On Saturday I was interviewed on BBC Breakfast about some research carried out by a charity called Contact a Family. It surveyed over 1,100 families with one or more disabled children and found that 23% had gone without heating, 34% were behind with credit card or loan repayments and one in seven went without food.
Most of these figures showed a deterioration from the last time the research was carried out in 2008. They reveal a struggle that many families with disabled children face to arrange child care (which is far harder to access if you have a disabled and often much more expensive), combine caring for a disabled child with work and to do more than survive financially.
No one would pretend that the benefits system is straightfoward, whatever type of state help you want to claim. But disability living allowance (DLA), which is the main benefit disabled children are entitled to, is particularly complex. There are two different components of the benefit (care and mobility components) which can be paid at several different levels. And assessing whether a child needs extra care because they are disabled or because they are a child is not always clear cut.
Add to that the fact that most parents find out about benefits they're entitled to through other parents whose children have the same disability and you can see how hit and miss the system is.
There are no government figures on the number of families with disabled children who claim disability benefits, but charities estimate that as many as 40% of parents don't get the help they're entitled to.
In this period of austerity the government is looking to reduce spending on welfare, not increase it. But if families with disabled children are getting further into debt or going without food and heating, something needs to be done. How about better signposting of benefits so that families are told about the help they may be entitled to when they receive a diagnosis for their child?
And what about encouraging employers to be more flexible? At the moment you only have the right to ask for flexible working once you've been in a job for six months. For families with disabled children who want to get back into work, that six-month 'hurdle' can be an impossible one to clear. Some companies may genuinely struggle to give these employees the flexibility they need. But I bet some could think of more creative ways of working than 9-5. What do you think?
Tuesday, 13 July 2010
Tuesday, 6 July 2010
Public Sector Pensions
The government has asked John Hutton to carry out a review of public sector pensions. There's no doubt that the cost of providing a final salary pension for workers in the public sector is rising and, at a time when the UK's finances are in a mess, it's right that public sector pensions, along with other spending, should be looked at.
But it's important that any changes made don't penalise one section of the public sector workforce disproportionately. We don't yet know what the Hutton review will suggest, there is a real danger that cutbacks to public sector pensions across the board could have the effect of penalising women.
We all know that women retire on far less than men. Figures from the Prudential show that 35% women will retire 'in poverty' (as defined by the Joseph Rowntree foundation) this year. If women give up work to have children, retirement saving becomes a luxury.
The one time when women do save for their retirement is when they work in the public sector. 60% of those who join public sector pensions are women; in the private sector the figure is 40%. But we're not talking a 'gold plated' retirement as the average public sector pension is around £7,000 a year and women - generally - receive far less. In local government, the average pension is around £4,400, but for women it's £2,600. Around half of women in the NHS retire on a public sector pension of £3,500 - that's less than £70 a week on top of the state pension.
In a way these figures show the big success of public sector pensions - the fact that they've encouraged people on lower incomes to save for their retirement, which doesn't happen to the same extent in the private sector.
What we do need is long term affordability and sustainability of public sector pensions (and there are some imaginative ways that could reduce the costs while protecting the pensions of those on the lowest incomes). What we don't need are changes that will hit the lowest paid workers - who are mainly women - hard. Reducing their pension benefits could just tip them into means-tested benefits, which hardly seems fair and - ultimately - is unlikely to give the government the savings it's looking for.
But it's important that any changes made don't penalise one section of the public sector workforce disproportionately. We don't yet know what the Hutton review will suggest, there is a real danger that cutbacks to public sector pensions across the board could have the effect of penalising women.
We all know that women retire on far less than men. Figures from the Prudential show that 35% women will retire 'in poverty' (as defined by the Joseph Rowntree foundation) this year. If women give up work to have children, retirement saving becomes a luxury.
