American Express? That won't do nicely

Amex workers in the UK will count the cost of its decision to stop paying into its employees' pension scheme contributions

I have been warning for a long time that the recession will bring with it a fresh round of final-salary pension scheme closures and employer contributions cuts. But I didn't expect employers to go as far as ceasing all contributions, yet last week American Express decided that it cannot afford to pay into its UK employees' scheme until January 2011.

The credit card provider, which employs some 6,000 people in the UK, says this is a temporary measure to cut costs in the face of the global downturn. The move affects the firm's stakeholder pension as well as its final salary scheme, which was closed to new entrants in 2006. Crucially, there is nothing to stop Amex turning around in 18 months' time, mothballing its current scheme and launching a cheaper pension plan. In fact, Amex, like other employers, won't be compelled to pay into its employees' pensions until the introduction of personal accounts in 2012 – which may never see the light of day. In one respect, in a recession it's good to see employers, employees and unions being flexible and doing what they can to avoid job cuts. It's a key difference from the early 1980s and 1990s recession. However, even under a best-case scenario, job losses will continue for the next year at least, and the pressure on pensions will grow and grow; heaven knows where occupational pensions will be by 2012 or 2013. As for Amex stopping pensions' contributions, to paraphrase its most famous advertising slogan: "That won't do nicely."

Disloyalty incentive

What rewards for loyalty? Well, if you use a particular retailer, car-dealer or airline time and again, you can usually expect a little titbit for coming back, either money off, or air miles or some sort of loyalty card programme. But in financial services, you're treated, frankly, as a bit of a mug. Take student accounts: banks offer lots of freebies and free overdrafts to get youngsters to sign on the dotted line. But against the backdrop of the credit crunch, banks are increasingly reining back on graduate accounts, cutting overdraft limits in double-quick time. A reader emailed me the other day to complain that, having just left university, her overdraft was slashed by her bank – she took out the account on the understanding that, at graduation, her overdraft would fall much more gently and slowly than has actually happened. She is now working in two low-paid jobs, in a scramble to meet the bank's demands. But there is another option: move your account at graduation. The financial information service Moneyfacts has shown, in the first year after graduation, the level of interest-free overdraft on a graduate account ranges from £1,000 up to £3,000, while additional authorised borrowing is charged at between 9.9 and 19.9 per cent. So ditch loyalty and shop around. Remember: the banks want you because you are on the cusp of a career. Play them at their own game.

Direct inaction

HomeBuy Direct, the Government's much-vaunted shared equity scheme designed for first-time buyers, has helped a pitiful 215 people into their own homes. Now I know HomeBuy Direct had the gross misfortune of being launched slap-bang in the middle of the biggest mortgage and housing slump in a generation. But 215?

The Government's original target for HomeBuy was 18,000, but the low take-up seems partly due to the fact that it's only available on new-build property, and in a falling market with so many building projects being mothballed, who would buy off-plan?