Student loans system in a right palaver

July 23rd, 2014 No Comments By Ian Wade

student Student loans system in a right palaverMPs are calling for an urgent review of the student loans system, after it transpired that 45% of student loans will never be repaid.

It’s estimated that 45p in every pound shelled, the taxpayer won’t ever get back.

Under the current system, students can borrow to cover the full cost of £9,000-a-year tuition fees, and do not have to start paying back their loans until they have finished studying and are earning above £21,000 a year, and any outstanding debt is written off after 30 years.

However the sheer amount of students defaulting on their debt (ie: they haven’t got jobs or even if they have, they’re not paying enough), and the system looks in crisis as it will soon become financially unviable.

Originally, the government has projected that 28% of loans would have to be written off, but ministers have been continually shouting “HIGHER!”

The number has been revised because economists have downgraded their predictions of how much graduates are likely to earn in the future.

The National Audit Office predicts that student debt will increase from £46 billion in 2013 to about £330 billion by 2044.

Meanwhile, the Student Loans Company is supposed to have 98.5 per cent of borrowers in a repayment channel – which means they are either repaying on time or not earning enough to repay, but they’re allowed to include people in that total, even if they don’t have any information on them.

The Institute of Fiscal Studies has predicted that the average student will now leave university with about £44,000 of debt, in 2014 prices, compared to about £25,000 under the old system.

Although the lowest earners will pay back less, far fewer graduates will pay off their debt in full by the age of 40, and almost three quarters will never earn enough to pay back their loans in full.

Tuition fees are higher in England than in any other public university system on Earth, and when you throw in other expenses, the cost of studenting in England in general was the third highest in the world.


pensions 300x187 Osborne reveals new pension plans (not his, sadly)New rules for private pensions have been announced, allowing the retired greater freedom to fritter away their cash.

The rules were launched by Trouble-haired chancellor George Osborne, following his announcement earlier this year when he scrapped a rule forcing people to buy an annuity, and thus freaked out insurers the land over.

Osborne is keen to allow people to tap into the cash they set aside during their working life by reducing tax penalties imposed on those who withdraw their savings in a lump sum.

On Monday, the government confirmed its intention to go ahead with such plans, seen as the biggest reform of pensions in a generation, and added details to its proposals following a consultation with industry, employers and consumer groups.

Osborne said: ”It’s right to support hard working people that have taken the long-term decision to save for their future and I’m pleased that the responses we had to our proposals on making pensions more flexible have been overwhelmingly positive,”

“The government believes that the overall impact … is likely to be limited,” it said. “It is expected that there will still be a strong continuing demand for high-quality fixed-income assets, including government and corporate bonds.”

It all sounds quite good, but there are worries that the changes will allow pensioners to piss away all their savings while giddy in the first flush of freedom. Osborne, with his legendary charm, has rejected this idea.

It was all panic when Osborne first announced the shake-up earlier this year, it hit the share value of firms like Legal and General, Aviva and Standard Life who run annuities businesses. The shares have since recovered slightly, but remain below their pre-announcement levels.

The finance ministry said that after consultation, the industry estimated that only 10-20 percent of people in defined-benefit pension schemes would transfer out of them. Some pension schemes might need to hold more liquid assets as a result, however.

A summary of the consultation said the financial guidance provided to retirees would be provided independently and funded by a levy on regulated financial services firms.

All good news for anyone with a pension then. Oh.

payfriendz 300x300 Payfriendz allows you to, yes! Rob your enemies!Payfriendz allows you to do just that – pay your friends.

The new app allows you to transfer money via instant messaging, and goes beyond the current methods of other payment apps (Paym, PayPal, Barclays Pingit, etc) that don’t go beyond offering transactions.

It’s all very genius-sounding, and you wonder why it hasn’t been thought of before.

With an instant messaging network users can chat with their friends and talk about money matters without awkwardness or having to resort to threats.

Users can send and request money as quick as a chat message.

Money can also be spent comfortably via an integrated virtual MasterCard on online stores such as Amazon .

And as it works like a digital wallet Payfriendz makes it easy to split restaurant bills, collect money for a gift or share flat share expenses. Jolly!

That is if you actually have money to transfer, it doesn’t yet offer any tips on how to respond to “Pay your rent or all your shit is going into the skip out front sunshine”.

Let’s enjoy one of their promotional ads with the extremely irritating ‘Kimmy’!

“Ice cream” indeed. She’s clearly off to her dealer.

old lady money 300x187 Youth of today need to start saving 30 years before they’re born to get a decent pensionDespite a new IFS report that suggests today’s pensioners are enjoying record high levels of income, for those of us unlucky enough to be young, it seems we may as well throw the towel in, as we can’t save enough for a pension even if we started at birth.

