Two Pennies Worth

Make pension saving more interesting and we’ll all be better off

Consumer champion Sam Dunn calls for someone to spark a serious interest in saving so we don’t all retire poor.

Bouquets or brickbats? Praise and encouragement versus punishment and fear of failure have long been minted as two sides of the same coin: how best to motivate an individual to succeed?

Which suits you most comfortably is rather less simple, of course.

However, sometimes you won’t even have the choice – when it comes to saving for a pension, it’s the bogeyman approach or bust.

The scale of the pensions shortfall

Last week, a fearful report by the Chartered Insurance Institute estimated the UK's overall retirement savings deficit – the chasm between what we will retire with and what we really need for a decent income in old age - stood at a jaw-dropping £9 trillion.

Earlier this year, a mournful survey from insurer Aviva warned that a fifth of the current over-55s owe £65,000 on average while trying to save for a pension – and heaven help those whose debts hover at the higher end of this sad scale.

Separately, the OECD, who work to improve the economic and social well-being of people around the world, recently noted that, on average, UK pensioners only manage to take home less than a third (30 per cent) of their pre-retirement salary when they stop working. The OECD found that much needed to be done to avert a crisis.

Other industry reports continue to underline the mountainous task facing us: for a £25,000-a-year pension, your pension pot must currently aim to top a staggering £500,000.

Are we getting the message?

These are undoubtedly big sticks and they do a good job of beating us around the head about the sheer size of the problem. Yet how much do they actually achieve? Precious little, might be one conclusion given the low retirement savings rates.

Some 12.5 million employees aren’t even members of a company pension scheme while nearly 2 million UK pensioners are officially in poverty. And worryingly, six out of 10 single pensioners in Britain take home an annual pension of less than £10,000 – that’s way below half the national £26,000 average salary.

Heartless hectoring of the UK’s workforce about their poor pension provision isn’t exclusively to blame, naturally. Plenty of deep-rooted factors are at play here: small salaries, ignorance, huge personal debts and mistrust of the UK financial services industry (and who can be surprised after countless mis-selling scandals?) to name just a few.

Each of these carries an emotional charge which in turn complicates the matter for pension providers trying in vain to make a more general connection with the population at large and encourage saving.

However, it’s horribly evident the message is being scrambled.

A better approach

So instead of the scaremongering, perhaps it’s time for a subtler, softer – nay, smarter – approach to encouraging saving for retirement.

Rather than spout blood ‘n’ thunder about the dangers of not saving enough, why not introduce – via Citizens Advice, financial advisers or even product literature - a more positive “can do” approach along the lines of “Save £50,000 over a lifetime and this is how much you can expect to have in retirement; save £75,000 and it’s this; £100,000 and you’ve this; and so on”?

Or why not – this time through a Government agency - harness the vast company pension databases to throw up some more encouraging statistics such as the number of new savers and their average contribution size, and how much it’ll likely give you assuming 5 per cent annual growth, say?

Could a pension lottery do the trick?

Although the soon-to-arrive semi-compulsory national pension scheme (nicknamed NEST) is part of a long-wished for radical rethink on pensions, a subtle change in the way savers are talked to is arguably as important.

Ros Altman, director-general of Saga and a respected pensions specialist, has gone so far as to suggest renaming pensions and even introducing a monthly £1m lottery prize to reinvigorate interest. Gimmicky, yes, but still one hell of an incentive likely to spark some serious interest in saving.

I’d suggest a key caveat, though: at least half of the windfall must be kept back for the winner’s pension. 

How much do you love your partner?

Confused.com columnist Sam Dunn says couples should tread carefully when considering a financial union.

I don’t pry out of excessive prurience, of course, rather from genuine concern for your cash.

When any couple make a commitment to each other, it’s not too long before their finances draw closer together too – a joint credit card often pops up first, followed by savings, then a current account and mortgage.

Naturally, two wallets are better than one: a step-up in spending firepower; more generous savings for a smarter car; a bigger mortgage for a larger property.   

Yet your heavenly match could also leave your money in hell if it all turns sour.

For starters, your credit rating could collapse.

Or you could end up forking out for your partner’s profligacy and bad card debts.

And how about paying every penny of a joint home loan because your ex-partner is either bad-tempered enough to refuse to pay or has fallen on hard times and can no longer keep up?

Double trouble

The problems are twofold. First, very few of the lovestruck bother to stop and carefully question the risks of hitching their personal finances to those of another.