The one time when women do save for their retirement is when they work in the public sector. 60% of those who join public sector pensions are women; in the private sector the figure is 40%. But we're not talking a 'gold plated' retirement as the average public sector pension is around £7,000 a year and women - generally - receive far less. In local government, the average pension is around £4,400, but for women it's £2,600. Around half of women in the NHS retire on a public sector pension of £3,500 - that's less than £70 a week on top of the state pension.
In a way these figures show the big success of public sector pensions - the fact that they've encouraged people on lower incomes to save for their retirement, which doesn't happen to the same extent in the private sector.
What we do need is long term affordability and sustainability of public sector pensions (and there are some imaginative ways that could reduce the costs while protecting the pensions of those on the lowest incomes). What we don't need are changes that will hit the lowest paid workers - who are mainly women - hard. Reducing their pension benefits could just tip them into means-tested benefits, which hardly seems fair and - ultimately - is unlikely to give the government the savings it's looking for.
Tuesday, 11 May 2010
Who's cashing in on ISA rates?
A few weeks ago I wrote an article for SavvyWoman about switching cash ISAs and - knowing how fond banks and building societies are of changing rates - last weekend I checked that the rates were up to date.
What was interesting, no, let me rephrase that, somewhat shocking, was how low some cash ISA rates were. Did you know that some ISA providers will take your money and give you a tax-free return of 0.10%. Yup, a tenth of one percent.
That means even if you paid in the current tax year's maximum amount of £5,100 you'd still only earn just over a fiver in interest after a year. That's enough for a fish and chip supper or a bottle of nail varnish, but it's not much to show for saving several thousand pounds for 12 months.
OK so let's name some names - Santander, which - rightly - got lots of publicity for its market-leading cash ISA earlier this year also has an 'easy ISA' paying 0.1%. Oh, but if you've got £27,000 or more you'll get 0.3%. That's OK then.
The Dunfermline building society has a Soccersaver Cash ISA for Celtic fans, but scores an own goal with its 0.1% interest rate.
Meanwhile Barclays has announced that it will keep its market leading cash ISA (paying a healthy 3.1%) open to new customers until June 1st. That's the good news. The bad news is that this ISA won't accept transfers in from existing ISAs, it will only take new money. If you want to transfer your ISA to Barclays, you can transfer it to an account paying 0.1%. Hmmm. I'll get back to you on that one.
I appreciate that banks and building societies have to make a profit and that the Bank of England rates are low. But the grand game of snakes and ladders that cash ISA savers seem to have unwittingly signed up for isn't the answer. Someone's laughing all the way to the bank, but it's not the majority of cash ISA savers.
What was interesting, no, let me rephrase that, somewhat shocking, was how low some cash ISA rates were. Did you know that some ISA providers will take your money and give you a tax-free return of 0.10%. Yup, a tenth of one percent.
That means even if you paid in the current tax year's maximum amount of £5,100 you'd still only earn just over a fiver in interest after a year. That's enough for a fish and chip supper or a bottle of nail varnish, but it's not much to show for saving several thousand pounds for 12 months.
OK so let's name some names - Santander, which - rightly - got lots of publicity for its market-leading cash ISA earlier this year also has an 'easy ISA' paying 0.1%. Oh, but if you've got £27,000 or more you'll get 0.3%. That's OK then.
The Dunfermline building society has a Soccersaver Cash ISA for Celtic fans, but scores an own goal with its 0.1% interest rate.
Meanwhile Barclays has announced that it will keep its market leading cash ISA (paying a healthy 3.1%) open to new customers until June 1st. That's the good news. The bad news is that this ISA won't accept transfers in from existing ISAs, it will only take new money. If you want to transfer your ISA to Barclays, you can transfer it to an account paying 0.1%. Hmmm. I'll get back to you on that one.
I appreciate that banks and building societies have to make a profit and that the Bank of England rates are low. But the grand game of snakes and ladders that cash ISA savers seem to have unwittingly signed up for isn't the answer. Someone's laughing all the way to the bank, but it's not the majority of cash ISA savers.
Thursday, 29 April 2010
How fair is the Farepak settlement?