Liberty SIPP has calculated that, not only would age zero be too late to start saving for a pension, in fact, your parents would have had to have started saving 30 years before you were born to allow you to be comfortable in your retirement. Anyone with parents younger than 30 is therefore facing a double-impossibility-pension problem.

The figures are calculated assuming people would need half of the average salary in retirement- which works out at around £13,500. Assuming you would want to take a 25% tax-free lump sum, as is currently available, and that you contribute average contributions, the average person born today would need to have started saving in 1984 in order to achieve a pension pot of £250,000 needed to generate that level of income at current annuity rates. Good stuff.

But it’s not all bad news- if the lump sum is not taken, and with the forthcoming changes to pension rules this is likely to become more common, the pension pot only needs to be £188,000 at retirement, so you would only have had to start contributing to your pension in 1991, 23 years before birth.

Despite the scary numbers though, it isn’t actually impossible to save sensibly for a pension, although it might be impossible for babies born today to access the State Pension before age 80. Nevertheless, the State Pension should take some of the strain out of the total income required in retirement, reducing the size of the fund needed on retirement day.

Also, the average contribution into a pension is just £207 a year, so if you can afford more, you’ll build up a pot quicker. Saving £1,305 a year will mean you only need to start saving at 21, when pension provision is clearly top of your priorities.

Finally, more and more people are working past age 65, partly owing to the increase in State Pension age, so if you can afford to keep going a bit longer, your pension will go further when you do retire. You mightn’t be able to afford not to. Also, the new rules mean that buying an annuity will no longer be compulsory*, so you may be able to better use your pension lump sum and generate a more lucrative income.

Or just pop your clogs before you get old.


*assuming the rules haven’t changed again by that time that is.

Deathwatch: Wonga puppets

July 15th, 2014 No Comments By Ian Wade

Wonga+TV+advert 300x199 Deathwatch: Wonga puppetsWonga, the unethical and dodgy payday lending company, is having an image overhaul.

They’re planning to ditch the “cuddly” puppets too. Which plays havoc somewhat with the definition of cuddly, but there you go. They’re off.

Incoming Wonga chairman Andy Haste, former chairman of insurance giant RSA, has said he didn’t want Wonga to be associated with ‘anything which inadvertently attracts children’.

Which is a relief, because the only children who’d be attracted to those puppets are the sort that need counselling.

Mr Haste added that he wants Wonga to become more ‘customer focused’ and change its business operations, even if that means it makes less money in the near term.

It’s all part of the government’s attempt to put a cap on lending and stop these asshats from rinsing the vulnerable for all they’re worth.  As of July 1, lenders must put ‘risk warnings’ on television adverts. They are also banned from rolling over loans more than twice and must check potential customers can afford to take out debt before giving them loans.

The Wonga news comes weeks after Wonga said it had agreed with regulators that it would pay £2.6 million in compensation after chasing struggling customers with fake legal letters to pressurise them into paying up. Classy.

Mr Haste said the company, must review rates, fees and charges and no longer be seen as targeting ‘the young and the vulnerable’. We can assume they’ll have to stop sponsoring Newcastle United then?

He said: “Wonga is a company that needs to go through significant change if it is to have a sustainable future. Some serious mistakes have been made. The company admitted those mistakes and it has apologised for those mistakes. Wonga has understandably faced a lot of criticism and I know that we need to repair our reputation and regain our right to be an accepted part of the financial services sector.”

Which is all waffle as you can imagine, but ultimately the godawful pensioner puppets are no more. Now if we can convince Dolmio and Compare The Market that the puppet thing isn’t working, we can have a lovely big bonfire.

Cabbies go cashless

July 15th, 2014 1 Comment By Ian Wade

london cab 300x225 Cabbies go cashlessLondon, and it seems that to get around these days, you don’t need any cash.

Well actually you do, to charge up your Oysters and all that, but a London cab driver is trialling Barclay’s Pingit app for the next week.

It allows the fare on the meter to be transferred between bank accounts within 30 seconds.

Mr Cable, who has been a London black cab driver for 23 years, told the Independent: “I am always up for trying new technology to help make mine and my passengers’ lives easier.”

He’s Mr Future basically, as he was also the first cabbie to accept chip and pin cards in 2004.

“It means I have more time on the road to earn money – rather than stopping off at the bank to pay in my earnings or pulling up at ATMs for passengers with the risk of getting a hefty parking fine,” he added.

