The survey found that almost a quarter (23%) of pension schemes are now shut to both new staff, and to future contributions from people who were already in the pension scheme. This is up by a third from 17% in 2010, and from just 3% in 2008.

The survey shows that more change is inevitable. Among those pension schemes which are closed to new staff but still open to existing staff, 30% expect to close the pension altogether in the next five years. They plan to then move staff into a ‘defined contribution’ pension, where the employer is exposed to much less risk. Meanwhile, one in ten (11%) say they will keep the existing defined benefit pension scheme structure, but will make it less generous. This could include changing accrual rates or moving from a final salary to a career average structure.

The findings reflect an escalation in the decline of final salary (or ‘defined benefit’) pensions, as schemes that have already closed to new joiners shift their focus to existing members. Final salary pensions have been increasingly strained by rising longevity, poor investment results and red tape. Employers have been closing these pensions to try to manage risk and mounting costs. Only 19% of private sector schemes are now open to new joiners, compared with 88% ten years ago.

Joanne Segars, NAPF Chief Executive, said: “The private sector is seeing a seismic shift in its pensions, and more change is certain. Demographic and financial pressures mean businesses are struggling to afford these pensions and final salary deals are coming off the table and are either being watered-down or replaced altogether.

“Many firms are trying to get a grip on the risks and rising costs by freezing the fund to both new and existing staff. While it is difficult to be exact, we estimate up to a quarter of a million have been moved out of their final salary pension over the past three years. People will often find that the replacement pension on offer is a good one. It’s encouraging to see that, despite the harsh economic climate, payments into defined contribution pensions by staff and their employers have remained stable.’’

If you want to find out more or need advice about pensions and savings, contact one of the team at Ashley Law Crawley on 01293 817240 who will be happy to help.

Proposals published in December 2011 require each FSA-authorised bank or building society based in the UK to state that: ‘Your deposits are protected up to £85,000 by the Financial Services Compensation Scheme, the UK deposit protection scheme. Any deposits you hold above this amount are not covered.’

Banks with branches in the UK, but headquartered and authorised in the European Economic Area (EEA), will have to state that deposits held with them ‘are not protected by the UK Financial Services Compensation Scheme.’ They will also have to state which other national scheme is providing the protection so that customers again know which compensation scheme they are relying on, which country it is based in and how it would work – for example how long it would take them to get their money back.

The proposed changes are designed to reinforce existing deposit protection measures and to ensure that every customer can clearly see how much of their money is protected, how much is not and whether they are covered by the UK compensation scheme. Recent research conducted by the FSCS to measure consumer awareness of the scheme, found customer knowledge continues to be extremely poor, and has in fact dipped since the crisis.

These proposals are the latest step in improving the deposit protection arrangements for consumers. A year ago all national compensation schemes across the entire European Economic Area were harmonised to offer cover at €100,000, or the local currency equivalent, and ensure eligible consumers are paid within 20 working days. At the start of 2011, the UK introduced faster payout rules, with a target of a seven day payout for the majority of claimants and the remainder within 20 working days.

If you want to find out more or need advice, contact one of the team at Ashley Law Crawley on 01293 817240 who will be happy to help.

Only 38% of working-age people, 11.6 million out of 30.4 million people are saving into a private pension. In reporting the analysis, the DWP highlighted that this shows exactly why automatic enrolment into pension schemes being introduced from October 2012, is so critical.

The figures show a steady decline in pension saving between 1999/2000 and 2009/10, with the decrease being most dramatic among men and the under 40s. While the overall number of people saving into a private pension fell from 46% in 1999/00 to 38% in 2009/10, pension saving among men fell from 52% to 39%. And among people aged between 20 and 39 years old pension provision fell from 43% to 31%.

The analysis also reveals a map of pension provision across the UK in 2009/10, with higher pension provision in the South East (43%), Scotland (42%), the South West (41%) and the East (41%), and lowest pension participation in Northern Ireland (33%), London (34%) and the West Midlands (34%).

