Pension delay for women – time for action

The Government is currently trying to pass a Pensions Bill that will equalise men’s and women’s state pension age at 65 in November 2018, and then raise it to 66 by April 2020. This is 6 years earlier than previously planned.  AGE UK and Saga are campaigning for the Government to rethink this proposal since it will result in a delay of up to 2 years for women born between 1953 and 1959 to receive their old age pension.

The campaign is gaining support amongst MPs and it was reported last week in the Sunday Times’ that the Treasury is now considering a reprieve for the hundreds of thousands of women affected.

The table below shows exactly how the proposed changes will affect them unless the government acts to stop this legislation becoming law.

Anyone affected should write to their MP and lobby them to stop this legislation altogether. Time is running out since the second reading of the bill is scheduled for the 20th June.

With the basic state pension worth around £5,000 a year, a woman facing a two year delay in receiving her state pension will lose out on a massive £10,000. … Continue Reading

Sacrificing savers: the short-term politics of long-term pain

Pre-election, both David Cameron and George Osborne were pro-saving; they were going to rebuild the economy on a recipe of exports, investment and savings. But rather than nurturing and rewarding saving, they now seem intent on bleeding savers dry in order to support growth in an unbalanced economy.

The last decade saw record low savings with a booming economy fuelled by massive consumer debt. Now we have an economic policy that is designed to penalise savers, encouraging them to spend rather than save; our diminished savings are being sacrificed to prop up a semblance of economic growth. However at the same the Government realises that we are saving too little and we are seeing the introduction of initiatives such as NEST to encourage us to save more!

The result of this schizophrenic approach, which as ever sees political expediency triumph, is to undermine the long term financial security of millions of households. Providing the economy does eventually pick up, the retired – who contributed least to the financial crisis and are the most badly hit by current Government policy – will be the least likely to benefit. … Continue Reading

The budget for growth must be built on a stable foundation of savings

This week’s budget has been labelled a budget for growth. Cuts and tax rises have been ruled out; tax breaks for industry, enterprise zones and vocational training are in. But you don’t get economic growth without investment and the money for investment comes from savings. If this is to be a budget for lasting growth it must also address the issue of the UK’s troubled savings culture.

In decline

Saving in the UK has been in decline for years; in fact if you exclude employer pension contributions then overall we have had negative saving since 2003.  The result is that the level of gross national savings has fallen to 12.2% of GDP. This is 6% less than the European Union average and as Mervyn King has pointed out, is the lowest it has been since the Second World War. … Continue Reading

Making it pay to save

Last week, speaking on the future of the state pension, Secretary of State for Work and Pensions, Iain Duncan Smith, said “We have to fundamentally simplify the system. And we have to make it crystal clear to young savers that it pays to save.”

Mr Duncan Smith has already succeeded in putting forward welfare reforms that make sure you are better off working than not working.  Now he is preparing the ground for reforms that will ensure that you are better off saving than not.

Proposed State Pension Reforms

The proposed reform to the state pension will mean that those who have saved will receive the same support from the state as those who haven’t. The proposed £140 week basic state pension may not be enough to sustain your desired lifestyle, but this is obviously not the point. Beyond that it is your responsibility to save for a pension and under this scheme you will at last have a fair basis to save from. Your savings will no longer be a substitute for Government benefits that you would otherwise have been entitled to, had you not saved.

Making it pay to save has been Save Our Saver’s message from the start. These proposed changes to the state pension would be a major step forward, but the reforms must not stop there. … Continue Reading

Heading towards an old age dependency culture

Iain Duncan Smith is a man on a mission to mend Britain’s broken society. A society, he warns, that is splitting in two due to the development of a dependency sub-culture. He describes a growing underclass totally reliant on the welfare state with lower life expectancy and low general expectations for life.

His solution is to get people back to work by making sure that it is financially worthwhile to earn a living, rather than to rely on benefits. Mr Smith understands that working and earning your own living increases self-respect, self-reliance and greater independence. Overall, this will encourage a greater sense of belonging to society.

