My say on the Autumn Statement

So, the government are inviting the public to “have their say” on what should be included in the 2016 Autumn Statement. My submission, for what it’s worth is:

I would introduce a minimum, government-backed, interest rate for savers of base rate +3% and cap total eligible savings at the same amount the financial services guarantee is set at – i.e. £75,000 per person.

In my opinion QE has only sought to discourage spending by savers that are punitively punished by the rock-bottom interest rates. So introducing guaranteed rates for savers, will allow individuals to save for the future, secure sufficient income from savings, and as a result free up more disposable income for spending now.

If you want to have your say too, here’s the LINK to the survey.

Expat woes with the Lifetime ISA

So we’ve recently had the budget from George Osborne and amongst other things, he announced the Lifetime ISA. On the surface of it, the Lifetime ISA seems like an attractive proposition. And for many, it will be.  

Effective 25% profit (interest) guaranteed from the government on up to £4,000 of annual investment, until a person reaches the age of 50 appears very attractive. And that’s before any natural growth on where the ISA is invested, until the age of 60 when it can typically be accessed.

And this is where Osborne has been crafty, in my opinion. Dangling that 25% carrot in front of many almost seems too good to be true. In many cases, it will make sense to take advantage of the Lifetime ISA – but is this going to be at the expense of pension saving? 

The key difference between a pension and a Lifetime ISA is when tax is paid. So, with a pension, the money we put in to it now is tax free and then we get taxed when we take it out in retirement, often at a more favourable tax rate.

With a Lifetime ISA, the money that goes in has already been taxed up front. This in itself is a shrewd move by Osborne, because in a single swipe, he’s potentially reducing the immediate burden of pension tax relief whilst also securing tax revenues from future chancellor’s budgets.

However, for many, retirement – at whatever age it comes – may include a move to a sunnier climate, retiring overseas and joining an expat community of like minded folk. And this is the issue I have with the Lifetime ISA. 

Because tax has already been paid when the money enters the ISA, it should be tax free when it comes out. But this isn’t the case for expats. ISA’s lose their tax free status for those permanently living overseas, so in effect, a Lifetime ISA will result in money being taxed twice.

This isn’t the same case for a pension though. Putting money into a pension now, benefitting from tax relief at a potentially higher rate and then paying tax on the money coming out, regardless of where you are in the world – may arguably be a better home for retirement investment, if retiring overseas is even remotely being considered.

This isn’t intended as financial advice, it’s just my take on the Lifetime ISA – so please carry out your own research before making any investment decisions!

Cut benefits for Sky TV subscribers

With all the focus on the recent budget from George Osborne and the welfare cuts about to be imposed, it still surprises me that one of the UKs big benefits issues persists and remains undiscussed and untackled.

Simply put, why are people on benefits able to have Sky TV subscriptions? If they’re rich enough to pay for Sky TV – with minimum subscriptions starting at over £20 per month and top tier packages over £80 per month – then they should arguably have their benefits reduced by this amount.

It confuses the hell out of me why the taxpayer funded benefits are allowed to support Sky TV subscriptions. Pay TV is a luxury, not a basic human right or utility, and certainly not one that should be paid for by the UK taxpayers. This benefit cut is much more logical than the bedroom tax that’s come about recently and would, in my opinion, have much wider acceptance by the general public.

I know many people, gainfully in employment, with good jobs, decent salaries and families to support – and they’ve made a careful decision not to have Sky TV because it’s too expensive for them. They pay their taxes, out of hard earned income, to – among other things – support the needy. And Sky TV should not be funded by these taxes. It’s just wrong.

With Freeview, or even Freesat, offering such a good range of completely free programming I can’t think of any genuine reason why Sky TV should ever be considered a necessity, and certainly not one that people on benefits should be able to pay for.

So, it might be a controversial statement – and it is entirely my personal opinion – but I believe that anyone on benefits that has Sky TV, should have their benefits reduced by the amount they pay for their subscription. That’s surely a fairer way of redistributing taxes and supporting those genuinely in need, isn’t it?

Government backed annuities

Every time there are reports in the media about the woefully low annuity rates or the recently implemented pension freedoms, I wonder why there aren’t more flexible or state-backed options for annuities. As much as the pension freedoms might have kickstarted a more flexible approach to retirement planning, annuities will still have a place in many people’s financial scenario planning because the security they offer is something many people will desire in their twilight years.