Minister for Pensions, Steve Webb, said: “These are alarming figures and they underscore exactly why our pension reforms will be so vital. With fewer people saving into a pension, lower annuity rates and an average of 23 years in retirement, many people could face a poorer future in their later lives.

“We simply must put a stop to this trend and get people saving. Automatic enrolment, beginning for the largest employers later this year, will get millions of people saving, many for the first time.”

Automatic enrolment in a nutshell

• Beginning in autumn 2012, many more people will have access to a pension at work, to help them save for their later years.
• Employers will have to enrol all eligible employees into a pension and make minimum contributions into the scheme.
• If you are eligible, your employer will enrol you automatically into a pension.
• You will be able to opt out if you want to but will therefore miss out on an employer contribution of around £600 a year once minimum contributions are established – 3% of average earnings of £26,200 for full-time workers (ONS 2011 Annual Survey of Hours and Earnings).

If you want to find out more or need advice about pensions and savings, contact one of the team at Ashley Law Crawley on 01293 817240 who will be happy to help.

With the changes in the economy we have seen savers suffer and interest rates have remained at their lowest in over 300 years for a sustained period of time and economists indicate this could continue for some time.  This does mean that potentially Cash which has often been perceived as the safest of asset classes is no longer the sole area to invest and other forms of investment may now need to be considered.  Low interest rates mean Cash ISA returns have suffered to such as extent that:

• The average rate of interest on Cash ISA is currently 1.17% (including introductory bonus accounts).
• This is less than half than the average rate when the Bank of England base rate was cut to its current level of 0.5%.
• The average rate on Cash ISAs is the lowest it has been since they were introduced in 1999.

 Source: Bank of England, October 2011

You many need to ask yourself, how much does my Cash ISA now pay and can I continue to solely pursue investing in Cash?  We can offer you a free no obligation review on your portfolio to assess the options available to you and to ensure that you are taking the right level of risk to achieve your financial objectives.

Managing your money

With well over 50,000 funds and over 5,000 fund house to choose from, there is plenty of choice but the key is being able to choose the right funds and to be able to manage this on an active basis.

If you are considering investing in an ISA in this tax year to make the most of the tax efficient opportunities this offers, now could be the right time. Alternatively, if you are considering how transferring your existing ISA portfolio might make it work harder for you we can help so please do not hesitate to contact Derek Evans at Ashley Law Crawley on 01293 817243.

The value of the investment can go down as well as up and you may not get back as much as you put in.

1. Sort out the mortgage

The mortgage is the biggest monthly expense for the vast majority of people, and making sure that the rate you’re paying is competitive is basic common sense. Many people are paying a higher rate than they need to and half an hour with an IFA or independent mortgage broker can be time very well spent. Yes, there are costs involved in moving your mortgage, but these can often be outweighed by the savings to be made.

2. Sort out our life cover

This is an absolute priority, especially if you have children. Many people don’t know the answer to questions like ‘how much life cover do I need?’ ‘How much do I have?’ ‘Does it include critical illness cover?’ No-one likes to think about the possibility of being seriously ill or dying, and therefore we tend to neglect our protection policies. Life cover can be surprisingly inexpensive: and even if you do have cover in place, make sure you have it checked on a regular basis. In many cases the cost of protection is continuing to fall and it may be possible to replace old policies and increase the amount of protection you have, without increasing your premiums.

3. Start saving for the children

However much you’ve just spent on Christmas presents, your children are going to cost you a lot more in the future. Whether it’s university tuition fees, a first car, your daughter’s wedding or the deposit on a house, the numbers are only going to go one way. Even if you only save a small amount, doing it on a regular basis over a long period can make a significant difference – and with the ability to save tax efficiently through an ISA, at least the taxman will be on your side.

4. Start saving for ourselves

What’s true for the children is equally true for yourself; if there’s a specific savings target you have in mind, or whether you simply need to save for the proverbial ‘rainy day,’ the earlier you start to save the easier it is to achieve your goal.