Of course, you can still probably get away with doing a runner if you’re that way inclined, but we’d never advise readers to do anything like that.

A man named Darren Foulds, the director of Barclays Mobile and Pingit, said: “We are always keen to support new ways to make people’s lives easier. This trial really demonstrates the huge potential for mobile payments as they gain more widespread use.”

The app will use QR codes (SEE? THERE IS A USE FOR THEM AFTER ALL) and can access any bank account when cash is needed for their fare.

Uber, meanwhile…

FCA proposes 0.8% payday loans cap

July 15th, 2014 4 Comments By Mof Gimmers

payday loans FCA proposes 0.8% payday loans capJust what are we going to do with payday loan companies? They’re not doing anything illegal per se, but no-one likes having them around.

The Financial Conduct Authority have come up with a plan.

They want to see a cap on the amount that payday lenders can charge their customers, and they’ve announced what they’re going to do.

The short version is that payday loan rates should be capped at 0.8% a day of the amount borrowed, and the FCA add that in total, no-one should have to pay the loan companies back more than double what they borrowed.

These changes will come into play in January 2015, and some say that those desperate for money will avoid companies like Wonga and Quick Quid, and go back to old fashioned loan sharks who will reclaim debts with thumb screws or whatever it is they do.

The new rules say that there’s also going to be a cap on default charges, which is probably being set at £15.

FCA chief executive Martin Wheatley said: “For the many people that struggle to repay their payday loans every year this is a giant leap forward. From January next year, if you borrow £100 for 30 days and pay back on time, you will not pay more than £24 in fees and charges and someone taking the same loan for 14 days will pay no more than £11.20. That’s a significant saving.”

“For those who struggle with their repayments, we are ensuring that someone borrowing £100 will never pay back more than £200 in any circumstance.”

The FCA predict that these new rules will see payday loan providers losing £420m in revenues each year.

tax 215x300 Scary new powers for scary taxman to deduct what he likes from your salary (without telling you)HMRC seems to be getting more sinister by the day. Hot on the heels of regulations allowing HMRC to forcibly remove cash in unpaid tax debts from your bank account, new regulations out for consultation would allow HMRC to change an employee’s tax code, which governs how much tax is deducted from salaries before reaching their bank account, without telling them- for up to 30 days. This means employees could receive far less (or presumably more) wages than they were expecting with no prior warning. Which seems a bit off.

Currently both employer and employee are immediately informed when a tax code is changed, and this allows the employee to contact HMRC should the tax code be incorrectly amended. Figures released last month showed that the number of taxpayers who had paid an incorrect amount of tax rose to 5.5m last year, so it’s not like the system is foolproof either. The proposed delay would mean people only find out when it is too late to correct the mistake and the money has already been deducted from their monthly salary.

Lesley Fidler (her real name, honest), a tax director at Baker Tilly, said: “When you are counting the pounds in your pay packet…you are thinking ‘have I got enough this month?’…People will effectively be lending to the taxman out of their salaries.”

However, Lin Homer, chief executive of HMRC, insisted that the powers would only be used in extreme circumstances and would never leave taxpayers short of “enough money to live.” But before you start chuffing about how on Earth the stonkingly well-paid Chief Exec of a public body would be able to gauge what is enough to live on, don’t worry, because HMRC propose to be able to judge this perfectly by gaining access to 12 months of the target’s personal spending habits. That’s not terrifying AT ALL.

An HMRC spokesman said that the delay is only likely to be used in “limited circumstances” at busy times of the year, such as around the self-assessment deadline and that it was all OK as “HMRC anticipates savings for the taxpayer of several millions pounds in printing and postage costs, as a result of these changes.”

HMRC will, however, welcome “comments on the detail” of the regulations, before finalising them “in the autumn.”

The proposals are currently out for consultation until the end of July.

school uniform 300x211 A third of parents take children out of school to save money on a holidayIt’s almost the end of term. Unless you are in Scotland in which case that is old news. Some parents may be looking forward to having their offspring around 24-7, others may be experiencing a growing sense of dread. But some parents will have been rubbing their hands with glee as more than a third of parents (36%) take their children out of school during term time. And this risk to their child’s education is all in the name of saving money.

New research by Nationwide Building Society shows that, despite increased attention and new £60 penalties for unauthorised absences, the proportion of parents angling for a cheap getaway has remained largely unchanged since last year’s research, where 37% admitted taking a hooky holiday. Out of those parents who did opt for term-time holidays, almost one in five (19 per cent) further compounded their children’s moral slide by lying about it and telling  the school their child was sick rather than admit they were off on holiday.

