mike No Comments

Pensions – UK Data July 2019

Pensions – UK Data July 2019

I’ve cut and pasted the following data from The Money Charity’s report received on 24/07/2019:

According to The Pensions Regulator’s Compliance Report, at least 10.11 million employees had joined a pension scheme under auto-enrolment by the end of June 2019, making a total of 22.12 million members of pensions schemes, but leaving 9.4 million employees unenrolled, out of the total declared workforce of 31.55 million.

According to the Family Resources Survey, 49% of working age adults actively participated in a pension in 2017-18, up 4% on the previous year. This was 71% for employees and 16% for the self-employed. The Annual Survey of Hours and Earnings reports that in 2018, 19.6% of private sector employees received an employer contribution to their workplace pension of 8% or more, whereas 94.8% of public sector employees received a contribution of 12% or more.

36.4% of employees with a pension were in an occupational Defined Benefit scheme in 2018, according to the Office for National Statistics, while 34.0% were in an occupational Defined Contribution scheme.

In August 2018, there were 13 million claimants of State Pension, a fall of 110,000 on August 2017. Of these, 960,000 were receiving the new State Pension (nSP) introduced in April 2016.

 

My thoughts on the above data:

It is good news that more people are in pensions, Auto Enrolment has helped with this.  However, I have a few real concerns with the data above.  They are as follows:

  • Those ‘Auto Enrolled’ into a Workplace Pension but not receiving advice could think that at standard Auto Enrolment contribution levels, the legislative basis, they have a pension for their retirement. A pension funded on the standard ‘minimum legislative’ basis will not provide much of a pension fund for your retirement
  • The self employed are still not getting the message. They need to be in pensions too, perhaps legislation in this area?
  • We need changes to Auto Enrolment on the following counts:

 

  1. Lower age, enrolled from age 18
  2. All of your salary should count for the contribution basis. Currently we have a lower and upper threshold and you don’t have to contribute against full salary (in generic terms)
  3. Higher level of contributions

Although the State recognise the need for changes to 1 & 2 above they want to defer until c 2025 as they have no more money to spend on pension tax relief.

 

  • Those in a Public Sector Defined Benefit pension scheme will be doing well. Politicians enjoy good (very good) pension provision
  • We seem to have quite a large proportion of the population still not in a pension. These might be people with 2 or 3 low paid jobs who are not hitting the lower threshold?  They could be people who have opted out under financial pressure or they could be people outside of the criteria.  Whoever they are everybody needs a pension unless you are very wealthy.

One of the key issues and a missing piece of the jigsaw is financial education.  We should start this at school and continue through college, university and in the workplace.

If we can catch people at a young age and spell out the benefits of good financial literacy and planning I believe we can make a real difference.

 

 

Steve Speed

24/07/2019

mike No Comments

Don’t let a scammer enjoy your retirement – beware of fraudsters

There is seldom a week goes by without hearing that a large, well-known firm has been hit by hackers; the latest one was British Airways. You have probably seen the TV adverts warning of the dangers of retirement plans being ruined by fraudsters.

The Financial Conduct Authority (FCA), our industry regulator, recently published an online article designed to highlight the dangers and suggest how to protect yourself from fraudsters. We’ve lifted the advice from their article.

 

Four simple steps to protect yourself from pension scams

Reject unexpected offers

If you’re contacted out of the blue about your pension, chances are it’s high risk or a scam. Be wary of free pension review offers. A free offer out of the blue from a company you have not dealt with before is probably a scam. Fortunately, research shows that 95% of unexpected pension offers are rejected.

Check who you’re dealing with

Check the Financial Services Register (www.register.fca.org.uk) to make sure that anyone offering you advice or other financial services is FCA-authorised.

If you don’t use an FCA-authorised firm, you also won’t have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme. So you’re unlikely to get your money back if things go wrong. If the firm is on the FCA Register, you should call the Consumer Helpline on 0800 111 6768 to check the firm is permitted to give pension advice.

Beware of fraudsters pretending to be from a firm authorised by the FCA, as it could be what we call a ‘clone firm’. Use the contact details provided on the FCA Register, not the details they give you.

Don’t be rushed or pressured.

Take your time to make all the checks you need – even if this means turning down an “amazing deal”.

Be wary of promised returns that sound too good to be true and don’t be rushed or pressured into making a decision.

Get impartial information and advice

The Pensions Advisory Service (www.thepensionsadvisoryservice.org.uk) – Provides free independent and impartial information and guidance.

Pension Wise (www.pensionwise.gov.uk) – If you’re over 50 and have a defined contribution (DC) pension, Pension Wise offers pre-booked appointments to talk through your retirement options.

Financial advisers – It’s important you make the best decision for your own personal circumstances, so you should seriously consider using the services of a financial adviser. If you do opt for an adviser, be sure to use one that is regulated by the FCA and never take investment advice from the company that contacted you or an adviser they suggest, as this may be part of the scam.

 

To read the full article, go to www.fca.org.uk/scamsmart/how-avoid-pension-scams.

If you have any doubts about someone contacting you about your finances, get in touch with us to discuss.

olivia No Comments

The New State Pension and Age

The New State Pension and Age

The new legislation brought in by the government from 6th April 2016 introduced a differential of the state pension in England. The pension plan provides a higher rate of up to £155.65 per week to those who are eligible, supporting a more comfortable lifestyle. The new legislation is a confusing array of eligibility criteria on who can gain the State Pension, who has the old pension plan and who is not eligible at all. Read more

olivia No Comments

MPs and Pensions

I have been listening to the rhetoric of MPs with regards to pensions for a long time but over the last few weeks, particularly with regards to one particular party, MPs are attacking pensions again. I feel I must make the following points: Read more