Given that the companies providing the annuities are effectively profit focused organisations, the fact they still offer these products means there must be money in it for them to do so. But if they’re basing their calculations of an annuity’s viability on historic mortality data, it’s no wonder that the returns they’re expecting will be lower as we’re all supposedly living longer these days. So in order to retain their operating margins, inevitably the value of annuities to consumers falls.

What I wonder though, is why the government doesn’t offer a state-backed annuity, accepting lower returns than the incumbent organisations but basing those returns over a longer period. In doing so , they’d be able to offer individuals higher rates and make the option of an annuity a much more attractive proposition. And because the government has the comparative luxury of basing their calculations over a longer time frame, it could result in a long term revenue source for a future government. 

Maybe the concept is too alien for any government, thinking about future generations – and future governments – but as a concept, I think this could definitely be a good move for both individual and the broader country finances.

Part time rail season tickets

I have a cynical supposition that the rail companies continue to talk about part time season tickets but never actually commit to introducing them because they believe it’ll cost them too much to set up or lose them too much money in lost revenue.

My particular issue with this is that all season tickets are based on 7 days of travel, yet in my experience, the majority of season tickets are used to commute to and from a place of work. The fact that these tickets are based on 7 days of unlimited travel along a particular route means that for many, the weekend days of travel are completely unnecessary and in effect any season ticket holders are subsidising the cost of those weekend travellers.

If you think that a typical commuter might only need to travel to and from their place of work on weekdays – ie Monday to Friday – then surely the rail companies should now be in a position to offer a season ticket that is 5/7 the cost of a full-week season ticket. For them not to do this smacks of profiteering in my mind.

The situation is further shown to be grossly unfair when you consider part time workers – and this can include flexible working individuals, return-to-work mothers, working parents, etc. and anyone else that maybe doesn’t work a traditional working week. In this case, they may not even need the 5 days of weekday travel that I was arguing for above, but have no option but to either buy individual tickets or a full week’s season ticket. They may work a fixed pattern of days and therefore should surely be able to benefit from a season ticket that fits that pattern.

In my own case, for example, working 3 days a week in London means it’s just not viable to buy a season ticket for the cost of this travel. Why can’t I be allowed to buy a ticket for those fixed 3 days of travel, instead of paying for 4 days of travel I’ll never use? With today’s mobile tickets, Oyster card system, contactless payments and other advances in ticketing and payment, I can’t believe there’s a valid reason not to offer this flexible approach to pricing.

A BBC report ( suggested that flexible tickets and travel cards would be launched (in London) from January 2015, but I’ve seen no sign of these yet. And the Guardian also reported around the same time, with the Campaign for Better Transport calling on the government to “honour its pledge” to introduce flexible season tickets ( Despite the news apparently suggesting something might be happening soon, there’s still no news about what might change.

Flexible and part-time season tickets aside, there’s also the enormous cost of travel that needs to be taken into consideration too. An annual season ticket from Chester to London costs nearly £13,000! And that’s before the cost of travelling to/from the station and home, and any onward travel once in London. The actual cost is £12,844 (at the time of writing) – use National Rail’s season ticket calculator here: to see the options. The calculator helpfully tells me the average journey price is £26.75 – but this wrongly assumes 480 journeys per year (2 per day), whereas in reality a part time or flexible worker working 3 days a week, would make ‘just’ 288 journeys. With this number of journeys, if we were able to use the same average journey price of £26.75 the part time season ticket would cost £7,706.40 – so whilst not cheap, it’s still over £5,000 less than the full-week ticket.

Without that flexibility, it means many just can’t afford to use a season ticket and instead have to go through a complicated process of attempting to secure the cheapest way of travelling to and from their place of work. In my case, I use the very helpful ticket splitting services from Money Saving Expert ( that allows me to make some hefty savings on the cost of travel. But not every ticket can be split and then occasionally to see the look on some ticket inspector’s faces when you hand them a split ticket, you might think you’re personally pickpocketing them by the look of distate on their face (note – this isn’t every inspector, but some seem genuinely perturbed by the concept of a split ticket).

The system of pricing for rail travel compared to elsewhere in Europe is massively out of sync with other countries. The Telegraph produced a comparison report in 2014 ( that shows some distance and cost comparisons – and I’ve highlighted some below.

Rail fares 1-10 miles using a travel card:

– Britain £17
– France £9.60
– Belgium £7
– Italy £4.79

Rail fares 100-150 miles
– Britain £96.50
– France £29
– Belgium £16
– Italy £16

So not only are we paying more generally, the services are (over)crowded, the trains – particularly outside of London – are very old (I’m looking at you Arriva Trains Wales for the Chester to Crewe service here!), but we’re also being forced into a payment structure that fails to reflect the modern way of working today and penalises those who work either reduced hours or have flexible arrangements to support a better work/life balance.

