Why you should take out a pension.

Saving for your retirement is not something that many of us take seriously when we set out on our career.  However with many of us now living longer, we can expect to live many years into retirement, and saving into a pension pot now will provide an income when you retire.  The more you put into the pension pot in the early days, should in theory provide for a better pension in the future.  However this will depend on how your pension is invested, and you should consult an independent financial advisor for impartial advise that is geared to your situation.

The state pension has taken a hammering recently with changed that have come into force from the Coalition Government as part of the austerity measures introduced.  In the UK the age of entitlement will be raised gradually to 66 years of age for both men and women, and even then the average payment is  expected to be around £100 per week.  If you take out a personal pension, and have made significant contributions, you can start collecting your pension at the age of 60, even while you continue in employment.

Many employers offer a pension scheme as part of their employment package.  Work based schemes can be a great way of saving for your retirement, and depending on what your employer offers as part of the package, many will also pay a contribution which in many cases would equal what you contribute.  If your employer has a pension scheme in place it would be worth seeing how you could benefit by joining.  You may also find that there are addition benefits for members such as life assurance.

While it is best to join a pension scheme when you are younger, because the longer that you are in the scheme, the more contributions you will make over your working life.  However even if you have not joined a scheme now and think that you may be too late, you may find that you still have a good opportunity of being accepted.  However what will finally be paid to you as a pension will be a lot less than what you have if you had been a member of a scheme all your working life.

For more information on pensions, or for information on the right scheme to join it is advisable to talk to an independent Financial Advisor who will carefully consider your needs.

Peter Spencer, their chief economic advisor told the BBC “Consumption was very badly hit by rising inflation last year, business spending has been paralysed, and of course recruitment has also gone on hold as a result of the euro crisis.

“And unfortunately, turning to exports, Europe takes the lion’s share of our exports.”

The past few week has seen devastating news on the High Street, with Tesco announcing that the Christmas period had been disappointing, resulting in billions of pounds being wiped of the value of the company.  The Christmas period also brought bad news for Argos, Halfords and the chocolate manufacturer Thorntons as consumers tightened their belt and scaled back on spending.

Further bad news has been announced today with the news that Past Times has entered administration and fears that the Peacock group is about to enter administration with 11,000 jobs now at risk.

This would be the largest firm on the high street to enter administration since the Woolworth’s was forced to close its doors.

The growing problem is the Euro zone is also causing problems for Britain as exports to the Euro zone fall, and may force British Manufacturers to seek new markets for their goods.

As a result, many companies are holding off recruitment plans, with many failing to recruit while the down turn continues.

The office of National Statistics is due to publish it’s results next week, and it is expected that the figures would not throw out any good news.

This is good news for many households who are currently struggling to pay for the cost of household energy bills.  Many are even having to make the choice to either heat or eat.

The price cut by EDF has come about as a result in the fall in the wholesale price of gas that the supplier pays.  The cost of the wholesale price has fallen by 9%, however as the company has argued that as it  has to pipe the gas to households up and down the country, they can only reduce the price to consumers by 5%.

EDF was one of the company’s which increased the cost of supplying households with gas and electricity prices, however the increase that the company increased their prices was less than some of the other suppliers.  British Gas increased the cost to consumers of Gas by 18% and Electricity by 16%.

EDF is not the first to reduce its energy prices.  Ovo announced that the cost of their gas and electricity prices would fall also.

Martin Lawrence, managing director of energy sourcing and customer supply at EDF said “We know customers are finding it difficult, particularly during winter. So I am pleased we have been able to make this announcement now and help our customers at a time they use more gas.”

The cost of the price of electricity from EDF will remain unchanged at present.

However the main aim of the introduction of the Universal Credit is not only to save money administering the benefit system, but is key in the Governments plan in making work pay.  In other words the main driving force is to get people back into work and off the benefits system.  The Government argues that the current system encourages people to stay on benefits and does not provide enough motivation for people to get back into work after being on benefits.

The New universal Credit System is due to come into force in October 2013, and could take up to 4 years to migrate current benefit recipients onto it.  The new system  will replace the seperate benefits that people receive.  People will receive one payment with different elements added to it.

The Government is also proposing to implement more severe penalties for those that refuse to work under the system.  For example if a claimant refuses to work in any 12 month period, they could loose up to 3 months benefits payment.  However if a claimant refuses a second job over the second 12 month period, they could loose their benefits for a further 6 months.  If a third job is rejected by the claimant over the following year, the claimant could possibly loose the benefit for three years.

Disability Living Allowance is also due to be reformed.  The Government wants to scrap the current system were people with certain Disabilities are automatically entitled to the benefit, and want to replace it with a system were by all claimants will have to under go regular assessments to see how the condition that they have effects their lives.

