Money

Greek debt talks go into weekend

Press Association — 2012-02-04T03:04:00+00:00

Filed under: News

"Crucial" issues remain to be resolved in Greece's critical negotiations over a second multi-billion euro international bailout as talks continue.

A long-anticipated bond swap deal was now the easier part of the process in securing continued funding for the country, finance minister Evangelos Venizelos said after marathon talks with debt inspectors from the European Commission, the European Central Bank and the International Monetary Fund, known as the troika.
Mr Venizelos said he would speak by teleconference with the other eurozone finance ministers on Saturday and that the ministers would meet on Wednesday - a gathering that had originally been expected to be held on Monday.

"After 12 hours of continuous and tough negotiations with the troika on the new programme, we have solved quite a few issues. But there remain crucial issues which concern the future of the country and the Greek people," he said.

Greece desperately needs to secure the second bailout and the bond swap deal that seeks to halve its debt load in order to avoid a catastrophic default within weeks. A major sticking point in the negotiations over Greece's second 130 billion-euro (£108 billion) bailout are disagreements over the troika's demands for private sector wage cuts.

Apart from the new bailout talks, Greece is conducting urgent negotiations with its private creditors, who are being asked to lose half the face value of their Greek government bonds. New talks on the writedown - which would slash Greece's national debt by 100 billion euro - will be held in Athens over the weekend.

Mr Venizelos said the negotiations on the bond swap "is now the easier part of the whole procedure".

In a letter to the government on Sunday, Greek unions and employers said they rejected proposals to slash the minimum wage and further cut annual salaries. Private sector workers have already suffered a 14% loss in income due to emergency taxes imposed since the beginning of 2010, the letter said.

The creditors argue that cutting labour costs is essential to making the Greek economy more competitive. The unions and employers' associations argue that the move will only further depress consumer spending and therefore tax revenue.

The government must conclude negotiations on its second rescue package "that will ensure debt sustainability of the country in the long run, and that will bring remedies to a number of serious problems that the Greek economy has had even before this crisis," said Amadeu Altafaj Tardio, spokesman for EU monetary affairs commissioner Olli Rehn.

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Warning on private sector pensions

Press Association — 2012-02-04T02:59:00+00:00

Filed under: Pensions

Around half a million private sector workers retiring each year are being "short changed" by up to £1 billion from their total future income, pensions bodies have warned.

Evidence of "sharp practice and murky pricing" in the annuity market was highlighted in a report from the National Association of Pension Funds(NAPF) and the Pensions Institute (PI) at Cass Business School.
It called for more transparency and greater scrutiny from Government, with more "shopping around" to help retirees get the best deal. Failing to shop around for a better deal can wipe 30% off someone's annual pension income and in some cases halve it, the report said.

PI director Professor David Blake said: "This report is a wake-up call to the pensions industry, the Government and the regulators.

"If the annuity system is not radically overhauled, employees in defined contribution schemes in the private sector will continue to suffer massive detriment and the Government's new auto-enrolment regime will fail the very people it aims to help secure financial independence in retirement."

When they retire, workers in the private sector saving in a defined contribution (DC) pension use their pension pot to buy an annuity from an insurer, a decision which sets the size of their pension for life.

The report - entitled Treating DC Scheme Members Fairly in Retirement? - said the majority of people stick with their existing pension scheme provider as the "default option".

The loss could treble in size to £3 billion as the annuity market matures and as people start being automatically enrolled into workplace pensions from this October, the study said.

Mark Hoban, the Financial Secretary to the Treasury, said: "I welcome the NAPF's contribution to the debate on how to help consumers get the best from the annuity market.

"The Government recognises that there are particular issues about individuals accessing small pension pots, which is why the Government announced in December measures to allow holders of small personal pension pots to take up to two small pots as a lump sum, and why the Department for Work and Pensions are consulting on options for reform."

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House price confidence 'improves'

Press Association — 2012-02-04T02:55:00+00:00

Filed under: House Prices, Scams & Fraud

Optimism in the housing market has grown in recent months, with more Britons predicting prices will rise this year than those forecasting a fall, a study has found.

