Multiple Jobs Cause Women to Lose Out on Pensions

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According to the Citizens Advice Bureau many people, primarily women, are missing out on their right to a workplace pension. The chief cause of this is working multiple jobs, something that women are currently much more likely to do than men.

Auto-enrolment was introduced a few years ago with the intention of making sure that all workers are given access to a pension through their employer, except those only working a handful of hours. Employers must automatically enrol any worker who is earning at least £10,000 a year into a workplace pension scheme unless that worker specifically opts out.

However, according to citizens advice over 100,000 people, the majority of them women, are being effectively excluded from auto-enrolment because they work multiple part-time jobs instead of having a single job. This means that, even though they are earning more than £10,000 in total and may be working full-time or close to full-time hours, they never reach the threshhold from any single job. As such, they do not qualify for auto-enrolment with any of their employers.

This issue has been recognised by the government. A review of the situation is expected to take place some time this year. A review of auto-enrolment was already due to take place in 2017, and in December the government said this would include looking into the issue of people who work more than one job.

It is not exclusively women who are affected by this issue, but there are significantly more women falling into this situation than men. Of the roughly 100,000 people affected, according to Citizens Advice, around 72,000 are female.

Gillian Guy, Citizens Advice chief executive, said: “Many people – particularly women – work several part time jobs, which helps them manage commitments like childcare or study.”

Guy continued: “But while in many cases they earn over £10,000, and pay tax on this combined income, they don’t have access to a workplace pension and miss out on the opportunity to save for their retirement.”

According to a separate study, as well as being affected by this issue women are also missing out by being left with smaller pensions, on average, than their male counterparts. Issues like the gender pay gap and the greater impact of bringing up children on women’s careers is giving them less opportunity to contribute to their pension pots and, accordingly, smaller incomes upon retirement. Zurich, one of the UK’s major insurance companies and pension providers, has said that the difference at the point of retirement between an average man’s and woman’s pension pot will be around £47,000.


Interest Rates on Savings Hit New Low

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Interest rates on savings accounts have long languished at disappointing levels. Recent data shows that these rates have hit new lows, with seven consecutive months of rate cuts far exceeding increases.

Financial data specialist Moneyfacts says that the past seven months has seen only 188 increases in savings rates, and a much more sizeable 883 rate cuts. Of these seven months, the leader when it came to overall rate cuts was February 2016. In February, only 12 rises in savings rates were recorded compared to a total of 253 instances of interest being slashed.

Moneyfacts names several factors as partial causes of the heavy cuts seen in recent months. These include the continuation of a now long-lasting historic low base rate, a lack of certainty about the future of the UK economy, and low levels of competition between savings providers.

The series of interest rate drops over the seven-month period has brought the offerings available to savers to new lows. The very best rate on the market right now for an easy access account is RCI Bank’s 1.45%. Savers who specifically want their savings to be protected under the UK Financial Services Compensation Scheme, as opposed to an overseas analogue of the scheme which is the case with RCI, will not find a better rate than 1.26%.

As tends to be the case, most if not all of the best rates come from smaller “challenger banks.” Those who want to bank with a major high street name will find that most of them are offering rates that are considerably lower still. For example, NatWest offers an easy access account that pays a near-negligible 0.25% interest.

Fixed-rate savings offer better rates than easy access, but have still suffered significantly. For example, locking funds in for a year will give only a small benefit, with the best rate on offer right now being 1.75% from Punjab National Bank. As ever, locking in for longer periods gets better rates – though still at unimpressive rates. For example, a five year bond will give savers access to rates of up to 2.75%.

Only one class of account has recorded an overall increase in available savings rates recently; regular savings accounts. These accounts are designed for regular monthly contributions, typically ranging from around £25 to roughly £300, and are often offered by banks in combination with current accounts. Rates for these, like all other accounts, are much lower now than before the financial crisis, but unlike other savings solutions they have at least been increasing. The average rate in December was 1.64%, but over the past six months this has risen to 1.68%. This is still, however, less than savers would have got from a regular savings account even one year ago, when the average rate was 1.72%.


