March 8th, 2017 | Andrew Hagger | News

• There are 30 fixed dual fuel tariffs ending on March 31.
• Households could see their energy bills rise by more than a quarter (27%).
• Two of the ‘big six’ suppliers have deals ending that will result in price increases: EDF Energy and Npower.

Families could be set for a shock a 30 fixed dual fuel deals expire on March 31^st, resulting in an average rise of £269 (27%). However, customers could save as much as £305 by shopping around for a better deal.

Research by Gocompare.com Energy found that a range of fixed dual fuel energy tariffs, including deals from energy giants Npower and EDF Energy, are due to expire at the end of the month.

Unless they take action now, customers who are currently on these tariffs will be automatically rolled onto a standard variable rate (SVR) which, in the majority of cases, are more expensive than the deal they are currently on.

March 7th, 2017 | Andrew Hagger | News

The British public wants banks to lend to organisations and projects that benefit society, but most people do not know what happens to their savings while they are deposited with their bank.

This is one of the findings of a new piece of research conducted by Charity Bank, the ethical bank with a mission to use money for good, as it launches its campaign to persuade the public to transfer their Cash ISA to an ethical provider.

Charity Bank commissioned Opinium to research the attitudes of the general public towards various aspects of banking. This research found that:

• 74% of the British public don’t know how the money they save in their bank is being used or invested;
• 71% would like their bank to make it clearer where their money is invested;
• 56% would like to be an offered an ethical option when choosing a savings account; and
• 61% would consider opening a savings account that paid a fair rate of interest and lent money to charities and other good causes.

Patrick Crawford, Charity Bank’s Chief Executive, said, “People don’t know what banks do with their money but the findings tell us that there is an appetite to find out and that people would like their savings to be used for good causes.

“Wherever it’s invested, money takes a journey. This might be around the globe, around the big banks or on the stock markets. Sometimes it does good along the way; sometimes it doesn’t.

“When you open a Cash ISA with Charity Bank, we give you a fair rate of interest, whilst making sure your money takes a shorter journey. It spends less time travelling and is invested directly in charities and projects that benefit people across the UK.

March 7th, 2017 | Andrew Hagger | News

Despite the Government’s pension freedoms giving us more control over our money in retirement, new research shows that 40% of people over 40 have no idea of the cost of even a basic lifestyle in retirement, suggesting that more needs to be done to show people how much they need to save in order to be able to afford a decent retirement.¹

According to research by Saga Investment Services, four in ten over 40s said they had no idea of the cost of even a basic lifestyle in retirement, with women much more likely to say this than men.  When it comes to understanding the size of the total pension pot they would need to fund retirement, 80% of people admitted they no idea how big this would need to be.

Experts recommend that people should aim in retirement to have two thirds of the income they enjoy while working in order to have the same lifestyle.

Although some people are good at understanding the annual cost of these different lifestyles, when it came to translating that into the size of retirement pot they would need people really struggled, underestimating by around 50%.  One in ten thought you could afford a basic lifestyle on a pension pot of up to £25,000, which would pay £987 a year, but on average people thought you could afford this with a pot of £126,000, which in reality would get you just £6,904 a year.  This demonstrates the retirement leap people need to make in order to make up the difference between ambition and reality.  People in the North East are most likely to underestimate the cost of a basic retirement, thinking this could be achieved with a pot of just £74,000.

When it comes to affording a comfortable retirement, people on average thought this could be achieved with a pension pot of £244,000, which would actually only give an annual income of £13,300, some £7,000 short of target.  Eight out of ten people said they did not know how big a pension pot you would need to achieve a comfortable retirement.

Typically people thought it would take a pension pot of £500,000 to afford a luxury lifestyle in retirement, but this would just pay £27,000 a year, which would leave people two thirds below the real income needed to enjoy a lavish retirement.

Sally Merritt, head of product, Saga Investment Services, commented: “The research proves just how desperately affordable advice and guidance is needed and we urge the regulator to address this.  It is a real concern that people in their 40s and beyond are so unaware of what they need in their pension pot to give them the lifestyle they want in retirement.  People are in danger of becoming pothole pensioners, who face a bumpy road ahead because they didn’t invest well enough when they had the opportunity.