Nearly a third (29%) of those surveyed believe house prices will increase in the next 12 months, Halifax said, up from 28% when a similar report was compiled in October. Meanwhile 22% predict a decline, down from 30% when the study was conducted previously.
However, most people believe the market will be stable rather than see any sharp change, with two-thirds not expecting to see any increase or decrease of more than 5%.

Londoners are the most optimistic, having seen strong overseas buyer interest which could be boosted further by this year's Olympics, while people in the North East, an area particularly dependent on public sector employment, are the least.

Those expecting rises outweighed those predicting falls in eight out of 11 regions, compared with just three regions when the research took place in October, according to the latest housing market confidence tracker.

Martin Ellis, housing economist at Halifax, said: "The modest improvement in consumer confidence in the outlook for house prices reflects the resilience of the UK housing market over recent months in the face of a weak economic recovery and the deterioration in the outlook for both the UK and global economies."

Worries about job security and problems raising a deposit are seen as the main hurdles to buying a home, with squeezed household finances and restricted mortgage availability also featuring highly in the study.

This comes despite recent research from Halifax which found that mortgage payments for new borrowers have become their most affordable for 14 years. Lenders have been expanding their mortgage ranges and offering some of their cheapest ever deals, but concerns have been raised that they will tighten their borrowing criteria amid the weak economic backdrop.

Half of those surveyed said it was a good time to buy while only one in 10 believed it was a good time to sell. The rental market has seen a boom as those who have been unable to get on the housing ladder have remained trapped in the rental sector. Six out of 10 of the 2,009 adults surveyed believe the cost of private rents will see a further increase over the next year while 3% think they will fall.

Alongside London, the East Midlands and Yorkshire and Humber are positive about the year ahead. People in the West Midlands are feeling optimistic, as are those in Scotland, Wales and the South East. However their counterparts in the South West, North East and North West are feeling gloomy.

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Insolvencies at three-year low

Press Association — 2012-02-04T02:51:00+00:00

Filed under: Debt

Personal insolvencies have dropped to their lowest level since 2008, despite the tough economic conditions, official figures have shown.

There were 28,973 individual insolvencies in England and Wales in the fourth quarter of 2011, a 4% drop on the previous quarter, the Insolvency Service said.
The total number of personal insolvencies in 2011 was 119,850, a decrease of 11% from 2010.

This included 41,845 bankruptcies, which were down 29% on 2010, 49,056 Individual Voluntary Arrangements (IVAs) - down 3% on 2010 - and 28,949 Debt Relief Orders (DROs), a 15% rise on the previous year.

Analysts warned that the rise in those taking out DROs hinted that many people could slip further into insolvency as employment conditions deteriorate and bills pile up.

In December, the Insolvency Service said that one in four people taking out a DRO is aged between 25 and 34.

Dubbed "bankruptcy light" by some, they are a formal process aimed at people who have more modest levels of debt but no realistic prospect of paying it off. The maximum allowable debt is £15,000.

Nick O'Reilly, an insolvency practitioner at chartered accountants HW Fisher & Company, said: "The huge leap in the number of debt relief orders - often seen as 'bankruptcy light' - hints at more trouble to come. To qualify for a DRO, a person must have relatively small debts - of less than £15,000. But there's every chance that those struggling with DROs now could slip into insolvency proper."

Louise Brittain, a partner in Deloitte's insolvency team, said: "As the labour market continues to deteriorate, we will see more households struggle to pay their debts as unemployment levels increase. We have seen a noticeable increase in professionals filing for bankruptcy and we can see this trend continuing."

She highlighted a "boom" in the payday lenders market, and continued: "We will inevitably continue to see large numbers of individuals become insolvent in 2012. We predict the number of individuals entering in insolvency in 2012 will top 120,000."

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Million face £100 late filing fine

Press Association — 2012-02-04T02:46:00+00:00

Filed under: Tax

One million taxpayers face a £100 fine for failing to submit their self-assessment tax returns on time, HM Revenue and Customs (HMRC) has said.

But more than nine out of 10 people met the deadline, the highest proportion since the revenue body was created in 2005.
A record 9.45 million self-assessment tax returns were filed on time this year, meaning 90.4% of taxpayers met the deadline.

