Tag Archives: savers

Great update for savers as bank offers ‘compelling’ interest rates

A GREAT update has been issued to savers, as one bank has entered the personal savings market for the first time, with a wide range of accounts to suit the needs of many different people. Indeed, these accounts also come with solid interest rates in an effort to help those who want a good return on their cash.

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Yorkshire Building Society 3.5% interest rate withdrawn in shock for savers – where next?

“Elsewhere, Coventry Building Society has a fixed term regular saver and lets savers build up to £6,000 in the year and pays 1.50 percent variable.”

Another top account is offered by West Brom Building Society, currently offering a two percent interest rate fixed for 12 months.

However, it is worth bearing in mind it only has 20 branches, and these are scattered exclusively across the West Midlands.

With a number of options at Britons’ disposal, then, the removal of one of the top paying accounts may not be the end of the world.

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This post originally posted here Daily Express :: Finance Feed

‘Positive’ news for savers as interest rates across accounts rise – ‘act quickly’

She continued: “A positive change to see has been a rise to the average easy access rate, encouraging for savers comparing deals but regardless of rate, it seems the popularly of having flexible access to cash remains a vital aspect to savers. 

“Indeed, savers are still storing their cash in sight deposits, with £6billion in deposits made in May – or £56billion so far this year – according to the Bank of England. 

“Considering the pandemic effects on financial vulnerability, savers may even choose a deal with a brand they trust and is completely flexible in the months ahead.”

The savings market, however, has yet to recover from the widespread impacts of the pandemic.

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This post originally posted here Daily Express :: Finance Feed

Pensions boost: Royal Mail to pioneer ‘third way’ scheme – ‘win-win’ for savers

Savers have been stripped of certainty about their incomes in old age following the closure of final salary pension schemes by companies across the UK, but the Royal Mail is due to pioneer a new model intended to provide greater security and stability. The Collective Defined Contribution (CDC) scheme is designed to provide stronger protection against economic shocks – such as a pandemic – and also help people save towards a clear target income.

A Government source said: “This new ‘third way’ for workplace pensions is a win-win for savers – they’ll have the security of an income in retirement and better return on investment – it’s the best of both worlds.”

The widespread demise of final salary pensions means many people have to rely on Defined Contribution (DC) schemes which offer no certainty about income, and savings can be devastated by inflation and the poor performance of investments.

CDC schemes are intended to offer a new way forward. The Government is confident the new model will deliver higher incomes for the same level of contributions as individual DC pensions.

The consultation will nail down the final details about how the new pensions scheme will work, paving the way for companies across the country to offer these to employees.

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A key difference with DC schemes is that both employers and savers will contribute to a pooled fund which will provide members with a regular income.

It is also expected that CDC schemes will be good for employers, providing greater predictability about their costs and obligations.

The Royal Mail is due to lead the way in rolling out a CDC scheme for more than 100,000 employees. Such schemes are well-established in the Denmark and the Netherlands.

Pensions minister Guy Opperman said: “We have seen the positive effect of these schemes in other countries – and it is abundantly clear that when they are well-designed and well-run they have the potential to provide a better retirement outcome for members, and can be resilient to market shocks such as the pandemic.”

Mr Opperman said savers should not face a choice between “security and affordability”.

Matt Rodda, Labour’s shadow pensions minister, described the new model as “potentially exciting”.

He said: “Pensioner poverty has been on the rise and the Government must do much more to secure a decent standard of living for everyone in retirement. Collective Defined Contribution schemes could be a potentially exciting answer to some of the challenges we face in making sure all workers have a decent standard of living in retirement.

“This consultation is an important opportunity the Government must not squander to make sure that schemes are fair, sustainable and accessible to different types of employers.”

The proposals received a guarded welcome from Daniela Silcock of the Pensions Policy Institute.

She said: “Designed effectively, CDC could provide members with greater certainty and potentially higher retirement incomes. However, in order to ensure sustainability, scheme managers need to ensure that members understand the potential benefits as well as the potential risk – for example, contribution rises or benefit cuts during times of economic shock.”

Former Conservative pensions minister Baroness Altmann also sounded a note of caution, saying that in other countries CDC schemes have had problems “because younger members may end up with lower pensions than older ones if the actuarial and investment assumptions prove incorrect”.

She added: “I can see some employers, such as Royal Mail, feel the need to try to replace traditional [final salary] schemes, which are ruinously expensive now, with something better than DC… Time will tell, however, whether these schemes really do deliver better outcomes particularly for the younger members. “The risks of inter-generational unfairness are clear.. The theory is good, whether such schemes work for members in practice will only become clear over many years.”

Angela Gough, head of corporate pensions at the Royal Mail, said: “[We are] committed to delivering the best possible pension arrangements for our people. We believe a Royal Mail Collective Pension Plan pension scheme would meet our objectives of providing sustainable and affordable future retirement arrangements for our people and our Company.

“The DWP consultation puts us one step closer towards making our plan a reality for Royal Mail and its people. We are working closely with CWU [trade union] and others on this important issue.”

Caroline Abrahams of Age UK added: “The move to defined contribution pensions has left individuals shouldering all the risk in the event that something goes wrong with the investments… There is so much that can go wrong, for example falling victim to a scam, and anything that introduces risk pooling into pensions is a step in the right direction.”

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This post originally posted here Daily Express :: Finance Feed

Savings rate rises have ‘started to slow’ as savers take millions out of NS&I – what to do

“There’s also a reasonable chance that at some stage someone will decide to nudge the rate up slightly to stand out.

“Mortgage lending is also still strong, which is helping to underpin the savings market. Net mortgage volumes were at £6.6billion in May, while approvals for house purchases remained elevated at 87,500.

