Monday, 16 December 2013

2m enrolled in pensions

More than 2 million workers have begun saving into a workplace pensions scheme as a result of automatic enrolment, according to figures released today by The Pensions Regulator.

Automatic enrolment began in October 2012, when supermarkets and other large employers led the way. 

Eventually 9 million people will be signed up - though they can opt out if they want to.

3,500 employers have joined so far but tens of thousands more will start signing up staff next year as medium-sized companies get involved.

All employers, including charities and the public sector, will have to enrol eligible workers into a pension scheme.

Thursday, 12 December 2013

Who's doing better: old or young?

Given that there is yet more comment today on how much better older people have been doing in financial terms -- supposedly -- than everyone else, it's worth having a a closer look at the figures.

The "elderly have done best in the austerity years" mantra is an important one, because it is likely to be used in the debate over whether all pensioners should carry on getting Winter Fuel Payment and free bus passes -- and, crucially, whether the Triple Lock should continue.

The Triple Lock is the guarantee that the state pension will be raised each year in line with average earnings, inflation or 2.5%, whichever is higher.

The latest ding-dong over this was prompted by official figures showing that while the typical incomes of working households have fallen sharply in real terms during the downturn, retired households have actually enjoyed an increase.

Here are the numbers: retired households up 5.1% between 2008 and 2012, working households down 6.4%. (Note, there's a fall because the income figures are adjusted for inflation or price increases.)

It's a big contrast. However, and weirdly, when this trend is highlighted, there is seldom any mention of how much money pensioners are actually getting -- or how little.

So let's look at some data in yesterday's Family Spending survey, which includes an analysis of the disposable incomes of different households and age groups. Disposable income is what you have after tax and National Insurance are taken off.

Non-retired households with two people received an average of £748 a week last year, retired households with private pensions and some work got £501 and those mainly dependent on the state pension had £295 a week.

The matching numbers for one person households were £336, £285 and £174.

If you look at household disposable income by age, it was nearly £700 a week on average where the homeowner or renter was between 30 and 64 years of age, but £478 for those between 65 and 74.

What's particularly interesting is that income falls with age through the years of retirement years. The figure for households with someone aged 75 and over is just £341 a week.

The reason for the decline is that the older people get, the less likely it is that someone in the house is carrying on with some form of paid work and the more dependent the household becomes on the state pension.

Of course, this is the reason why campaigners for the elderly point out that 1.5 million pensioners live in poverty. And they would say it is one reason for having the Triple Lock.

So the situation is:

*incomes of retired people have been rising faster

*but their incomes are lower to start with

NB Here are the household income tables. A37 and A38 are the relevant ones.

Earnings eaten up by inflation

Typical weekly earnings have failed to match the general increase in prices for the fifth year in succession -- and women's earnings dropped further behind those of men.

Official figures show that the April figure for median, or middle of the range, earnings was £517, up 2.2 per cent from last year.

But that was a slower rate of increase than inflation as measured by the Consumer Prices Index, or CPI, meaning that workers found that their pay didn't go so far.

The gap between male and female earnings increased to 10 per cent from 9.5 per cent last year. That's the first time it has widened since April 2008.

The figures come from the Annual Survey of Hours and Earnings from the Office for National Statistics.

Wednesday, 11 December 2013

£100m set aside by Lloyds

There's a rumour that Lloyds has set aside £100m to cover conduct issues, including the compensation payments due to customers as a result of today's record fine for unacceptable sales incentives.

What's definitely true is that it is sales to 692,000 customers to check whether or not they lost out, or if they were sold an insurance or investment product they didn't need.

Within that number 11,000 cases are being prioritised. These are the ones where the behaviour of the advisers was most questionable.

Monday, 9 December 2013

Earlier payday cap?

Labour wants the cap on the cost of credit from payday lenders to be implemented 3 months earlier than the government is planning.

Ministers have promised that the financial watchdog, the FCA, will have a duty to impose a cap and that the launch date should be not later 2nd January, 2015.

Today Labour has proposed an amendment to the Banking Reform Bill, which would require the FCA to apply the cap from 1st October, 2014.

It wants the upper limit on interest and other charges to come in before shoppers go on a borrowing spree before Christmas next year.

There is expected to be a vote on the amendment in the Lords tonight.

Here's the amendment, followed by the original government amendment bringing in the cap.



