Workplace Money Guidance - Now a Premium Benefit

As predicted earlier by MoneyTargets - the government is preparing to launch a national money guidance service to help consumers make better financial decisions. The Thoresen Review - a Treasury Report commissioned by Ed Balls when he was Economic Secretary - says the new service could "transform people's lives" and recommends a regional roll-out over the next two years. Money Guidance will focus on budgeting, saving and borrowing, protection, retirement planning, tax and welfare benefits, and jargon busting - with no sales propositions allowed. More >>

 Workplace News

When Alistair Darling announced in his Spring Budget that the basic rate of Income Tax was being cut to 20% - this reduction was initially welcomed - but then financial commentators 'seized' on the fact that over 5 million of the lowest paid workers would end-up being worse-off - as the cut in basic rate tax from 22% to 20% was accompanied by the 'abolition' of the 10 pence tax rate on the first £2,320 of earnings.

The 'disappearance' of the 10 pence rate was of course originally heralded by Gordon Brown in his April 2007 Budget when he was still Chancellor - but the fact that it still remained in Mr. Darling's Spring Budget a year later, caused a 'rebellion' of some 70 Labour MP's - who demanded that the 10 pence rate be restored.

After some 'backtracking' therefore, and appearances on BBC Radio's popular "Today" programme, Mr. Darling eventually announced a £2.7 billion 'package' - to ensure that the majority of Britain's lowest earners will be no worse off - at least during this current tax year.

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John Hutton - Secretary of State for Business - announced in May that agency workers are to receive the same rights as permanent staff, following a deal struck between the Government, the unions and the Confederation of British Industry (CBI).

The deal means that temporary workers on 'short-term' contracts will soon enjoy equal pay and conditions after 12 weeks in the same employment - just as if they were recruited directly by the employer, rather than through an agency. Mr. Hutton said "It will give people a fair deal at work without putting their jobs at risk or cutting-off a valuable route into employment." More >>

Flexible Working Rights are being extended to include all working parents with children under the age of 16. More >>

TUC says public sector workers deserve more pay. More >>

 Savings & Pensions

Some major provisions in the 2007 Pensions Act involve certain key changes that will come into effect in 2012. These are:

• Annual Increases in the Basic State Pension (BSP) are to be linked to rises in 'average earnings' - rather than the current system of being linked to changes in the Retail Prices Index;

• Contracting-Out for personal pensions - the system where employers and employees who 'contract-out' of the State Second Pension (S2P) receive rebates of National Insurance Contributions (NICs) which are then invested in a private pension - is to end in 2012;

• Personal Accounts - the national pensions savings scheme for individuals with low to moderate earnings will commence, and employers will have to automatically enrol all eligible workers into a Personal Account - or enrol them into an equivalent or better workplace pension scheme;

The changes to BSP have received criticism from many quarters, including the unions, retired people's organisations, and MPs from all parties.

Most critics say the current weekly BSP of £90.70 for a single person and £145.05 for a couple is too low - and that to impose a "means test" to get the State Pension Credit, which lifts the BSP to £124.05 for a single person or to £189.35 for a couple is unfair. They say means testing should be abolished by 2012 or earlier, and the BSP should be raised to the level of Pension Credit for everyone.

Contracting-Out rebates have undoubtedly boosted many people's retirement income - but the government says the system has been an administrative "nightmare". When rebates end in 2012, individuals who are still then 'contracted-out' will be automatically contracted back into S2P - whilst those without any pension other than the BSP will be encouraged to join their workplace pension scheme.

Tim Jones - Chief Executive of the Personal Accounts Delivery Authority (PADA) - says Personal Accounts will allow millions of people to save for the future, to boost their retirement income.

Personal Accounts will force employers to provide a workplace pension scheme for their employees. From 2012 all employers must automatically enrol all eligible employees (including part-time and temporary workers) into either a Personal Account or into their own alternative scheme. Employers must also add their own contribution each year of at least 3% of the employee's "band earnings" between £5,035 and £33,540. In today's terms this means an employer has to make a contribution of at least £855 into your workplace pension . 

 Health & Education

Otto Thoresen - Chief Executive of Aegon Scottish Equitable believes that "good money sense needs to be as much part of people's lives in the twenty-first century as healthy eating and keeping fit". More >>

Extended Diplomas - the student qualification recently launched by the Rt. Hon. Ed Balls MP - Secretary of State for Children, Schools and Families - have attracted some criticism from academics, who say the new qualification could steer students away from A-Levels. More >>

Virgin Healthcare is to open a string of one-stop-shop health clinics across the UK, as part of the government's drive to improve consumer access to health services. The initiative allows private companies to open GP and Dental surgeries in Shopping Centres and on Housing Estates for example, where people will be treated on the NHS, whilst having access to other paid-for services. The one-stop-shop clinic is extremely popular in the USA and in Canada, but the BMA says it could jeopardise the traditional doctor/patient relationship. More >>

 Pay & Benefits

Margaret Snowdon - Chairman of The Pensions Advisory Service (TPAS) says that "UK regulated Insurance Companies offer the best possible long-term security" for the safety of pension scheme members benefits. When pension benefits are secured via a 'buy-out' of scheme liabilities - Ms Snowdon says that trustees need to be convinced that members' benefits are safe, will be paid in full when due, and that members will be well-treated after the deal. More>>

Employee Sharesave Bonanza - is a headline worth reading - when it refers to thousands of ordinary employees who recently made big profits from their employer's share saving schemes. Organisations such as Tesco and HBOS are just two of many hundreds of companies who offer Share Incentive Plans to their workers, so they can enjoy tax-free cash by saving an average of £50 a month for terms of three, five or seven years. HBOS staff are set to make gains of up to £3,900 each...More >>

Double Tax Relief is possible when you save in a Workplace SIPP says JP Morgan Invest director Jonathan Watts-Lay. A SIPP is basically a personal pension where you control more of what happens - and a Workplace SIPP is designed to accept both employer and employee contributions - including shares from approved Sharesave schemes. Tax rules after A- Day allow for more tax-free flexibility... More>>

 Finance Property & Markets

City regulator the Financial Services Authority will have a new chairman when Adair Turner - a former Director General of the CBI takes over the role in September 2008. Following the  government's 'rescue' of Northern Rock Building Society, the Parliamentary Select Committee criticised the Chancellor, the Bank of England and the FSA for not acting quickly enough to prevent Northern Rock's lending on sub-prime mortgages from turning into a crisis. But the FSA says it had contingency plans ready in case the more recent Bradford and Bingley deal with a US private equity house had fallen through. More>>

The world 'high' in the price of oil - now almost $150 a barrel - coupled with the surge in world food prices - has led to major price-inflation in energy, food and fuel costs. There is now what might be called a severe 'credit-crunch' in the financial markets, and the knock-on effects of sub-prime mortgage failures in the USA have been felt in many economies, and as a result UK Banks and other lending institutions have become more stringent with their loans criteria.

People who have mortgages originally taken-out on 'fixed-rate' deals where the interest rate is 'lower' for the first few years, before it then rises in-line with market rates, are particularly affected. and some will have seen their monthly mortgage payments rise by around £100.

The 'buy-to-let' market has also been hit - and property 'forecasters' are predicting that UK property prices could fall by as much as 25% over the next 24 months. More >>

Equity Release Schemes can be fraught with dangerous pitfalls for the unwary - and the FSA and MoneyTargets recommends seeking proper financial advice before entering into any Equity Release Plan to give a 'boost' to your retirement income. Falling property prices can severely affect some some types of plan and advice is essential. More >>

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