Base rate, debt, pensions and university costs

The chances of another Bank of England rate cut today are close to zero after some recent upbeat economic data, although further action is expected later in the year, according to Thisismoney.

The Bank’s Monetary Policy Committee, which announces its latest interest rate decision at midday today, cut the base rate from 0.5 per cent to a new record low of 0.25 per cent in August to cushion the impact of Brexit on the UK economy.

However, recent surveys have suggested that the economy has held up well so far, with the services sector returning to growth in August after July’s contraction and the construction sector defying expectations of a drop in output.

Debt

Research carried out by Debt Advisory Centre has exposed how the growing numbers of people whose incomes vary month to month can struggle to pay essential bills and meet their debt repayments.

Eleven million Brits have a job where their income is variable. This includes those on zero hours contracts, variable hours contracts, those whose overtime hours fluctuate and those who are self-employed.

Overall just over one in five adults in the UK say that their earnings can vary week to week and month to month, but this rises to four in ten of young people aged 18 to 24.

For those whose incomes vary, making regular monthly payments such as the rent or mortgage, credit card repayments and utilities can be a struggle. Of those who have a variable income, 44 per cent find it difficult to keep up with bills such as rent, utilities and council tax and a similar number 41 per cent also struggle to keep up with regular credit commitments such as credit card and loan repayments.

Care costs

Government-funded care for older people is being increasingly rationed in England, leaving growing numbers to fend for themselves, a review suggests.

The number of over-65s being helped by councils had fallen by a quarter in the four years to 2014, the joint King’s Fund and Nuffield Trust report said. This was despite more people needing help, because of the ageing population. But the Government said it was investing in the system to ensure ‘affordable and dignified care’. The report said there had been a rise in those left without support, while others now had to pay for their care, it added. Pensions Thisismoney reports that a ‘quality mark’ scheme to help savers pick a decent income drawdown products that can see them through retirement has been launched.

Tests to ensure products come up to acceptable standards will include charges that are fair and reasonable and provide value for money, easy transfers out of products, security measures, and clear explanations of options and risks.

Many people new to investing are looking to plough their lifetime savings into drawdown schemes, which let you take sums out of your pot while the rest remains in stocks and other risky assets, to fund their old age.

In other pensions news, today is Pension Awareness Day, an initiative aimed at encouraging the public to save more for their future. To mark the occasion, the UK’s largest specialist pension advisory firm My Pension Expert is extending the appeal to those entering retirement with a warning to ‘shop around’ and seek professional advice to get a product more suitable for their needs and for the best returns, or potentially risk losing 20 per cent of their lifetime income.

The warning comes after nearly half of its customers changed the product they would have had from a lifetime annuity to something more suited to their personal circumstances. Typically, customers fed back that prior to advice from My Pension Expert they were unaware of the alternatives and had no intention to change.

Meanwhile, new research compiled by Moneyfacts has revealed that annuity rates are on track for their biggest ever annual fall. Based on a benchmark annuity (standard level without guarantee), the average annuity income for a 65-year-old has fallen by 14.8 per cent on a £10,000 purchase price and by 15 per cent on a £50,000 purchase price so far during 2016. These figures easily surpass the previous highest annual annuity income fall of 11.5 per cent recorded in 2012. Landlords The average cost to a landlord of their tenant being advised to ignore an eviction notice stands at nearly £7,000, according to a recent survey of landlords. Private tenants are often advised by local councils and agencies to ignore eviction notices served by their landlords – and to wait until evicted by bailiffs – in order to qualify as homeless and thus eligible for rehousing. The latest findings from the National Landlords Association (NLA) reveal that the mean total cost of a tenant being advised to remain in a property is £6,763. In addition, half of tenants who have been served a section 21 eviction notice by their landlord say they have been told to ignore it by their local council or an advice agency such as Shelter or the Citizen’s Advice Bureau. University costs

With the academic year now underway, analysis by Rplan.co.uk, the online investment platform, shows that new parents should be looking to invest up to £260.55 per month to cover the cost of sending a baby to university for a three-year course in 18 years’ time.

Rplan estimates that the amount needed in 2034 will be £74,307.08, assuming current fees of £9,000 and annual living expenses of £8,000 adjusted for 2 per cent annual inflation.

Holidays

New research from Direct Line Travel Insurance reveals nearly half of British holidaymakers’ switch off from work while away, with 10.2 million (32 per cent) taking a welcome break from mobile devices while on holiday.  

One in eight carve out ‘tech-free’ time during their break, with 11 per cent of Brits choosing remote destinations that are less likely to have network coverage, to avoid potential contact with work. 

According to the research, nearly half of us completely switch off from work while on holiday. Despite fears of Brits being ‘always on’, almost three quarters of workers say their employer doesn’t expect them to take their phone, tablet or laptop away with them to stay in touch.