This topic seems to be picked up every now and again but nothing ever seems to come of it. We see the annual ticket price rises being announced on the news, accompanies by the typical complaints in TV interviews with commuters at rail stations, but then everyone just seems to get on with it and pay the extra costs because there’s no viable alternative. We’re collectively a captive customer with no recourse for challenging the status quo because there’s actually nothing we can do if we don’t like it. But by writing this post, I at least want to express my dissatisfaction with what I believe is a genuinely unfair and antiquated system that is increasingly less fit for purpose than when it was originally designed and implemented.

The looming generational pension crisis

It’s been a constant feature of the various online financial press in recent months and even years – at least as long as I’ve had an elevated interest in this sort of thing – but given the pace of change in the financial services market and in particular, with regards to pensions, I am increasingly concerned about the looming generational pension crisis that many are going to be facing.

What do I mean by a “generational pension crisis”? Well, if you think that the majority of us – at least those outside gold-plated civil service and public sector pensions – are now no longer on final salary pension schemes and therefore have an increased responsibility to save for our own retirement, then the question has to be whether individuals have actually done the sums required to understand what their financial situation will be at retirement. My guess is many haven’t and a majority of recent generations are relying on guesswork and assumptions, rather than making responsible provisions for what is arguably one of the main stages of life and one that many won’t be able to enjoy as they expect to (or see their parents and grandparents enjoying now).

What is enough?

This is Money featured an article last week, with a headline of: “Young people expect to retire with £95,000 pension pot – but most haven’t started saving yet”. The article raises some very valid points and for me, I find it both personally disturbing and largely worrying when I think of the looming crisis or ticking pensions timebomb as others term it.

Even having the aspiration of building a pension pot worth £95,000 – although apparently better than many others will achieve – is still going to lead to some harsh wake-up calls come retirement. At current annuity rates, this might secure an annual income of around £5,000 for a 65 year old male. That’s just over £400 per month! I appreciate spending habits might be reduced as we enter old age, but if you want to enjoy your old age, you’re surely going to want to have more disposable income available. Even the new flat rate state pension – again, assuming it’s still here and available to you when you come to retire – will ‘only’ add a further £8,000 per year to your income. So, a total £13,000 annual income isn’t that bad – but it’s hardly going to fund the lifestyle we see our parents and grandparents enjoying now, with holidays, cruises, new cars, buy-to-lets and other luxuries they have in their golden years.

Everyone’s retirement aspirations are going to be different, based on lifestyle now and individual financial situations. Given this is one of the main stages in life and the decisions made now will not really affect you for many years – but when they do, you’ll potentially have 10, 20, 30+ years during which you’re going to have to live with those choices you made in your earlier years. So making the right choices now, maybe saving more, or at the very least looking more closely at what you’re saving, whether it’s in the right plan or investment vehicle and whether it’s sufficient to give you what you want in retirement – is an essential activity I’d recommend everyone undertake. The Money Advice Service offer a helpful Pension Calculator that it would be worth using to give you an initial insight.

Compound interest

The effect of compound interest shouldn’t be ignored either. I wrote about it an article a while back, quoting Einstein as saying he considered it the 8th wonder of the world. As a father, I’m making sure my son is going to start off in a better position than I did by making pension contributions for him from the day he was born. I would argue that all parents interested in the long term financial security of their own offspring should do this – and any amount, invested now, will be hugely important 70+ years hence when he comes to retire (as the state pension age – if there even is a state pension still – will surely be in excess of 70 years).

Pension freedoms

I’ve read with interest the changes George Osborne has brought in to the pensions sector in the UK and think the decisions have led to progressive change that have made the situation at retirement much fairer and more easily influenced by the powers of the open market. But again, I wonder whether many will be relying on assumptions too much here and in reading about the pension freedoms and the ability to access your money, such as using it in flexible drawdown (assuming your provider permits it), or not investing in annuity – most articles overlook the fact that the freedom to do something with your pension only truly becomes a worthwhile change, if there’s a sufficient pension pot available to do something with in the first place. 

The answer

So, what’s the answer? Right now, I feel that everyone of working age needs to take a long hard look at their saving plans and really work out what they’re saving, what that could total at their future target retirement date and figure out whether that’s an acceptable level for them. I’m confident many won’t have done this, otherwise we wouldn’t be seeing articles like the one in This is Money. 