The Co-Operative bank currently has 1.5 million customers and is the largest Mutual Bank in the UK.  Speaking on behalf of the Bank  Robin Taylor, the head of Banking said: “In these difficult economic times, we want to offer a helping hand to those customers, who may be struggling financially, and give some additional support to those whose finances may be stretched after the festive period.”

“Many people review their finances at the start of the year. As a responsible lender, we want to encourage customers to take control of their finances by providing them with the additional leeway to begin tackling any debts.”

The bank is currently in negotiations for the purchase of 632 branches of Lloyd’s banking Group, and is the prefered bidder for the Branches.  An announcement is due to be made in April this year.

The Battle for our money has heated with some big players offering good deals for switching accounts. Santander and many other banks are offering good deals on switching and so it pays to check what deals are available from them.

However there are a few things that we can do which can have an impact on our lives and help make your money go further.  Some will involve big changes in our household and our mindset towards money, others are small and will have a bigger impact over time.

The first thing you need to do is look at the income that comes into your home and work out a budget to help you live within your means.  Look at your income and expenditure and identify areas were spending can be reduced.  Look at non essential spending and see if these can be avoided.  Look at your personal debts – that is loans and credit cards, see if you can get these paid off as quickly as you can, after all it highly likely that you are paying interest on these every month if you are only paying the minimum balance.  If you can not afford to pay these off, look at ways in which you can reduce the amount of interest accumulating on this debt.  Consider using a price comparison site to switch your credit card and loans  so that you get a lower rate of interest.

Examine your lifestyle.  Make small changes to how you live.  When you cook a meal for the family, do not throw out any left overs keep them for the next day as the basis for another meal.  The UK has a problem with food waste.  We throw away 7.2 million tonnes of food away each year.  This equates to £50 a month for the average family or £680 per year.  If you plan your meals in advance and reuse food that is left over, you could potentially save a lot of money.

Make a list when you go shopping and stick to that list.  Don’t be tempted by the latest buy one get one free deals unless you actually need to buy the goods on offer.

If you are food shopping, avoid paying VAT on goods.  Buy goods in their raw form which have not been processed.  It may mean more time in preparing the goods for cooking, but they will be 20% cheaper.  Instead of going to your local super market, consider shopping local.  You may be surprised how much cheaper  goods are when bought from the local market or green grocer and butcher.

If you smoke cigarettes, consider giving them up.  There could potentially save you thousands of pounds.  If you smoke up to 20 cigarettes a day, that equates to nearly £2500 a year.  Check out http://smokefree.nhs.uk/ways-to-quit/ for help and advice on quitting.

Be energy efficient in the home.  When using the washing machine, use a cooler cycle and ensure that there is a full load.  Turn your heating down by at least one degree and ensure all radiators are free from obstructions to allow heat to circulate around the home.  Close doors in rooms that are not used to avoid draughts and close your curtains at night to prevent heat escaping from windows.  When using the oven, try and cook a couple of meals at once.  One for dinner that day, and one for the next day that could be re-heated.  Make good use of your freezer and keep all leftovers aside for further use.  Do not leave electrical appliances on standby, they can use up to 30% of the electricity as if they were running fully.

When you are next on the high street think twice before you decide to buy something.  Do you really need to buy the item, or is it just something that you would like to have.  Changing the way we think about money can have a massive impact on they way we spend and what we spend our money on.

There are a number of benefits associated with online shopping.  Many of the old fears have been dispelled.  We no longer fear bad service, inferior products, or even money going missing from our bank accounts.  Instead we have embraced the new technology and it has opened up a new way of buying and selling right from the comfort of your own home.

The fact that you can shop from home at your own convenience is itself the main benefit when it comes to online shopping.  You no longer have to go to a physical shop on a High Street or a large out of town retail park.  You are no longer constrained with traditional opening hours, long queues, trying to find a parking space, or even battling with the weather.  With online shopping, you simply log on to the Internet, look for what you want to buy and then make your purchase.  Plain and simple.  Online stores take orders 24 hours a day, 7 days a week so you can make your purchase at a time that suites you.

Using the Internet for online research can help point you to the best online retailers and bargains.  If you know what product or service you are looking for, you can simply type the goods and services into a search engine and you can read from other consumers who have purchased these already.  Many people tend to complain about bad service and products, so keep this in mind if you are thinking of purchasing any large expensive goods.  If you are considering purchasing an expensive item, it pays to shop around.  the same principle applies to online shopping.  Visit several online retailers and look at the different products that they have before making a purchase.  Read the reviews that people leave, and check the service that you will receive.  Many people find that if they think ahead before purchasing a product, the delivery time of the goods does not become a major issue.  However if you leave your online shopping to the last minute, then you may find that delivery may pose an issue, especially if the goods needs to arrive before a birthday, or a special time such as Christmas.