5. Sort out my pensions from previous employment

Many people have pensions left over from previous jobs, and despite various Government initiatives aimed at simplifying the system they still don’t have an accurate idea of how much is in their pension ‘pot.’ Good pension planning is impossible without knowing the position you’re starting from, so it’s a sensible idea to talk to an IFA and find out the position with any old pension policies. For example, can they can be brought together and simplified?

6. It’s time I understood the company pension scheme

Just as importantly, far too many people don’t understand their existing company pension scheme. Is it final salary? Money purchase? Eightieths? Sixtieths? Can I make additional contributions? Buy extra years? Again, half an hour with a knowledgeable independent financial adviser will be time well spent. He’ll be able to summarise the main benefits of the scheme for you, tell you the sort of pension you’re likely to receive and advise you of the best course of action if you want to improve your pension benefits.

7. Investigate Inheritance Tax and Long Term Care

If it’s the case that your parents are elderly, then it may be worth thinking about Long Term Care planning. Similarly if their – or your – estate is likely to be subject to Inheritance Tax, then action taken now could pay significant dividends in the future. Again, an IFA will be able to tell you what’s possible, and the steps that could be taken now to prevent an unpleasant surprise in the future.

8. Look at Private Medical insurance

With tales of woe from the NHS continuing – and more economies seemingly still to be made – many people are starting to look at the option of private medical insurance. This may be an investment worth making, particularly if you run your own business and would need treatment at a time to suit you.

9. We need to sort out the partnership insurance

Many businesses are run as a partnership (whether it’s a straightforward partnership or through equal shares in a limited company). The death or serious illness of one of the partners could have catastrophic consequences for the business – and serious implications for the other partner. And yet very few businesses have addressed the simple question of partnership assurance. Your IFA will be able to explain the basic rules to you and give you an idea of what protection might cost: you may well be pleasantly surprised!

10. We need to make a will

Last – but by no means least – make sure that you have an up to date will. The consequences of dying ‘intestate’ (that is, without a will) can be severe, and with a simple will being relatively inexpensive it’s sensible to make sure that this area of your financial planning is kept up to date.

So there’s plenty to think about… If you would like to discuss any of the above points – or any other aspect of your financial planning – then as always, please don’t hesitate to contact us at Ashley Law Crawley on 01293 817240.

The National Insurance rebates an individual currently gets if they are contracted out are intended to provide benefits broadly the same as those given up in the additional State Pension. However, because benefits from defined contribution schemes can vary, it is very difficult to predict with any degree of certainty what they will get. Due to this uncertainty and the difficult judgements that individuals currently have to make about whether they would be better off in the additional State Pension or contracted-out, the Government has decided to abolish contracting out on a defined contribution basis.

It is intended that from 6 April 2012, instead of receiving rebates of National Insurance contributions, individuals will begin to build up an entitlement to the additional State Pension. For every year that they pay National Insurance on earnings over £4,940 a year (based on 2009/10 earnings), they’ll get an extra £1.60 a week on their State Pension when they come to claim it.

An individual will still be able to save in a defined contribution company pension, personal pension or stakeholder pension. All this change will do is remove the option for people to use this type of pension arrangement to contract out of (leave) the additional State Pension. An individual’s pension scheme administrator or employer should contact them nearer the date of abolition in order to explain how their scheme will operate in future.

People should continue to review their pension position each year as they may be better off opting back into the State system prior to the abolition date.

If you want to find out more about how this might affect your pension savings arrangements, contact one of the team at Ashley Law Crawley on 01293 817240 who will be happy to help.

50 per cent of women now save adequately for retirement, compared with 43% in 2010. Women who save are saving a higher percentage of income than men – 12.9% for women compared with 12.6% for men, including employer pension contributions.

However, despite the higher income percentage saved by women, men are saving as much as £700 more than women each year due to a disparity in income levels. The Scottish Widow report findings suggest that men are able to save significantly more for retirement as they typically earn higher salaries; £28,091 p.a., for men compared to £22,490 for women, a difference of nearly 20% (figures from the Office for National Statistics Annual Survey of Hours and Earnings (ASHE)). The average man who is preparing for retirement saves £4,158 a year, compared to £3,457 a year for women, both figures again including any employer contributions into their pensions.

