The bad news for students brings out a good idea for parents paying for them

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The Independent Online
There is nothing like a bit of bad news to bring out financial companies, waving new products or the offer of some wonderful advice to help you cope with a looming disaster.

So it proved this week with David Blunkett, the Education and Employment Minister, who published a report calling for all students to be charged pounds 1,000 in tuition fees.

This quintessentially Conservative proposal was backed by Mr Blunkett on the grounds that higher education helped students receive higher wages, so it was right that they pay for the privilege. Of course, the higher taxes paid by these supposedly higher earners don't count any longer.

Despite the sickening way in which the language of redistribution and justice is used to justify almost any retrograde measure, it makes sense for parents whose children are preparing for university in the next two or three years to begin planning for the worst-case scenario.

Among the many brochures that have landed with a heavy thud on my desk, one tip from Towry Law, the financial advice firm, is worth considering. Couples whose income is being assessed to determine their children's grants can offset some of their earnings by making higher contributions to a pension. This can either be by means of personal pensions, or payments into a free-standing AVC top-up scheme.

With personal pensions, you can make age-related contributions of between 17.5 and 40 per cent. Acting swiftly can help bring down the family's residual income, thereby increasing the student grant. It may not be much, but every little bit helps.

While on the subject of pensions, I was not surprised this week to learn that Mercury Asset Management has pulled the launch of a new investment trust called the Retirement Trust. Apparently no-one wanted to invest in the fund.

The aim had been to appeal to savers who wanted to supplement existing pension arrangements with an additional tax-efficient investment. But the problem with new investment trusts is that they invariably move from launch to a discount on the value of the assets held. In effect, investors face a near-immediate loss in the value of their capital.

Perhaps investors and their advisers weren't quite so apathetic as they seemed. They could see plenty of other opportunities that didn't involve them taking a big hit in the value of their money from the word go.

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