Shopping on line can be done at your own leisure, and you do not have to put up with any sales staff, or gimmicky sales tricks to sell you additional warranties, or items.  The choice is yours there and then.  You decide what you want, and make the purchase.  You can jump from one online retailer quicker than you can by physically walking out of a store, and into another.

In many cases shopping online can save you quite a bit of money, you can search for special offers more easily than if you were in a traditional store.  In some cases you may decide to purchase goods from outside the UK  if they are a good bit cheaper.  However be aware of what the returns policy and how secure they are.  It is always good to do some research before moving to this level.

Always ensure that when you are making a purchase by debit or credit card, that the site you are paying through is secure.  Most public web addresses begin with the letters http.  If you are making an online payment, ensure that the website that you are making a payment through is secure.  A secure website will begin with the letters https instead of the standard http.  Always ensure that that your computer or laptop has got the latest antivirus update and that you run your anti virus checks regularly to keep it safe and secure.

When the credit crunch started a few years ago, the  then Labour Government  under Gordon Brown was worried that as the economy fell into recession prises would fall.  In other words there would be a period of deflation in the economy.  This did occur, and the Government eager to get us all spending again lowered the rate of VAT to 15% to encourage us all to go out and spend our  money.  However this temporary rate of VAT was not to last and the rate returned to 17.5% in January 2010.  VAT was to jump further when the Coalition government announced that VAT would rise to 20% in an attempt to help reduce the deficit.  The Chancellor of the Exchequer announced that this rise was to be permanent, and that there would be little chance of the rate lowering.

And so began the steady rise of prices in our stores.  The effect of the VAT rise was to steady creeping up of prices across the nation in towns and cities.  Slowly but surely month after month there was a steady rise in the rate of Inflation , with the promise from the Bank of England that this was temporary and that the rate would fall back within the 2% threshold.  However it hasn’t, and it looks like the rate way continue to rise in the short term, with the Bank of England looking increasingly unwilling to act using the traditional tools at its disposal to counteract it.

One thing is for sure, the factors that are causing the rise in the rate of inflation are outside the control of the Bank of England and the Government.  Massive double digit increases in the price of wholesale energy is beginning to filter down into every household throughout the country.  There are a number of factors which have led to this sharp increase.  The increase in demand for oil and gas from emerging economies in the Far East, and the unrest in the Middle East seen this year has disrupted the supply of oil to the markets.  The Economic principles of demand and supply dictate that as demand rises, and supply falls, then prices will rise.

However the rising cost of goods and services is something that we all should worry about.  Inflation eats at the real value of our money, put simply, what a pound can buy you know, is not the same as what it could buy you last year.  The real value of the currency becomes eroded as it’s value falls and becomes less.  While inflation is not as bad as what has been seen in extreme cases such as Wiemar Germany or currently in Zimbabwe,  the value of the currency is something that should hold and retain it’s value over time.

One of the most noticeable consequences of the the rise of inflation can be felt by those who hold savings in Banks and Building societies.  The value of their savings is being eroded, as the pound looses it’s value.  And as Interest rates are lower now than they have ever been, the rate of return on savings is very low.  Many are now in a situation were they are loosing money.

In the past many households would be compensated when inflation rose when they would have received their annual pay award from their employer which generally kept their spending power similar to what they were used to. However this in no longer the case.  The average pay rise is now less that the rate of Inflation, and for many the chances of a pay award are slim as the economy is in a dangerous place.  Those that are on benefits were also cushioned as the rate of inflation in September usually dictated how much state benefits would rise by the following year.  The Coalition Government is looking at ways to prevent the current hike in State Benefits over the 5% mark, so next years increase could be well below 5%.

So as housholds up and down the country feel further squeezed, the Government seems to be doing very little to help struggling households up and down the country.  Labour has called on the Government to reduce the VAT rate so that people would have more money in their pocket.  So far this has been ruled out.

While the rate of inflation in the short term looks set to increase further as the price hikes by the energy suppliers trickle down through the economy.  The Bank of England believes that inflation will return back to it’s 2% mark.  It argues that the current factors that brought about the rise were a result of factors outside the UK economy and that in the long term prices will fall back again.

However other changes have been recently implemented giving you more rights in the work place.

Agency Workers

If you are an agency worker, you will now be entitled to the same rights and conditions as permanent employees in the organisation that you are placed in from the first day of employment.  You will now have full access to facilities such as staff canteens, and child care facilities.  After 12 weeks you will be entitled to, by right,  equal treatment in basic conditions such as holidays, and pay.

