the tax relief they attract goes to people who would save anyway, with or without a tax incentive. This damning verdict comes from the Institute for Public Policy Research (IPPR) which is calling for a new type of savings account for low income families. 2. The IPPR says that more than half of households in the UK ...
15 Jul 2011
Women grow into budgeting
1. Women become more financially independent as they age, says Halifax. Older women are twice as likely to make their own financial decisions as younger ones. Almost two thirds of those aged 65 and over make small budgeting decisions themselves compared with only one third of the under 25s. 2. The Halifax’ research shows that bigger financial decisions, such as buying a car, are taken...
14 Jul 2011
Live for the moment not on £140 a week
One in eight people does not have the patience to wait for a bigger reward, says Standard Life. Instead they grab and go, living for the moment instead of the future. (1) The pensions provider was testing the view, held by researchers into human behaviour, that if offered a reward now or a bigger reward in the future, many people will just settle for what they can get immediately. Th...
13 Jul 2011
Cashing out of a pension
UK companies are being warned about offering cash incentives to employees to induce them to move to less generous pensions or give up some future benefits. Pensions Minister, Steve Webb, says this is bad practice and must stop. He was commenting on the trend for shifting workers out of final salary, also known as defined benefit pension schemes which usually provide a pension based on fixed fact...
12 Jul 2011
Over 50s suffer lifestyle crash
Britain’s 21 million over-50s are seeing a quality of life crash according to the latest Saga Quarterly Report. They are making drastic cutbacks in personal spending and more than 60 per cent of those surveyed said their quality of life has changed dramatically. The over-50s are reporting considerable reductions in non-essential spending and 15 per cent say they have had to cut back on...
11 Jul 2011
Complaints under new management
Consumer complaints about financial services are falling and major banks and insurers are assigning senior managers to complaints teams, says the Financial Ombudsman in his annual review. The agency publishes details of the complaints it receives and gets directly involved in about one million complaints a year in order to resolve problems and obtain compensation where appropriate. The numbe...
10 Jul 2011
Healthy working
Employers are beginning to take more notice of the health of their employees as workforces age, says Eurofound, which has looked at what it describes as the “complex relationship between work and health”. The European Foundation for the Improvement of Living and Working Conditions (Eurofound), was set up by the European Council to contribute to the planning and design of better livi...
09 Jul 2011
Cost of long-term care to escalate
Spending on long-term care is set to double or even triple in 31 countries, including Britain, in the next 40 years says the OECD, an international think tank. The trend is being driven by ageing populations. By 2031 almost one in four people in Britain will be over 65. In Help Wanted? Providing and paying for long-term care the organisation says that half of the people who need long-term car...
08 Jul 2011
No such thing as free banking
There is no such thing as ‘free banking’ according to the Treasury Select Committee. In its report into Competition and Choice in the Banking Sector it says that the term ‘free-in-credit banking’ is inaccurate because consumers with positive balances pay through foregoing interest on the cash. The committee says that price transparency in banking remains a problem and c...
07 Jul 2011
Death calculator
Knowing when we will die could be useful. It might, for example, influence our decisions about retirement and retirement income. Enhanced or impaired life annuities, for instance, pay out more to those who have higher risk of dying early. But the problem when making such choices is that there are no accurate predictors of the time of death for most individuals. That maybe about to change. A ...
06 Jul 2011
Ageism for youngsters
Researchers who set out to monitor attitudes towards the over 70s found that age discrimination is experienced more by younger people. The results published by the Department of Work and Pensions also showed that ageism particularly affects those less well educated, who feel poorer, are not in paid employment or are living in urban areas. Ageism was personally experienced by about one third o...
05 Jul 2011
Not so equal
The Government has delayed the passage through Parliament of the Pensions Bill which had prompted protests from thousands of women. Women between the ages of 56 and 57 have joined a campaign launched by Saga, the over-50s insurer, to get a re-think on the Bill which, if enacted, will equalise the state pension age for men and women to 65 by 2018, two years earlier than had been promised. This ...
04 Jul 2011
Pensions boost
The majority of people who head a family in the UK do not contribute to a workplace pension but would do so if their contribution were matched by their employer. Just 2per cent are currently actively paying into a pension. The most popular amount to set aside for retirement saving would be 5per cent of annual salary, according to the latest Aviva Family Finances Report. This level of contribu...
