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Fraud losses from pension freedoms 25% higher than anticipated

Archive for November, 2016

Fraud losses from pension freedoms 25% higher than anticipated

Wednesday, November 30th, 2016

Recent statistics from City of London Police suggest that losses due to fraud after pension freedoms were introduced could be around 25% higher than was initially estimated.The figure originally reported to the force for the first six months from April 2015 was £10.6 million.This figure has recently been revised to £13.3 million following updated statistics, due to the updating of reports by victims to reflect the full amounts lost. The new figure demonstrates a 146% rise year-on-year in reported fraud from the £5.4 million figure recorded during the corresponding period during 2014.

The figures have played a large part in the call for a complete ban of cold calling in the pensions sector, with a petition to the Government having attracted well over 7,000 signatures at the time of writing. Those in the pensions industry have criticised the Government for ‘sitting on its hands’ with regards to taking action against pension scammers.

“The good financial advice companies don’t need to cold call. Government services don’t cold call”, explains Michelle Cracknell, head of the official government-funded Pensions Advisory Service. She went on to refer to the number of calls we all receive about PPI and whether we’ve had a car accident but explained that this would be coming to an end under new regulation, making pensions the next potential sector for scammers to target. She was adamant that putting a ban on cold calling would give customers added protection, as it would help vulnerable people to know that any cold call they received about their pension was suspicious.

It is estimated that over 10 million pensioners are now being targeted every year by cold callers, a figure which has risen considerably since the introduction of pension freedoms. As scammers often put the money through several companies based overseas, this makes it incredibly difficult for investigators and forensic accountants to identify the criminals and where the money has come from. Mrs Cracknell admitted that her organisation has been forced to advise those who contact them about being scammed that they have virtually no chance of retrieving their money.

Savings ‘Moments of Truth’

Thursday, November 10th, 2016

A recent study has found that around one in three people in the 18-40 age bracket not only are not saving any money for when they retire, but also don’t consider it likely that they will begin paying towards their pension in the future. Many people aged between 30 and 40 said they now felt they had left it too late to begin putting money away for their retirement, and planned to rely on the state pension alone when they finish working.

The reason behind these alarming figures is the financial pressure many feel during this period in their life. In a survey of those aged between 35 and 44, around a third said they felt their financial position was ‘squeezed’, meaning that they struggle to meet regular financial commitments including bills, debt repayment and raising a family. Those in this group also ranked saving for retirement as one of their lowest financial priorities behind saving to buy a house and living for today.

When asked about improving their savings habits, most said that they would put away more if they had a change of circumstances. This could include an increase in pay, an unexpected windfall, or even an existing financial commitment coming to an end. These could be referred to as ‘Savings Moments of Truth’ (MOTs), and recognising them can help to create an environment of saving, rather than spending.

Let’s say you’re spending £245 a month on childcare (the national average). There will probably be a temptation to spend that extra money once your children no longer needs childcare. However, you could identify this MOT and put that money away, into a pension or ISA say, which will steadily manage to build up your savings without impacting upon your everyday finances, as your monthly outgoings will remain the same. Other MOTs like this could be paying off a credit card or personal loan in full. What about keeping your car for a little while longer, once you have paid it off?

Embracing these MOTs when they occur can help build up a substantial pension pot of savings cushion before you retire. Even someone aged 40 paying £240 per month towards their retirement could end up with a pension fund in excess of £100,000 (above the national average pension pot size) by the time they reach 65. It’s never too late to begin saving for your retirement, and seizing your savings MOTs when they happen can be a manageable way of accruing a worthwhile nest egg.

Victory for Donald Trump

Thursday, November 10th, 2016

Much like the Brexit vote, the polls, the bookies and the financial markets all pointed towards a Clinton victory so the Trump win has wrong footed many investors.

In years to come it may be that historians and political commentators look back on 2016 as the year when the rise of anti-establishment politics really began.  Whether it be the vote for Brexit in the UK or the election of Rodgrigo Duterte as Phillipine President.  All this will surely be Trumped, in every sense of the word, by the election of a billionaire reality TV star to the highest political office on the planet.  This pattern may not be ending any time soon with elections due in major economies like France and Germany next year and signs that anti-establishment parties are also polling higher than expected.

