UK State pension age rise to 68 will not be brought forward yet

 By Kevin Peachey & Sam Francis

Cost of living correspondent and political reporter

A rise in the state pension age to 68 will not be brought forward yet, the government has announced.

Those born on or after 5 April 1977 will be the first cohort to work to 68, under current plans. A 2017 government review suggested expanding this to include those born in the late 1960s.

The work and pensions secretary said the pension age would not be changed until a further review was carried.

A decision is now expected in 2026, after the next general election.

By law the government is required to examine planned changes to the system every six years.

A recent report found life expectancy for retiring Britons is now two years lower than when the government last reviewed the state pension age in 2017.

Labour said increases in life expectancy were being "dragged down" by a "rising tide of poverty".

A separate review by Baroness Neville-Rolfe looking at what factors the government should take into account when setting the pension age was published on Thursday.

• When do you get the state pension?
• Chancellor announces state pension to rise by 10.1%

And on Thursday, a further review was commissioned by Work and Pensions Secretary Mel Stride to look into raising the state pension age.

A further study was needed as the previous reviews were "not able to take into account significant external challenges including impact of the Covid pandemic and global inflation caused by Putin's illegal wat in Ukraine", Mr Stride said.

The new review will report within two years of the new parliament, he added.

Labour supported the government's position, but shadow work and pensions secretary John Ashworth said the government had last year said bringing forward an increase in state pension age "was absolutely necessary for the long term sustainability of the public finances".

"Now it turns out with general election only a year away the and the government trailing so badly in the polls, not raising the state pension age is not so reckless after all," he added.

The state pension is a monthly payment currently made to 12.5 million people who have reached qualifying age and have paid enough in national insurance contributions.

Next week, the amount paid will increase by 10.1% in line with the rising cost of living.

That means it will be worth:

• £203.85 a week (up from £185.15) for the full, new flat-rate state pension (for those who reached state pension age after April 2016)
• £156.20 a week (up from £141.85) for the full, old basic state pension (for those who reached state pension age before April 2016)

Work and Pensions Secretary Mel Stride will make a statement in the House of Commons later to confirm the conclusions of the latest statutory review on the pension age.

The Daily Express newspaper, where the story first appeared, said Mr Stride would announce a new review to be carried out after the next election.

The qualifying age to receive the pension has been a matter of intense speculation, with two reviews having been considering the appropriate age and how that should be calculated.

The main argument for accelerating a rise in the state pension age has always been that people are living for longer.

The state pension bill is estimated to grow by 35% to around £148bn by 2027-28 according to the Office for Budget Responsibility.

The Institute for Fiscal Studies, a leading economic research group, said that it was a "reasonable estimate" that increasing the state pension age by one year in the late 2030s would save the Government £8bn to £9bn a year in today's terms.

But experts point out that, although the cost of the state pension has been rising, life expectation has stalled recently.

There is also a wide difference in life expectancy across different parts of the country, with people generally likely to live longer in more affluent areas. That creates an added complication when setting a state pension age which is uniform across the UK.

At the moment, the age limit is based on ensuring no-one spends more than one third of their adult life in retirement.

State pension increases currently set out in legislation are:

• A gradual rise to 67 for those born on or after April 5, 1960
• A gradual rise to 68 between 2044 and 2046 for those born on or after April 5, 1977

Proposals to raise the state pension age are often controversial. Riots broke out on the streets of France after the French government decided to force through pension reforms without a vote in parliament.

https://www.bbc.com/news/business-65120317

UK credit card rates reach record in new blow to consumers. Average annual percentage rate for the products is now 30.4%.

Publish date: Tue, 10 Jan 2023

UK shoppers taking out new credit cards face record-high interest rates on their bills.

The average annual percentage rate for the products is now 30.4%, according to Moneyfacts Group Plc, which began compiling the data in June 2006. That includes fees and is up from 26% a year ago.

Shoppers in Britain are putting more money on their credit cards as the highest inflation in 40 years erodes savings built up during the pandemic. They splurged on their cards before Christmas, spending £1.2 billion in November, triple the amount of the previous month.