Second, and rather more delicately, even fewer would ever dare suggest a solution to the risks of bigger joint financial decisions such as a mortgage or pension: a neat legal document detailing what would ever happen in the event of a split.

Unfortunately, passion killers don’t get any bigger than two sets of lawyers’ bills so to spare you such humiliation, here are crucial pointers about knowing when to best pool your finances - and when you’re better off pulling apart.

Home is where the heart is

Doubling up has its greatest impact with a mortgage as you can usually borrow a larger sum than when going alone by adding your salaries together; an income multiple of three or four times a combined £60,000 tends to buy you a swankier pad than one with a solo £30,000.

Yet make no mistake, when you sign the mortgage forms, you become jointly and severally liable for that monthly sum; if the relationship heads south and either you or your ex can’t – or won’t – pay, the bank or building society can legitimately hound either or both of you for the money.

This same principle can sour joint credit cards or loans (and even utility bills) too: if your personal circumstances deteriorate, the debts must be settled. And if one party defaults or is unable to pay, the other half remains liable.

Banking issues

What about a joint current account? While it at least relieves a couple’s administrative burden by corralling payments for all bills, it also poses a credit rating risk by creating a financial “link” between the two of you noted by credit reference agencies (a joint mortgage will alert them too).

So if you or your other half hit the skids financially, the poor money management can be contagious if it damages your joint account and make it harder to obtain fresh credit.

A joint life insurance policy might sound like a simple money saver – a £500,000 payout for less than the price of two separate £250,000 policies – but carries particular risks all on its own.

If you were to split years down the line, that joint cover would need an instant junking in favour of a likely very expensive replacement (to pay for dependent kids, say) since you’ll be older with less robust health.

Similarly, even if still together and one half sadly dies, the survivor will benefit from the larger payout but any new subsequent life cover would likely cost more if many years have passed.

Get saving and avoid tax

At least joint savings offer a brighter vision of financial unity: two incomes channelling spare cash into an emergency fund will generate a bigger savings pot much more swiftly than one.

You’ll also qualify for double the usual £85,000 guaranteed protection in the event of a bank crash – cash in joint accounts counts as a half each, so together you can save £170,000 without fear of loss.

And if one partner earns significantly less than the other – or nothing at all – they can cannily avoid higher tax bills.

By parking as much in the way of joint savings in the name of the lower-earning partner, they can make use of the £7,475 tax-free personal income allowance (if under 65) and lower savings tax rates to legitimately keep as much interest as possible. 

Rip-off Britain is here to stay

Consumer champion, Sam Dunn tells Confused.com warns us that the most common day to day rip-offs are here to stay.

If you took the reins of a major UK company, would you instinctively hustle your customers?

I only wonder because every month or so, another swathe of the British public falls victim to hucksterish rip-offs.

Last week, Consumer organisation Which? filed a so-called “super complaint” with the Office of Fair Trading (OFT) in a bid to kibosh "rip off" surcharges levied by companies on debit and credit card transactions.

Teams of Which? researchers discovered that, while the cost to companies for processing a payment by debit card hovers around 20p and is no more than 2 per cent of the transaction value for a credit card,  companies regularly charge far higher fees.

Egregious examples included train-ticket booking site the Trainline slapping on a £3.50 charge for credit card payments while Eurostar laid it on extra thick at £4.

Naturally, the retailers themselves contend that they’re trying to recoup the cost of charges levied to them by banks and card issuers.

The Which? salvo is just the latest in a frankly ludicrous litany of criminal charges and rapacious rip-offs that continue to leave the average UK punter blinking in a state of incomprehension.

What could go wrong with council tax band valuations? Easy: estate agents drove down streets in second gear and wrongly valued some 400,000+ homes leaving many overpaying thousands since the early 1990s.

Or how about the sale of over-priced payment protection insurance on credit cards and personal loans?

And don’t forget monstrous personal pension mis-selling in the late 1980s where providers creamed the fattest of commissions for their own pay packets while convincing retirement savers to swap a secure final salary scheme for the vagaries of the stock markets.

Then there’s endowment mortgages (cheap interest-only home loans were an easier selling point than complex stock market-related endowments), high-risk precipice bonds for elderly savers, door-step selling, split cap investment trusts….

It would all seem to suggest that being a modern-day mountebank is either too lucrative to ignore – hang the inevitable penalty fines that ultimately come with it! - or that it doesn’t take much to swindle the ordinary British customer.

