Archive for the ‘ UK ’ Category

UK firms contribute £35bn to reduce their pensions bill but deficits keeps rising .

UK firms contributed over £35bn to their pensions pot to reduce deficit but this didn’t touch the surface as deficits keeps rising .

The largest 350 British firms are still struggling to meet their final salary pension commitments to their current and former employees, with total deficits only reducing by £4.1billion to £64.9billion since 2009 despite the hefty contributions by firms.

I keep a very close eye on this as this is a problem that’s just getting worst and people are not aware of it , I started a 3 part article in the British Chamber of Commerce Japan to highlight this , the first of these post was “UK FIRM PENSIONS: IS THE END NIGH? and this talks about this and the problems facing UK defined benefits scheme .

Number of these companies with pension deficit are flirting with the prospect of going into administration as their pension deficits at more than 20 per cent of their market value, according to pension consultants Barnett Waddingham.

Last month i posted ” 7,000 mineworkers retirement takes HUGE HIT ! British Coal Pension enters PPF , Who’s Next ?” this explains what happens to people in a scheme like this .

Deficits are calculated based on the promises made to current and past employees. They can fluctuate as investment returns rise and fall and as life expectancy increases.

I like to emphasis it’s a promise not a guarantee ,companies have the right to change the benefits they pay a recent example is Thousands set to lose out as drugs giant Glaxo slashes pension benefits for UK workforce

Defined benefit (DB) pensions see employers guarantee workers an income for life once they retire.
The amount they get is calculated by multiplying a fraction of their final salary, or their career average salary, by the number of years they have worked.

The schemes have been closing down at a record rate – particularly in the private sector – as they have become increasingly unaffordable and have caused firms to build up significant deficits.
Instead, most companies are now offering defined contribution schemes – known as money purchase pensions – where they offer to match or double an employee’s contributions to a pension pot, which is then invested.

Upon retirement, it’s up to the pension holder to buy a retirement income – either through an annuity or income drawdown.

Barnett Waddingham says that with firms having to fork out so much to meet their final salary pension commitments, those on money purchase schemes may well be losing out.

If you like more information on your options on this let me know ,

Tony Evans

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Pound receives a boost as BoE delay forward guidance statement

The Pound has found some support against the majors following the Bank of England interest rate announcement this lunchtime. The MPC neglected to release a statement on forward guidance and have postponed it until the 7th August, which will coincide with the quarterly inflation report. The Central Bank also left interest rates and quantitative easing unchanged for the month.

There will be widespread speculation ahead of the release of the key inflation report next week and Sterling is unlikely to gain much ground against the majors between now and that release. Nonetheless, the lack of a statement today has a positive impact with the Pound bouncing back above 1.52 against the Dollar and 1.15 versus the Euro.

The one currency that has been sold even more aggressively than the Pound this week is the Australian Dollar and the exchange rate is heading towards a fresh three year high just under 1.70.

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Young workers trapped in pensions crisis

Young workers trapped in pensions crisis.

Pension experts are adamant believers that young professionals face huge financial pressures because a pensions crisis is inevitable for them – leaving them to struggle to make ends meet in old age.

The main reason behind this is that millions of young workers are being ushered into company pensions, which are highly unsustainable today let alone in 40 years time.

The inadequacy of these plans is so bad that someone earning £50,000 in their mid-30s must save an extra £460 a month for the next three decades to secure a comfortable retirement.

Meanwhile, in October last year, the UK government proposed changes that saw the death of the final salary pension schemes.

As a result, as companies replace these expensive schemes with defined contribution alternatives, the retirement prospects for younger workers have dimmed. Instead of lifetime payout worth two-thirds of their final pay cheque, the pension one will get is now determined by how much they put in, the investment returns and interest rates at the time of retirement.

It therefore come as no surprise that figures from the Office for National Statistics last week showed that fewer people are saving into a company pension plan than at any point for the past 60 years.

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Barclays calls for £5.8bn cash to fill shortfall

Barclays calls for £5.8bn cash to fill shortfall.

Earlier today Barclays revealed that it plans to issue £5.8 billion in new shares in an effort to build cash and refill a capital shortfall created by new regulatory demands – a move that will make the bank stronger, Barclays said.

In addition, Barclays will also issue £2 billion of bonds that are turned into shares or wiped out if the bank gets into trouble.

The share sale will be done as a rights issue, which means that existing investors will have the opportunity to buy new shares so their stakes will not be diluted.

Notably, within the same breath, Barclays also admitted that adjusted second quarter pre-tax profit fell 17% to £3.6 billion.

The plans enable the bank to maintain its planned level of lending growth, according to Barclays chief executive Antony Jenkins.

“I am certain the decisive and prompt action we are taking will leave Barclays stronger”, he stated.

The Barclays move comes after the banking regulator, the Prudential Regulation Authority, issued tough new capital requirements aimed at ensuring that banks are protected from the risk of investment losses, even in the event of a fresh financial crisis.

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Jane Austen unveiled as face of new £10 note

Jane Austen unveiled as face of new £10 note.