Adding to the Value of Your Home

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For most home-owners, their property is the most valuable thing they own, and there are a number of reasons you might want to add value to your home. Perhaps you are going to sell it soon and want to invest in maximising the price. Maybe you want to make your home more enjoyable in a way that will “pay for itself” by increasing its value. Or perhaps the home in question is an investment property, and you want to improve it in order to maximise its rental value and resale price. Whatever the case, there are a number of things you can do to increase its value.

Extension

The most effective way to increase a property’s value is to make it bigger. Unfortunately, this can also be one of the most expensive ways. Even so, it can definitely be an investment that adds more to your property’s value than it costs, depending on the circumstances. The number of bedrooms is one of a key deciding factors in a property’s value, and adding a bathroom is also an effective way to increase a home’s worth. Adding one of each, according to Nationwide, can boost a property’s value by up to 20%.

The most cost-effective way to extend a property is by using part of the existing structure, which most commonly means a loft conversion, as this cuts out much of the expensive and labour-intensive building work. This also eliminates the problem of cutting into the garden’s space, as most “true” extensions will. However, actually increasing the size of a property can still deliver a net gain through added value in many cases.

Refurbishment and Redecorating

If changing the size of your property is not an option then its condition, and the condition and style of its décor, is also a significant factor in determining its value. Whether this delivers a net financial gain can be much harder to determine, as it depends on how much of an improvement it makes to the property. If the current decoration looks a bit worn or dated, then simply painting the walls and replacing flooring can be a relatively inexpensive way to increase its value. Repainting may also be worth doing if you are selling a property with questionable or contentious colour choices or strong elements of personal taste, in order to make it more neutral and broaden its appeal.

Refurbishing the kitchen or the bathroom is rather more expensive, but these are also two of the most important rooms from a valuation perspective, so this can still be profitable if the current set-up is past its best. If your goal is less abstract and more about actually selling the property in the very near future, then even little and negligible-cost things like touching up the paint on skirting boards can genuinely help you secure a sale a little bit quicker, and even that bit closer to your asking price.


Preparing for the New Personal Savings Allowance

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The new calendar year may be truly underway now, but the new tax year is still approaching. As always, this is going to bring some changes and the biggest change for many people will be the introduction of the new personal allowance for savings interest.

From 6th April onwards, there will be a tax-free personal allowance on all income generated by savings, similar to – but separate from – the personal allowance for employment income. For basic rate taxpayers, the first £1,000 of interest on savings will be exempt from tax, regardless of whether those savings are stashed in a tax-free ISA or a different kind of savings account. For higher rate taxpayers, the allowance on savings income will be £500. The only ones who do not benefit at all from this change will be those who pay the 45% additional rate of tax. Those who fall within this top tax band will not receive an allowance on savings.

The changes are undoubtedly good news for the great majority of savers, but they also have the potential to create confusion. Suddenly, a lot of the things that are currently common knowledge about financial planning and where best to put savings have been shaken up, and some people find they are not sure what best to do with their money when the changes have taken effect.

For example, it has long been the case that putting as much money as you can into an ISA each year is a no-brainer. However, the reason for this was the fact that no tax would therefore be payable on interest. Now that the first £500-£1,000 of interest is going to be tax-free for the vast majority of savers anyway, the place and purpose of ISAs is looking less clear.

ISAs will continue to exist, but unless your savings are likely to generate interest in excess of your personal allowance they will not be the essential savings wrapper they once were. Assuming the interest you earn is going to fall within your personal allowance, instead of just looking at ISAs you should look for the best interest rate you can get regardless of whether it is a dedicated tax-free account or a regular savings account.

This is particularly pertinent at the moment, as the changeover approaches. In theory there is no reason not to keep your money in an ISA unless you can earn more elsewhere, but there is a good chance that you will earn more in a different account. Many non-ISA savings accounts have long offered better rates, but the tax-free advantage of ISAs has meant they have still been the more profitable option on the whole. Now the playing field has been levelled for many savers, it may be time to switch away from an ISA and into a higher-paying savings account. Whether there will be any shake-up of rates after the changes take effect that may change this remains to be seen, but any rate you switch to now should be guaranteed for some period.