February 28th, 2017 | Andrew Hagger | News

The Ministry of Justice has decided to reduce the discount rate used in calculations for compensation payments for those who suffer long-term injuries, and the net result could well be higher insurance premiums for drivers.

Matt Oliver from Gocompare.com Car Insurance, commented:  “First IPT increases and now this!  Drivers are being hit with news about rising costs left, right and centre at the moment.  In terms of their insurance, there are likely to be only two things that motorists need to understand – car insurance premiums are going up this year and the only way to be sure you get the best price possible for your specific circumstances is to shop around when your renewal comes through.

“In general, we are expecting car insurance prices to continue rising this year, but different insurers will always take a slightly different view of you and your car, when it comes to insurance risk.  Therefore, when prices are rising, it is more important than ever not to accept the premium your current insurer is offering, but check to see if you can get a better deal elsewhere.  The savings from shopping around this year could be significant and drivers need to give themselves enough time at renewal to do a proper job, rather than just letting their insurer role them over for another year.”

February 28th, 2017 | Andrew Hagger | News

STEP has condemned the sharp increase in probate fees due to come in this May as a new tax on bereaved families.

The new fees will now be pro-rata, and apply to all estates worth GBP50,000 and over. An estate of GBP300,000-GBP500,000 will now pay GBP1000, and estates of GBP2m or more will pay as much as GBP20,000.

This represents an extraordinary increase over the current fees, which are GBP155 if made by a solicitor, and GBP215 if made by an individual, whatever the value of the estate.

A consultation set up by the Ministry of Justice was met with strong opposition from STEP and many others. You can view our full response via the link below.

As STEP Chief Executive George Hodgson said: ‘STEP is very disappointed that the Ministry of Justice has decided to ignore the view of both STEP and the overwhelming majority of respondents to this consultation and press ahead with what represents a new tax on bereaved families.

‘In many cases the probate ‘fee’ will rise very sharply indeed. A family with an estate worth just over GBP1million, not at all unusual given the current housing market, will not only have to pay a large inheritance tax bill (GBP270,000), but then pay an additional probate ‘fee’ of GBP8000, as opposed to the current fee of GBP155.

‘This is back door taxation and we note that there is not even an attempt in the MoJ’s response to justify the fairness of these new charges.’

STEP notes that the proposed fees bear no relation to the cost of processing the application, and appear to be intended to subsidise other civil claims, which, unlike, probate fees, are voluntary.

In addition, paying a fee running into thousands will be hugely problematic for law firms which normally pay such fees up front on behalf of the executors. Obtaining funds will only incur further cost and delays, and add to the stress of bereaved families. Many will have no choice but to sell their homes.

•           STEP comments on the consultation on fee proposals for grants of probate dated 18 February 2016 by the Ministry of Justice

ENDS

February 28th, 2017 | Andrew Hagger | News

With excitement revving up for the release of ‘17’ number plates on 1 March, buying a car is a significant purchase. A new study from American Express^® has found that 19% of adults will spend an average of £11,094 buying a brand new or second hand car this year, equating to a bumper £108 billion across the UK as a whole.

In addition, it’s not just the outlay for the purchase to consider as the research reveals that drivers will spend an average of £1,492 per car this year on running costs.

American Express offers the following finance tips when it comes to buying and running a car:

1)     Think outside your local area – while popping down to your local car dealership might seem like the easiest option, it is always worth broadening your search further afield to make sure you are paying the best price for your new wheels.

2)     Think about the future – Before you start browsing the forecourts think about what you really need from a new car. There’s no point buying a two-seater convertible if you’re thinking about starting a family, so work out what is realistic.

3)     Set a budget – While many Brits balance the books before buying a car itself, it’s also important to consider the financial commitment that continues after you’ve driven out of the dealership. Setting a monthly budget for those regular costs such as fuel, road tax and toll payments can help put the brakes on any overspending.

