UK retires early
People in the UK take their pensions earlier than workers in other EU countries, but also work longer into old age, research has found. Experts said the findings are a warning to savers planning to plunder their pensions under the new retirement freedoms next year. Take too much, too early and you could be forced to work longer, or return to work.
The average British worker first accesses personal pension savings at the age of 58, according to research by The European Commission. By contrast, Spanish workers accessed pensions at 62. The gap with the UK was seven years in Norway and Iceland, where workers waited until they were 65. Yet Britain also had a higher proportion, at 20%, working past 65. In Spain the figure was just 5%, although that may reflect the dire levels of unemployment in Spain. The figures, which relate to 2012, found that savers in Bulgaria, Poland and Slovenia took their pensions aged 57. In Greece and Italy it was 58, while the French waited until 59 and Germans to 61.
Weak eurozone hits UK manufacturing
The UK manufacturing sector grew at its slowest pace for 17 months in September as a result of the strong pound and eurozone weakness. The Markit UK Manufacturing Purchasing Managers’ Index (PMI) fell to 51.6 in September from 52.2 in August. A figure above 50 indicates growth.
The current sluggish growth in the eurozone contributed to exports growing at their slowest pace for 18 months. The strength of sterling against the euro also hit sales. Where an increase in new export orders was reported, it reflected demand from North America, Germany, Scandinavia and the Middle East. However, the number of jobs created in UK industry accelerated in September, regaining most of the momentum lost over the summer.
British pay declines in the ‘lost decade’
Workers in Britain face a ‘lost decade’ of falling pay as wages rise slower than prices, according to a report. Average earnings after inflation is taken into account will be more than £1,000, or 5%, lower in 2017 than they were in 2008 before the financial crisis. The figures, from the Ernst & Young Item Club, highlight the cost-of-living problems affecting families, despite the strong growth figures for the overall economy.
“Households are facing a lost decade of real wage growth which will mean consumer spending growth will be low by historic standards,” said Martin Beck, senior economic adviser to the Item Club. This has caused a situation where total household incomes have strengthened, because more people are in work, but individuals do not have extra money in their pockets.
Industry slams draconian HMRC
The Revenue has been accused of trying to become ‘all-powerful’ after vastly increasing the amount that can be taken from salaries. HM Revenue & Customs will be able to take up to £17,000 from pay packets, compared with the current limit of £3,000. From April tax codes will be altered for those believed to have underpaid income tax, capital gains tax or National Insurance contributions.
This follows controversial proposals by the Treasury to allow HMRC to take funds from bank accounts for unpaid taxes without gaining permission from the courts. HMRC says it has had the power to seize funds from pay packets since 1944 and that any amount taken will be spread over 12 months via the tax code. Some industry bodies have described the measures as ‘draconian and regressive’.
Stamp duty receipts have rocketed by £1.5 billion in just one year as the Treasury has cashed in on soaring house prices. Home buyers paid £6.4bn in the levy in the last tax year, up almost a third from £4.9bn in 2012-13.
Critics have accused the Government of being ‘addicted’ to revenue from stamp duty, which is paid on house purchases over £125,000. Ministers have failed to update bands for the fee, which range from 1% for assets costing up to £250,000 to 7% for those of £2 million plus. This means thousands more first-time buyers have been dragged into the net as house prices have risen by double-figure percentages across many regions.
In sickness and in health
Employers say the number of days taken as sick leave fell from an average of 7.6 to 6.6 days this year. The report, from the Chartered Institute of Personnel and Development (CIPD), found that more of those days off were being used to care for other people, such as elderly relatives. It also claimed there was evidence that people were attending work while sick, with a third of employers saying people had struggled to work before fully recovering from illness.
Absence levels remain higher in the public sector, with 7.9 days per year taken as sick leave, compared with 5.5 in the private sector. Many people will put this down to the ease with which sick leave can be taken in the public sector, but CIPD says many public sector workers, such as nurses and teachers, deal with the public directly, so are more exposed to contagious diseases such as colds and flu.
Stashing the cash
Keeping income details private from friends is considered polite, but now a study has found that one in seven middle-aged couples keeps their earnings secret from each other. Many admitted they kept quiet to buy treats for themselves, while others revealed they had set aside money in case of divorce. A third of those concealing their true salaries deliberately lied to their partners, according to the survey by insurer, Prudential.
The survey, which took views from 1,851 people over 40, did show some evidence of altruism One in four respondents said they used deception so they could buy things for their partner. The survey also found 22% were saving for a dream holiday, new car or another family surprise. However, far more respondents said they had their own interests at heart. More than a quarter said concealing cash was necessary to maintain independence, while one in eight couples over 40 had secret debts.
Banks slash ISA interest rates
Banks have cut ISA payouts by more than £600 million a year, despite an influx of money into the accounts since March, according to Bank of England data.
Savers have poured an extra £12 billion into ISAs since the Chancellor, George Osborne, announced reforms in March that trebled the annual allowance to £15,000 a year. But during that time banks have heavily reduced the amount of interest they pay out, making hundreds of separate cuts to rates. The reduction has been so severe and widespread that, despite savers holding more money in their accounts, banks are actually paying out £569m less in annual interest overall.
Industry experts have accused banks of taking advantage of savers by reducing rates, even though the bank rate has remained fixed at 0.5%. The average ISA paid just 1.73% in August, according to the Bank of England, down from 2.07% in March.
Drugs and sex out-strip drink spending
People in the UK spend more on drugs and prostitutes than on beer and wine, the first official study of money spent on illegal activities has found. The Office for National Statistics, which tracks changes in spending habits, found people spent a staggering £12.3 billion last year on illegal substances and illicit sexual gratification. This was more than the amount spent on wine and beer in 2013, which was just under £11bn, according to the ONS data.
The statistics body has been forced by the European Union to investigate the amount of money spent on illegal drugs and prostitution. The EU said such data was necessary to create a fair comparison of different national economies. The figures are based on estimates from previous studies for spending on these illegal activities. The ONS estimated that including spending on drugs such as cocaine and heroin in the national accounts would add £6.7bn a year to the UK’s GDP – the traditional measure of economic activity.
More don’t give up the day job
The number of over-65s who are still in work has risen by a quarter in just three years. There are now 230,000 more workers older than 65 than in 2011, pushing the total to a record 1.1 million. This means more than one in 10 over-65s are in employment, after the scrapping of the default retirement age which meant employers could force older workers to retire.
While better health means more people feel able to work longer, experts said many had been forced to postpone their retirement to boost their pension pots. The employment rate for the over-65s has increased sharply since October 2011, when the default retirement age was fully phased out.
Young ‘not ready for employment’, says BCC
Young people lack workplace skills such as communication and team working, a study among employers has suggested. The British Chambers of Commerce survey of 3,000 firms found nine out of 10 thought school leavers were not ready for employment, and more than half said it was the same with graduates. The business organisation is now pressing for universal work experience in all secondary schools.
Three-quarters of the companies surveyed put the situation down to a lack of work experience, and more than half said young people did not have basic skills such as communication. However, half admitted they did not offer work experience placements, despite criticising the lack of these programmes in schools. The BCC said assessments of educational establishments should include information about employment as well as exam results.