In the short term however what does this all mean?  Global markets reacted badly in early trading the morning after but have since recovered which is similar to what happen after the Brexit vote. It is important to re-emphasise our belief that timing of the markets is impossible, we believe that time in the market is what matters.  Yes, investments will go down today, but they will recover, we just don’t know when this will be and you are more likely to miss the recovery than not.

The big moves have been seen in the currency markets with the USD down versus the Japanese Yen, the Euro and Sterling. However the biggest move has been in the Mexican Peso which has fallen 10% against the USD at the time of writing.

Now that the Presidential race has been decided, investors will be turning their attention to what Trump’s economic policies actually look like and these have been light on detail. Trump has made tax cuts a focal point of his agenda and talked about a policy for growth. Trump also made infrastructure spending a key part of his economic policy and we do know that this is one area that both Parties agree on. Its worth remembering that the Republican’s will have the majority in both the Senate and the House of Representatives meaning they control Congress.

However, the rhetoric from Trump’s camp is already more moderate, stepping away from some of his extreme comments. What Trump said while campaigning and what he actually does as President may be two very different things.

Its does seems certain that political uncertainty will continue and there will be implications for the forthcoming European elections. Markets don’t like uncertainty and political risk is very difficult to judge. The US remains one of the most dynamic and important economies in the world, and only in the most extreme version of a Trump Presidency which sees him ripping up trade deals and defaulting on government debt is this going to change. Once the dust settles then the markets will likely turn their attention towards other key forces that are driving the global economy and markets.

Millions have less than £100 in savings

Wednesday, November 2nd, 2016

A recent survey has revealed the startling statistic that over 16 million people in the UK have less than £100 of savings. In five areas of the country – Northern Ireland, the West Midlands, Yorkshire and Humber, North East England and Wales – over 50% of the adult population has savings amounting to less than that amount. The South East had the lowest amount of people with savings of less than £100 at just over 30%.

The research by the Money Advice Service (MAS) was carried out by CACI, a consumer data company with 48 million adults in its database. Whilst the results suggested that saving was particularly difficult for those on low incomes, they also showed that around 25% of adults with less than £13,500 in household income have over £1,000 in savings. Additionally, two in five people in the same bracket are able to put some money away each month.

Surprisingly, 45% of those without savings earned a household income over £30,000, meaning they are not considered to be low-income. This means that they should be in a position which allows them to build up a savings buffer in order to overcome financial obstacles.

The reasons behind the lack of savings are also concerning. 47% of those who are in a position to save said they simply didn’t have any financial goals for the next five years, whilst slightly more at 49% expressed a preference for living for today over planning for tomorrow.

The advice from MAS is simple: saving a little regularly is an achievable way to build up savings over time. “If you earn enough to set even a little aside each month that’s great,” said Nick Hill, a representative of MAS. “A direct debit into a savings account might be an easy way to do this, even if you start small and increase the amount with time.”

The Personal Savings Allowance introduced in April will help those who save get a little more from their money too. It allows those paying a basic rate of tax to earn up to £1,000 in a savings account annually whilst paying no income tax. For higher-rate tax payers, the amount is reduced to £500, whilst those paying the top rate of tax can’t take advantage of the allowance.

November market commentary

Wednesday, November 2nd, 2016


We left you last month having reported on September as a month where ‘nothing much happened’ on the world’s stock markets. For many of the major markets October was much the same: only three of the twelve markets we cover were down in the month, but most managed only small gains. As you’ll see below, however, two markets were significantly ahead in the month.

Away from the stock markets the great and the good had their usual influence on world affairs. Whether either Hillary Clinton or Donald Trump qualify as ‘great’ or ‘good’ I’ll leave to your own political judgement, but the fact remains that in a week’s time one of them will have been elected as the 45th President of the United States. A few days ago it was long odds-on Hillary Clinton, but the re-opening of the FBI’s e-mail investigation has sharply narrowed her lead and in a year that has given us Brexit and Iceland’s Pirate Party, anything is possible.