If your savings are substantial enough to earn interest in excess of your allowance, then the best bet is probably a mixed approach. Put enough of your savings to use up your allowance in the highest-paying accounts you can find, and then as much of the remainder as possible into ISAs to maximise tax-efficiency.


Bank of England Concerned over Buy-to-Let Investment

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As savings interests continue their long trend of languishing at rock-bottom levels, ever more savers are being drawn to alternative ways to earn returns from the money they have put aside. Investments are increasingly popular, and buy-to-let property investment is prominently on the rise. Now, however, the Bank of England has raised concerns about the boom this has created, suggesting potential investors may want to think things over a bit more carefully before deciding whether to put their money into property or not.

Property generally has a reputation as a comparatively safe investment (all investments being inherently risky to some degree). As such, it has proved an attractive prospect to those whose savings are sufficient to afford the steep initial outlay, usually with help from a buy-to-let mortgage. Becoming a landlord has been an especially popular prospect recently for retirees looking for alternative, potentially more profitable ways to make use of their pension pots. However, many savers who can afford to invest in property have been doing so as a way to beat savings accounts, and some of those who can’t afford to buy an investment property by themselves have been making use of crowdfunded property investment schemes allowing them to buy a stake in a buy-to-let investment for as little as £500.

However, the relatively sudden surge in popularity of buy-to-let investment – especially following the introduction of new freedoms giving people more choice in making use of their pension pots – has created something of a boom. It is this that the Bank of England is now concerned about, following recent analysis by its Financial Stability Committee (FPC).

The Banks concerns revolve in particular around the increase in lending in the buy-to-let sector that has accompanied its growing popularity. As many new landlords require a mortgage to help them purchase their investment property, an increase in the number of people becoming landlords has naturally meant a greater number of mortgages being taken out. Lending in the buy-to-let sector has grown 40% since 2008, the FPC said. This compares to an increase in mortgages for owner-occupiers of only 2%.

This has the potential, the FPC warned, to “amplify” a boom-and-bust cycle within the property market. It could be that, as a result of heavier lending, a stronger property boom is followed by a more dramatic bust. This could be bad news for those who have invested in properties. It could also, the FPC says, “pose risks to broader financial stability, both through credit risk to banks and the amplification of movements in the housing market.”


Self-Employment: Protecting Yourself Financially

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Going self-employed with your own business is exciting and gives you a lot of freedom, but it does also have its downsides. Working for yourself means you lose a lot of the financial benefits and protections you have when in employment, and in some circumstances this can really be something to miss.

If you want the freedom of self-employment with as many of the protections of full employment as possible, then there are a few steps you can take.

Accessible Funds

While it depends on the field your working in and the individual business, most self-employed people find their income fluctuates. Sometimes business is booming and they make much more than they would working for someone else, and at other times things are slow and their income drops. For this reason, you might want to make sure that a chunk of the savings you put aside when custom is plentiful are kept in easy reach – perhaps in a high-interest current account for instant access – rather than locked away in a hard-to-access savings account. That way, those funds can help supplement your income in the slow periods and make your situation a bit more in line with somebody whose income is steady and regular.

Sickness Protection

One of the key benefits you get in a regular job is sickness pay, but if you’re too sick to work when you’re self-employed this usually just means that you are not earning. Over a week or two this is hopefully just an inconvenience, but over any longer period it means you have suddenly lost your income. There are insurance products such as income protection insurance and sick pay insurance you can take out to protect against this possibility and replace the sick pay you would get if you were employed. These will pay you an income – either a fixed amount (sick pay insurance) or a percentage of your usual earnings (income protection insurance) – for a certain period or until you are able to work again. Most commonly, the policy will pay out for up to a year but shorter and potentially longer periods are available.

