Money News: Insurers resist pension scheme with 0.3% cost
The proposed new national pension savings scheme cannot be run at an average charge to savers of just 0.3 per cent, the Association of British Insurers (ABI) has warned.
The fee is too low and wouldn't cover the cost to providers of getting the planned private pension arrangements into the UK's workplaces, it added.
Instead, the ABI said its members could manage "partnership pension" funds at an annual management charge (AMC) of 0.6 per cent. They would then be able to market "portable, personal accounts" for all workers.
A £57bn gap has opened between what Britons are saving and what they will need to live comfortably in retirement. The planned scheme, which would automatically enrol staff when they join a company, is one of the Pensions Commission's proposals to solve this looming crisis. Other suggested reforms include raising the retirement age to 68 and linking basic state pension rises to inflation.
The ABI was responding to the Government's consultation on the reforms. It also recommended the creation of a new "economic regulator" to monitor fees, charges, incentives and contributions. However, it has rebuffed the commission's challenge to come up with a 0.3 per cent product.
A low AMC has a huge impact on savers' returns over the long term. But insurers argue that stakeholder pensions - low-cost alternatives to standard personal pensions - have not been widely taken up because companies could not afford either to market them or offer sales advice.
Base rates on hold: Where next for the cost of borrowing?
The Bank of England has left base rates on hold at 4.5 per cent for the sixth month in a row.
After recent signs of slower economic growth, weaker-than-expected consumer spending, higher unemployment and a subdued housing market, the decision by the Bank's Monetary Policy Committee last week had been broadly expected by City analysts and the financial markets.
Although many believe the next move in interest rates will be down, to help counter these economic difficulties, others argue that higher oil prices and other inflationary pressures could prompt a move upwards instead.
The last time the Bank changed the base rate was in August last year, when it notched down the cost of borrowing by a quarter point from 4.75 per cent.
The latest decision came as the Halifax, the UK's biggest mortgage lender, unveiled figures on the health of the UK housing market. Annual house price inflation was running at 5.1 per cent last month, it said, leaving the average house price at £170,833.
This annual rate of growth matched predictions two weeks ago from Nationwide building society.
However, the Halifax's monthly survey clashed with that of its rival. It said that, nationally, prices fell by an average of 0.4 per cent in January - compared with Nationwide's indication of a 1.4 per cent rise.
This difference is usually down to the size and make-up of the survey sample.
"Despite this fall, the housing market remains underpinned by a combination of economic expansion, historically low interest rates and high employment," said Martin Ellis, chief economist at the Halifax.
Insurance: You couldn't make it up
Errant zebras, curious cows and a frozen squirrel topped a list of the most unusual - and successful - car insurance claims received last year by Norwich Union.
While most claims are a result of incidents between motorists, or poor driving or parking, the insurer has compiled its bizarre alternative list to remind drivers of the importance of staying alert.
"We see a lot of strange claims," said a spokes-woman, "but we were surprised at the number involving animals and food. We can hardly tell drivers to beware of flying kebabs and frozen squirrels when they're on the roads, but this shows how important it is to be aware of what's going on around you at all times."
Last year's claims included the following.
"A zebra collided with my car when I was in a safari park."
"A frozen squirrel fell out of a tree and crashed through the windscreen on to the passenger seat."
"A herd of cows licked my car and caused damage to the paintwork."
"A wasp went down my trouser leg, which made me hit the accelerator and prang the car in front."
Every claim was legitimate and the insurer paid.
Self-assessment: Call for different tax deadlines
MPs on the Public Accounts Committee have suggested that deadlines for self-assessment tax returns should be staggered to relieve pressure on both individuals and the tax system. A choice of filing dates for different groups of taxpayer could make it easier to return the forms on time, the committee's chairman, Edward Leigh, said last week.
Despite early-warning letters and advertising campaigns by HM Revenue & Customs, millions of people still struggled to get their forms in by the 31 January deadline, he said. A £100 fine is automatically levied if taxpayers miss this cut-off point, and there are extra penalties for further delays.
Nearly one million - one in 10 - self-assessment taxpayers are estimated to have failed to meet the deadline this year.
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