I think we also should see an increase in saving more – and the auto-enrollment for pension saving (Nest) is a helpful starting point, but is it enough? Is the general population being lulled into a false sense of security and thinking that just because they have the Nest and the state pension in place, that they don’t need to think about this sort of thing? I’d argue yes. I’d also argue that Nest needs to ramp up its contribution percentages – from all three parties involved: employers, employees and the government. An extra 1% even, from each, could make a significant difference to the financial situations of many.

I also believe that child benefit should have a mandatory pension element for all children up to the age of 18. Even at at £25 per month, for 18 years at 5% compound growth (after charges), the pot would be £106,701.70. The government needs to do more in this instance, particularly if they don’t want the state pension to become increasingly unfeasible, or a bigger burden on the UK economy.

Overall, the message is simple. Don’t rely on assumptions. Do your sums. Plan ahead. And save more!

As always, these are just my personal opinions and should only be used as guidance. Where financial situations are concerned, please do your own research and in many instances taking professional advice is definitely advised. 

Do comparison sites cost us more?

They’re often heralded as consumer champions, giving individuals access to the whole (or a much larger proportion) of the market than they would have been able to access independently. But I wonder how much the presence of the comparison sites has actually inflated the costs we all pay as a result of the fees that they charge (to the insurers and other financial services companies).

The main comparison sites:, Compare the Market, and Go Compare are all very profitable organisations in their own right. They must be making their money somewhere and since they don’t directly charge consumers for their custom, they must be making money from the insurers and other providers that they work with. And this cost must be funded somehow… so I believe this ‘cost of acquisition’ of a customer must be being passed on to the end user. It therefore has to be a false economy of some magnitude, arguably with inflated premiums for an end user to accommodate the extra costs the organisations are paying to the comparison sites. We may be getting access to a wider array of deals, so we can see the best rates in the market – but if the rates are all higher as a result, is that really benefiting anyone – other than the comparison sites?

To soften the impact of the inflated costs, there are different ways to benefit from the sales process that gives something back to the consumer. I’ve listed a couple of examples below that I’m aware of, where you’re additionally rewarded for using the services. I’ve used the cashback providers repeatedly and I’d highly recommend them.

The recently launched Meerkat Movies is a good example of one of the incentives these comparison sites offer to tempt consumers to use their services. On the surface, it seems like a great offer. Buy an insurance product after having compared through the comparison site Compare the Market and then you’re eligible to 2-for-1 cinema tickets every Tuesday and Wednesday for the following 12 months. It’s a better deal than the Orange 2-for-1 cinema deal that was only available on Wednesdays, and it’s valid for the whole year – but what’s the hidden cost? 

My car insurance recently came up for renewal and we all know the advice is to shop around for a better deal than the one your insurer offers you, as you’re typically able to better it on the open market. However, having seen the Meerkat Movies deal and thinking I’d like to take advantage of it – my search on the Compare the Market website returned a deal that was over 16% more expensive than the renewal deal offered by my existing insurer. I guess this is how they’re able to fund the Meerkat Movies deal!

Having said that – Hot UK Deals – a money saving / deals website where individuals report back on the best offers, savings and deals they find in the UK as they come across them – has reported a workaround for the Meerkat Movies, whereby you can simply purchase a one day insurance policy for as little as £1.37 and therefore be eligible for the Meerkat Movies offer. If this works, it’s a great piece of advice. Check out the link here.

Alternatively, to claw back some of the money the comparison sites make out of you, consider using one of the cashback sites, like TopCashback. Depending on the policy that you’re looking for, you could save a lot of money! At the time of writing, More Than insurance is offering £106.05 cashback on Landlords insurance, for example. Quidco is the other main cashback site in the UK – and they offer similar, although not always the same, cashback deals on insurers and other online retailers. So it’s always worth checking both of them to see where you can get the best deal. Through Quidco, for example, take out a life insurance policy via the comparison site and at the time of writing, you’re able to claim up to £127 in cashback. It’s free money, so you might as well claim it. All you’re doing is sharing the commission the insurer would typically pay to any referring organisation.

It would seem the comparison sites are here to stay – for better or worse. Going to the insurers direct offers no better rates than through the comparison sites, and in many instances you’re missing out on exclusive deals or incentives that are offered through those referral sites. Couple those incentives with various cashback offers (from the cashback sites) and it can soften the deal somewhat, but I just can’t help but wonder if the presence of the comparison sites is actually just costing us all more in the long run.