4)     Shop around – Whether you’re purchasing insurance or booking a service, make sure you shop around for the best deals and choose the option most suited to your circumstances. For instance, if you will only be occasionally driving, pay as you go insurance might be a better fit, whereas families who have adult children behind the wheel can make savings by taking out multi-car policies.

ENDS

February 21st, 2017 | Andrew Hagger | News

The biggest home running cost for most people is gas and electricity, just as the biggest car running cost can be fuel, according to AA Home Services.

Today the AA launches a radical new boiler cover and energy switching service, which guarantees to save members £200 on their gas and electricity costs and non-members £150.

It not only protects a user’s gas boiler – the largest consumer of energy in the home – against breakdown, but ensures that it burns the cheapest energy available while the home also benefits from the cheapest electricity supply, too.

The ‘big six’ energy providers have made £ billions in profits over the last six years according to Ofgem.

A recent report indicated that two thirds of UK households are still on the standard variable tariffs of the ‘big six’ suppliers which can be hundreds of pounds more expensive than the best deals. It is estimated that last year households paid up to £2 billion a year too much. Some of these profits are due to customer complacency, so the AA wants to get better deals for families.

Why the big idea

One of the biggest expenses for consumers is energy bills and many people are in the dark on how to get the best deal.

Not only are millions of families significantly over-paying for their energy, if their boiler breaks they often don’t get the service they deserve to keep their heating working and hot water flowing.  A boiler breakdown can be one of the most disruptive events for a household – especially for vulnerable people.

Consumers don’t realise there are options to keep them warm; their heating running reliably and save money.

That’s why the AA is launching an imaginative new energy switching service that both ensures customers never overpay for their energy again and provides prompt help if their boiler breaks down.

Customers buying an AA boiler cover product will be guaranteed to save at least £150 on their energy bills by using the AA to find and switch them to the cheapest energy supplier on the market. If a cheaper tariff becomes available, the AA will let them know and switch them again.

If a customer who is also an AA roadside member doesn’t make £200 of savings (£150 non-members) on their energy bills, the AA will refund the difference.

How it works:

The AA makes no charge and takes no commission from energy companies for this service.  And, it is completely independent – unlike price comparison sites that do take commission so may not always show the cheapest option.

By calculating actual energy usage, the best available deal is found and consumers are switched to the cheapest provider. Tariffs are regularly compared, ensuring that the best possible deal is always found.

On the guarantee there are no catches – if a customer doesn’t save £150 (£200 if an AA member), they will be refunded the difference (so the boiler cover could effectively be paid for too).

James Hosking, director of home services for the AA, said: “Because anything can happen, we want to give consumers a better energy deal while also continuing to ensure that they enjoy first-class boiler cover.

“The savings customers make by us switching their energy suppliers will pay for their boiler cover or we will top it up. Consumers can put their trust in the AA to save them money and get brilliant boiler cover.

“In our trial the average saving was £250 – the lowest was £79 and the highest an eye-watering £934.

“It really is a win win situation.”

February 21st, 2017 | Andrew Hagger | News

Aspirations for dream homes and cars are not just for the young, many of us live this dream after we turn 50 by carrying out major spending on homes, cars and holidays*. Part of this could well be driven by retirement as almost half of people say they notice more repairs that need to be done to their home since retiring. Two thirds have bought a new kitchen, the same number have bought a new bathroom and two thirds say they have carried out major work to their home.

According to the research by Saga Personal Loans amongst over 8,000 over 50s, these home projects do not come cheap; typically people said they spent around £17,000 on renovations, they spend around £5,000 on a new bathroom and £13,000 on a new kitchen.  People seem keen to continually revamp their homes, with one in eight typically refitting the bathroom twice and carrying out three-six major home improvements.

And the spending does not just stop at home – people over 50 account for almost half of the UK’s spend on motoring. Having a reliable car is a key concern whether they need it for commuting, shopping or for leisure, which could explain why a people in their 70s say they have bought three new cars since turning 50.

Wanderlust also kicks in once the children have left home or people stop working.  People are keen to spend their extra time travelling the world, typically taking 7 foreign holidays in their 50s, whilst people in their 70s said they had had 22 foreign holidays since turning 50.