The original online filing deadline of January 31 was extended to February 2 because of a strike by tax office staff. The proportion of people who filed online this year rose to 80%, also a record high, and up from the 78% of taxpayers who used the internet last year.

David Gauke, Exchequer Secretary to the Treasury, said: "I'm delighted so many people filed their tax returns online this year. The record number proves that it's quick, easy and secure to do.

"HMRC have always been clear that they want returns not penalties, so it is good news that over 90% of all returns were submitted on time."

Under the revenue body's new penalty system, those who miss the deadline face an initial £100 fixed penalty, even if there is no tax to pay or if the tax due is paid on time, and additional daily charges of £10 will accrue after three months. A maximum penalty of £1,600 could eventually be due.

The busiest day for online returns was January 31, when HMRC received nearly 445,000.

The "self-assessment rush hour" occurred between 4pm and 5pm on that day, when 37,460 returns, equating to more than one every six seconds, were received.

Some 1,100 people filed online on Christmas Day last year and 11,648 used the internet to do this on New Year's Eve.

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What would you do with a million?

Hannah Ricci — 2012-02-03T14:30:00+00:00

Filed under: Investing

Julian Stratenschulte/DPA

Hundreds of Facebook employees are set to become millionaires as the company edges closer to a blockbuster $5billion stock exchange flotation.

Facebook has submitted paperwork to regulators for the most anticipated initial public offering (IPO) since Google in 2004. So what could the lucky employees buy with their new found wealth?

In its regulatory filing with the Securities and Exchange Commission, Facebook Inc. indicated it hopes to raise $5billion in its IPO - a new record for a technology company, surpassing Google's $1.9billion IPO in 2004.

One of the most dramatic Internet success stories of the decade, Facebook is expected to be valued at up to $100billion following the IPO when public investors get a chance to buy a piece of the company for the first time. The IPO filling is the company's first step toward becoming a public company, which will happen once the company's shares officially start trading sometime in the spring.

The company's pay structure means that founder Mark Zuckerberg isn't the only one set to benefit. Since most Facebook employees receive salary plus some kind of equity-based compensation, the wealth will profit all levels of employers and trickle down to engineers, salespeople and other staffers who joined the company.

At least 1,000 employees of the social network based in Menlo Park, California, are set to benefit and it is reported that they already hatching plans on spending potential new wealth, despite regulations typically preventing employee stock options from being cashed in for six months.

"There's been discussions of sort of bucket list ideas that people are putting together of things they always wanted to do and now we'll be able to do it,' said one ex-employee who joined in 2005, according to the Daily Mail.

So what could the lucky employees be considering splashing out on?

Findaproperty.com

Chester pile
How about six-bedroom Woodbank Hall set in 10.6 acres of land? Situated about five miles north of Chester and 12 miles south of Liverpool, the property is believed to date from the 1700's, before being re-modelled in in the 1860's.

It comes complete with tennis court, summer house and equestrian facilities, including traditional coach house and a stable block - with an asking price of £1,500,000.

Baldi

Crystal bathtub
How about a bespoke rock crystal bathtub created by Italian company Baldi? The three-person bath pictured was carved out of a single piece of rock crystal found in the Amazonian rainforest. 2.5 meters in diameter, and took six months to make.

The original was purchased by a Russian magnate, who splurged $858,763 for the tub and company has since created another one especially for the Harrods window with a price tag of $790,310.

Lamborghini

Lamborghini Reventon

How about the most powerful and most expensive Lamborghini ever built?

The third fastest car in world, it takes 3.3 seconds to reach 60 mph and it has a top speed of 211 mph. Its rarity (limited to 20) and slick design are what makes it so expensive with a cool price tag of $1,600,000.

findaproperty.com

London mews
Perhaps a modest three-floor mews in central London would take your fancy?

With an asking price of 1,395,000, the three-bedroom property in Southwick Mews is in walking distance to Hyde Park and Paddington and comes with entrance hall, reception room, kitchen, bathroom, shower room and garage, currently converted into an office.

