May 8th, 2015 | Andrew Hagger | News

At the beginning of April the media went into overdrive speculating what would happen when people were given greater access to their pension cash, but it seems that the scare stories of people splurging their pension pot on fast cars and expensive holidays were well wide of the mark.

Having spoken to some of the pension providers, they have been much busier as you’d have expected however it seems that most people are seeking guidance and clarification regarding their options and the most suitable ways to manage their retirement savings.

A spokesman from Scottish Widows said: “We were prepared to expect a surge in calls the week beginning 6th April with people deferring accessing their pensions until the freedoms came into effect and we had on average a call every 10 seconds.

“It was also a watershed for us in terms of online – more customers have contacted us digitally than by phone.  We received 45,000 phone calls in the first three weeks with 55,000 people visiting our Retirement Freedoms website”.

One positive that has come out of the high profile changes is that there is now a growing choice of excellent online resources for consumers who are keen to understand more about their retirement planning options, without them having to book a face to face appointment with a financial adviser.

With more people aged 60 or over in the UK than there are those aged under 18 you cannot underestimate the need for straightforward help and guidance for this fast growing sector of the UK population.

As well as the Scottish Widows ‘5 steps to retirement’ guide, Unbiased.co.uk has launched ‘Your retirement countdown checklist’ in partnership with Prudential.

More than a fifth of people admit that they have taken no steps to plan for their retirement, so this sort of online resource will prove an invaluable help in making that first step.

It covers the key stages every new pensioner needs to take in order to ensure they make the right choices for themselves under pension freedom, and in the decade leading up to retirement.

Skipton Building Society has been proactive in this area too with the launch of RetireSavvy an online retirement community.

As well as helping demystify retirement through a range of articles, real-life user blogs and discussion on its live forum, retiresavvy aims to contribute to the wider social debate around retirement and provide a strong voice for retirees and pre-retirees.

Dr Ros Altmann CBE, the UK Government’s Business Champion for Older Workers and an independent expert on consumer finance, pensions and retirement, praised the move:

“There is certainly a need for this, as too many people fail to plan ahead and don’t make the most of their later life opportunities. Retirement is not just about money – it is something that has a major impact on people’s lives and their families – and you really need to be prepared for it.

May 6th, 2015 | Andrew Hagger | News

Halifax has just launched a new low rate credit card offering a single rate of 6.45% interest on purchases and balance transfers.

According to personal finance experts this card just pips the long time best buy low rate card from MBNA at 6.6% APR. Other competitive cards in this space are Tesco Bank at 7.8% and Virgin Money at 7.9% APR.

A spokesman for Halifax Credit Cards, said: “By launching this simple, low rate product Halifax is demonstrating its continued commitment to providing extra value and choice to customers.

“The Halifax Low Rate Card is designed to help customers keep things simple, with the same low rate across purchases and balance transfers, enabling customers to keep track of their spending more easily.”

April 29th, 2015 | Andrew Hagger | News

Latest research from online will creation provider, Affio reveals that many people are reluctant to write a will, unaware of the various ways to do so, and also unsure how much it will cost.

As a result the company feels this is why more than 13 million 30-54 year olds in the UK currently do not have a will.

Affio polled people between the ages of 30 and 54 who are yet to create a will. More than half said the process of writing a will is off-putting because it requires them to confront their own mortality. A further 25% are putting off the process because they consider it to be low down their priority list.

When asked where they would go to if they had to create a will tomorrow, the majority of respondents – three-quarters – said they would seek third-party help with more than a quarter (26%) admitting they would go to a local firm of solicitors.

Most of those interviewed thought creating a will is more expensive than it actually is. When asked to estimate the cost, almost six in 10 thought creating a will costs between £100 and £199 while 18% reckoned it costs between £200 and £499

Only 10% correctly estimated the average cost of will creation — between £50 and £99. In reality, going through a solicitor to write your will typically cost around £150 – and writing one yourself online can cost as little as £60.

A spokesman for Affio said: “The results of this survey confirm the huge level of misunderstanding in the UK surrounding wills. Not only are people unaware of the various ways to create a will, but most think it’s far more expensive than it actually is. Add in the fact that many people simply do not like to confront their own mortality and you can see why so many of us haven’t got a will. The risks of not having a will, of course, are well-known. It can cause all sorts of confusion and anguish at an already difficult time. But for whatever reason, the message, to date, simply hasn’t been getting across.”

