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Money & Rights

Money and Rights News: June

More people than ever in workplace pension schemes

More than three-quarters (76 percent) of UK employees were members of a workplace pension scheme in 2018, up from 73 percent in 2017, according to new data from the Office for National Statistics (ONS). This is a 29 percent increase compared with 2012, when automatic enrolment was introduced.

The ONS also reported that the amount of money paid into defined contribution (DC) pension schemes by employees has overtaken the amount paid into defined benefit (DB) schemes for the first time in history. Employees contributed £4.1bn into DC pension pots in 2018 while just £3.2bn was paid into DB pension schemes by workers.

Stuart Price, Partner and Actuary at Quantum Advisory, puts this down to automatic enrolment and education. Stuart said: "Auto enrolment has seen a huge increase in the number of emplyer DC pension schemes and there's no denying people are more clued up about their pensions than ever before."

However Jamie Jenkins, Head of Global Savings Policy at Standard Life adds that self-employed people also need to be helped to save for a pension, saying that it should be made easier for them to "start growing their life savings in a tax efficient way from an early age.

"Unlike employees, self-employed people have no employer to set up and run a workplace pension, so the government is rightly exploring and testing different ways of nudging this population into saving."

Retirement benefits issue in easier divorces

It has been widely reported that obtaining a divorce is to be made easiser with couples no longer having to provide evidence to support the irretrievable breakdown of their marriage, and the ability to contest a divorce scrapped. 

While the proposals have been broadly welcomed, financial planning group LEBC has warned of the importance of couples agreeing on division of financial assets sooner rather than later in order to avoid the loss of some pension benefits should one of them die after the decree absolute.

The firm, which specialises in helping divorcing couples, cautions that some pension schemes, which pay a guaranteed income for life, do not pay a dependant's pension to an ex-spouse after the scheme member dies. "It is essential couples agree upon the splitting of pensions with the court, known as a consent order, and that the pension sharing order is implemented before applying for the decree nisi", says Kay Igram, Director of Public Policy at LEBC.

"If the pension scheme member dies after the decree absolute, some pensions schemes will pay out nothing, as their rules only require a lifetime pension to be paid to the widow/er or civil partner of the deceased member.

"Failing to implement a pension share before the decree absolute, which follows automatically six weeeks after the decree nisi, could result in huge financial loss."

Pensions dashboard progressing

The Department for Work and Pensions has published its response to its consultation on pensions dashboards, the Government and pensions industry scheme that will enable you to view all of your retirement savings in one place.

The report includes more details of how the dashboard will work. The Money and Pension Service will be responsible for the initial phase of the project and will bring together a 'delivery group', including consumer groups and Governement. The latter will introduce legislation requiring pensions schemes to make consumer data available to people via their chosen dashboard. Pension schemes will have to participate and must have their data ready within a three to four year timeframe. The State Pension will not be included immediately but will be part of the service at the earliest possible opportunity.

Regulation for claims management companies

The Financial Conduct Authority (FCA) began regulating tthe claims management industry from April 1. All claims management companies (CMCs) in England, Scotland and Waes now have to demonstrate they meet and maintain minimum standards set by the FCA, and all CMCs must apply to the FCA for authorisation.

This gives the FCA powers it can use if firms do not comply with the rules. This may involve requiring a firm to change its business practices (for example, ensuring its communications with consumers are clear, fair and nor misleading), imposing a financial penalty or refusing to authorise a firm if there is serious misconduct. 

More mortgage options for older people

Nationeide Building Society has laiunched three 'Later Life' mortgage products, couples with dedicated afdvice for those aged 55 and above. These are a Retirement Captial and Interest product (RC&I), a Retirement Intererst Only (RIO) product and a Lifetime Mortgage.

Initialy the products will only be available to existing Nationwide borrowers, but the plans are to roll out the Later Life mortgage products more widely by the summer. Applicants mist be over 55, both if joint and can apply up tp age 85. There are no product, valuation or advice fees, and borrowing can be for a number of reasins including home maintenance and improvements, giftinf to family members, holidays and debt consolidation. 

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