Pension Changes to Leave us Worse Off 
With the state pension age for men and women set to increase to reach 66 by 2020 for those born before April 1960; and 68 by 2044 for those born after April 1960, it’s likely that very few new workers will have considered planning for retirement.

However, from October 2012 UK based companies will be legally obliged to start enrolling staff into workplace pension schemes, which will have an affect on workers salaries – with some experts concerned that this will push millions of low incomes workers further into debt.

Under the proposed changes workers who don’t opt out of the auto-enrolment pension, will be required to make a contribution to the scheme each month – this contribution will start at 1% of their salary.

But the Consumer Credit Counselling Service (CCCS) are warning that even this small amount could have an affect on personal financial situations; with their research showing that a £50 reduction in monthly income amongst those that are financially vulnerable would double the number of people with “no money left” to live off.

The CCCS believe that auto-enrolment onto pension schemes will lead to increased financial pressure, with low incomes workers being left struggling to pay off existing debts.

These comments are contained in a report by the CCCS into the UK’s spiralling debt crisis, which shows that almost a quarter of households within the UK have already fallen behind with payments or are “at risk” of doing so.

A spokesperson for the Department of Work and Pensions (DWP) has moved to quell the worries by stating that those earning over £7,475 per annum will be auto-enrolled onto the pension schemes, meaning those on very low incomes will be exempt.

If you’re concerned about what these changes will mean to your finances or if you’d like advice on pensions, contact the accountants Bristol, Yeovil, Taunton at Milsted Landon today.

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UK Growth Up 
According to data published yesterday by the Office for National Statistics (ONS), the UK economy grew by 0.5 per cent in the third quarter of this year, compared with a 0.1 per cent expansion in the previous quarter.

And service industries output jumped by 0.7 per cent in the period, up from 0.2 per cent. Services accounts for more than three quarters of the nation’s total GDP.

The overall growth was better than expected, as most economists had predicted a figure of between 0.3 and 0.4 per cent. However, growth is still below its long-term average and it is feared that the GDP was just playing catch-up after the previous quarter, which as hit by one-off factors such as the Royal wedding.

The statement from the ONS said “As with 2010 Q4 and 2011 Q1 (affected by the bad weather in Q4), it may be wise to look at 2011 Q2 and 2011 Q3 together, rather than separately, On that basis, GDP has grown by 0.6 per cent in the last two quarters and by 0.5 per cent in the last year.”

Notably, the ONS says that there is ‘no evidence’ that the riots in August had any significant impact on GDP during the third quarter.

David Kern, chief economist at the British Chambers of Commerce, said of the data, “The figures for Q3 are better than expected, though they follow particularly disappointing 0.1 per cent growth in the previous quarter, which was affected by special factors.”

He went on to say: “Over the last year growth has been relatively weak at only 0.5 per cent, but it is reassuring that fears of a recession have so far been unfounded. There are still risks ahead. Early indications from the fourth quarter are concerning, and if the situation in the Eurozone worsens there could be serious adverse repercussions for the UK.”

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Small Businesses Starved Of Funds 
According to data released today by the Bank of England, lending to small businesses fell by over 5 per cent in August against an overall decline in corporate credit of 3.4 per cent.

Considering that such businesses make up 60 per cent of the private sector workforce, employing almost 23m people, the news will not please the Government, which yesterday pledges £1bn to help kick-start the economy.

And the European Investment Bank (EIB) is tightening a credit line for small businesses that enables high street banks to offer discounted loans, although the banks says that it still wants to lend to the UK’s small business sector.

Bank sources report that the EIB is changing its terms and making less money available, which is a worry when it has been an important source of mall business loans since 2008.

However, Simon Brooks, the EIB’s Vice President said that he is putting pressure on the UK banks to pass on its discounted lending rate.

“We are always keen to make sure that the financial advantage that we bring to the deal reaches the SME,” he said.

The EIB says its funding has supported discounted loans to 7,500 UK small and medium-sized businesses in the last four years. The average loan, which has to be used for investment and not working capital, comes in at around £400,000.

Mr Brooks went on to say that the EIB would maintain “a good level of commitment” to SME lending this year but is less sure of 2012, given the condition of the European economy.

“Clearly things have not returned to normal as quickly as we hoped and expected and we continue to maintain a strong level of loans for SMEs for 2011 and beyond. Whether it will be quite the level of 2010 remains to be seen but we are not about to pack up our bags,” he said.

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£1bn To Kick-start The Economy 
The Government has announced that it is on an “all-out mission” to kick-start industry amidst claims that it has been too focused on reducing the country’s deficit and not doing enough to boost growth.

In a newspaper interview, Chancellor George Osborne wrote: “In terms of future productivity, this infrastructure deficit is as serious as our budget deficit. In terms of job creation today, getting construction projects off the ground is critical.”

“Too often projects get hobbled by planning restrictions, funding blockages or regulatory burdens. So this autumn the government is on an all-out mission to unblock the system and get projects under way.”

With plans to create 35,000 jobs in the initiative, more than 100 projects should attract further investment from private enterprise to the tune of around £6bn.

The funds raised will be focused on small companies and those in the manufacturing supply chain and will benefit every sector from telecommunications and services to electronics and automotive.

There are also plans to build two new power plants in Ferrybridge and Thorpe Marsh in Yorkshire, which will create 1,000 new constructions jobs and news has been announced that BT will complete its roll-out of superfast broadband by 2014, thus generating work for 500 more engineers.

As well as creating them, the scheme will help to safeguard more then 200,000 jobs with more infrastructure announcements expected over the coming months.

Prime Minister David Cameron has said that the eurozone crisis was having a “chilling effect” on global growth and warned that there were “no short-cuts to success.”

"The eurozone crisis has had a chilling effect on major economies around the world, and has added to the unprecedented pressures facing the global economy," he said.

"But, in spite of the difficulties, I am confident that we can both resolve the crises at hand and come through them with an economy that is stronger and fundamentally fairer."

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To Have Or Have Not 
As news emerges that pay for the directors of many of the UK’s FTSE 100 companies rose 50 per cent over the past year, research shows that the average pay rise in the private sector was just 2.6 per cent. And in the public sector there has been a general pay freeze for most workers.

The research, from Incomes Data Service (IDS), an independent research organisation, highlights a growing divide between private and public sector pay awards. And in both sectors, average pay is well below the current rate of inflation, which stood at 5.2 per cent last month.

Ken Mulkearn, editor of IDS Pay Report said: "The different experiences of the public and private sectors are shaping the difference between the level of pay settlements between the two sectors."

"While pay awards are ahead in the private sector, they are still some way behind inflation, even in manufacturing where pay awards are higher in comparison to other sectors," he added.

Further data from IDS show an even greater divide, as the research reveals that the average pay for a director of a FTSE 100 company is now over £2.5m.

And the handsome remuneration doesn’t just stop at salary; directors’ bonus payments rose on average by 23 per cent over the last year, taking the average bonus to £906,000.

Editor of this report, Steve Tatton said that closer scrutiny of bonus payments was expected in the future and that "remuneration committees will have to make sure that they are able to provide full and thorough justifications for the bonuses awarded."

Meanwhile, down at the other end of the pay scale, the TUC is calling on the Low Pay Commission to recommend rising the nation minimum wage – currently £6.08 per hour for an adult aged over 21 - next year by more than the rate of inflation.

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