03 Jul 2011
Effects of recession now arriving
Households in the UK grew slightly better off during the recent recession but we are now in a period when higher inflation is likely to erode living standards. The Institute of Fiscal Studies (IFS) made the surprising assessment from official figures released by the Department of Work and Pensions. The effect on household incomes was measured after deducting direct taxes, adding tax credit and...
02 Jul 2011
Plain English Pensions
The search is on to turn pension information into plain English. At least two attempts are being made by the Plain English Campaign and the National Employment Savings Trust Corporation known as NEST. The Pensions Guide is the Plain English Campaign’s attempt to end the jargon. It has teamed up with Annuity Direct to explain private and state pensions and the rights of ordinary people clai...
01 Jul 2011
A Pensions’ Big Win
A savings Lottery has been suggested to encourage more people to save for retirement. The idea comes from Dr Ros Altmann, Director General of the Saga Group. She says that workers have generally lost confidence in pensions and often decline the chance to join company pension schemes. They don’t like the idea of not being able to touch the money until retirement. The current system of...
30 Jun 2011
Pensioner deprivation
The Government has introduced a new way to measure pensioner poverty. The 'material deprivation' indicator will capture elements of everyday life that many people take for granted but are also key indicators of older people's quality of life. (18) The measure uses a set of uses fifteen goods, services and experiences to capture low standards of living and is designed to complement existing i...
29 Jun 2011
UK Government plans for retirement
It is worth checking out just when you will be able to retire because the goalposts are moving as you read this. Yet another pension reform bill is winding itself through Parliament as the Coalition government tries to balance the books between promising a more generous state pension and making sure you won't get it until you are nearing 70. The Coalition has picked up pension reform where ...
28 Jun 2011
The Annuity Puzzle
If you don't want to buy an annuity expect your local economist to be bemused. The Annuity Puzzle is the term given to the general reluctance of retirees to hand over their pension fund to an insurance company in return for a regular income for the rest of their life. The average economist thinks this odd because annuities are considered to be good value as 'insurance' against living too lo...
27 Jun 2011
The Prudent Twenties
The UK's young adults are single-mindedly saving for the future but their parents are watching their dreams of retirement fade according to the latest research from the financial services industry. Overall the UK has a declining savings habit but one group seems to be bucking the trend according to Barclays social trends analysis and research which notes that almost a third of 20 to 29 year...
24 Jun 2011
Money is worth less
The pound in your pocket is dropping in value every year according to research by BM Savings (Birmingham Midshires) part of the Lloyds Banking Group. The drop is so dramatic that what you could buy for £100 in 1960 will now require £1,796. The average price of a loaf of bread in 1960 cost the 2011 equivalent of 3p. Using data from the Office for National Statistics, BM Savings has...
23 Jun 2011
Coping classes turn to parents for help
Middle income, middle-agers are relying on retired parents for financial support according to a Friends Life report entitled The Coping Classes. More than half (59%) of middle income households (£25-50k) are said to be unable to provide for themselves and their families for longer than six months if they lose their main source of income. The report, compiled by the Future Foundation, ...
22 Jun 2011
Longer life for managers
Life expectancy is increasing but not in equal amounts for everyone. Managers and professionals are living longer than other workers. So are people with university degrees. According to an Office for National Statistics report the gap in life expectancy between men in the most and least advantaged social groups has increased. The gap is less for women. Those with the greatest growth in life e...
21 Jun 2011
Getting out of debt
The recession has changed attitudes to debt according to the latest Spending Power Report from Lloyds Banking Group. Despite spending power being 3.3% higher than a year ago, consumers are spending less and cutting back on their levels of debt. The survey shows that there is a growing trend towards pessimism about personal finances and the housing market. Forty nine per cent of those questio...
20 Jun 2011
No saving grace
Britain is not saving. According to the Chartered Insurance Institute (CII) we face a £9 trillion savings gap that will affect future pensioners for 40 years. Its new report into retirement savings the institute looks at the level of savings required to fund retirement when the cost of long-term care and debt are taken into account. The picture is not pretty. David Thomson, director o...
17 Jun 2011
Health benefits of an annuity
Ill health has some benefits when it comes to choosing an annuity. It is possible to get a higher income in retirement if you have high blood pressure, heart problems, diabetes or high cholesterol. Unhealthy habits such as smoking also qualify you for a better pension. The reasons are obvious: if life expectancy is likely to be reduced then an insurer can afford to pay a retiree more in the ea...