When it comes to paying to achieve their dreams, much of this is achieved by diligent saving throughout their working lives, others use income by continuing to work for longer either full or part time, some use the equity they have built up in their homes and many use loans to pay for maintaining their lifestyle.

February 21st, 2017 | Andrew Hagger | News

Britons haven’t lost their appetite for saving – despite the current low interest rate environment and economic uncertainty over issues such as Brexit.

A survey conducted by one of the UK’s leading building societies, the West Brom,  shows that 72 per cent of the nation still class themselves as regular savers.

Out of more than 1,300 adults questioned, some 69 per cent expected to save the same amount of money in the next 12 months as they did last year, while 53 per cent said they would like to save more but currently don’t have enough disposable income to do so.

In contrast, only one in five said they would prefer to live for today rather than save for tomorrow, although this increased to more than a third among 18-24 year olds who are more likely to put spending first.

Across the board, only 25 per cent of respondents were prepared to take greater risks with their money to increase their chances of a better return.

However, middle-aged Brits – between 35 and 44 – admitted they were hoping to save more as a precaution in the next 12 months because they are worried about the future.

David Taylor, the West Brom’s Head of Products, said: “It is reassuring to see that the majority of people in the UK, particularly in these uncertain economic times, see themselves as savers.

“Putting money aside figures strongly in people’s minds and they believe it’s important to build themselves a financial buffer.”

The study also revealed how people were starting to think beyond the humble savings account, showing a willingness to consider investing money in alternative ways.

A third were prepared to look at investing in stocks and shares and 25 per cent agreed property might provide a means of boosting their cash pot.  Peer to peer lending, Premium Bonds and even investing in material goods such as classic cars and fine art were also mentioned. 

David added: “Diversifying their investments can help some people get more out of their money, albeit with careful consideration for any risks involved. 

“Our survey showed that people do generally have a strong grip on their finances and regularly review their financial position, something we would strongly advocate at the West Brom.”

February 14th, 2017 | Andrew Hagger | News

The Government’s new Lifetime ISA is set to be a hit with parents and grandparents who are keen to get younger generations into the saving habit, according to new research by The Share Centre.

The Lifetime ISA, which will be available from 6 April 2017, is a new type of saving account aimed at 18- to 40-year-olds. You can save up to £4,000 a year, and any savings you put into the account before your 50th birthday will receive an added 25% bonus (up to £1,000 per year) from the Government. However, if you take out any money before the age of 60 there is a 25% penalty charge based on the amount withdrawn. The exceptions to this are if the money is withdrawn for a first home purchase, or in the event of terminal illness or death.

A survey by The Share Centre has found that 64% of investors over 40* will be encouraging their children or grandchildren to open a Lifetime ISA account, and a further 30% would consider doing so. Just 6% said they would not recommend the product.

The most popular feature of the Lifetime ISA among the over-40s is the government bonus, with 77% saying that this is a reason for recommending the product to younger generations. Far from being put off by a penalty charge for early withdrawal, one in five said that this would be a reason for encouraging children or grandchildren to open a Lifetime ISA, as they wouldn’t be tempted to take out their money too soon.

The over-40s also like the flexibility of the Lifetime ISA product, with 65% saying they would recommend it to younger generations because it helps them to save both for a first home and for retirement. Nearly half the respondents (48%) can see younger family members continuing to use a Lifetime ISA after taking money out for a house purchase.

Having recommended a Lifetime ISA to younger generations, the Bank of Mum and Dad (and indeed the Bank of Grandma and Grandad) are set to help them to fund their account. Nearly two thirds of over-40s (64%) said they will give younger family members money to pay into a Lifetime ISA. Among these, 41% see themselves giving ad hoc lump sums and one in five expect to give payments on a regular basis.

Nearly three quarters (72%) of over-40s believe the new product will be effective in helping more young people to save for their future. In a further endorsement of the Lifetime ISA, 79% say they would have opened one if it had been available to them between the ages of 18 and 40.