How would you feel if you'd saved £400 for Christmas but only received £60? Probably you'd be pretty angry, but that's what's happened to the 150,000 or so people who saved with the Christmas savings club Farepak.
It went bust over three years ago taking millions of pounds with it. I covered the Farepak story at the time when I was was a freelance reporter for BBC Breakfast and I spoke to someone who'd saved hundreds of pounds with Farepak and - as an agent - had encouraged her work colleagues to do the same. She was furious, not only because she'd lost out, but because she genuinely believed that she was helping her colleagues by encouraging them to save.
At the time, credit was easy but the people who saved with Christmas clubs like Farepak liked the idea of locking money away throughout the year. The reward for this prudence was knowing they'd have extra cash to spend at Christmas.
It's taken three years of work by the liquidators (whose fees come directly out of the money available to creditors) to come up with the settlement of 15 pence in the pound. Pretty poor, in my opinion. The only positive bit of news is the fact that it's brought the wait for compensation to an end.
The situation has improved in that Christmas clubs that are members of the Christmas Prepayment Association now have to pay customers' money into a trust account, so the cash is kept separate from the companies' own money. This is big step in the right direction. But when over 150,000 people are still down by 85% on money they saved in what they thought was a safe scheme, I don't think anyone can say enough has been done.
It went bust over three years ago taking millions of pounds with it. I covered the Farepak story at the time when I was was a freelance reporter for BBC Breakfast and I spoke to someone who'd saved hundreds of pounds with Farepak and - as an agent - had encouraged her work colleagues to do the same. She was furious, not only because she'd lost out, but because she genuinely believed that she was helping her colleagues by encouraging them to save.
At the time, credit was easy but the people who saved with Christmas clubs like Farepak liked the idea of locking money away throughout the year. The reward for this prudence was knowing they'd have extra cash to spend at Christmas.
It's taken three years of work by the liquidators (whose fees come directly out of the money available to creditors) to come up with the settlement of 15 pence in the pound. Pretty poor, in my opinion. The only positive bit of news is the fact that it's brought the wait for compensation to an end.
The situation has improved in that Christmas clubs that are members of the Christmas Prepayment Association now have to pay customers' money into a trust account, so the cash is kept separate from the companies' own money. This is big step in the right direction. But when over 150,000 people are still down by 85% on money they saved in what they thought was a safe scheme, I don't think anyone can say enough has been done.
Monday, 15 March 2010
Credit card companies bought into line...kind of.
Credit card companies have been coming under increasing pressure to clean up their act over the last year or so, and finally it seems that change is on the way. OK, so it won't happen overnight (as the card companies have until the end of the year to make the changes) but it should mean a better deal for many card customers.
There are five major changes, one of which will force card companies to give customers 60 days' notice that they're going to raise their rates as well as the right to reject the rate rise. Under current rules, we're only given 30 days' warning. It could mean that millions of people are better off. Last year credit card companies raised the rates on over 6 million cards and it's not clear that consumers knew they had the right to freeze their account and pay off the debt at the old rate. It seems very few people did this and - as most of us don't have money to chuck around - the assumption has to be that some weren't aware they could do this.
But this isn't the only change; one that I think is more interesting will mean that credit card companies have to use our payments to clear the most expensive debts first, a complete reversal of the present situation for the vast majority of credit cards. I did a report about this for TV a few years ago and most of the people I spoke to couldn't believe that card companies chose to maximise their profits by paying off the cheapest debt first.
It meant that if you transferred your balance to another card (say, one charging 0% interest), but then bought something using the same card when it charged 18% for purchases, your payments would be used to clear the 0% balance first and only then to pay off the purchases at 18%. Of course, this wasn't a problem if you cleared your credit card balance in full or if you didn't use a balancen transfer card for purchases. But the card providers' trade body the UK Cards Association says the changes will benefit around 25% of cardholders or around seven million people.
I'm all for making a profit (even the banks and credit card companies would be allowed to make money, if I ruled the world!). But I don't think that tricks and catches are the way to go about it. This clampdown on card companies can't come a moment too soon.