April 28th, 2015 | Andrew Hagger | News

A third of parents in Britain (32 per cent) are secret piggy bank raiders, taking money from their children’s savings accounts to pay for something for themselves, according to new research from Santander.

An unexpected bill was the most common reason (44 per cent) for raiding their children’s savings, but many also took cash to cover the cost of living expenses, to buy a new car, go on holiday or to make home improvements.

 While 49 per cent of piggy bank raiders paid the money back as soon as they could, 19 per cent said they intended to pay it back but didn’t, and 15 per cent admitted to having no intention of paying the money back.

 The study also reveals that over a third of parents (39 per cent) in Britain who set up a savings account for their children admit they have stopped putting money into it. Of those parents, 73 per cent say they can no longer afford to and 15 per cent have just got out of the habit.

A spokesman for Santander, said: “Regularly putting money away, however little, and building a savings habit has a hugely beneficial long-term impact. Our new cash Junior ISA is a great way to build a tax-free savings pot to help save for a child’s future.”

 Of those parents surveyed who have children under the age of 18, half (49 per cent) have set up a normal savings account for them, a third (36 per cent) have set up a Child Trust Fund, and one in five (20 per cent) have set up a Junior ISA. The average amount parents put away for their children is £23 per month. One in five parents (19 per cent) have never set up any kind of savings for their children.

April 24th, 2015 | Andrew Hagger | News

With the recent Budget having announced plans to consult on allowing UK retirees who have already purchased an annuity to cash-in their policy, new research has revealed that a large proportion of existing annuity holders will consider selling their guaranteed incomes for a cash lump sum.

The Tilney Bestinvest survey, carried out by YouGov amongst over 1,800 GB adults who had already purchased an annuity, found that 17% of respondents agreed with the statement ‘I would personally consider selling the annuity I have already purchased for a cash lump sum’.* Of the remaining respondents, 33% said they ‘would not personally consider selling the annuity I have already purchased for a cash lump sum’, and 50% said they didn’t know.

A spokesman for Tilney Bestinvest said: “While this announcement certainly grabbed the headlines and is likely to be popular with some retirees for whom “annuities” has become an almost dirty word as a result of the depressed gilt-yields that have driven annuity rates, the practicalities of implementing the policy are far from straightforward. Indeed, those looking to receive their original annuity investment minus what they have already taken from their annuity will likely be severely disappointed for several reasons.

“It has been announced that insurance companies who currently provide annuities will not be able to enter the market, and therefore the function of selling annuities will be carried out by third party brokers. This cost, coupled with the fees involved in medical underwriting which will be required to carry out the encashment, means that the overall fees for selling an annuity are likely to be substantial. These are on top of the tax which would need to be paid when receiving the cash, payable at your highest tax rate as well as any financial advice taken.

“As it is more likely that those with smaller annuity pots will be the ones most tempted into selling them due to the low levels of income received, the combination of these costs will have a considerable impact, perhaps even prohibiting the sale.

April 23rd, 2015 | Andrew Hagger | News

The number of current account customers who switched banks in the last 12 months has jumped by 7%,with Barclays experiencing the biggest net loss of customers.

The latest figures from the Payments Council reveal that 1.14 million customers switched bank up to 31 March, compared to 1.06 million the previous year, taking advantage of new, faster switching rules.

Between July and September, the most popular banks to switch to were Santander and Halifax, with a respective net gain of 43,312 and 53,624 customers. The only other providers to make net gains were Nationwide (6,608 customers) and Tesco Bank (2,467).

But Barclays saw the biggest net loss of 31,331, with HSBC, Lloyds and NatWest all suffering losses too.

Personal finance expert Andrew Hagger of MoneyComms said customers should attempt to shop around to get the best deal, though the “confusing array” of tariffs, overdrafts charges and interest payments, makes it a “minefield” for those looking for the best offer.

“The figures show that although more people are voting with their feet and looking for a more suitable banking relationship, the vast majority are refusing to budge from their existing provider despite the array of enticing up front cash incentives on offer,” he said.

April 17th, 2015 | Andrew Hagger | News

Many RBS and NatWest customers face paying higher agreed overdraft charges after being automatically switched to current accounts with higher overdraft interest rates.

Approximately 140,000 customers with money in seven old accounts that the bank no longer offers will be moved to its standard Select account, which has an overdraft rate of 19.89% EAR.

NatWest charges a £6 monthly fee for authorised overdraft usage plus interest at 19.89% EAR. First Direct’s charging structure is 15.9% EAR but the first £250 of overdraft used is interest free.

