Pension Management

Apacs, the UK’s payments body, has warned that only half of us check through credit card statements carefully, meaning many extra fees and charges could be being paid without us even knowing. In addition to this, many consumers may find the way their balance is being divided a little confusing, as often different amounts of debts are charged at different interest rates. This makes it even harder to understand exactly what you are paying and why you are paying it.

Although people are getting better at checking their statements, research suggests that there are still too many of misunderstandings. Taking out secured loans or homeowner loans can be a much cheaper option and a much more simple way of managing finances in comparison to a credit card.

As well as typically offering a much lower interest rate than a credit card, a secured loan or homeowner loan can produce all your payments together, making it easier not just to manage your money but also to consolidate your debts. A secured loan can be used for almost any purpose such as paying off expensive credit cards and reducing monthly repayments, home improvements, a new car, a wedding or that long awaited holiday.

Secured loans are secured on your property. This means that the lender is taking less of a risk in lending you the money and the rates are lower than for unsecured loans. Secured loans are also available to people who may not be eligible for an unsecured loan such as people with a bad credit rating, or people who are unable to prove their income. This may also be a solution for those who are relying on an income from benefits or a pension. Larger secured loans are also available, depending on how much equity is in your property. However, it is important that you know that you are at risk if you don’t keep up the repayments.

UK mortgage brokers are increasingly focusing on secured loans making it easier for consumers to get good quality advice on when to take out such products. This is just one finding revealed by a new study carried out by the Association of Finance Brokers (AFB). Its survey of UK mortgage intermediaries said that around 50 per cent of respondents now advise on mortgages, with 56 per cent having advised on between one and ten secured loans in the past month. Close to 20 per cent of intermediaries placed their business with ten or more lenders.

In recent years mortgage brokers have been saying that they want, or intend, to become more involved in offering secured loans. Mortgage brokers are increasingly using secured loans as an appropriate part of their advice to consumers. This should ensure that the customer receives good quality advice. Although only 20 per cent of intermediaries did not offer Payment Protection Insurance (PPI) with the loans they advised, the remaining 80 per cent offered PPI either as a monthly premium or a choice of a monthly or a single premium.

UK residents over the age of 55 are being hit hardest by the rises in living costs and the tightening in consumer credit markets, Skipton Building Society has found.
According to research recently published by the group, Britons in this age group are more likely than any other to have tightened their belts in recent months as fuel, food and energy costs increase and credit, mortgages and loans become more difficult to come by. In the first report in a Credit Crunch Britain series, Skipton identifies that more than eight out of ten (84 per cent) of respondents have cut back on spending in an effort to protect themselves against the worsening financial climate.
The group notes an overall trend in which the older people are, the more likely they are to have attempted to rein in spending. While 55.7 per cent of people aged between 16 and 24 said they had cut back on outgoings as a result of the credit crunch, 57.8 per cent of 25 to 34-year-olds answered positively. A sharper jump was seen when 35 to 44-year-olds were questioned, with 72.6 per cent saying they had limited their outgoings recently.
People who have found themselves in an untenable financial situation as the cost of living soars and lending markets dry up may find taking out a debt consolidation loan useful. In taking out this type of loan and entering into lowered payment arrangements with energy providers and creditors, borrowers may find they are in a better position to meet the inflated monthly payments.
For 76 per cent of 45 to 54-year-olds, cutting back had also been a priority, while those of pensionable age were said to be most likely to have reduced spending. A number of regional trends were also identified. In the north-east, Skipton notes the effects of the Northern Rock crisis beginning in the summer of last year may have been more sharply felt in this area. More residents in this region said they had cut back in recent times than in any other area in the UK, with 62.8 per cent of people saying they had made financial sacrifices. In Scotland and the south-west meanwhile, residents seem more reluctant to rein in spending, with 54 per cent and 54.8 per cent of respondents respectively saying they had done so in recent months.
Londoners followed those living in the north-west with a positive response from 62.3 per cent of people in the capital, with residents in the east rounding out the top three areas forced into frugality by the credit crunch.
Commenting on the findings, Steve Haggerty, managing director at Skipton Building Society, said: “It is clear that the credit crunch is having a marked impact on UK consumers’ spending. But the fact that almost a third of adults have not cut back on their spending at all suggests that either they are financially strong or that they see the current economic climate as short-term. It is our view that, the credit crunch will ease in the short-term; making mortgages cheaper and more available. However, the wider, global issues, such as oil prices, will continue to create pressures on the pockets of UK consumers for some time to come.”
For those who have found themselves out of pocket and facing money management problems, taking out a debt consolidation loan may be of assistance. It may also prove a prudent course of action for the 23 per cent of people identified by Fairinvestment in a recent study who are set to cut back on life’s luxuries as the credit crunch takes hold.

As financial worries increasingly prompt Britons to attempt to review their finances and reduce their debts, one aspect that may be overlooked is the pension. With various surveys demonstrating the extent to which people are finding themselves having to cope with mounting credit card bills and loan payments, thoughts about saving for retirement could be pushed to the back of minds.Yet it could well be that the current economic problems highlight just how important careful financial planning is. This is certainly the view of the Association of British Insurers (ABI), which has produced a guide aimed at addressing the issues and concerns consumers may have.Simply entitled ‘People need pensions’, it intends to make just that point. The ABI observed that confidence is the most important factor in pulling through the recession, but investments and long term savings have taken a knock due to stock market falls.Director of consumer strategy at the organisation Maggie Craig explained that pensions remain an excellent prospect, particularly as savers can benefit from “free money” – both from the government and employers.”Saving for retirement is crucial both for individuals, as it helps to ensure they will have a more comfortable retirement, and for society, as it reduces the burden on future generations of taxpayers,” she remarked.And the importance of having a nest egg in place has been emphasised by a recent study by Help the Aged and Age Concern. Beginning early could be the key, as nearly half of those over the age of 50 told the charities that they are less confident their pension and savings will be enough to fund retirement than they were six months ago. The organisations also cited Office for National Statistics figures showing that the number of unemployed people in this group has risen nearly 50 per cent over the last year, which could mean even more people are relying on their investments.One provider that has recognised the need for investments to be made is Scottish Widows, which has announced the launch of two new multi-manager funds. Through these, customers are being offered the chance to see their money spread across a range of assets – including equities, commodities, bonds and property.This particular approach may not be to everyone’s liking, but the advice from various quarters does appear to be clear – consumers should not forget about pensions despite the economic problems currently taking hold around the world. To this end, Ms Craig stated: “In these difficult economic times, it is especially important that people make the right decisions about their finances, now and in the future.”