Virgin Galactic

Virgin Galactic trip
How about splashing out on a space adventure for your friends and family? At a mere £127,000 per person, four hundred and fifty would-be astronauts have already booked for Sir Richard Branson's space venture aboard the WhiteKnightTwo and SpaceShipTwo space vehicles.

Taking off from Virgin Galactic's home, Spaceport America, dubbed the 'Virgin Galactic Gateway to Space', you can book the three-day Virgin Galactic Experience with selected UK operators, including Seasons.

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How much should you be taking out for pension?

The Motley Fool — 2012-02-03T13:45:00+00:00

Filed under: Investing

Could you live comfortably on a 4% drawdown from your investment pot?

If so, happy retirement. If not, keep plugging away.

The 4% is the magic figure financial planner William Bengen came up with in a study in 1994. Based on a study over 75 years' worth of returns, Bengen found that retirees who draw down no more than 4.2% in the first year, and adjust that amount in subsequent years for inflation, stand a good chance their money will outlive them.

He also found that retirees who draw down 5% a year run a 30% chance their investment pot will bite the dust before they do.
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Since then, his analysis has been disputed in both ways. It's seen as being a bit too mean for some people who, quite understandably, want to take out a big chunk on retirement and work their way through their money while they're still willing and able to. On the other hand, it's been criticised as being too generous in today's world of near meaningless interest rates, when trustworthy gilt yields are tiny.

The 1998 "Trinity Study" agreed with the 4% safe withdrawal rule-of-thumb. It concluded that in a retirement portfolio that includes a mix of stocks and bonds, then 4% works well over the long run.

This study accepted that withdrawals may exceed the income earned, and the value of the portfolio will shrink during bear markets. It also assumed that the portfolio needs to last 30 years.

What about me?

The 4% rule seems a good one to live by if you can, and if you like the idea of your capital staying in place.

But the truth is there is no "one size fits all" approach. It all depends whether you want to whittle away your capital while you can, or leave it in place for your dependents or your care if you live a very long time.

Of course, it also depends on what you perceive that you need to live on. I'm sure we all know people in retirement from both ends of the spectrum. There are those who spend nothing like 4% of their non-home assets annually as they're trapped in a penurious lifestyle that was a real necessity earlier in life. Then there are those who live to the financial maximum while they still can.

So the 4% rule has to be taken for what it is -- a guide to stick to if you want your investments to pay your way and to stay in place.

Fools do better

I would imagine that most Fools do a lot better than 4% as an overall measure of capital growth. But then most Fools probably aren't typical of the population as a whole; I would guess they're a lot better informed than average, with generally larger pension pots.

I certainly hope so anyway. The latest data from the Department for Work and Pensions show that just 38% of working-aged people in the UK are saving into private pensions; the lowest level for a decade.

There are lots of shares around that will give you much better than 4% return in dividend yields if they're sustainable. But what about inflation? Funnily enough, the Consumer Prices Index was running at exactly the same rate (4.2%) as Bengen's suggested pension draw-down in December. So if you're okay at 4.2%, you should theoretically be treading water at least. But you're going to have to just beat 4.2% as an annualised return to stand still and take an income while keeping pace with the rising cost of living.

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Valentines voucher round-up

Sarah Coles — 2012-02-03T12:36:00+00:00

Filed under: Shopping & Deals

Jan Haas/DPA/Press Association Images

This weekend our thoughts turn to Valentines Day - either how to celebrate it without breaking the bank, or how to avoid it entirely.

Luckily we have rounded up some of the best vouchers around for those seeking to do either.

Free Valentine's Card

Make someone happy, while simultaneously feeling smug that you have avoided buying into the commercialism of love, with this voucher code. Go to cardtown.com, create an account, click 'add prepay credit' and then type in your code LOVEFILM. Then all you have to do is click on the 'redeem' tab and you should automatically have £5 ready to spend on your chosen card,

Body Shop

Get your Valentine something smelly - or indulge yourself with a 30% discount. You'll have to sign up at vouchercloud.com to get your voucher code, then enter it into the site by the end of the day on Monday along with your order, and the cut-price smellies will be yours.