There are five major changes, one of which will force card companies to give customers 60 days' notice that they're going to raise their rates as well as the right to reject the rate rise. Under current rules, we're only given 30 days' warning. It could mean that millions of people are better off. Last year credit card companies raised the rates on over 6 million cards and it's not clear that consumers knew they had the right to freeze their account and pay off the debt at the old rate. It seems very few people did this and - as most of us don't have money to chuck around - the assumption has to be that some weren't aware they could do this.
But this isn't the only change; one that I think is more interesting will mean that credit card companies have to use our payments to clear the most expensive debts first, a complete reversal of the present situation for the vast majority of credit cards. I did a report about this for TV a few years ago and most of the people I spoke to couldn't believe that card companies chose to maximise their profits by paying off the cheapest debt first.
It meant that if you transferred your balance to another card (say, one charging 0% interest), but then bought something using the same card when it charged 18% for purchases, your payments would be used to clear the 0% balance first and only then to pay off the purchases at 18%. Of course, this wasn't a problem if you cleared your credit card balance in full or if you didn't use a balancen transfer card for purchases. But the card providers' trade body the UK Cards Association says the changes will benefit around 25% of cardholders or around seven million people.
I'm all for making a profit (even the banks and credit card companies would be allowed to make money, if I ruled the world!). But I don't think that tricks and catches are the way to go about it. This clampdown on card companies can't come a moment too soon.
Monday, 22 February 2010
How state pensions discriminate against women.
Here's the thing. You work all your life, but in low paid part-time jobs. Or you give up work to care for a relative who's too proud to claim sickness benefits (or who doesn't realise what they're entitled to). And what happens when you reach pension age? You only receive a fraction of the state pension, that's what.
The government's own figures show that barely half of all women manage to qualify for a full basic state pension in their own right (worth £95.25 a week). To be fair, that percentage will increase in April when some fairly major reforms of the state pension system are introduced.
But the point is that most people assume that the state pension will be there for them when they retire, which is pretty much the case for men as only a small minority miss out. But it's very different for women. Tens of thousands of women don't earn anything towards their pension because they have part-time jobs that pay less than £95 a week. Worse than that, the planned state pension refoms due to come into effect on April 6th won't do anything to help them.
It's true that it will be easier for women who care for family members who are ill to be credited with National Insurance contributions after the new rules are introduced on April 6th. At the moment, they can only be credited towards their National Insurance record if they care for someone for more than 35 hours a week and they receive Carer's Allowance and the person they care for claims one of several disability benefits. Quite a tall order, so it's not surprising that many carers (mainly women) lose out.
It's obviously a good thing that state pensions are improving so that fewer women (and men) will lose out in the future. But it's still the case that - even after the major shake up of pensions in April - one in four women will not be entitled to a full basic state pension. The state pension reforms are much needed and long overdue, but I'm not convinced they go far enough.
The government's own figures show that barely half of all women manage to qualify for a full basic state pension in their own right (worth £95.25 a week). To be fair, that percentage will increase in April when some fairly major reforms of the state pension system are introduced.
But the point is that most people assume that the state pension will be there for them when they retire, which is pretty much the case for men as only a small minority miss out. But it's very different for women. Tens of thousands of women don't earn anything towards their pension because they have part-time jobs that pay less than £95 a week. Worse than that, the planned state pension refoms due to come into effect on April 6th won't do anything to help them.
It's true that it will be easier for women who care for family members who are ill to be credited with National Insurance contributions after the new rules are introduced on April 6th. At the moment, they can only be credited towards their National Insurance record if they care for someone for more than 35 hours a week and they receive Carer's Allowance and the person they care for claims one of several disability benefits. Quite a tall order, so it's not surprising that many carers (mainly women) lose out.
It's obviously a good thing that state pensions are improving so that fewer women (and men) will lose out in the future. But it's still the case that - even after the major shake up of pensions in April - one in four women will not be entitled to a full basic state pension. The state pension reforms are much needed and long overdue, but I'm not convinced they go far enough.