The age related gap in levels of saving by women is also growing – 56 per cent of women aged 51 and over are saving adequately for retirement compared to 46% of women aged between 30 and 50. The report also tells us that 23% of women are still saving nothing at all, compared with 17% of men. 71% of women say they can’t afford to save long term, compared to 60% of men.

Based on a sample of 5,200 adults, the report found that the gap between the number of men and women saving for retirement is closing, now at just 3 percentage points, down from 9 percentage points in 2010. The number of older women saving adequately for retirement has increased by 18 percentage points over the last 12 months, while 38% of women saved adequately for retirement in 2010. However, the 30 to 50 age group is now lagging behind by 10 percent.

Younger women understand that the government won’t be able to cover their retirement, with only 12% of women under the age of 30 assuming that it will contribute most of the income in retirement, compared with 28% of women over 50. This highlights the changing attitudes towards financial independence amongst younger women.

Younger women who have more faith in their cash savings (including ISAs) to help fund their retirement, are not taking action. Only 19% of women under 30 are currently investing in cash savings compared to 40% of those over the age of 50. On the flip side, older women use more equity backed investments compared to younger women, or even their male counterparts.

If you want to find out more about savings for retirement, contact one of the team at Ashley Law Crawley on 01293 817240  who will be happy to help.

The previous day, the Organisation for Economic Co-operation and Development (OECD) had predicted that the UK would slip back into “a modest recession” early in 2012, with unemployment reaching 9%. The OECD blamed this on a weak demand for exports, the Government’s austerity measures and the squeeze on consumer spending.

Reporting on Tuesday morning, the Office of Budgetary Responsibility (OBR) was slightly more optimistic, forecasting growth of 0.7% for 2012 and 2.1% in 2013. However their forecast of growth reaching 3% from 2015 was looked on sceptically by most commentators.

The Chancellor began his statement by emphasising that Britain “would live within its means” – but he still promised a significant investment in education and infrastructure projects, so that the country “could pay its way in the future.”

Government borrowing is currently predicted to hit £127bn in 2011/2012.

However, the problems in Europe mean that total Government borrowing over the next four years is now forecast to be higher than originally anticipated with an extra £112bn being needed. It was inevitable that figures like this would mean that savings (or ‘cuts,’ depending on your political standpoint) would have to be made, and the axe quickly fell on the public sector. The Statement contained a serious amount of pain for public sector workers: pay rises will be capped at 1% for two years (after the end of the current freeze in Spring 2012), and the OBR is now forecasting 710,000 public sector job losses by the first quarter of 2017. With many public sector workers due to strike today (November 30th) presumably the Chancellor thought he might as well get all the bad news out of the way.

George Osborne also announced that the pension age will rise from 66 to 67 from 2026, which is eight years earlier than previously planned. This move will save a further £59bn. Short-term, the value of the state pension will increase by £5.30 per week from April 2012.

One of the key themes of the Autumn Statement was investment in infrastructure – as Deloitte’s head of infrastructure, Nick Prior, commented on Twitter, economic growth only comes when “shovels get in the ground.”

In a new initiative, some of the money for the infrastructure investment will now come from UK pension funds, following a model which has worked well in Canada and Australia. Joanne Segard, Chief Executive of The National Association of Pension Funds (NAPF), described the investment as “a real winwin.” Currently UK pension funds hold over £1 trillion in assets, but only 2% of that is invested in infrastructure. However, the Government is going to need to offer the pension funds long-term investments with an income that exceeds inflation. So potentially good news if you’re invested in a pension – possibly not so good if you suddenly find that you’re on a brand new toll road.

There is also a distinct possibility that we’ll see the sovereign wealth funds of other countries investing in UK infrastructure projects. Before the Chancellor’s speech the FT had already carried a piece by the Chairman of the China Investment Corporation, expressing his desire to “team up with fund managers or participate in public-private partnerships in the UK infrastructure sector.”

