Individuals will instead be able to leave their pension plans invested and draw down cash as they see fit. This may allow individuals to wait or seek alternatives if annuity rates are poor at the time, and removes the risk of effectively ‘losing’ the whole pension pot if the holder dies shortly after taking out an annuity.
However, not everyone will benefit from the changes. The ‘minimum income requirement’ is designed to ensure people do not spend all their pension savings and then fall back on the state for support. Only those who have an income of at least £20,000 per year from elsewhere will have complete freedom to cash in their pension savings; anyone else will only be able to withdraw what they would have got from an annuity.
Similarly, while the changes introduce the option of passing on a pension pot on the death of the holder, this should not be seen as a tax mitigation strategy, as a 55 per cent tax rate will be charged on any such payment. Nonetheless, that is more than would have been passed on if an annuity was used.
While this extra flexibility will be welcomed by those who can take advantage of it, many pension holders will not notice any difference, and it may be that further reforms will be necessary down the line to improve the system for those who do not have multiple income streams.
For more information, please visit www.glazers.co.uk
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( 3 / 680 )As the controversy over student tuition fees rises to fever pitch today, with MPs preparing to vote this afternoon on plans that could almost treble charges in some cases, the CBI has introduced a new angle to the debate.
Richard Lambert, its director-general, has written to CBI members, saying that if the proposals go through, businesses will have an important role to play in working with young people to help them decide their career paths.
He says the sector will need to help them “to choose the right subjects to study, to offer relevant work experience, and where appropriate to work with universities to develop courses that will provide attractive employment for graduates”.
Mr Lambert also cites some innovative examples of where this is already happening. The University of Birmingham, for instance, has teamed up with BP on a new degree course in mechanical engineering.
And McDonald’s recently launched a two-year foundation degree course in Managing Business Operations, accredited by Manchester Metropolitan University.
Mr Lambert says in future, employers looking for a particular set of skills may find it makes sense to work more closely with institutions that can develop the right courses, helping to shape the course choices that students make.
He also suggests that businesses could be more proactive in engaging with students – their potential future employees – through measures that could include bursaries or other forms of sponsorship or offering relevant work experience, including sandwich courses.
For many young people and their families out there, wondering just what their options will be should the new tuition fee regime go through, there may be a big, black cloud hanging over their university aspirations. But perhaps the CBI’s proposals could offer just the hint of a silver lining to that cloud.
For more information, please visit www.glazers.co.uk
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( 3 / 646 )With four weeks to go until the VAT jumps 2.5 per cent to 20 per cent, the Federation of Small Businesses (FSB) has made an interesting connection between VAT and job creation.
According to a report from the Centre for Economics and Business Research commissioned by the FSB, raising the VAT registration threshold from its current level of £70,000 to £90,000 could save small businesses up to £162 million a year by cutting the red tape around VAT compliance, together with another £700 million in VAT bills.
Those extra millions could be used to create up to 35,000 jobs on an average wage, says the FSB, creating income tax revenue that – taken with the extra cash generated by the 4 January VAT rise to 20 per cent – would more than compensate for any loss in VAT receipts to the government from raising the registration threshold.
John Walker, FSB chairman, says that small firms will be hardest hit by the January VAT rise because they’re less likely to be able to absorb the increase, meaning that they have to pass it on to customers, cut stock levels or find savings elsewhere.
He says: "If the Government is truly committed to a private-sector led recovery, then it must implement a Small Business Programme for Growth to allow small firms to grow and invest – and this would be a great start.”
Chancellor George Osborne will already have his thinking cap on in terms of the content of the Budget he’ll be delivering on 23 March. The FSB, and millions of small businesses up and down the country, will no doubt be hoping that its VAT plea won’t be falling on deaf ears.
For more information, please visit www.glazers.co.uk
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( 3 / 632 )We all accept that there’s a cost to borrowing. It’s the price you pay for the convenience of having the money you need, when you need it, and as long as the repayments don’t unbalance your budget, the arrangement works for everyone.
But the news today that banks are charging the highest interest rates on authorised overdrafts since records began in 1995 – 19.09 per cent in October, according to the Bank of England, or some 38 times the bank’s base rate of 0.5 per cent – is enough to make your eyes water.
According to reports, Lloyds TSB – saved by the taxpayer two years ago, remember, and 41 per cent owned by the government – charges 19.3 per cent on overdrafts, with customers charged another £5 a month on top for access to their overdraft facility.
Coming as this does days after Barclays chief executive John Varley hinted that banks may start charging customers for personal banking – describing the concept as “idiosyncratic by the standards of the world” – it is enough to make you wonder, considering the banks’ somewhat tarnished reputation in the wake of the economic crisis that’s affecting so many people, just how out of touch with their customers they are.
Put sky high interest charges and fees for personal banking into the context of the bank profits – Barclays’ pre-tax figure £3.95 billion for the first half of 2010, for example, or Lloyds TSB’s pre-tax £1.6 billion for the same period – and it’s even more of a puzzle.
Research published last month by Consumer Focus found that three-quarters of the people it questioned had not even considered moving their current account business to another provider and only seven per cent had changed banks in the last two years.
As Consumer Focus concluded, customers’ reluctance to change means that banks have little incentive to raise their game, which means consumers may miss out on better deals and service elsewhere. In the light of today’s headlines, perhaps it’s time for customers to start voting with their feet.
For more information, please visit www.glazers.co.uk
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( 3 / 644 )A couple of months ago, a survey by XLN Telecom of more than 600 small businesses found that more respondents (67 per cent) rated broadband internet access as essential to running their enterprise than they did water or gas (39 per cent and 19 per cent respectively).
There’s no doubt that the internet has become integral to the way we work, rest and play these days and families and businesses across the UK, including those in more remote rural communities, will no doubt welcome the government’s announcement today of an £830 million investment in providing what Culture Secretary Jeremy Hunt calls a “superfast” broadband network for the whole country by 2015.
But it’s also refreshing to see the results of a BBC survey released today, which shows that although the number of empty shops on our High Streets is still rising, they are being replaced by retailers offering services that cannot be provided online.
For the survey for BBC TV’s Inside Out programmes, retail analysts the Local Data Company (LDC) visited 500 towns and cities in England, Scotland and Wales and found that businesses such as off-licences and travel agents were facing high closure rates, although the rate of increase in empty stores was slower than in 2009.
But it also found that a total of 2,633 restaurants, cafes and fast-food outlets opened in the first six months of 2010 along with 2,145 hairdressing and beauty salons.
AS LDC’s Matthew Hopkinson says: “The internet was widely heralded as the death knell for the High Street, but the data shows that shopping in person is still a key pastime for many."
Three cheers for that and long may it continue. Vibrant, varied High Streets are a valuable commodity for any town or city, bringing in visitors and income and building a sense of belonging amongst residents.
It’s not only the services that this new wave of High Street businesses are offering that can’t be done online. Cafes, hairdressers and beauty salons are also places where people meet, relax, talk and laugh with each other – and in a world where the pace of life, like broadband, is superfast for so many of us, that’s something that you can’t put a value on.
For more information, please visit www.glazers.co.uk
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