Line 19, leave out “2 January 2015” and insert “1 October 2014”

After Clause 123


Insert the following new Clause—
“Duty of FCA to make rules restricting charges for high-cost short-term credit
(1)   In section 137C of FSMA 2000 (FCA general rules: cost of credit and
duration of credit agreements), after subsection (1) insert—
“(1A)    The FCA must make rules by virtue of subsection (1)(a)(ii) and (b)
in relation to one or more specified descriptions of regulated credit
agreement appearing to the FCA to involve the provision of high-
cost short-term credit, with a view to securing an appropriate
9degree of protection for borrowers against excessive charges.
(1B)   Before the FCA publishes a draft of any rules to be made by virtue
of subsection (1)(a)(ii) or (b), it must consult the Treasury.”
(2)   In Schedule 1ZA to FSMA 2000, in paragraph 11 (FCA’s annual report), in
sub-paragraph (1), after paragraph (h) insert—
“(ha)   any rules that it has made as a result of section 137C during
the period to which the report relates and the kinds of
regulated credit agreement (within the meaning of that
section) to which the rules apply,”.
(3)   The FCA must ensure any rules that it is required to make as a result of the
19amendment made by subsection (1) are made not later than 2 January 2015
and apply (at least) to agreements entered into on or after that date.”

Friday, 6 December 2013

NatWest website problems

RBS/NatWest's meltdown on Monday had nothing to do with hacking or suchlike, the bank said then.

But today's problems with NatWest's website ARE being blamed on outside forces.

An RBS spokesperson said:
"Due to a surge in internet traffic deliberately directed at the NatWest website, customers experienced difficulties accessing some of our customer web sites today. This deliberate surge of traffic is commonly known as a distributed denial of service (DDoS) attack. We have taken the appropriate action to restore the affected web sites. At no time was there any risk to customers. We apologise for the inconvenience caused."

Thursday, 5 December 2013

Pension delayed

As many as ten million people in their late 30s and mid 40s will have to wait an extra year to before they start receiving the State Pension, after changes announced in the Chancellor's Autumn Statement today.

This group would have expected to qualify for their pensions at the age of 67, but they will now have to wait until they reach 68, as the date for raising the pension age is brought forward by about ten years.

Pension analyst Tom McPhail, of Hargreaves Lansdown, has estimated that 10 million will be affected on the basis that around 1 million people are likely to be retiring each year.

The pension age is being increased in stages as life expectancy rises, with a pension age of 66 starting in October 2020 and 67 being phased in between 2026 and 2028.

The move to 68 had been pencilled in for people retiring from 2044, but George Osborne said the date would be brought forward to the mid-2030s.

It will rise to 69 in the "late 2040s", he added.

Wednesday, 4 December 2013

Mini-budget: Will he, won't he?

George Osborne delivers his Autumn (or is it Winter?) Statement tomorrow.

So will he or won't he..

Clobber wealthier pension savers by limiting what they can take from their fund as a tax free lump sum?

Fiddle with stamp duty thresholds to soften the impact on people buying lower value homes?

Let people do more with tax free ISAs, to encourage savers?

Give a cast iron promise to freeze fuel duty until 2015?

Curb buy-to-letters by axing the tax break they get on mortgage interest?

Charge foreign property owners Capital Gains Tax when they sell up in the UK?

We'll find out at 11.15 in the morning.

Monday, 2 December 2013

Pound on the rise

The pound's value measured against a basket of other currencies, including the dollar and the euro, has reached its highest level for more than 4 years.

The trade-weighted index stands at 85.0. It was last at that level on 5th August 2009, during a rally as the financial crisis and recession began to take hold.

The pound has been surging ahead amid growing hopes about the scale of the economic recovery.

The called the trade-weighted index, called the effective exchange rate by the Bank of England, shows the pound's value in comparison to the currencies of our main trading partners.

The index was based at 100 in January, 2005. It fell to 74 in late 2008.

Retired incomes have suffered least

Official figures published today add to evidence that older households have suffered least in financial terms from the impact of the financial crisis and austerity.

Working households saw their typical incomes fall by 6.4 per cent between the financial year ending in April 2008 and April 2012.

However, the incomes of retired households grew by 5.1 per cent.

The ONS has taken the median, or middle, figure for incomes and reduced them to take account of rising prices over the four year period.

While wages have come under severe pressure, ministers have protected pensioners by promising annual increases linked to inflation or average earnings, with a minimum of 2.5 per cent.

Since the start of the economic downturn, typical household income for the overall population has fallen by 3.8 per cent after adjusting for inflation.