Hidden pension charges to be revealed

26 Feb 2014

New plans are being set out by the Government to force pension fund managers to be more open about any hidden costs.

Last year, the Office of Fair Trading (OFT) warned there was ‘insufficient visibility and comparability of charges’. Currently thousands of pounds can be wiped from the value of retirement savings without any notification being given to savers.

A spokesman for the department for work and pensions said: ‘we’re taking action to ensure consumers have access to good quality pension schemes so they have the confidence to plan for their futures’.

They added: ‘A lack of transparency around the true cost of schemes can prevent savers from having value for money. We will outline our proposals to tackle this issue shortly’.

Investment transaction costs, incurred from buying and selling shares, are often hidden and deducted directly from savers’ funds. Pensions minister Steve Webb, said: ‘For the first time we are shining a light into the murky corners of the pensions industry to make sure savers know what is happening to their money’.

More details on the plans are due to be released soon.

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New shared parental leave plans for 2015

25 Feb 2014

As of 5 April 2015 the regulations for shared parental leave will be changed, in an attempt to make workplaces fairer and give easier access to maternity and paternity pay. The new Children and Families Bill will receive Royal Assent in March this year.

Legal responsibilities for employers will be to ensure that requests by both men and women are treated equally. This includes preventing discrimination against men who seek parental leave, and also discrimination against women during the recruitment process.

In addition, mothers can end their 52 weeks maternity leave after the initial two week recovery period. Working parents can then decide how they wish to share the remaining 50 weeks of leave.

However, the Trades Union Congress (TUC) estimates that one in 172 fathers will request this leave, due to low paternity pay. The current rate is £136 per week, which could cause financial problems for parents. The TUC has requested for the Government to amend the Children and Families Bill, and raise paternity pay to 90% of average fathers’ or partners’ earnings for six weeks.

For more information on Shared Parental Leave go to: https://www.gov.uk/government/news/shared-parental-leave

Consumer confidence improves along with business

24 Feb 2014

Following recent surveys that indicate business confidence is at a high in 2014, Lloyds Bank has released a report showing that consumer confidence has also improved.

The Spending Power report shows that 57% of those interviewed believe their financial situation is ‘excellent’ or ‘good’, and that they will be better off in six months’ time. January also saw the greatest improvement of confidence in the economy.

Figures also show that more people were inclined to save than spend their extra cash. Director of personal current accounts at Lloyds, Philip Robinson, said: ‘With consumer sentiment continuing its upward trend, together with the highest positive levels seen to date towards personal finances, 2014 continues to show signs of a more stable year’.

With inflation still below the Bank of England’s 2% target, both consumers and businesses are now looking forward to a rewarding year. Hopes are high that wage growth will be able to overtake the rising cost of living, further contributing to the sense of wary optimism about the coming year.

Record low interest rates ‘to rise in spring 2015’

21 Feb 2014

A Bank of England policy maker has announced that interest rates are expected to rise for the first time since the economic crisis.

Martin Weale, a policy maker in the Monetary Policy Committee commented in a Sky News interview that ‘the most likely path’ would be an interest rate rise in the spring of 2015.

He said that ‘the path is likely to be relatively gradual’ but also that ‘he could not rule out’ an earlier rise if wages increased more quickly than forecast.

Governor of the Bank of England, Mark Carney, previously suggested that once unemployment levels fell to 7%, the bank would consider raising interest rates. But with unemployment rates expected to reach the 7% mark in the next few months, an inflation report released by the Bank of England stated that interest rates are not likely to rise in correlation.

Unemployment has fallen faster than analysts expected, but wage increases still remain sluggish.

Howard Archer, chief UK economist at IHS Global Insight, remarked on Weale’s recent comments, saying ‘It really does tie in with what Mark Carney implied when presenting the inflation report’.

Business groups react to new unemployment figures

20 Feb 2014

After impressive unemployment statistics of 7.1% in the three months to November, the number of people in full or part-time work remains steady. New figures show the unemployment rate was 7.2% in the three months to December.

Latest estimates show that 193,000 more people were in work between October and December 2013.

Jame Sproule, Chief Economist at the Institute of Directors (IOD), said: ‘As the Government undertakes very necessary restructuring of the welfare state, it is becoming ever more apparent that a vibrant private sector is the best guarantor of sustainable growth’.

Head of Group Economic Analysis at the Confederation of British Industry (CBI), Anna Leach, agreed: ‘It is particularly encouraging that more people are finding full-time work and that there are fewer people turning to part-time roles because they could not find full-time positions’.

Employment rates among women also improved, with 67.2% now in work – accounting for 46% of the UK workforce, according to figures from the Office for National Statistics (ONS).

The ONS has warned that monthly figures are volatile and a three-month average is a more representative indicator.

Economists react as inflation beats 2% target

19 Feb 2014

Inflation has fallen below the Bank of England’s 2% target for the first time in more than four years. January figures from the Office for National Statistics (ONS) show that the annual rate of inflation hit 1.9%, welcome news for consumers across the UK.

This fall gives support to the Bank’s recent announcement that interest rates will not rise for at least a year.

Samuel Tombs, economist at Capital Economics, commented: ‘This should enable real earning to rise for the first year since 2007’.

Chief economist at the British Chambers of Commerce, said, ‘An economic environment of low inflation and low interest rates allows people and firms to plan ahead, as they can be confident they will not encounter any unwelcome surprises.

‘It is now up to the chancellor to use next month’s budget to implement measures to boost enterprise and wealth creation’.

The impact for individuals may be less noticeable, according to Howard Archer, chief economist at IHS Global Insight: ‘The squeeze on consumers’ purchasing power remains significant given that inflation at 1.9% in January is still running at double average annual earnings growth of 0.9% in the three months to November’.

Frances O’Grady, general secretary of the Trades Union Congress (TUC), agreed, saying, ‘Hard-pressed working people need far stronger pay rises before they can feel the benefit of falling inflation’.

Business group calls for fair treatment for flood-stricken firms

19 Feb 2014

As leading members of the UK insurance industry meet to discuss the flooding crisis, the British Chambers of Commerce (BCC) has called for businesses affected by the adverse weather to receive fair treatment from the industry as they begin the recovery process.

Speaking ahead of the meeting at Downing Street, BCC Director General John Longworth said, ‘We support all efforts to help businesses get back on their feet following the recent flooding across parts of the UK. But we must be mindful that in many cases, there will not be a quick fix’.

‘The task ahead is to ensure that businesses can recover once weather conditions start to improve. That means an SME insurance market that provides robust cover for businesses without sky-high premiums and excesses, investment to ensure resilience on our over-stretched transport networks, and on-going support for companies that need to restructure their finances and tax payments.’

Meanwhile, a separate report from the TUC has urged employers to take a sympathetic approach to workers who have been affected by the floods.

As well as advising employers to ensure that premises are safe before allowing staff to return to work, new guidance published by the organisation also offers tips on supporting staff whose homes have been affected, such as allowing staff to use workplace shower facilities, and granting them time off to deal with flood-related issues.

The guidance can be accessed here: http://www.tuc.org.uk/healthandsafety/flooding.