Holiday spending has so far helped retailers surprise to the upside in earnings, with shoppers paying out more than £12 billion on groceries alone for the festivities.

That expenditure was driven in part by food inflation, which has contributed to a cost of living crisis that’s expected to leave families £2,100 worse off.

As well as increasing rates, credit card providers have been making their terms less attractive on average. Over the past 12 months, balance transfer fees have risen and the interest-free balance transfer term has shrunk, the Moneyfacts data show.

  - Bloomberg

UK Economy Crash Course (whole presentation)

Also visit: 

Why UK will have economic depression

http://www.youtube.com/watch?v=0PQZuB1TeP4&feature=endscreen

Ailing Britain's central bank turns money taps back on. Quantitative Easing 3.

Pedestrians pass The Bank of England in the City of London February 14, 2012.

Credit: Reuters/Olivia Harris

By David Milliken and Sven Egenter

LONDON | Thu Jul 5, 2012 3:54pm BST

(Reuters) - The Bank of England launched a third round of monetary stimulus on Thursday, saying it would restart its printing presses and buy 50 billion pounds of government bonds with newly created money to help the economy out of recession.

The BoE's action, coming just two months after it ended a previous asset buying programme, coincided with interest rate cuts in China and the euro zone as the trio of central banks took steps to counter a global economic slowdown.

There is no guarantee the new cash injection, which the bank linked directly to the worsening backdrop in the euro zone, will offer a major boost to an economy officially in recession since late last year.

BoE Governor Mervyn King has been adamant that gilt purchases still work as a stimulus.

But policymakers Martin Weale and deputy governor Paul Tucker as well as external economists have voiced doubts about the effectiveness of the latest round of purchases, though some in the market still forecast the four-month programme would be extended.

"We continue to have doubts over how successful extra QE will be, but seeing as the BoE has few other options we expect them to stick with it," said James Knightley at ING.

The BoE bought 125 billion pounds of gilts between October and April, calling a halt in May largely because inflation was falling more slowly than hoped towards its 2 percent target.

Since then, inflation has dropped to 2.8 percent, and the BoE said a worsening economic situation in the euro zone was the main factor behind its decision to restart purchases.

"Without additional monetary stimulus, it was more likely than not that inflation would undershoot the target in the medium term," King said in a letter to finance minister George Osborne explaining the decision.

The BoE has bought 325 billion pounds of government bonds to date, and the purchases announced on Thursday take this total to 375 billion.

Many economists had expected new programme to be spread over less than four months, and a minority had forecast the BoE would plan to buy 75 billion pounds of bonds.

Gilt futures, which had rallied in the run-up to the decision, fell by more than 30 ticks to hit a session low after the data.

"We continue to expect that QE will be expanded markedly further over time, reaching a total of about 500 billion pounds," said Citi economist Michael Saunders, who had expected an initial dose of 75 billion.

MONETARY POLICY STILL KEY

Britain's Conservative-Liberal Democrat coalition is largely reliant on the BoE to boost the economy because it has limited scope to cut taxes or raise spending while it tries to eliminate the country's big budget deficit over the next five years.

In a letter authorising Thursday's QE expansion, finance minister Osborne confirmed that monetary policy was the "primary tool" to deal with a worsening economic outlook.

However, many economists think gilt purchases are losing the effectiveness they had when they first started in March 2009.

"The BoE has been excessively optimistic about how powerful QE is," said Philip Rush, an economist at Nomura. "The latest increase is more than just a token, but it is not hugely significant for the outlook for growth and inflation."

Some BoE Monetary Policy Committee members have doubts too, and recommended at last month's meeting - when the committee split 5-4 against restarting QE - that other complementary policy measures might be better suited to reducing firms' and households' borrowing costs.

The QE stimulus follows joint measures announced by the government and BoE last month to improve the flow of credit to businesses, and to ensure banks do not suffer from a lack of ready cash if the euro zone crisis deepens.

The BoE says its purchases of government bonds help the economy by encouraging other investors to buy riskier assets instead, making it easier for large companies to raise funds through bond or share issues. But critics argue the BoE needs to do more to boost the flow of credit to smaller companies.