But I wonder how much of it is vanquished victims and the rest middling mugs?

Part of the problem is that enough of us, when faced with outrageous card charge hikes or preposterous sales pitches, still plough ahead and buy anyway.

In worst-case scenarios, many won’t have a choice because of lack of income or poor knowledge – especially among the vulnerable and elderly – and that’s a nasty exploitative situation we can all do without.

However, it’s also the case that many more who do have a choice will be complacent and won’t think to cast even a fleeting glance at small print; won’t blink at a spiralling credit card charge because they can afford it; or are simply too trusting to ever balk at a particular charge and say ‘Excuse me, did you just say that would cost me X? I’ll have to think again.’

Of course, there’s greed too: barrelling headlong into a financial arrangement – take your pick from store finance to hire purchase or credit card promotion – simply to get your hands on favoured goods is nobody’s fault but our own.

Unfortunately, all these flaws favour those with money over those without: and if enough of the former carry on with their daily financial routines like this, it’ll simply get worse for the latter.

Rip-offs thrive in such adverse conditions as, when consumers don’t all pull in the same direction, their overall protection remains stunted.

Until this changes, all manner of snake oil salesmen, profiteers and traders seeking to make a fast buck – whether dressed up in corporate suits or flogging fakes in back streets - will continue to creep into our lives.

So look lively: the rip-off is here to stay for a long while yet.

Could David Cameron protect drivers from soaring costs?

As fuel costs soar yet again, Prime Minister David Cameron has floated the idea of a “fair fuel stabiliser” to stop drivers being priced off the road. But how would it work? Confused.com’s Stephen Jones takes a closer look.

Motorists in Britain have long bemoaned the soaring cost of fuel, which has crept above the £1.30-a-litre mark in recent weeks. Consecutive governments have failed to deal with the problem and, with scenes of civil unrest dominating media reports in recent weeks – students in particular have made headlines after smashing windows and poking royalty (see below) – the Con-Lib coalition could do without a repeat of the nationwide fuel protests Tony Blair encountered 10 years ago.

Perhaps sensing that trouble may be afoot in the months ahead, David Cameron used a speech at Caterpillar’s factory in Leicester to float the idea of a “fair fuel stabiliser”, a price mechanism by which the government could reduce fuel tax when petrol inflation is at its highest.

A nice idea, perhaps, but this isn’t the first time the Conservatives have mentioned it. Indeed, a consultation on the measure was actually promised in their pre-election manifesto. There was, however, no mention of the stabiliser in the coalition agreement, and the proposal looked to be dead in the water by September, when an Office for Budget Responsibility study dismissed the idea for being too costly.

All of a sudden, though, the stabiliser has mysteriously re-appeared. Whether this is political posturing, or a genuine attempt to offset rising costs for drivers, it’s difficult to know. What’s certain is that most motorists would welcome any moves to drive down the price of fuel.

If David Cameron really does want to help drivers, he might also want to keep a close eye on next week’s debate into the rising cost of car insurance. The Transport Select Committee will meet to discuss the issue for a second time on 11 January, after hundreds of you contacted us to tell your stories about soaring premiums.

Goodbye!

And that's my last rant on Two Pennies Worth... I'm moving onto pastures new, so a big thanks to everyone who's followed this blog and especially to everyone who has commented or emailed me with your stories.

Farewell, it's been emotional!

Got a view on the rising cost of driving? Would a fair fuel stabiliser work? Have your say by commenting below or email: editor@confused.com.

Will 2011 really be "a horrible year"?

2010 was yet another tough year, with Britain pulling slowly out of recession and witnessing the start of tough new government money-saving measures. But trade unions are now warning that we should expect even worse in 2011. Are they right? Confused.com's Stephen Jones considers it all.

Most Brits could be forgiven for breathing a huge sigh of relief as 2010 draws to a close. It's been a tricky old year, and few, if any, have escaped the pain altogether - whether they've suffered from low interest rates, continued job losses, stuttering property prices, falling annuity returns or indeed anything else that's come with this economic downturn.

However, if the Trades Union Congress is to be believed, we could be in for worse in the coming 12 months. In a cheery New Year message, general secretary Brendan Barber warned that "2011 is going to be a horrible year", before arguing that cuts to benefits and public services, along with increases to taxes such as VAT will lead to growing public hardship in the coming months.