No doubt Vladimir Putin and Kim Jong-un will be watching the result with interest and wondering what mischief they can make in the ‘lame duck’ period between November and January, when the new President is waiting to be sworn in and Barack Obama will be concentrating on his legacy and his Presidential library.


We now have confirmation that Theresa May intends to trigger Article 50 – and begin the two year process of leaving the EU – by March 2017. The debates over whether it will be a ‘Hard Brexit’ or a ‘Soft Brexit,’ whether it will be challenged in the courts and whether parliament will have a veto, will rumble on. I will not weary you with them here.

The man charged with steering the UK economy through the period leading up to Brexit is new Chancellor Philip Hammond – aided by Bank of England Governor Mark Carney, who has now confirmed that he will remain in that position until 2019.

On 23rd November Philip Hammond will present his first Autumn Statement, which is expected to see significant investment in the UK’s infrastructure, as he seeks to protect the UK economy from the impact of leaving the EU. “Hammond to spend his way out of Brexit fallout,” as the Guardian put it.

The Government received a welcome piece of news at the end of the month when Nissan committed itself to its Sunderland plant, announcing plans to build both the Qashqai and the X-Trail SUV there, following Government “support and assurances.”

This was significant news and represents a big vote of confidence in the UK car industry: the Sunderland plant now produces more vehicles than the whole of the Italian car industry. The news came on the same day as the growth figures for the third quarter, which showed the UK economy growing by 0.5% in the immediate aftermath of Brexit. This was lower than the Q2 figure of 0.7%, but significantly ahead of the generally-expected 0.3%.

Figures released for September showed another good month for UK manufacturing, which grew at its fastest rate since June 2014. The Purchasing Managers’ Index rose to 55.4 in September from 53.4 in August (with any figure above 50 indicating expansion). Manufacturing and exports have been helped by the fall in the pound since the Brexit vote, and with the pound now down to $1.22 we can presumably expect this good news for the sector to continue.

There was also good news for the UK services sector, as the PMI for September came in at 52.6. This was slightly down on August’s 52.9 but still ahead of expectations.

UK inflation rose in September, up to 1% from 0.6% in August with rises in fuel and clothing pushing the rate up. The Bank of England has long had a target of 2% for inflation and it now looks like we are moving in that direction. The Office for National Statistics has said that the fall in the value of the pound is not yet responsible for the rise in inflation: October’s howls of outrage from the nation’s web designers and developers suggested otherwise as Apple unceremoniously hiked the price of a Mac.

Finally in ‘official’ news, the latest figures showed that UK unemployment had held steady at an eleven year low of 4.9% for the three months to August.

We’ve long written about the troubles at Tesco in this commentary: the shares jumped in September as sales improved but the company is now being sued by its own investors over the recent accounting scandals: and in what will be an increasingly common development for many companies, the pension scheme deficit doubled.

As for the FT-SE 100 index of leading shares, that hovered around the 7,000 mark for much of the month, but closed at 6,954 for a modest rise of 1% in October. It is however, up by 11% on a year-to-date basis.


Wallonia is the French speaking region of southern Belgium. According to Wikipedia it’s known for its medieval towns, Renaissance-era architecture and traditional Trappist beers. Well, they’ll have to add ‘blocking the EU-Canada trade deal’ to that list…

The EU and Canada began negotiating a trade deal in 2009. It would have eliminated 98% of tariffs between the EU and Canada and after seven years of negotiations was finally ready to be signed: and then the good people of Wallonia blocked it, saying that it gave too much power to multinationals and threatened local farmers and welfare. In the long run, Wallonia may be proved right, but in the best traditions of the EU a last-minute deal was done, and the treaty should now go ahead.

This incident echoed warnings from Professor Otmar Ising, the first economist of the European Central Bank, who gave a stark warning that that the ECB in particular and the wider European project in general was becoming “over-extended and unworkable.”