"The last round of QE proved ineffective, with little or no evidence it found its way to small businesses - the engine room of our economy," said Phillip Monks, chief executive of Aldermore, a recently established bank that lends to business.

"To really stimulate economic growth, the Bank of England needs to do more to ... ease credit availability for small firms."

With the possibility of interest rate cuts yet to enter the debate in Britain, both the European Central Bank and the People's Bank of China cut borrowing costs on Thursday.

http://uk.reuters.com/article/2012/07/05/uk-britain-boe-idUKBRE8630RO20120705?feedType=nl&feedName=uktopnewsmid

A UK Blue-Chip Starter Portfolio

Company	Industry	Share Price (Pence)	P/E	Yield (%)
HSBC	Financials	561	9.0	5.2
Royal Dutch Shell	Oil & Gas	2,225	7.6	5.0
BHP Billiton (LSE: BLT.L  )	Basic Materials	1,806	7.6	4.3
British American Tobacco	Consumer Goods	3,242	14.6	4.5
Tesco (LSE: TSCO.L  )	Consumer Services	310	8.8	5.0
GlaxoSmithKline	Health Care	1,447	11.4	5.3
Vodafone (LSE: VOD.L  )	Telecommunications	179	10.9	7.4
Rolls-Royce	Industrials	858	14.2	2.4
National Grid	Utilities	676	12.4	6.1
ARM Holdings	Technology	506	32.2	0.9

Excluding tech share ARM, the companies have an average P/E of 10.7 and an average yield of 5.0%. The numbers were 9.8 and 5.2%, respectively, when I last carried out this exercise in October 2011.

So, the group is rated a bit more highly today than it was nine months ago. However, I think it still veers towards the value end of the spectrum, because my rule of thumb for this group of nine is that an average P/E below 10 is firmly in "good value" territory, while a P/E above 14 starts to move toward expensive.

http://www.fool.com/investing/international/2012/07/04/a-blue-chip-starter-portfolio.aspx

3 Reasons To Buy Into The Market Today

29 June 2012

This market is a buy. Here's why.

The stock market, it's fair to say, is in an uncertain mood. And, as in the early days of 2009, just before the market's nadir, daily items of news are having a disproportionate effect on sentiment.

The economy, Greece, banking downgrades, American purchasing and housing surveys -- you name it, and stock prices are reacting, oscillating wildly on euphoria and gloom.

At such times, it's tempting to sit it out, and wait for calmer times before putting more money into market. But that, I think, would be a mistake.

Here's why.

Pessimism abounds

Let's start with why the market is reacting to newsflow, and not shrugging it off. Simply put, investors today are far more pessimistic than they were earlier in the year, when the FTSE 100 (UKX) was within a few points of 6,000.

And pessimistic markets, in short, are buying opportunities. As Benjamin Graham put it: "Buy when most people -- including experts -- are pessimistic, and sell when they are actively optimistic." Or, to cite that other well-known super-investor, Warren Buffett: "Be fearful when others are greedy, and be greedy when others are fearful."

Can the market get more pessimistic still? Undoubtedly. Can people get even more fearful? Of course. But with the market down 10-15%, you can buy today the same shares that you were buying just weeks ago -- but significantly more cheaply.

And as Warren Buffett -- again! -- so memorably put it in a thoughtful article in Fortune magazine a few years back:

"When hamburgers go down in price, we sing the Hallelujah Chorus in the Buffett household. When hamburgers go up, we weep. For most people, it's the same way with everything in life they will be buying ‑‑ except stocks. When stocks go down and you can get more for your money, people don't like them any more."

And unquestionably, the stock market's hamburgers have just gone down in price. AstraZeneca (LSE: AZN), Aviva (LSE: AV), BT (LSE: BT-A), BAE Systems (LSE: BA), Barclays (LSE: BARC) andLloyds Banking Group (LSE: LLOY) -- undeniably, Britain's blue chips have gone on sale.