Monday, 8 February 2010
Did you know you could lose your home if you can't pay your credit card bill?
OK, so in reality very few people's homes are repossessed because they can't pay their credit card bills or other personal debt (such as bank loans etc), but the fact is that some do. According to the Ministry of Justice, fewer than 350 properties were sold in the last six months of 2008 because credit card companies and banks wanted their money back.
There may well be times where it's not a case of 'can't pay' but 'won't pay' - when only the threat of drastic action will do the trick, but I bet the vast majority of people who had to sell their home had no idea what they were letting themselves in for when they signed up to their credit card or personal loan.
We're used to the disclaimer that 'your home may be at risk if you don't keep up repayments' when we take out a mortgage or other secured loan. In fact, we're probably so used to it that the words barely register anymore. But losing your home over a credit card debt?
Debt advice charities have become increasingly concerned about the rise in the number of companies trying to get the courts to approve 'orders for sale', which gives them the power to force someone to sell their home. Although the numbers are relatively low, the concern has to be that there will be more as property prices recover.
It's certainly been the case that there's been a rush of companies trying to stake their claim to money they're owed. Ten years ago there were fewer than 20,000 applications to the courts to have unsecured debt turned into a debt that was secured against the value of your property. By 2008 (the last year the government has accurate figures for), that figure had increased by around 1000% to 165,000.
Now, I'm a firm believer in the fact that if you borrow money, you should expect to pay it back. But I also realise that changes in someone's life - redundancy, illness, divorce etc., can make this pretty difficult. What I also believe is that companies should be straight with us. So, if they're going to charge us 16% (the average credit card interest rate), compared to 8% or so for a secured loan, they should be prepared to take on the extra risk that goes with it. Or, if they're really offering a credit that's secured against our home, we should pay secured loan rates.
The government is planning to raise the bar so that credit card companies and banks won't be able to force the sale of a home if you owe less than £5,000-£10,000. That would be a welcome step, but it also needs to force card companies and banks to spell out the worst that could happen if a customer gets into arrears. Preferably on their marketing bumph and in the same sized font as the eye-catching slogan.
There may well be times where it's not a case of 'can't pay' but 'won't pay' - when only the threat of drastic action will do the trick, but I bet the vast majority of people who had to sell their home had no idea what they were letting themselves in for when they signed up to their credit card or personal loan.
We're used to the disclaimer that 'your home may be at risk if you don't keep up repayments' when we take out a mortgage or other secured loan. In fact, we're probably so used to it that the words barely register anymore. But losing your home over a credit card debt?
Debt advice charities have become increasingly concerned about the rise in the number of companies trying to get the courts to approve 'orders for sale', which gives them the power to force someone to sell their home. Although the numbers are relatively low, the concern has to be that there will be more as property prices recover.
It's certainly been the case that there's been a rush of companies trying to stake their claim to money they're owed. Ten years ago there were fewer than 20,000 applications to the courts to have unsecured debt turned into a debt that was secured against the value of your property. By 2008 (the last year the government has accurate figures for), that figure had increased by around 1000% to 165,000.
Now, I'm a firm believer in the fact that if you borrow money, you should expect to pay it back. But I also realise that changes in someone's life - redundancy, illness, divorce etc., can make this pretty difficult. What I also believe is that companies should be straight with us. So, if they're going to charge us 16% (the average credit card interest rate), compared to 8% or so for a secured loan, they should be prepared to take on the extra risk that goes with it. Or, if they're really offering a credit that's secured against our home, we should pay secured loan rates.
The government is planning to raise the bar so that credit card companies and banks won't be able to force the sale of a home if you owe less than £5,000-£10,000. That would be a welcome step, but it also needs to force card companies and banks to spell out the worst that could happen if a customer gets into arrears. Preferably on their marketing bumph and in the same sized font as the eye-catching slogan.
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