More than 200,000 people will cash their entire pension pot when the government reforms take effect next year, with one in five planning to use their savings to fund a holiday, a study has found. From April, workers over 55 will be able to use their pensions like bank accounts and withdraw thousands of pounds to save, invest or spend as they wish. The change builds on the pension reforms Mr Osborne announced in his Budget, under which he scrapped rules that force most Britons to use their pension savings to buy an annuity. At the time, ministers emphasised that pensioners would be able to draw down the entirety of their pension pots to save, invest in property or even buy a Lamborghini. But Tom McPhail, head of pension research at Ipsos Mori, said that the poll showed people were underestimating the amount of tax they would have to pay despite the reforms, as only 25 per cent of each lump is tax free and the rest is taxed at a marginal rate. The withdrawals could land the taxman with a £1.6billion windfall. The poll found that those wanting to cash in their savings were most likely spend the money on holidays, with one in five saying that is how they would use the cash. Another 12 per cent said they would use it for DIY projects, 14 per cent to help their children and eight said they would spend some on new cars. One in four said they would save a portion of the money, whilst 13 per cent would use some of it to pay off existing debts. Investment in property would be the main reason to cash in their savings for 16 per cent, the survey found. Critics have questioned whether people could end up struggling financially if they spend all their money after retiring. TELEGRAPH
“Outrageous conduct”: City facing more than ‘a few bad apples’, says Bank of England deputy governor
Minouche Shafik, the deputy governor for markets and banking, said the industry urgently needed to come forward with its own proposals to reform a system recently tarnished by allegations of the rigging of foreign exchange trading. She warned that bad practices in markets may be re-emerging as memories of prior scandals fade. She said much had been done to strengthen the financial system, but some of the benefits were “offset by a long tail of outrageous conduct cases. These are like salt rubbed into the wounds to public confidence in financial markets.” Ms Shafik is overseeing the UK Fair and Effective Markets Review, launched by chancellor George Osborne over the summer after allegations that traders had rigged interest-rate and currency benchmarks. The scandals have damaged Britain’s reputation as a key global financial capital. A consultation paper by the Bank, Treasury and Financial Conduct Authority, launched on Monday, raises the prospect of tougher penalties on staff who breach internal guidelines, more intrusive electronic surveillance of trading floors and more established procedures for protecting whistleblowers. But it also considers harsher regulation including imposing higher capital charges on firms that fall foul of rules. It also floats the idea of extending the UK’s bonus clawback rules from banks to non-banks such as asset managers and trading firms. The review said regulators should have the power to police seven key financial benchmarks, including those governing oil, precious metals and foreign exchange. In the paper, the review asked whether there was a need to strengthen criminal sanctions in fixed interest, currency and commodity (FICC) markets, as well as to introduce punishments such as temporarily suspending firms’ or individuals’ permissions to trade in certain markets. FINANCIAL TIMES
Sports Direct forced to spell out zero-hours workers' rights in their job adverts
Zahera Gabriel-Abraham launched the case after taking a zero-hours contract with Sports Direct which she says did not make clear that she might not be offered work with the business. She also claimed that she was told she would not receive holiday pay. She resigned saying her health was suffering because the threat of not being given any work some weeks was making her ill. Mike Ashley’s Sports Direct high street chain has now reached a settlement with Ms Gabriel-Abraham. About 20,000 of Sports Direct’s 23,000 staff are employed on zero-hours contracts and reaching a settlement with such a large business means it will resonate around the industry. Unusually for a settlement, the claimant did not agree to be gagged from speaking out about it as a condition of striking a deal. “Zahera wanted to make a difference and in order to do that she would not agree that it would be secret,” said Elizabeth George, a barrister at Leigh Day which represented Ms Gabriel-Abraham. “This is a significant step in the right direction. It will be interesting if other companies are more upfront about the contracts as a result.” Ms George added: “The new adverts have to state three things: hours are not guaranteed, they may vary and there may be weeks when no work is offered. “They are not going to be the most attractive job adverts: ‘Come work for us and there’s no guarantee you will get any work.’” TELEGRAPH
Asda faces mass legal action over equal pay for women