“But competition in the mortgage market has pushed rates to record lows, which will put savings rates under pressure.

“Savings rate rises have started to slow, which is a useful reminder that there are no guarantees they’ll keep creeping up indefinitely. If you’re planning to switch, the key is to find the best possible rate in the market right now, rather than hanging on in the hope of finding rates that might not be on the cards for years.”

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This post originally posted here Daily Express :: Finance Feed

Great news for savers as bank increases ‘enticing’ interest rates on three accounts

Individuals can manage their account via the phone seven ays a week, online, or through the RCI Bank app.

Rachel Springall, Finance Expert at Moneyfacts, offered further insight into the changes.

She said: “It’s great to see rate improvements from RCI Bank UK and for savers looking to supplement their income they may find these offers enticing as they pay monthly interest and can be opened with a £1,000 lump sum.

“However, when comparing the rates offered to their peers, savers could find a rate of up to 1.10 percent as an expected profit rate from Gatehouse Bank on a one-year bond. In the two year fixed bond sector, Gatehouse Bank offer a market-leading 1.20 percent as an expected profit rate. 

Author: Rebekah Evans
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HMRC issue urgent tax scam warning – savers urged to look out for refund & rebate offers

HMRC issued a warning on tax themed scams today and it urged savers to review its “scams checklist” to ensure they’re not caught out. As the official HMRC twitter account detailed: “We’re always detecting new tax scams.

Suspicious phone calls

HMRC explained consumers “can be sure” it will:

  • Only ever call you asking about a claim or payment on a debt that you already know about
  • Never leave a voicemail threatening legal action
  • Never give the reason for a call on a voice message

If a person has been the victim of a scam and has suffered financial loss, they should report it directly to Action Fraud.

The contact details for the HMRC security team and Action Fraud can be found on their respective websites.

Unfortunately, this guidance will likely be needed now more than ever for some people as scammers have been known to take advantage of coronavirus themed difficulties.

Indeed, recent YouGov research showed as many as one in four Britons receive scams every day (25 percent) rising to one in three Britons aged over 65 (31 percent).

This post originally appeared on Daily Express :: Finance Feed

ISA savers invest in cash accounts despite low interest rates – how to boost your returns

ISA decisions appear to have been forced on savers recently as according to analysis of HMRC figures from Hargreaves Lansdown (HL), coronavirus has sparked a “last-minute” ISA dash. In examining the details, it was found that cash ISAs remain popular among savers, even in a low interest rate environment.

Sarah Coles, a personal finance analyst at HL, broke down these figures.

She said: “The coronavirus crash sparked a last-minute dash into ISAs in the 2019/20 tax year. Both cash and stocks and shares ISAs took more money than a year earlier, while the number of Lifetime ISAs more than doubled.

“Until the last few weeks of the tax year, stock markets had moved around a little but looked set to end the tax year roughly where they started. The pandemic changed all of that, sparking a massive sell-off that knocked a third off the value of the FTSE 100. Suddenly investors saw huge value in the market, and rushed to buy before the end of the tax year.

“We saw the impact of this rush at HL. In the last week of the tax year, there were 2.96 million visits to the HL website – up from 1.07 million a year earlier. In the final hour, a HL stocks and shares ISA was opened or topped up every seven seconds.

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“This was just the beginning too, as the pandemic gave people the time, money and enthusiasm for investment that saw an enormous boost in stocks and shares ISAs. Next year’s figures are going to show another big increase.

“2019/20 was a huge year for Lifetime ISAs, which more than doubled from a year earlier. Whenever a new ISA is launched we see the numbers climb as people get familiar with them, and in its second year, the LISA has boomed. Next year we expect these figures to have jumped again, as people who made lockdown savings ploughed their money into LISAs to help meet their property and retirement goals.”

Sarah went on to examine cash ISA which prove to be popular despite their limited benefits in the current market: “Despite a lacklustre cash ISA season, the number of cash ISAs was up from a year earlier too: almost £50billion was saved into cash ISAs. They’re by far the most common home for our money, and made up 75 percent of all ISAs we paid into during the year.

“Savers are realising that despite the tax-free savings allowance, there are still very good reasons to open a cash ISA. For a basic rate taxpayer with modest cash holdings, you won’t save any tax today: the key is what you could save further down the line as your savings build – especially if interest rates rise, you move tax brackets, or the savings allowance is cut.

“However, although cash continues to dominate, the rush into stocks and shares ISAs at the end of the year can be seen in the figures. For 14 of the past 15 years, cash ISAs have made up a larger proportion of new ISAs than we saw in 2019/20.”

While many experts welcomed the fact that savers are contributing to ISAs generally, some warned savers could lose out by not utilising stocks and shares accounts.

It should be remembered returns from investing in the markets are not guaranteed but over the longer term, sensible investments can generate profits well above what one could get from current interest rates.

Myron Jobson, a Personal Finance Campaigner at interactive investor, commented on this: “The figures show that cash ISAs remain a firm favourite among British savers.

“Despite the low rates on offer, four times as many people opened or contributed to a cash ISA in the 2019-20 tax year than to the stocks and shares equivalent on from the previous tax year (1.2 million versus 300,000).

“However, while the coronavirus crisis highlighted the importance of having cash savings for a rainy day, long term savers should take care to not to keep more than they need in low interest accounts because it can be eroded by inflation.

“Rock bottom savings rates also provide the impetus to invest.

“Investing can be volatile on a day-to-day basis and while the potential for greater returns from the stock market comes with inevitable risk, taking a long-term view means you can smooth out some of those highs and lows whilst benefiting from the long-term potential that comes with this approach.”

This post originally appeared on Daily Express :: Finance Feed