‘Over-extended and unworkable’ are precisely the adjectives which have been applied to Deutsche Bank of late, with the bank facing an $11bn fine in the US for mis-selling mortgage products and the shares dropping to a thirty year low. But German business and industry were quick to rally round the bank. A solution certainly needs to be found to Deutsche Bank’s problems: having effectively ruled out a rescue of any failing Italian banks, Angela Merkel would surely struggle to bail out a German bank.

October was a quiet month for the major European stock markets: both the German and French markets rose by 1% to 10,665 and 4,509 respectively. On a year-to-date basis Germany is down by just 1% while the French market is down 4%.


…And so to the land of the free and the home of the brave, which this time next week will know the identity of its next Commander-in-Chief. Both candidates are embroiled in controversy and you suspect that whoever wins, America will remain a sharply divided country.

That is for next month, however: for now, the latest payroll figures for September were disappointing, with private employers adding 154,000 jobs in the month – below the 166,000 expected and the smallest monthly increase since April.

There was better news later in the month when it was confirmed that the US economy grew at its fastest pace for two years in the third quarter. For the three months to September the economy grew at an annual rate of 2.9%, with analysts having predicted just 2.5% – although the stronger-than-expected growth could mean that the Federal Reserve will now raise interest rates before the end of the year.

In company news, Microsoft shares surged to a record high as they continued to focus on ‘cloud computing’ and telecoms giant AT&T announced plans to buy entertainment group Time Warner for nearly $86bn – a deal that was questioned by both Presidential candidates and which will require regulatory approval.

On Wall Street the Dow Jones index was unimpressed by the mooted AT&T/Time Warner deal, and closed the month down 1% at 18,142. For the year as a whole it is up by 4%.

Far East

The Chinese Government set a target of 6.7% for economic growth this year. Wouldn’t you know it, in the third quarter the Chinese economy grew at … 6.7%. ‘If it seems too good to be true it is too good to be true’ is a maxim that rarely fails, and several commentators raised their eyebrows at this news. “The general performance was better than expected,” China’s National Bureau of Statistics commented.

But worries persist, especially about the levels of Chinese debt. At 260% of GDP it is worryingly high and October saw the International Monetary Fund warn about the extent of both corporate and personal debt. China is edging towards “a financial calamity” said the IMF and must “wean itself off addiction to debt.”

Despite that stark warning, business confidence in China increased again, with the People’s Bank of China reporting its business confidence index rising to 51.2 for the third quarter, up 2.2 percentage points from the previous quarter.

The words ‘stark warning’ bring us to South Korea and Samsung, where the company had to tell owners of Galaxy Note 7 to turn them off as the phone developed a worrying propensity to explode and/or catch fire. The company said it is “investigating.” It probably needs to do that quickly, as it saw $20bn wiped off its share value in two days.

Not surprisingly, this impacted the whole South Korean stock market which was down 2% in the month to 2,008. The Hong Kong market was down by a similar amount to 22,935, but China’s Shanghai Composite index rose 3% to 3,100. The real star in the region was Japan though, where the market rose 6% in October to end the month at 17,425.

Emerging Markets

So much for Japan’s 6% rise in the month. It was totally eclipsed by the performance of the Brazilian stock market, which rose 11% to close September at 64,925 where it is now up a very neat 50% for the year as a whole. Clearly, the market is confident that new President Michel Temer will sort out the economy.

The other two major emerging economies we cover turned in much more sedate performances. The Russian market was up 1% to 1,990 while the Indian stock market managed a gain of just 64 points to finish more or less unchanged at 27,930. On a year-to-date basis the two markets are respectively up by 13% and 7%.

And finally…

We’ve already covered the distress of the UK’s creative sector as Apple Macs rose in price. We must also shed a tear for the nation’s model railway enthusiasts, as Hornby announced plans to raise prices for the first time in more than two years. The company has been making its model trains in China for more than twenty years and – with its international trading denominated in US dollars – the pound’s 17% devaluation against the dollar since June 23rd has inevitably meant a price hike.

So if you are a web designer who spends his weekend with a model of the Flying Scotsman, we extend our sympathies – especially if you own an exploding Samsung. Perhaps the answer is to move to Wallonia, where you can at least console yourself with a traditional Trappist beer…