Flower delivery

OK, so this one has Valentine's Day written all over it. You can order flowers to be delivered from eflorist through Quidco. Enter the code QUIDCO10 and you can get 10% off your order and 18% cashback - so you can earn a bit of cash from your Valentine's gift.

Half price EuroTunnel

This deal, featuring on HotUKDeals.com, runs over Half Term and Valentine's Day, so you can choose who you treat on a shoestring. A car and its passengers can get a round trip for just £22, as long as you are willing to travel mid-week. You'll need to call 0844 879 73 71 and book for either Tuesday 14, Wednesday 15 or Thursday 16 February.

Weight Watchers

This one really isn't recommended for Valentine's Day. You can sign up for a three month membership of the online plan through vouchercodes.co.uk and get 25% off. You'll need to sign up by Monday when the deal expires. It's a saving of £31.95, but it's still not worth giving it a go as a Valentine's gift.

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Ben & Jerry's become Green Dragons

Sarah Coles — 2012-02-03T12:30:00+00:00

Filed under: Career

Toby Talbot/AP/Press Association Images

Do you have a brilliant idea for an ethical business? Are you just waiting for the cash to get you going? Then this could be your big opportunity, because Ben & Jerry's is launching a new competition to find socially responsible start-ups, and the winner could scoop a €10,000 cash prize.

So what do you have to do to be in with a chance of winning?

The idea

The brand may be owned by Unilever now, but its roots as a business devoted to 'Peace Love and Ice cream' have inspired an interesting competition.

"When we set-up the company in 1978, Ben and I always believed giving back to the community was as important as making great tasting ice-cream," says Ben & Jerry's co-founder Jerry Greenfield. "That's why I am really excited about this competition, to find business models with those same values."

The competition

The competition, called Join Our Core, encourages entrants to put their business ideas forward for the chance to scoop a €10,000 cash prize, a round of mentoring, and fame featuring on the side of tubs of Ben & Jerry's ice cream.

The best entrants will have the chance to pitch their business idea to a panel of industry leaders in a kind of Green Dragon's Den. The judges will include Greenfield, as well as representatives from Ashoka, VSO and the Fairtrade Foundation.

The 15 finalists chosen by the panel will be taken to Africa this summer for the last stage of the programme with development gurus VSO, where they will share social business ideas, live with vanilla farmers and help local development projects in their community.

The prizes

Five overall winners will scoop themselves a €10,000 cash prize and they will be featured on a Ben & Jerry's tub.

There will also be a 'People's Choice Award', where the Join Our Core community will pick five winners who will each receive €1,000 in cash.

And in case your idea shows more enthusiasm than business acumen, there's always the chance to be one of the first 100 entrants, who apply before 15 March, which means you'll get the equivalent of a year's supply of Ben & Jerry's ice cream. Just pop over to the website and enter your idea.

So what do you think? is this time for your compostable garden furniture or your solar-powered wind chimes to get the green light?

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Will the Olympics break the Internet?

Guy Clapperton — 2012-02-03T10:31:00+00:00

Filed under: News

Just when we thought we'd seen enough of Olympics-bashing in the media a group has published a warning that the interest in the games might cause the UK's creaking bandwidth to crash. There could be slower Internet or complete drop-outs, the group is warning.
The thoughts carry weight because they are from the Olympic Organising Committee, which has told Money Marketing that the interest in the games is likely to be so strong that businesses could be disrupted as millions expect to be able to log on and watch the games on the Net.

9/11

The last time many people will remember services being disrupted in this way was another event entirely with no sporting or positive overtones - 11 September 2001 saw many Internet news services freeze as demand to find out what was going on knocked many servers out - this was before there was much video to speak of on the Web. The frustration was massive - at least this time there won't be the same worry about the events unfolding when the services were failing.

Clearly technology has improved since then but so has the demand - millions more are online as part of their ordinary lives and they'll expect to be able to look at results, stream games and so on.

The trick is partly to advise people to consider older technologies. A phone call is good for communicating and won't clog the Net as long as you use a land line, and a TV is a good way to watch the Games. It may be advisable, though, to plan for the possibility of some interruption to the Web while the events are going on.

It's just lucky we haven't got the Queen's Jubilee year in the same 12 months or something...

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