Retirement

Another of the most useful financial benefits that the employed get and the self-employed don’t is a workplace pension. Even if retirement seems a long way off, this will prove very important one day and could impact on your quality of living when you retire quite significantly. For this reason, you will probably want to replace your workplace pension with a private pension. This may not be a priority when you first go self-employed, but you will probably want to get around to it sooner or later. Any workplace pension pot you have already accumulated should be eligible for transfer into a private fund. You will lose the benefit of employer contributions, but should still have your own input topped up through tax relief.



The Things Credit Cards are Best for

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Some people swear by credit cards, others swear at them and stay away. Out of the first category, some people use them wisely and gain a real financial benefit while others use them poorly and end up paying more interest than you have to, possibly even damaging their credit score in the process.

Credit cards are better for some purposes than others. Some of the best ways you could make use of them to enhance your finances instead of hindering them include:

Spread Costs With 0% Only

Sometimes we don’t want to spread the cost of a large purchase because we can’t afford to make it all at once. Sometimes it’s just nicer to pay in instalments rather than hand over all that money at once. The problem is that paying in instalments almost universally inflates the price tag, as it is essentially a loan. This means you can’t spread the cost out of convenience without paying for the privilege, and if you actually can’t afford to pay all at once then you are stuck with paying more. This is where the plethora of 0% offers on the market come into their own. They are a great way to spread the cost without paying any extra in the long run, whether it’s because you need to or just because you want to. Use a comparison site to find the best 0% deals, and see if the lender’s website offers an eligibility checker that won’t harm your credit rating before you apply.

Improving Your Credit Score

Improving your credit score can be useful for obtaining anything from a mortgage to a small personal loan or even just a better credit card. Having a card is one of the more useful ways to improve your credit score, or to build one up in the first place if you have never borrowed before and have very little credit record. The main way that companies judge your worthiness for credit is to look at previous borrowing, and without credit card the only way to really pull this off would be to take out a loan of some kind and then pay interest on it just so that lenders in future could see that you made the repayments. With credit cards, you have a ready source of borrowing in your pocket which can be used on a whim in a normal shop. Rather than borrowing a large sum of money, you can borrow enough to pay for your weekly shop, a bigger purchase you would have bought anyway, or even the odd little item. Then pay it back promptly with no or negligible interest, and build up your credit record ready for that mortgage you really want to take out.



Getting the Best Deals on Credit

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Used properly and responsibly, credit can be useful for a wide range of purposes, from spreading the cost of large purchases to plugging a gap in an emergency. However, there are a lot of different credit products around from a number of different providers, and borrowing costs can vary very widely. There are a number of steps you can take to ensure you get the most affordable deal possible when borrowing.

Get Your Credit Rating in Shape

The better your credit rating, the more likely you are to qualify for the best deals. If in doubt, there are a number of things you may be able to do to improve your score, potentially even at fairly short notice. Looking at your current report and then taking steps to improve it can be a useful first step in finding the best deals on credit.

Know Your Options

Some credit products overlap in terms of the amount you can borrow, but offer very different rates. Credit cards offer 0% offers which can be extremely useful, but are otherwise expensive forms of borrowing compared to many alternatives. Payday loans – which are usually best avoided – can be used for a similar amount of borrowing but carry interest rates so high that even the worst credit cards look negligible. Look into different forms of credit and choose the one that fits your needs at the best rate.

Shop Around

As with so many things, it is best to shop around in order to find the best deal. Many lenders offer finance products of the same kind and which are almost identical except for having wildly different rates of interest. When looking at personal loans, check not only the offerings of different providers but also different amounts of borrowing. Lenders offer better rates the more you borrow, so if you are near a threshold it may be that you can increase your borrowing slightly in order to unlock a better rate and ultimately be better off.

Pay Back ASAP

Assuming there are no early repayment penalties, paying back early is one of the best ways to reduce the total cost of borrowing. The sooner you pay back, the less time interest will have to build up and the less you will ultimately pay for the loan. If your intention is to spread the cost of something, then there may be a balance to strike, but on the whole it is definitely a good idea to repay early if possible. Make repayments above the minimum if you can, and try to repay it as soon as you can without putting yourself under financial pressure.