Asda, the UK's second largest retailer, is facing a mass legal action by women who work in their stores. The women claim they are not paid the same as male workers in the distribution warehouses - despite their jobs being of "equivalent value". One Asda store worker said that the work was the same whether you were in the shop or in the warehouse - packing and unpacking pallets of clothes and food and putting stock on shelves, often through the night. The legal firm managing the case, Leigh Day, says it has already received 19,000 enquiries from current or former Asda staff in relation to the group legal action. The case will test how retailers decide what they pay their staff in different parts of their business. And if the women are successful it could have serious ramifications for the whole sector. Lauren Loughheed, the solicitor with Leigh Day who is leading the case, said that the pay difference between shop and warehouse workers could be as much as £4 an hour. That's a big difference when you are earning £7 an hour. And, if the cases are successful, women workers could be compensated for six years of back pay. The legal action, believed to be the largest of its kind in the private sector, could lead to some very high payouts. In the public sector, the issue has led to major battles between councils and their workers. Women who worked as cleaners and school catering staff have taken hundreds of class actions to close pay differentials with men who had jobs such as refuse collector or street cleaner. One council, Birmingham, has agreed to pay over £1bn to settle the claims of tens of thousands of women which go back over many years. Ms Lougheed said that the private sector had been slower to act and that this test case could prove a watershed. Asda has signalled it will fight the claims vigorously and says it does not discriminate. BBC NEWS
London gets 24 times as much spent on infrastructure per resident than north-east England
Figures derived from a research report by IPPR, show Londoners receive around ten times more per head spent on capital investment than the rest of England – a discrepancy sure to reignite a long-running row on whether London’s growth is coming at the detriment of the rest of the UK. In August the UK chancellor George Osborne endorsed a £15bn plan to improve infrastructure in five northern cities this week. Although he did not commit to any funding, Osborne said the overall aim was: “To end the imbalance in the UK economy so our success is not wholly dependent on the global city of London, so we have across the north of England individual cities that are better connected, have a better quality of life, and are able to create.” Comparing London and the North, London’s Crossrail alone is earmarked to receive nine times more funding than all the rail projects from the North’s three regions combined. Other projects in the capital including tube improvements mean that £5,426 will have been spent on each resident of London compared to £223 on those in the north-east region. That’s over 24 times as much. GUARDIAN
Cameron hails plan to fast-track devolution for English cities
The prime minister has welcomed an ambitious proposal to devolve power to UK city regions along the same brisk timetable as the Scottish devolution process, suggesting Greater Manchester and West Yorkshire could gain more autonomy in 2015. The report from the City Growth Commission argues that devolution from Whitehall to city regions will boost economic output in the UK’s 15 largest metropolitan areas (“metros”) by £79bn per year – approaching 5% of current GDP. It also proposes a vastly improved transport network in the north of England across the Pennines, including a northern answer to London’s Oyster card – dubbed the “Noyster”. Praising the report as “absolutely first class”, David Cameron told Prime Minister’s Questions on Wednesday that there was a “real opportunity” to rebalance the economy using high speed rail and other infrastructure to “link up our great northern cities” and create a “northern powerhouse”. The report was welcomed by business people and political leaders in the 15 “metros” singled out in the report: London, Greater Manchester, West Midlands, West Yorkshire, Glasgow, Merseyside, Tyne and Wear, South Yorkshire, East Midlands, South Hampshire, Edinburgh, Cardiff, Bristol, Belfast and Leicester. But smaller cities, like Hull, Peterborough and Carlisle, expressed concern that they will be left out. GUARDIAN
Yorkshire BS to refund thousands after it is fined £4.1m for mistreating customers struggling to pay their mortgage
When a customer phones any mortgage provider to explain they are having problems meeting their payments, the lender should seek to understand the root cause of the borrowers' inability to pay. They should then look into their income and expenditure to establish what the borrower can afford to pay. The lender should also consider all the options for forbearance available to the borrower. All this should happen as quickly as possible so that the borrower does not fall further into financial difficulty. But the Financial Conduct Authority (FCA) found that between October 2011 and July 2012, call handlers at YBS failed to follow these guidelines. The FCA issued the fine after it found the mortgage provider sometimes took months to come up with a repayment solution to help customers in arrears. In the meantime, these borrowers accrued extra interest and late payment fees at a time when they could ill-afford them. As many as 33,900 customers will also be repaid a total of £8.4million after YBS agreed to refund all mortgage arrears fees – plus interest – charged to customers since January 2009. Customers will receive an average of £247 each. YBS has also stopped charging mortgage arrears fees until the identified issues are resolved. DAILY MAIL