Is this fair? Well, certainly things will get tougher for some. Charities such as Shelter have warned of a rise in home repossessions as a result of government cuts to housing benefit and mortgage support schemes, while this would undoubtedly be exacerbated if interest rates were to rise from their current record lows. And of course, an estimated 500,000 public sector job losses aren't likely to help.

On top of that, the Bank of England predicts that the Consumer Prices Index (CPI) is likely to stay above its 2 per cent target throughout 2011 – meaning earnings and savings rates are likely to stay below inflation for the next 12 months at least.

But there are some reasons to be cheerful, even if they might be hidden underneath all the bad news. The British Chambers of Commerce recently pointed out that growth in the private sector would mean that the country shouldn't slip back into recession next year, and a recent study by the Forum for Private Business predicted that more than half of small businesses would create jobs in the coming 12 months.

It may seem that economists are just damning our economy with faint praise, but you only have to look at Greece or even across the Irish Sea to see how much worse things could get. So let's be grateful for small mercies, and keep our hopes up for a prosperous 2011.

And on that note –thanks to everyone who has followed this blog during 2010, I hope you all have a very happy new year. Here's hoping it's not so horrible after all!

What are you expecting for 2011? Have your say by commenting below.

Interest rates: Is now the right time for a rise?

The Bank of England announced this week that inflation is likely to stay high for the rest of the year, prompting some calls for interest rates to rise in response. Confused.com's Stephen Jones weighs up the options.

Bank of England governor Mervyn King attracted yet more attention this week following his warning that inflation is likely to stay (un)comfortably above target for at least the rest of the year.

Announcing the grim news for consumers, he said that the Bank would ready themselves "like the English batsmen preparing to defend the Ashes, watching carefully, perfectly balanced in the crease, ready to play forward or back according to the length of the incoming delivery... in order to keep inflation on track to meet the two per cent target in the medium term."

Bizarre cricketing analogies weren't the only thing raising eyebrows. In case you didn't know, I'm hooked to Twitter, and the responses on there to King's statement were pretty pronounced to say the least.

One fellow tweeter, Dr Ros Altmann - a hugely-respected pensions expert and newly-appointed director general of Saga – put her point across:

"at last Bank of England waking up: inflation is too high, no deflation. Growth is faster than forecast. So why are interest rates so low?!"

In less than 140 characters, she pretty much voiced what most beleaguered savers are feeling right now. With CPI inflation at 3.1 per cent, the vast majority of Brits' savings are actually losing value year-on-year. Whichever way you look at it, it's fair to say that savers are getting a pretty raw deal.

However, there is another side to the story. Housing benefit cuts, real-terms reductions to mortgage interest support and a tough economic backdrop mean a rise in interest rates could be devastating for thousands of homeowners. That's not to mention what it would mean for British businesses.

The Bank and the government are playing a careful balancing act, with loose monetary policy offsetting harsh fiscal measures such as the VAT increase and cuts to benefits and other public spending.

As a result, one major concern is that raising rates now may well be seen as the measure that pushes the UK economy from uncertain recovery to double-dip recession. And none of us want that.

Have you got a view? Let me know your thoughts by commenting below.

Can we make pensions simpler? Please?

As he navigates a workplace pension for the first time, Confused.com reporter Stephen Jones shares his experiences, and why he thinks it could be made easier...

When I first started writing about personal finance, the one area that filled me with dread was pensions. As a green young journalist fresh out of university, the whole area was one that seemed full of confusion and a sense of something near taboo. My parents had gone through the still-fresh embarrassment of trying to explain the birds and the bees to me, why not touch upon pensions too?

A couple of years later, and thankfully the subject isn't quite the source of fear that it once was.I'm now in a position where I can start looking at my own retirement options with less anxiety and start to make my own – if modest - contributions for the first time.

At 23 years of age, it might seem early, but in my job I'm acutely aware of just how poorly many Brits are preparing themselves for old age because our culture promotes spending and debt above prudence and saving. Starting early is likely, I hope, to mean that I'm not left with a panic later in my career when I might also have commitments to think about elsewhere.

Furthermore, almost every expert I speak to tells me that failing to take up a defined contribution scheme from my employer would be equivalent to throwing away a pay rise. Of course, they're absolutely right - with the average employer contribution standing at just over 6 per cent, and the added tax bonuses of saving into a pension scheme, you're wasting a significant amount of money if you don't opt in.

So why aren't more people saving for retirement?