As well as the above, other key points in the Autumn Statement were:

• The Bank Levy will rise to 0.088% from January 1st. The Government is aiming to collect £2.5bn a year from the Levy
• A credit easing programme is to be introduced to underwrite up to £40bn in low-interest loans to small and medium sized businesses. The business rate tax relief holiday will also be extended to 2013
• The Government will consult on allowing small firms to make staff redundant without them being able to claim unfair dismissal
• The rail fare increases will be less than originally planned
• The 3p fuel duty increase planned for January will be cancelled – so some good news for the hard-pressed motorist
• An extra £1.2bn will be spent on education, with free nursery places being extended
• And British science is to receive an additional £200m of extra funding to support research. (But to put this in perspective, it’s 0.2% of the value
• which was placed on Facebook the same day.)

Reaction to the Autumn Statement was predictably mixed. The Times said that Osborne was ‘inflicting pain to fight off [a] debt storm,’ while the Guardian concentrated on the job losses in the public sector. Many commentators criticised the Chancellor for ‘tinkering’ when bolder action was needed.

Reaction to the speech on the stock market could hardly be described as euphoric, but the FTSE did manage a small gain after the Chancellor’s speech. But as if to emphasise that Britain remains vulnerable to the world economy in general and the European debt crisis in particular, Italian bond yields reached new highs while Osborne was speaking and credit ratings agency Fitch downgraded its forecasts for the US economy. By Monday night Fitch was also warning that it is getting harder for Britain to maintain its AAA credit rating – which helps the Government to borrow at lower rates of interest.

“May you live in interesting times,” as the Chinese saying goes. Whatever the contents of his Autumn Statement, George Osborne and the British economy will certainly be doing that…

* Sources on request

Many of the 37 advisers recommended products that were inappropriate for the researchers, all of whom were aged over 60 and inexperienced investors. The majority of advisers showed a poor understanding of the risks of investing and made misleading statements about the features and costs of available products.

Particular failings identified by researchers included 17 of the advisers recommending complicated and high charging investment bonds, with four of the advisers failing to mention that these came with hefty exit fees (sometimes as high as 12%) if money is subsequently withdrawn in the first five years.

Banks and building societies make money through commission paid for the products that they recommend, but only a handful of advisers that were tested were upfront about this and 18 advisers claimed that there was no cost for their advice. In the worst case, one of the researchers was told by a Yorkshire Bank adviser to invest £50,000 in a bond netting more than £4,400 in commission, which was not disclosed.

There were a number of failings relating to consumer protection advice given to the researchers. Almost half of the advisers failed to mention the Financial Services Compensation Scheme (FSCS), and others made rudimentary mistakes about how much protection consumers receive. One Santander adviser incorrectly told the researcher that their investments were covered up to £85,000, instead of £50,000. A NatWest adviser even told a researcher: ‘let’s face it, the major banks aren’t going to go under,’ and handed her a leaflet about compensation, whilst saying: ‘you don’t have to read this.’

Commenting on the findings, Which? Executive Director Richard Lloyd, said:
‘Now, more than ever, consumers need advice they can trust on what to do with their money. It’s shocking to see such low standards. It’s also disappointing to see that things haven’t improved in the past year, despite two high street banks being fined (Barclays in 2011 and Bank of Scotland in May 2011) for advice failings and poor complaints handling.

‘We are reporting our findings to the Financial Services Authority (FSA) and urging the regulator to investigate and punish the worst offenders. We want the FSA’s Retail Distribution Review to force banks and building societies to be more upfront about the cost of their advice. We will also be talking to the banks and building societies about improving their standards.

This Which? investigation seems to show that the high street isn’t often the best place to go for investment advice and recommends that if in doubt, consumers should always talk to an independent financial adviser. Which? investigative research testing independent financial advisers, found that over 70% gave good advice to their researchers.

If you need advice about investment or savings products and personal finance planning, contact one of the team at Ashley Law Crawley on 01293 817240  who will be happy to help.