The responsibility for ensuring that you are treated equally as a permanent employee rests ultimately with the agency that you are employed with, however the company that employees agency staff will further have to ensure that the agency is aware what the terms and conditions are of it’s staff.  If an agency worker believes that they are not treated fairly, then both the Agency and the Company employing the agency worker could be held liable for the breach.

There are however some exceptions which are not included.  The agency worker will not be entitled to the same sick pay, or entry into an occupational pension scheme, or any bonus entitlement for long service or loyalty.

Changes to Maternity and Paternity Leave

The biggest change here is to allow fathers more paternity leave if they wish. The Leave entitlement can now be split between the father and the mother, which would allow the mother to return to work earlier.

Flexible Working

At the moment an employee has the right to request flexible working if they have children under the age of 18 years off age.  The government is looking at extending this provision so that all staff will have the right to request flexible working.  However this is currently out for consultation until December 2011.

Abolition of the Default Retirement Age

One of the biggest changes announced this year, is the abolition of the default retirement age.  What this will mean is that just because you attain the retirement age, this does not mean that you will now have to give up work.  In fact if your employer believes that they can terminate your employment at a certain age, they will then need to give good grounds and justification for the decision.

There are a few things that we can do about the house to save money and help you control the cost of  our energy bills. If we make simple changes to our lifestyle now we could potentially save hundreds of pounds a year.

Firstly,  look at what you are being charged by your current energy provider per unit of energy, and see if you could save money by switching.  There are many good comparison sites out there that will give you the latest deals, and show you how much you can save if you switch.  They will even redirect you in many cases to the energy provider that will give you the better deal, and help you make the switch.  Switching your energy provider may seem a daunting task, but it is well worth making the switch in the long run.

Look at how you currently pay your energy bill.  Many energy companies provide discounts if you switch to paying by monthly direct debit.  And you could save even more money if you switch from paper bills to online billing.  If you find that this does not suit, you may get a discount if you switch to pre-payment, however you will need to check this out carefully, as not every one will benefit from a pre-payment facility.  This can differ from company to company in the UK.

There are also things that you can do through out your home to save energy, simple things with out switching energy providers.  Some of these handy tips can save you hundreds of pounds a year. Many of these tips are also good for the environment, so you will also be doing your bit by going green, and helping the environment.

Look at the temperature in your home and set your thermostat one degree lower than it’s current setting -  consider even  a few degrees if you can.  This could potentially cut down your energy bill quite a lot.  Set the timer on your boiler to come one and off automatically, so that your home will be warm before you come home in the evening, and if you set it to come on in the morning, your home will be warm then also.  Make sure that all radiators are free from clothes and other items which block heat from coming them. Avoid drying your clothes over the radiator as this stops heat circulating in the room.  Make sure that items of furniture do not block the heat from circulating.  If you find that you only use a few rooms in your home, consider switching off the radiators in these rooms and keep the doors closed to stop the cold air traveling around your home.  If you find that you are still a bit cold, consider putting on a jumper before increasing the temperature on the thermostat.

Make sure that you take at least one hot meal a day.  This will give you the energy to cope with the winter weather and also help your body stay warm.

In  the rooms that you are heating, close all doors and draw the curtains.  Your curtains help stop heat escaping from your windows, and will act as a barrier to the cold air.  Ensure that there is very little cold air entering from vulnerable points in your home such as your front and back door.  Consider draft proofing your windows and doors.  Paying a few quid doing this could save you lots of money.

Watch your consumption of electricity.  Switch off lights in rooms that are not used, and turn your appliances off rather than keeping them on standby.  Only boil enough water in the kettle that you need, and if you are cooking with the oven, consider planning your meals so that several meals can be cooked in the oven and warmed up again using a microwave.  Defrost your freezer regularly, and when you are using your washing machine, ensure that there is a full load in it.

If you have sufficient money,  you could invest a lot of money up front which will potentially save you money.  The first thing that you should look at is your home insulation Insulate your loft to prevent heat loss.  Many energy companies will provide free loft insulation, and it is well worth seeing if you qualify. Insulate the walls of your home.  Heat can escape in the cavity wall, and cavity wall insulation will prevent this.

Switching to a new energy efficient boiler will save you hundreds of pounds during the life of the boiler, and now they are are also better for the environment.  Perhaps even consider installing a wood burning stove in the sitting room.  They give off quite a lot of heat, and as you are only burning wood are great for the environment.  Wooden blocks can  be obtained relatively cheaply and they look fantastic when lit.

If you live  in rented accommodation speak to your landlord about any concerns that you have, and see what he is prepared to do to help you save money this winter.  Energy prices tend to only go one way, and so far there is little end in sight in the price increases.  However we can change our attitude to fossil fuel and the way we use it.