As of 2017, Jane Austen will be the face of the new £10 banknote.

The note featuring the 19th-century author will replace the current note featuring Charles Darwin as soon as it ceases circulation.

Mark Carney, the new Governor of the Bank of England, announced his decision today, following a high profile campaign to ensure that a woman remained on an English banknote, after Sir Winston Churchill replaced Elizabeth Fry on the £5 note.

The decision meant that there would be no women represented for their contributions to the country’s history on the British banknote, apart from Her Majesty the Queen, a move which prompted a major online campaign set up by women’s rights advocate, Caroline Criado-Perez.

Mr Carney has also today agreed to review the Bank of England’s process for selecting historical figures to appear on banknotes, acknowledging concerns that had been raised recently about the diversity of characters on the notes.

Features of the new Jane Austen £10 note, which will be issued within a year of the Sir Winston £5 banknote, include a quote from her most famous novel, Pride and Prejudice – “I declare after all there is no enjoyment like reading!”, a portrait of the author and a picture of her writing table against the backdrop of Godmersham Park – the home of her brother, Edward Austen Knight.

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Baby Prince will boost the economy by £250m ‘Feel-good” factor .

The arrival of the royal baby will inject fresh momentum into the economy as a ‘feel-good factor’ sweeps Britain, an expert said last night.

Howard Archer, a City of London economist, said the impact on growth would be ‘overwhelmingly positive’.
‘The royal birth may provide the economy with a temporary, small positive boost at a time when it seems to be increasingly moving in the right direction,’ he said.

Economy is looking at expanding double the previous rate 0.6% in the second quarter , previous estimates 0.3% .

The birth of the likely future monarch is expected to give the economy a £240 million boost, according to the Centre for Retail Research. !

Researches also believe this would have a big effect across the Commonwealth . Looking at £5billion worldwide !

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Boris Johnson invites German, Italian and Spanish banks to move to the UK

Got to love this guy !

Boris Johnson invites German, Italian and Spanish banks to move to the UK.

Mayor of London Boris Johnson has called on major European banks to think about relocating their headquarters to London if Europe goes ahead with plans to implement a financial transaction tax.

Mr Johnson said that banks from all over the euro zone were likely to flock to the UK if the European Union went ahead with the new charge, which would put a tax on trading by financial institutions.

“I would advise German, Italian and Spanish banks to move their HQ’s here to London so that they can escape the tax on their operations around the world and as for the French, they are already here,” said Mr Johnson.

The measure has provoked stern criticism from the Mayor, and has also been challenged by the British government. Although it is likely to raise more than £10bn, banks have warned that it will lead to higher trading costs for customers and less liquid markets.

Pensioners facing higher charges on their funds will be hardest hit by the charge, since they could end up losing hundreds of pounds.

Supporters of the tax have responded by saying that the funds raised could be used to help developing countries and support domestic welfare programmes.

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#Royal #Baby even makes #news on #Bloomberg -#Duchess #Cambridge #Labour

Even Bloomberg is getting Royal baby fever !

Confirmed from Buckingham Palace !

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Bank of England changes strategy

Bank of England changes strategy.

In minutes of the July Monetary Policy Committee meeting released on Wednesday, the Bank of England signalled a more mixed strategy that shifts its focus from the flagship quantitative easing programme as the sole means of stimulating the economy.

The minutes provided evidence of the radical change that new Governor Mark Carney has instigated in the BoE within days of his arrival, replacing traditional QE support with a range of other measures centred on guiding financial markets.

Policy makers within the Bank of England said that financial markets had prematurely withdrawn stimulus from the economy in June and as such, the immediate priority for maintaining economic recovery is to counter these moves.

The mentioned guidance can be used to stimulate the economy either by giving households and companies confidence to borrow and spend in the knowledge that policy will remain loose for some time, or by pairing it with new efforts to boost growth.

It has been said that the new emphasis on guiding markets will be formalised next month. Economists interpreted the move as a change in the Bank’s methods of supporting the recovery rather than a hawkish signal.

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UK economy recovering as unemployment falls

UK economy recovering as unemployment falls.

The Office for National Statistics in London announced today that in June, UK unemployment claims fell at their fastest pace in three years, adding to evidence that the economic recovery is indeed gaining momentum.

Whilst Economists had forecast a decline of 8,000 unemployment claims, data showed that there was a 21,200 drop in June, from a month earlier, 1.48 million – the biggest drop since June 2010.

Moreover, as measured by International Labour Organisation standards, unemployment fell 57,000 to 2.51 million in the three months through May. The UK unemployment rate was however unchanged at 7.8%.

Experts commented that the figures provide a further boost to Prime Minister David Cameron, whose Conservative Party has gained in opinion polls as the economy improves, as the general election is now less than two years away.

Economist Philip Shaw said that, “The labour market numbers are positive and reflect the favorable part of the economy in the first half”. However, he then added that with pay growth running so far below inflation, there is ‘still a question mark over the recovery’.

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