However,  given the fact that the premium for a typical holiday in Spain for a family of four has been calculated as amounting to as much as an extra £1,347 during school holidays compared with term-time, £60 seems a fair price to pay for the discount.

The research also showed that:

57% took their kids out of school for holiday at the end of term, compared with 18% who chose the start of term and 17% who went for a mid-term break

72% of parents went for a foreign holiday during time term, which would result in greater savings compared with school holidays

62% of children on term-time holidays were from primary school, but the figure almost halved for older children, with only 32% of secondary pupils being taken out of school for holiday

But while over a third of parents sounds a lot, is this news so surprising? Alternative research by Yorkshire Bank suggested that almost a quarter (24%)  of people base their choice of holiday primarily on price, while a further 27% would book somewhere unusual if it would save them money. The average spend of a summer holiday is estimated at £1,027.72 per person per year.

So would you do it? Is a week’s education worth over a grand to you? Or do you live in Scotland and have already enjoyed a lovely family holiday abroad, cheaper and without a resort full of screaming English children…

Cheap food = tax dodging?

July 10th, 2014 3 Comments By Thewlis

tax image 300x230 Cheap food = tax dodging?We all know that inflation has been outpacing earnings increases for years, and is only now getting back to levels targeted by the Bank of England. This means that the pressure on cost of living has been immense for many people, many of whom may have turned to discount supermarkets such as Lidl and Aldi in order to make ends meet. And this has had a knock on effect of driving down food prices across the supermarket sector, which is almost certainly A Good Thing.

But does discount shopping come at a price?

New figures released today show that suggest that food price inflation is standing at record low levels. But some are suggesting that, like Amazon, the way discounters are managing to undercut the market starts with tax avoidance, potentially adding a moral cost to the discount

George Bull from accountants Baker Tilly cites Lidl as an example. Most of Lidl UK’s stock, management and administrative support arises from its German parent which means that Lidl’s UK tax liability is low owing to all the costs being sent back over to Germany. While Lidl is providing jobs and cheap food in the UK, it is therefore contributing little to the UK tax pot. More worryingly, Bull suggests that the big UK retailers might be eyeing up the smaller discounters – for example, Sainsbury’s is reported to be taking to take a half share in a new Netto chain with the Danish parent – meaning more money is diverted away from the UK treasury.

But does that matter so long as the cash is, instead, staying in UK consumers’ pockets? After all, we will eventually spend that money and boost the UK economy further. Or is corporate tax avoidance always wrong, even if, as in the case of Lidl, it was a legitimate foreign company long before it ever landed here.

Or does anyone even care anymore so long as prices are kept low? Is anyone still boycotting Amazon and Starbucks now they are no longer in the news?

pt piggy bank pink 2 300x300 It’s official  loyal bank customers get a raw dealEveryone knows that, to get the best deals, you need to shop around, and savings rates are no exception. Now, as part of its flurry of proactivity since being formed, the Financial Conduct Authority (FCA) have proved the fact as part of an investigation into the cash savings market- and they don’t like it.

The FCA have undertaken preliminary research which show that, owing to the fact that many consumers do not shop around, banks are able to pay lower interest rates to customers that have stayed with the same account for a number of years. They also found that the largest banks, with the greatest number of personal current account holders, are able to get a whole wedge of savings cash from their hapless current account holders despite offering lower interest rates, on average.

But so what? Most people are aware of the perils of doing nothing as a consumer, and if lazy account holders are effectively being penalised, that’s their problem surely? Caveat emptor and all that. Apparently not. The FCA have decided that this is Unfair and that they are going to Do Something About It.

Christopher Woolard, director of policy, risk and research at the FCA, said:

“Our preliminary view is that while some aspects of the cash savings market are working well competition does not appear to be working in the interest of many consumers. In this market there is a minority of very active, very engaged consumers who regularly change provider to get the best deal. We want to look more closely at what is inhibiting the majority of consumers from getting better deals.”

The FCA have decided to investigate the whole savings market, to ensure competition is working correctly and that consumers are informed as to their options. The FCA has announced they will now undertake further research, before deciding whether to ‘intervene’ to ensure competition is working in the interests of consumers.

Some of the things the FCA will look at include:

what could be done to ensure that more consumers are aware of the rates they receive and the rates on offer on other accounts

what information customers are given when rates are changing

whether it is possible to give consumers greater insight into how their interest rate is likely to evolve over time, especially after any introductory offer ends, so that they can make an informed medium-term choice between providers when opening an account

what could be done to make it easier to move savings to a new provider

whether other interventions may be necessary to improve outcomes for customers overall

The final report into cash savings will be published in late 2014.  We’re a little bit impressed.

wages 300x199 Wages: Still favouring men, unsurprisinglyAccording to the Office for National Statistics, Men are rogues and all is still unfair in the wages war.