The bank said it expects the switch to mean around a third of affected customers will see their overdrafts charges increase.

Those affected are customers with NatWest’s Personal Current and Gold Plus accounts and RBS’ Personal Current, Gold Cheque, Private and Private Banking current accounts and the Child &Co current account.

Personal Finance expert Andrew Hagger said: “There are plenty of cheaper overdraft options out there – this is a perfect example of why people should shop around.

“The cost of an agreed overdraft varies greatly between the main banks and building societies and because of the different types of charging tariff they use it’s a tricky job for consumers to fathom out the cheapest deal.”

April 16th, 2015 | Andrew Hagger | News

Barclays is to launch a paid-for new rewards scheme on Monday 20 April, called Barclays Blue Rewards.

For a fee of £3 a month, customers who sign up will get monthly fixed cash rewards up to £15 depending on which Barclays products they hold.

Blue Rewards members will also be eligible for cashback of up to 6% when spending with selected outlets.

Customers signing up to the Monthly Loyalty Reward scheme will receive £7 a month paid into a digital wallet connected to a Barclays current account of their choice, meaning they will be £4 up after the £3 fee. Mortgage customers will receive £5 a month , and home insurance customers £3 a month.

Experts warned that such reward schemes shouldn’t tempt you to switch your financial products to a provider without checking to see if there are cheaper alternatives elsewhere.

Andrew Hagger from Moneycomms.co.uk said”Although it may be convenient to have all your financial products under one roof, you could end up paying over the odds by not shopping around. By buying these products elsewhere you may be able to save more than the £60 and £36 you’ll receive each year for keeping your mortgage and home insurance respectively with Barclays.”

Hagger added: “It looks as if Barclays has realised it needs to be more competitive to maintain its share of the current account market.

March 13th, 2015 | Andrew Hagger | News

Scottish Friendly has called for the issue of formal ‘think again’ warnings to be issued to customers wishing to cash in all or part of their pension when the new pension freedoms take effect next month.

The savings and ISA provider says that guidance alone from bodies such as Pension Wise and Citizens Advice is not enough to prevent people putting their hard-earned pension savings at risk.

A spokesman for Scottish Friendly, said: “Like many in the industry, we have concerns that people will make investment decisions that could fall flat and ultimately leave pensioners without any source of income. Those retirees planning to invest into property are of particular concern as the volatile nature of the market could leave thousands of people penniless if the housing bubble was to burst.

“The prospect of considerable numbers of people using their pension to buy property for buy-to-let purposes is a very real and present danger to them and the wider long term economy. The industry needs to be doing a lot more to alert people to the risks they could be taking before they take the decision to withdraw all their money to fund this type of investment.”

It added “For those with modest pensions, putting all their money into property represents a real risk compared to those with larger pots who could use property as part of a diversified portfolio. Putting all their money into property means they would in effect be running a business, they’d have no access to their capital and there is no certainty that their property will generate the income they originally envisaged. Unlike regulated investments where customers are protected by Treating Customers Fairly rules, investing in buy-to-let property moves outside this protection.

“It is good that pensioners have access to guidance from such bodies as Citizens Advice and Pension Wise, but this relies on the individual reaching out to examine their options. A more formalised approach also needs to be adopted that ensures that all retirees are alert to the potential downside of drawing down all or part of their pension savings and in particular the risks of using buy-to-let for retirement income.”

March 6th, 2015 | Andrew Hagger | News

Up to one million people nearing retirement age still owe money on their mortgage, according to a new report.

The latest research from LV= looking at the finances of retirees reveals that less than one in four over-50s were planning to seek professional financial advice before they retire.

These numbers are worrying ahead of the government’s pension changes next month which will give people the chance to use their retirement savings as they wish.

LV= said that a third of people do not understand the new rules or how the changes will affect them.

Some may simply not be able to invest another property as a way of providing a monthly income with a million mortgages yet to be fully repaid by retirees.

It is estimated that more than four million current retirees have outstanding debts, with more than half of these owing money on credit cards.

A spokesman for LV= Retirement Solutions, said: “In just a few weeks those approaching retirement will have even more choice as to how they take their pension income. This is a great opportunity for pension savers and the men and women who take advantage of these new rules could significantly boost their income.

“We would always encourage people to seek financial advice to ensure they make the most of the savings they have spent a lifetime building. We believe that it is crucial that the industry works together to demonstrate the value of guidance and advice to savers.”