Why ISAs are still important

Given the recent announcements from George Osborne in his latest, pre-election budget about the planned changes to ISAs and the tax on savings we all pay (in the UK), there have been articles published and online discussion about whether this signals the beginning of the end for the cash ISA. One article in particular on the Guardian, goes into a great level of detail explaining why a basic rate tax payer can earn a similar amount of interest in standard savings accounts rather than needing to shelter money in a cash ISA. And they also claim it’s true for a higher rate tax payer too, although to a lesser extent.

But the key thing for me is that they miss one of the crucial points of using cash ISAs and using as much of your ISA allowance each year that you can. Yes, interest rates are currently at all time lows – and indeed, some speculate that they may fall further (source: BBC) – but that’s not saying that they’ll always be at this level. And as the interest rates inevitably rise, it will impact on the amount of interest you can earn on cash held in savings accounts. The Guardian article suggests a basic rate tax payer can save £62,500 in a standard, easy access cash savings account (whilst interest rates hover around 1.6%) before needing to pay any tax on the interest they earn. But if the rates return to higher levels, as they have done previously, then tax on interest earned becomes payable sooner. At 4%, a basic rate tax payer would only pay no tax on the interest on the first £25,000 of savings.

Whereas, if this cash had been dripped into (cash) ISAs over the years, the interest earned would continue to be tax free – forever (or at least until the government chooses to change the legislation around them!) And if the interest rates returned to the 1999 rates that were in place when the ISAs were first launched by Gordon Brown – at 6.5% – then it’d make even more sense to have your cash sheltered in an ISA. 


With the rates as low as they are, it makes little difference chasing an extra fraction of a percentage point and fixing your ISA rate for more than a year, when the cash ISA rates for easy access accounts are very similar to standard cash savings accounts. The critical difference here is that if you don’t use your ISA allowance in the tax year, you can’t then use it in subsequent years – although you will still be able to use a new allowance allocation.


A final important point to note is that the changes Mr Osborne has already brought in, means its much easier now to switch ISA savings between cash and stocks and shares, so it could be said that it’d be better to put cash into a stocks and shares ISA account now (choosing some relatively low risk tracker funds, for example) and considering switching to a safer cash ISA in later years, when the interest rates return to higher levels. Either way, for me, it’s better than trusting to easy access cash accounts with the banks.

Please note that anything I write in my blog is not to be construed as offering financial advice. It is merely my viewpoint and should be used as such. Any decisions you may make should be based on your own research and often, it’s advisable to seek professional advice.

The 8th wonder of the world

piggybankI read with interest the other day that according to Albert Einstein, the 8th wonder of the world isn’t any natural or man-made structure, but is in fact, compound interest. Einstein famously said, “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” And I happen to like this idea, even if I may bore my friends talking about it!

My general interest in the topic extends from a vested interest in pensions, ISAs and other saving mechanisms, but more importantly, now I have a son to consider it bears thinking about in terms of helping prepare for his future.

Read more

Why is worth using

 – classes itself as the UK’s leading cashback site, and there are a handful of reasons why I’m inclined to agree. I joined recently and through very little effort, I’ve already racked up earnings of nearly £60 in just under a month. The beauty of it is that I’m not doing anything I wouldn’t already have done – other than clicking on TopCashback before I go to the online merchant or shop I was going to use. You can Join Top CashBack by clicking on the link. It’s quick and easy to set up, and even easier to use.

What are the key selling points?

  • It’s free to join
  • They guarantee to pay the highest rates of cashback
  • Commission returns of up to 110%
  • No annual fee like on some other cashback sites
  • More than 3,300 online merchants
  • A variety of free payment methods – including PayPal, Amazon vouchers or direct into your bank
  • The option to earn referral bonuses of £10 for each friend that is referred (subject to them then earning £10 cashback too).

The site’s not a new thing either – it’s been around for ages, having been reviewed by the likes of The Independent, The Guardian, The One Show and Daybreak.

How to use the site

TopCashback requires just 5 simple steps to use their site.

  1. Browse through the list of online merchants (or use the search facility to find a company by name)
  2. Select the company or online shop you want to buy something from
  3. You’ll see a “Get Cashback Now” button – so click on that, then just shop as normal on the main site
  4. You have an Account area, where you can track the status of your cashback
  5. Once the Account area demonstrates that cashback is payable, you can request the money in the way that’s most suitable for you.

So what are you waiting for?! Join Top CashBack today