Tuesday, 29 April 2014

How to spot a fake £1

Fake one pound coins keep turning up. One in every thirty is counterfeit.

Take a look at this video of a fake I just spotted, to see what they look like.

1st clue...
The designs on the two sides don't line up. When you flip the coin over they should match up vertically.

2nd clue...
The milling on the edge of the coin is poor quality and easily worn.

3rd clue...
The writing around the edge is uneven, the letters thin and poorly stamped.

This is one reason why the Mint is planning to replace one pounds with the new two-tone version which will be harder to copy.

Monday, 28 April 2014

Pear-shaped mortgage market?

How many property purchases are going pear-shaped because of the new, stricter rules on mortgage applications introduced by the financial watchdog, the FCA?

One family told me a worrying tale today about their mortgage offer which had been reduced to £122,000 from £134,000.

The repayment period was cut from 22 to 17 years and the repayments themselves went up to £750 a month from £660.

This family has mobilised all its savings in order to afford the bigger deposit now required to move to the home they want to live in.

But as one of them said: "how will this affect others out there in a similar situation, who do not have the savings to back them up and are now likely to lose the homes they thought they could afford?"

He said that during the inquest into the household's spending -- a feature of the new application process -- he was asked about "eating, smoking and drinking and whether my wife planned on having children".

The family had looked at different properties and had ditched one with structural problems in favour of another. So it's perhaps not surprising that the lender took a fresh look at the situation.

On the other hand, it is a pretty common experience at the moment for buyers to get close to purchasing several homes before finally getting one.

There have already been predictions of a sharp increase in outright rejections of mortgage applications, but a reduced offer can be almost as damaging.

Could it be that the FCA will have to push lenders into easing off on stress tests and what many see as intrusive questioning, to stop the housing market being disrupted over the next few months?

People have more savings than we thought

The savings held by UK households have been underestimated by a significant margin, according to the Office for National Statistics.

Since 1997 the savings ratio - the proportion of income saved - should have been 3% to 6% higher per year.

So last year's rate of just over 5% was, according to a new, more accurate measure, between 8% and 11%.

Britons have long been criticised for not saving enough, but this new basis for calculating the rate would bring our savings habits more in line with those of countries such as Germany.

The reassessment reflects the growing value of employer-provided pension schemes rather than people setting aside more cash.

Experts had underestimated the funding needed to pay for salary-linked pensions, particularly for former workers in the private sector and local government.

Hence, the pot of savings households will enjoy in retirement is bigger than previously shown in the National Accounts.

The new method of calculation is in line with a worldwide standard being adopted across Europe this year.

Tuesday, 22 April 2014

Paying by mobile phone

Next week the banking body, the payments Council, is launching its way of letting you pay friends and traders using just your mobile and mobile phone numbers. It's called Paym.

There are lots of other new payment ideas on offer, including Pingit and Zapp, but in Paym's favour is that it is backed by all the leading banks.

RBS/NatWest isn't on board yet, though it will be soon. So will Nationwide and First Direct.

Here are some questions I fired at the Payments Council...

Can you register for Paym yet?
Yes, but you have to do it through your bank.

What if you have a joint account?
You can both attach you mobile phone numbers to the same account. However, you can't use the same mobile number for two different accounts.

What if you enter the wrong mobile number when paying someone?
Once you have entered the person's number, the name attached to that number will appear on your phone, so you will have to check that before confirming the payment. So there is a possibility of making an incorrect payment, but they have reduced the risk.

How quick is the payment?
Almost instant, via Faster Payments or LINK. The service standard is "within 2 hours".

What if you don't have funds in your account?
It is the same as if you paid using another method. Either you go into agreed overdraft. Or, if you don't have an agreed overdraft, your bank will have to make a decision and may charge you.

How will a payment appear on your bank statement?
It will have a special code, so it is likely to have Paym typed beside it.

Wednesday, 2 April 2014

Pension top up

The government has unveiled more details of a scheme to allow people to top up their state pensions, if they reach pension age before the new £144 a week flat rate pension kicks in in 2016.

Those reaching pension age before then will be able to buy up to £25 a week in extra pension.

The new information today is on how much the added pension will cost.

A 65 year-old man or woman will have to pay £890 to secure an extra £1 a week in pension. The maximum £25 top-up will cost £22,250.

A 75 year-old would pay £674 for an extra pound.

The scheme, available from October next year, could be of particular help to women and the self-employed, who are more likely to have incomplete National Insurance records, so lower pensions.

The government has designed the top-up so it does not create an extra burden on the taxpayer. However, pension experts say the terms are more attractive than annuity rates currently available to pensioners.

The state pension is now £110.15 a week. The new flat rate pension is pencilled in at £144 in current prices, likely to be over £150 a week when it starts in April, 2016.

DWP says:
"Pensioners and those who reach pension age in the next 2 years will be able to acquire up to £25 of additional State Pension a week under plans set out today (2 April 2014) by the Pensions Minister.
The State Pension top up will be available from October 2015 to all those reaching State Pension age before 6 April 2016.
The scheme will allow people the opportunity to get inflation-proofed additional State Pension by making Class 3A Voluntary National Insurance contributions.
The cost of a State Pension top up is based on a person’s age and takes average life expectancy into account. For a 65-year-old an extra £1 of pension a week will be £890, whereas for a 75-year-old the contribution rate for the same amount of pension is £674.
A calculator is available online which illustrates the contribution rates based on age and how much people wish to increase their additional pension by at www.gov.uk/state-pension-topup"