16 Jun 2011
Pensions and religion fading away
Age UK is urging women to protest to their MPs about pension reforms that will push their retirement back several years. The Government wants to speed up the timetable for equalising the state pension age between men and women. If new law is passed in July, women aged 56 and 57 will have to wait two years longer to claim the Basic State Pension. Only women who were 58 before April 6 this year...
15 Jun 2011
New pension freedom
Older people will no longer be forced to buy an annuity. The government has scrapped the rule that required an annuity to be bought by the age of 75, although new rules will ensure that only the relatively wealthy will benefit. It will not be possible to use up pension funds and then fall back on means-tested state benefits. To take advantage of the new freedom, those with money saved in money...
14 Jun 2011
Working past retirement
More than a quarter of older workers would choose to stay in their job past retirement age if they were able to work flexibly according to research by the Chartered Institute of Personnel and Development (CIPD). The organisation suggests that flexible working should become an employee reward to motivate staff and improve work life balance. But even without flexible working, older employees...
13 Jun 2011
No saving habit
The government is in a bit of a bind over how much it should encourage people to save. On the one hand we’re saving less than in the past and are heavily in debt. On the other, the government could do with us heading to the shops even more than we do now. The economy only booms if we buy stuff. Plus there is the little matter of 20% VAT going into the Treasury coffers. The messages comin...
10 Jun 2011
Pride comes before a loss
More than a million and a half elderly people in the UK are trying to live on the lowest state pension in Europe when they don't have to. Although they are eligible for extra cash they are not claiming it. This may have something to do with pride, as the extra help is means tested, or it could be that they just don't know how to claim. It would make a significant difference if they did, as ...
09 Jun 2011
Cake with ISA
One of the more irritating things about being a taxpayer is that savings also attract tax. Governments tell us they want us to save more so why not turn a blind eye to what we're making on our nest eggs? Well the tax collectors do to a certain extent. ISAs or Individual Savings Accounts are tax efficient because the savings are protected from income and capital gains tax, but there are rules ...
08 Jun 2011
Saving for Junior
The popularity of tax efficient ISAs (Individual Savings Accounts) and the ending of the Child Trust Fund have prompted the Government to allow Junior ISAs. Parents, and those with parental responsibility, will be able to put money into savings accounts for their children but the money will be locked away until they reach 18. Children eligible for a Junior ISA will be: • under the age o...
07 Jun 2011
Switch to a nisa deal
An ISA (individual savings account) is a smart place to put savings because it is free of tax but there is one key question to ask before signing up for what looks like a good deal: How long will the interest rate last? Introductory bonus rates are being used to attract savers but if the rate plummets when the introductory period finishes you may want to consider switching to a new provider. ...
06 Jun 2011
No early access to pensions
Americans and Australians have it, but savers in the UK will not be allowed early access to their pensions. The money will remain locked up until they are 55 except in very limited circumstances such as serious ill health. The Government has decided not to reform the rules on access following responses to its paper on whether savers would be more inclined to put money into pensions, if they we...
02 Jun 2011
Running rings around the banks
People with bank deposits and savings should sleep easier following the recommendations of the Independent Commission on Banks, but they may have to pay more in bank charges. The commission proposes that the banks’ relatively ‘‘safe’ retail operations should be ring-fenced from their more risky investment activities, and that each part should have its own capital reser...
01 Jun 2011
Money, Money… Advice
Working out finances can be a puzzle but so can working out what taxpayer-funded help is available. The Financial Services Authority (FSA) launched its money guidance service as moneymadeclear. Now it has changed its name to the Money Advice Service. The change must mean something to someone, but for those looking for financial advice it won’t mean much. Nor does the service actually gi...
31 May 2011
Pension winners and losers
Although the UK has one of the most complex pension systems in the world Government plans to simplify it are already attracting protest. The system is made up of a Basic State Pension which is a flat-rate payment currently worth £97.65 a week; a State Second Pension (S2P) which is partly flat rate and partly linked to earnings and Pension Credit which is based on means testing. In its ...
30 May 2011
Ageing Europe
Improvements in living and health standards are turning Europe into a Shangri-La of elderly people. But even an increase in fertility is unlikely to solve the problem that poses for governments across the EU as they try to balance the funding of pensions with the levels of taxation. Life expectancy at birth in the EU has increased by about ten years over the past 50 years and it is speeding...
