Speakers' Corner

Why pension changes mean you should start saving now

By Chris Torney

Daily Express personal finance editor and Confused.com writer, says why you should start saving for a pension now.

Big changes to pensions are afoot. The government has just announced its intention to proceed with plans to pay a universal state pension, possibly of £140 a week.

Almost simultaneously, Lord Hutton published his report into pensions in the public sector, recommending that the likes of policemen and teachers should not only retire later, but also contribute more of their salaries towards funding their pensions.

Clearly, public sector workers are unlikely to be happy with Hutton’s proposals – and ministers face a bitter struggle with the unions if they attempt to impose these reforms.

But the plans make sense to anyone who understands how rising life expectancy has added hugely to the cost of guaranteeing the income provided by final-salary pensions.

The move to a flat-rate state pension should be much more widely welcomed, however.

At the moment, the state pension system is a bewildering mish-mash of National Insurance contributions, extra payments (in the form of the State Second Pension), and means-testing.

And it’s the last of these – the means-testing that is required to qualify for pension credit – which is the most damaging.

As things stand, any pensioners whose total income – from state and private pensions, as well as from savings or other investments – falls below a certain threshold can apply for a weekly pension credit top-up.

But there are two issues with this: firstly, many people find the means-testing process very intrusive (although it could be argued that this is how it needs to be).

The second problem, on the other hand, is much more damaging.

Essentially, the pension credit system is sending a message that for those who are, say, 10 or 15 years from retirement but don’t have much in the way of pension savings, there is not much point in starting to put money aside.

That’s because any extra income that a small pension pot generated would simply reduce the individual’s entitlement to pension credit. So the money they saved up could end up making them no better off.

Pension credit acts as a disincentive to save for thousands of people who could potentially put together modest, but useful, retirement pots.

The scheme is well intentioned, and goes a long way to helping many older people get by. But replacing it with a universal payment that can cover reasonable living expenses overcome the drawbacks I’ve mentioned.

It’s not yet known exactly when the flat-rate pension will be introduced – 2015 is the consensus view at the moment – but it now seems certain to arrive at some point.

So if you’ve been putting off setting up a pension because you weren’t sure it would be worth it, the message is now clear: get saving.

How to beat the parking-fine scandal

Safiya Hussain, solicitor and director of www.NoParkingFine.co.uk tells Confused.com motorists how to avoid being stung by unfair parking fines.

There are few things that make motorists angrier than parking fines – especially if they are illegal.

Government statistics show that a shocking two-thirds of the 10 million parking fines issued in England and Wales every year could be legally invalid. That’s £500 million wasted by us. But only a very small minority of drivers bother to appeal.

Why are so many parking fines illegal? And how on earth are the parking authorities getting away with this?

Well, firstly, it can take a trained legal eye to spot the illegal parking fines. There are hundreds of laws which the local authorities have to abide by in order to give out parking fines. These complex rules are hidden in the hundreds of pages of legislation. If one minor rule is broken, then it renders a parking fine legally invalid. Our study has shown that these rules are being broken– for example signs are drawn incorrectly, road markings are marked wrongly, legal permissions have not been sought and so on.

But when was the last time the average motorist read the 157 pages of the Road Traffic Act 1991 to know that the council have broken a rule? This is why the parking authorities have been getting away with this, so make sure you know how to beat the parking fine trap.

Here’s what to do if you get a parking ticket:

1. DO NOT DESPAIR if you have received a parking fine – there is a chance it is legally invalid.

2. DON’T PAY IMMEDIATELY- You will have between seven and 21 days to pay at the discount rate so bide your time while you plan your next move.

3. TAKE PHOTOGRAPHS. This part is crucial. When you have been ticketed, immediately whip out your camera phone and take a few pictures. Take photos of the position you were parked, include signs and road entrance signs, road markings and anything else relevant.

4. LEGALLY INVALID? Carry out your legal research into the traffic laws to see whether the parking authority has broken any laws. Or if you don’t want to do the research yourself, email your details to www.noparkingfine.co.uk, where the legal team will take a look at your parking fine and advise whether it is legally invalid or not. A fee will be charged for this service although they do give 50% of profits made to charity. Basically, weigh up the cost of your fine and if this is worth it for you.*

5. APPEAL or PAY: If your parking fine is legally invalid then send a legal appeal letter. If your parking fine is not invalid then pay it immediately at the discount rate and forget about it and don’t make the same mistake again.

* After a free initial consultation, Noparkingfine.co.uk takes on cases on a no-win no-fee basis. The company’s fee is half of the parking fine that was originally charged (including discount if the case is taken on during the discount-rate period).

 

 

By Chris Torney

Personal finance editor of The Express and writer for Confused.com, Chris Torney comments on the ISA war.

With a rise in interest rates expected soon, and only a few weeks left until the end of the financial year, Britain’s banks have embarked on a price war to attract ISA savers.

In the last few days alone, a number of providers have increased rates in a bid to lure those who haven’t used up this year’s £5,100 cash ISA allowance.

At the time of writing, Santander was the market leader when it came to instant-access accounts having just upped its rate from 2.85 per cent to 3.15 per cent – not bad considering the base rate is anchored at just 0.5 per cent.

Halifax and smaller players such as Principality and Barnsley building societies have joined in with recent increases of their own.

This competition for customers who haven’t used up their £5,100 ISA allowances yet this year – the deadline is 5 April – is welcome at a time when most accounts are paying derisory returns and inflation is on the rise.

But in focusing on this dash for new cash we risk ignoring the bigger picture.

ISAs have been around for almost 11 years now: if you had invested your full allowance every year since the scheme launched in 1999, you would have deposited a total of £39,300 (including the current tax year’s allowance).

With interest added, this would be worth well over £40,000. So, for thousands of people who’ve saved conscientiously for the past decade, it’s far more important to ensure their previous years’ ISA money is getting the best possible rate.

In theory, this shouldn’t present a problem: every year when you are seeking the best place for your current ISA allowance, you could just move your old ISAs into the same account.

But this is where the banks, as usual, make it tricky. Many of the best deals for new ISA money do not accept transfers from existing ISAs holdings – and the market-leading account from Santander mentioned above is one of them.

The problem is that too many people will use the Santander ISA as a home for a new deposit, while ignoring the plight of their existing savings.

But remember that if you have an old ISA account, your provider is likely to have cut rates significantly since you opened it – and that’s where you’re losing out.

If you’re just earning 1 per cent on your £40,000 nest egg, that’s £400 interest a year. But if you move it to a top deal that accepts transfers – Halifax’s Direct ISA does and it is offering 3 per cent – you’d generate £1,200, tax-free.

By all means search for a top rate on this year’s cash – but neglect existing holdings at your peril.

 

The content of this blog is based on personal opinion only and does not constitute financial advice.