Given all of this, the obvious question seems to be why more people aren't making the right provisions for later in life. Recent government statistics showed that around 60 per cent of workers don't currently contribute to a workplace pension. The answer, to me, has to stem back to my very first feelings about pensions two years ago.

Pensions need to be made simpler. The coalition government recently made inroads into making the state pension more straightforward by announcing plans for a flat rate, universal basic state pension. However, we are yet to see anything like this simplicity in the realm of private pensions.

In 2012, all employers will be forced to auto-enrol their workforce in a workplace pension scheme, and this, many think, is likely to improve the number of people saving. However, it doesn't solve the problem of public confusion about pensions, or encourage people to take a more active interest in their investments – something which could make a huge difference by the point of retirement.

When starting up my pension, I found myself asking questions and taking a keen interest in what I was investing, but this was largely down to the fact that I read about pensions on a daily basis through my work. Even then, it still took me some time to digest exactly where my money was going and what it meant in terms of returns.

My biggest concern is that the majority of people wouldn't feel confident about doing this, with many having little prior experience with pensions and some likely to be afraid to ask questions at the risk of feeling stupid.

That is as much the responsibility of employers, pension providers and financial advisers as it is the government, and there have been a number of suggestions as to how investing can be made easier to understand.

But we also need to appreciate that, as pension saving becomes more and more our responsibility, we need to take control and invest some time into thinking about where and how we invest our money.

Have you recently joined a pension scheme? Or have you been offered one and failed to join? What are your reasons? I want to hear your thoughts and stories – comment below or email me on stephen.jones@confused.com.

Why should I pay for a pensioner’s TV licence?

There was always going to be a bit of inter-generational tension when it came to dishing out spending cuts, but it seems to me that George Osborne really opened a can of worms with his spending review on Wednesday. 

In recent weeks we have heard that university tuition fees are set to soar, potentially leaving students with tens of thousands of pounds in extra debt, if they choose to go into higher education at all. In comparison, those who went to uni in the pre-Blair years will have enjoyed largely-subsidised study.

In the same speech, Osborne announced the end of the Education Maintenance Allowance (EMA) - which gave a small but valuable weekly allowance to encourage poorer youngsters to keep on learning -  while continuing to promise free TV licences to everyone over the age of 75, regardless of their income.

However, perhaps the biggest issue that cements this generation gap is housing. Osborne announced changes to limit social housing availability and plans to cut the building of new homes substantially, despite the fact that house prices are still artificially high due to a desperate lack of supply.

One commenter noted, quite rightly, that many older people will also have benefited from house price increases that would make your eyes water over the last half a century, while young families in 21^st Century Britain often struggle to access the market for years.

I was covering the spending review live, and unease with this particular paradox was pretty clear. To gauge the mood, I put out a little poll among those in the room. Of those that responded, 43 per cent thought that 16-30 year-olds would be worst affected by the cuts.

While this was hardly the most comprehensive of research, it’s fair to say that it still reflected the mood.

Now, I’m not saying that we should hike tax on pensioners across the board, or ruthlessly strip away benefits to people who need them. I could never argue that a person who has lived through war and paid taxes throughout their life doesn’t deserve to be well looked after in retirement.

Equally, I realise full well that most pensioners aren’t rich, and many would find their lives significantly worsened if their local services or benefits were cut. It’s not the fault of the elderly that we have a huge budget deficit, any more than it is mine or my parents’.

But it does seem to me that the "fairness" balance here isn’t quite right – with no means-testing, some older people will continue to receive benefits they really don’t need while others suffer. Should a young worker, doing 40 hours a week just to keep their job, really be paying for a rich pensioner to watch Bargain Hunt? I'll leave you to answer that one.

Got a view? Comment below to have your say. I also want to hear how you’ll be affected by the spending cuts – leave us a comment or email me: stephen.jones@confused.com.

Should your home be an investment?

The new housing minister declares that homes should be for living in, not for investment. Confused.com’s Stephen Jones thinks he has a point...

The number of people buying homes for investment purposes soared in the Labour years, a legacy that has contributed to keeping hundreds of thousands of first-time buyers out of the market.

If you think I’m exaggerating, figures from the now-scrapped National Housing Planning and Advice Unit suggest that buy-to-let investment alone increased house prices by up to 7 per cent in the quarter before the big crash hit in 2007. Over three months that is a staggering amount, no matter how rapidly prices were inflating anyway.