The report claims that Men apparently don’t reach the height of their salary until they are 50. As for women, they reach their height at 34, which is right there, not really very good news.

Combining the results for both sexes produced a hypothetical highest average wage age of 38 last year, according to an Office for National Statistics report.  The average overall income was £13.93 per hour.

Comparing and contrasting that with what it was like nearly 40 years ago, the highest average earnings for a female was 29, but they were paid the equivalent of £7.09 per hour.

A bright, thoughtful type has helpfully pointed out that it reflects the fact that many women work part-time after having kids, and so the gender gap reflects that.

For workers of almost every age, average real earnings were higher in 2009 than last year, the ONS says. We can look down and laugh at the hoodlums in their twenties as they only learned 12% less.

Good looking and thin they might be, but older people can afford hitmen to take them out. Like we said – this is a wage WAR.

pt piggy bank pink 2 300x300 16 and 17 year olds get lucky with ISA changes While it’s quite doubtful that a 16 or 17 year old would have £19,000 knocking about in their piggy bank, loaded teens can save up to that amount tax free this year, thanks to an ISA loophole.

If you’re between these ages, you can open both a junior ISA and an adult ISA thanks to an anomaly in the system. The adult ISA limit has increased from £5940 to £15,000 today, while the junior ISA limit rises from £3840 to £5000.

And then when you turn 18, your junior ISA will be put in a separate adult ISA, which means your savings will still stay tax-free.

So perhaps if you’re a rich parent who is looking for a place to squirrel away Tarquin’s inheritance, or you’ve just got a REALLY BLOODY WELL PAID PAPER ROUND, then take advantage of it while you’re still young enough to get tax free savings.

Although you’re probably on Snapchat right now asking your mates if anyone wants to chip in for a Subway meal deal before you go to the job centre.

money jar 300x300 Couples with 2 kids have to earn £40,600 a year to live Ever wondered why you’re walking around in a knackered daze with moths flying out of your pocket, wondering how to make ends meet AND keep up with the endless demands of children, who want things like water, food and new shoes?

Well that’s because the amount of money required for an acceptable standard of family living has gone up by 46% since 2008, according to the Joseph Rowntree Foundation. And we’re not talking about trips to Legoland or booze and hookers for Dad. We’re talking BASIC NEEDS.

Despite the fact that the amount of money needed for staying alive has risen by almost half, wages have gone up by a piffling, paltry, perfunctory 9%.

The JRF have said that even if wages start to rise, the gulf between income and cost of living is so huge that families still couldn’t hope to catch up.

‘People have talked a lot about wages falling behind the cost of living but this really lays bare the challenge to make up lost ground.’ Said Katie Schmuecker from the JRF. ‘This isn’t just falling short, it’s falling behind.’

So that’s why you feel like you’re running to stand still ALL THE TIME. No wonder our heartless moneybags overlords call us ‘hardworking families’, eh?

*sells kids*

Mobile phones to be less hassle abroad

June 30th, 2014 No Comments By Ian Wade

mobile phone 300x225 Mobile phones to be less hassle abroadOne in six people who own a mobile phone, have admitted that they get shocked when they forget how much it costs to use it.

Many mobile phoners have used their phone on holiday, but have tend to forget the extra that can be run up when a-roaming.

However, that hopefully looks like it is all over as from midnight tonight, the EU’s Roaming Regulation will lower the price caps for data downloads when you are travelling within the European Union.

Although there’s a lack of knowledge about these caps and what they mean.

Which!!! executive director Richard Lloyd said: ”Capping EU mobile roaming charges is welcome news for millions of travellers, especially those who have faced expensive charges for data roaming when their mobile hasn’t even left their suitcase. Consumers travelling within the EU should now be much clearer on the charges they have to pay.”

Which we can all agree is quite a good thing.

The maximum charge for outgoing calls, excluding VAT, will now be 10p per minute, around 3p for outgoing text messages, and 16p for a MB download of data. These caps will only apply to the nations within the EU.

Four in ten people reckon they didn’t know they had a right to challenge their mobile phone provider if they received an excessive bill after using their phone abroad. And a further 48% of people didn’t know that if they have capped their mobile phone usage with their provider, they can refuse to pay the bill for their phone usage above the cap level.

So that’s good to know then, next time you’ve clocked up several grand by accident, you can turn around and shout at your provider.