From A-Day to 'Brics' - greet the financial new year
Pension reform, cuts in the cost of borrowing, compensation battles... the big events to watch in 2006
Sunday 18 December 2005
So that's it for another year. Congratulations if you've made it to the last two weeks of 2005 without getting into too much debt, if you've started a pension and if you've kept a firm grip on your overall finances.
Commiserations if you haven't, but it's never an easy task. Mortgage and savings rates can change in a blink, new tax rules might be applied retrospectively and government policy can change on the hoof.
This year has thrown up its fair share of financial milestones: the establishment of the Pension Protection Fund, a U-turn on residential property being put into self-invested personal pensions (Sipps), and Lord Turner's report on retirement saving.
So what should we look out for in 2006? Here are some of the major events.
The deadline for self-assessment tax returns looms at the end of the month.
Up to 9.5 million workers need to fill in the figures on their form for the 2004-05 financial year before midnight on 31 January. Failure to do so means a £100 fine and interest charged on any outstanding tax due by this point.
Revenue & Customs expects a surge in online applications in the last two weeks of January - and last year the system went down. So it's worth setting aside a little time over the holidays.
Many City analysts anticipate an interest rate cut once the Bank of England's Monetary Policy Committee has had a chance to study Christmas shopping and housing market figures.
With inflation expected to slip under the Bank's 2 per cent target, Ray Boulger at mortgage broker John Charcol reckons it will drop the base rate to boost the economy. "We expect to see at least two, but probably three cuts in 2006 - with the first quarter point in the first three months."
As the individual savings account (ISA) season gears up, we will see the first of what looks set to be a new breed of "Bric" equity funds, investing in Brazil, Russia, India and China. So far, these have been available only offshore, but this situation is about to change.
First off the blocks is Allianz Global Investors. Pending regulatory approval, it will launch its Bric Stars fund on 22 February.
Philippa Gee of independent financial adviser (IFA) Torquil Clark says: "This type of fund is a higher-risk product that would appeal to those seeking something a little different to the normal range of investments."
After considering the report from Lord Turner's Pensions Commission on solving the looming savings crisis, the Government is to publish a White Paper with proposals for a Bill.
Its view of a proposed national pension savings scheme and higher retirement age will become known.
It is also expected that, by 30 March, the Parliamentary Ombudsman, Ann Abraham, will have reached a decision (delayed from the end of this year) on whether the Government misled employees on the safety of their final salary pensions.
The delay has left over 80,000 workers hanging on to learn about possible compensation.
Ms Abraham's inquiry was launched last year after complaints that government departments wrongly gave the advice, via leaflets and websites, that workers' retirement income was guaranteed in such schemes.
Many employees have since lost a large part of their retirement savings, due to the collapse of their companies with underfunded pension schemes.
A special £400m Financial Assistance Scheme has been set up to help compensate some of the victims. Payments from this should be made by March.
A-Day, 6 April, brings changes to how we save for our pensions.
Despite Gordon Brown's Sipp U-turn, there are still plenty of reasons to take note of new rules, says Tom McPhail of IFA Hargreaves Lansdown.
First, the limits that restrict your annual pension savings according to age, salary and pension type will be abandoned. You will be able to contribute up to £215,000 of your income in the 2006-07 tax year, as well as chunks of your savings.
And no longer will you have to buy an annuity - an income for life - by the time you're 75. Instead, you can take an "alternatively secured income", which offers a lower monthly sum but lets you pass on any unused pension at your death to a loved one - subject to a charge for inheritance tax.
More estate agents and lenders are expected to offer voluntary Home Information Packs, which aim to speed up house sales. These won't be compulsory until July 2007 but the industry should now start gearing up for their introduction.
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