On the point of prices, it seems as though the downturn has taught us nothing. In the news and on our television screens, commentators constantly attempt to talk up values; if house prices fall, we are almost always presented with the homeowner’s point of view - that this is cause for doom and gloom, rather than a natural correction.

Despite everything that has happened in the last three years, we haven’t recovered from the pre-crisis mentality whereby artificially high values automatically mean good news for everyone.

A glimmer of hope for first-time buyers?

That’s why I took a bit of heart from the words of Grant Shapps this week. The Conservative housing minister spoke at this week’s Housing Market Intelligence Conference, outlining his “ambition for a period of house price stability”, and suggesting that homeowners shouldn’t be relying on their homes as a form of investment for retirement, but instead primarily as a place of living.

Of course, I take the point of the Daily Mail’s Stephen Glover when he responds that savers and pensioners have little option but to rely on property as a retirement cash cow, given fallen equities, low interest rates, and everything else that has befallen them. But that’s not the fault of first-time buyers.

If we really are “all in it together”, then the coalition government is making the right noises. Keep interest rates low and build new homes to ease the price bubbles caused by a lack of supply. We also hear a lot about progressive tax – surely taxing capital gains in line with income would be a start, or perhaps introducing some form of incremental tax increase for each property owned.

This would at least go some way to preventing these property oligarchs from locking people like me out of the market (not to mention adding a nice little extra to the deficit reduction fund).

To illustrate the issue a little closer to home (and perhaps to reveal my agenda), my current landlord needs his own letting company to run his affairs. I’m told that the number of properties he owns himself runs well into double figures.

Meanwhile, I, like so many others of my age, am stuck in a hole, where prices are still stubbornly high, meaning I couldn’t afford to get on the market even if I could stump up a 15% deposit from nowhere. Is that a sob story? Well, yes, but I’m entitled every now and then.

Obviously, I’m not expecting my point of view to be popular with everyone. Housing is often an especially emotive subject, so I want to hear your views, too.

Do you think it’s the government’s place to intervene and ‘balance’ the housing market? Or should they stay out and let the market do the work? Comment below to have your say.

Child Benefit: Just tell it to me straight

After a week of hyperbolic press coverage, Confused.com’s Stephen Jones cuts through the controversy and asks, ‘exactly how fair is the Child Benefit cut?’

Another week, another big debate about cuts. If the British weren’t such a resolute bunch, I think we’d all be on the verge of breakdown. Yes, we have a budget deficit to cut. No, it doesn’t mean we should all be cowering behind the sofa in fear of the taxman’s deathly knock.

This time around Child Benefit was the subject of ceaseless discussion in the papers, after Chancellor George Osborne announced that any family containing a higher-rate taxpayer would see its eligibility cut. This led to complaints from almost all sides that a couple bringing in a single wage of £45,000 between them would lose out, while a pair earning £40,000 each would not.

I, like many, can’t help but think the changes are pretty ham-fisted and, moreover, that coalition ministers have been more than a little disingenuous when constantly attacking the admittedly confusing tax system that was passed over from Labour.

Gordon Brown was, as many of us are aware, a big fan of means testing and tax credits – something which has become a source of ridicule, particularly from Conservative members of the government. They feel, perhaps rightly, that in many cases this has led to a confusing and costly exercise of giving with one hand and taking with the other.

However, just a day after the cut had been announced, David Cameron suggested that some families might be compensated with the introduction of a married persons’ allowance. Aside from this begging more questions about fairness – should marriage really be rewarded in the tax system? - it also smacks a little of hypocrisy. Isn’t this the same sort of to-ing and fro-ing that the prime minister and his colleagues have been mocking since opposition?

False platitudes aside, the cut itself is one of the inevitably painful effects of the Treasury tightening the purse strings. While our politicians must get into the habit of telling it to us straight, so we must also prepare for a squeeze on our household incomes.

This doesn’t mean we should all be living in fear; it’s simply the case that we’re going to have to be smarter with our money, saving a little more and spending a little less – whatever the Bank of England may say to the contrary.

As I pointed out recently, there are ways that some taxpayers can avoid losing the payments, for example by investing more in a pension. For others, sadly, there is no escape this time, but you can be certain that we’ll all be paying our way in one way or another.

For more information on the Child Benefit cut, see our guide to the changes. If you want to have your say on the issue and how it affects you, comment below or email me at stephen.jones@confused.com.