But if Mr Smith is to truly banish the dependency culture then he needs to apply these sound ethics and financial incentives to another area in his portfolio, pensions. Over 50% of people working in the private sector are not currently saving for a pension, so getting people to save in the first place is a priority. … Continue Reading

Reply to the Government’s petition response

In January of this year Save Our Savers submitted a petition on the Downing Street web site. It read:

We the undersigned petition the Prime Minister to take identifiable and specific measures which will benefit savers and pension funds, thereby encouraging a culture of saving rather than borrowing in the UK

The Government has just responded. The response however totally, and some might suspect, deliberately misses the point.

Yes, they say, we know people haven’t saved; we know that the level of debt has made the UK particularly vulnerable to financial instability. We agree we need to “encourage people to save and invest”. We intend to “foster a culture of personal responsibility” with “better financial planning”. We will even provide a free annual financial health check.

Well, if we hadn’t exercised personal responsibility and successfully planned our finances we wouldn’t be losing out now. The reality is that no amount of financial planning can overcome a Government that puts its need for low interest rates and inflation before returns on peoples’ savings. Savers do not need an annual financial health check we need a return on our savings. … Continue Reading

Government response to Save Our Savers petition

Shortly after our launch in January this year, we published the petition below on the No 10 web site;

We the undersigned petition the Prime Minister to take identifiable and specific measures which will benefit savers and pension funds, thereby encouraging a culture of saving rather than borrowing in the UK.

Despite the clear economic and social benefits of a thriving savings culture, savers have been persistently ignored in their efforts to provide for the future and the UK now faces a worsening savings crisis. The frenzy of spending and borrowing that was a major factor in the collapse of UK banking has hit prudent savers hardest and there is an urgent need to create policies that support saving in the UK.

With the announcement of the election the site was closed to all new petitions and all current ones were immediately put on hold, but in that time we collected 3,110 signatures. … Continue Reading

Do you have faith in the Government to reward you for saving?

By choosing to put money aside to spend later rather than sooner, savers are not only sacrificing what they could have now; they are taking a risk. They are gambling that their savings will be worth at least as much in the future as when they first put them aside.

Of course it is every saver’s responsibility to invest their money wisely and get the best return they can.  But this is only part of the answer. The highest paying accounts cannot accommodate everybody’s savings and as any prospectus will tell you, the value of your investments can go down as well as up. In short there will always be winners and losers and as long as there is a level playing field, there are no legitimate grounds for complaint. However, all this operates within and is dependent upon the economy as a whole and there’s the rub.

Ultimately by saving you are putting your faith in the Government. Will it support savers or not? Will it, through its tax and welfare policies penalise people for having saved? Will it enable savers to at least maintain the value of their savings in line with inflation?

Promoting greater personal financial responsibility while devaluing savings is dishonest … Continue Reading

The Government will back Ireland but not its own savers

The money markets and speculators are circling Ireland’s already severely injured economy and closing in for the kill. George Osborne, the Chancellor, has taken the position that we must support the Irish because of the collateral damage that would be inflicted on our own economy if we didn’t.

Hence the UK Government is preparing to lend billions to keep the money market wolves from the Irish door. In effect the UK will be using what is left of our own credit worthiness to borrow £7 billion, at say 3% interest, from the same international money markets that are refusing to lend to Ireland, and then we will lend it on to the Irish ourselves, at say 5%.

Supporting Ireland is the right thing to do for our political and economic interests. But why should UK taxpayers provide secure investments to the money markets and speculators which are causing all the turmoil?  Why not cut them out?  The Government should come straight to the UK savers who, as taxpayers, are underwriting the loan anyway, and who would welcome the opportunity to receive 5% interest in the current climate. … Continue Reading

30 Billion reasons for savers to fight back

Interest rates have been at rock bottom for savers since March 2009. They started to fall shortly after the Lehman Brothers crash in September 2008. Six months later the Base Rate had been brought down in stages to 0.5%. Savings rates had followed it down to a level on a par with the ones shown below for July 2010.

At the end of July 2010 there was £1.082 trillion of cash savings deposited in the UK. A trillion is a difficult number to grasp, so to put it another way that is £1,082,222 million (yes, a million million) of cash deposits.

… Continue Reading