That said, only some of those particular blue chips are rated as a 'buy' by Neil Woodford, the subject of a recent special free Motley Fool report: "8 Shares Held By Britain's Super Investor". And others in that short list above, it's fair to say, he wouldn't touch at all.

Which are which? Why not download the report, and find out? As I say, it's free.

Asset class perspective

That said, it's possible to view today's market in a very different light. Namely, this way: if you don't like shares at today's prices, what do you like?

Cash? Real returns are either negative or zero -- and the next move in interest rates is likely to be downwards. Property? You're braver than I am. Gilts? Every bubble has to burst one day -- and we're surely in a gilt bubble. And so on.

On the other hand, decent blue chips are on yields of 5% or so, delivering dividend growth of 5-10%, and offer capital growth into the bargain.

And, what's more, at very reasonable prices. The FTSE 100's price-to-earnings (P/E) ratio yesterday was 9.88, compared to 10 years ago when it was 19.88 -- and that, in short, is one helluva difference in valuation.

Watch-list wonders

Frankly, there's not much point in having a watch list if all you do is, well, watch it.

Or, to put it another way: "When shares on my watch list scream 'bargain', I buy them. What do youdo, Sir?," as master investor and economist John Maynard Keynes so memorably didn't quite say.

And with those sentiments in mind, there's one share in particular that I've been loading up on in recent times, having almost doubled my holding this year. What's more, I'll be buying still more of it in mid-July, when I've banked my dividends from Sainsbury (LSE: SBRY), Marks & Spencer (LSE: MKS),GlaxoSmithKline (LSE: GSK) and BP (LSE: BP), and found some more spare cash.

Its name? You can find that out in another free special report from the Motley Fool -- "The One UK Share Warren Buffett Loves". But from the way that Buffett has seemingly been topping up himself in recent times, it's clear that the share is on his watch list, too. The report is free, so why not download a copy now?

Your view?

Of course, not everyone will agree with me. Some of you, as you've explained before, in comments appended to articles like this, are rather keener on property than I am.

But with the FTSE 100 on a P/E below 10, real interest rates largely negative and a wobbly housing market, that's the world as I see it. Comments?


http://www.fool.co.uk/news/investing/2012/06/29/3-reasons-to-buy-into-the-market-today.aspx

15 U.K. Shares Trading Near 52-Week Lows

Published in Investing on 20 June 2012

These shares are near the cheapest they have been for a year.

Unless the market is gripped by irrational exuberance, there will always be some shares trading at depressed prices. I trawled the market to find companies whose share price is within 5% of its lowest point in a year. Investors have to determine what has led a share price to fall and what the probability is that a significant turnaround could occur.

A list like this should be used as a starting point for further research. These shares have previously been higher and could rise significantly if sentiment improves. Alternatively, the picture could worsen, driving further falls.

Company	Market Cap (£m)	Share price (p)	% off 52-week low	P/E	Yield %
Tesco (LSE: TSCO)	24,354	303	2.9	8.9	4.9
Glencore International (LSE: GLEN)	23,136	334	2.4	7.5	2.9
Wm Morrison (LSE: MRW)	6,892	278	5.0	10.7	3.9
Resolution (LSE: RSL)	2,707	197	3.3	7.5	10.1
Songbird Estates (LSE: SBD)	1,586	102	1.8	n/a	n/a
Man Group (LSE: EMG)	1,330	74	3.2	18.0	14.4
African Minerals (LSE: AMI)	1,108	336	1.3	n/a	n/a
Genel Energy (LSE: GENL)	805	605	3.2	n/a	n/a
APR Energy (LSE: APR)	564	722	1.6	n/a	0.9
Fidessa (LSE: FDSA)	550	1,495	3.9	18.5	2.5
Computacenter (LSE: CCC)	500	325	4.4	8.9	4.6
Shepherd Neame (LSE: SHEP)	497	625	0.8	12.6	3.8
Halfords (LSE: HFD)	476	239	2.4	7.0	9.2
Shanks (LSE: SKS)	308	78	0.7	11.4	4.4
London Mining (LSE: LOND)	292	212	2.7	n/a	n/a

Here are three shares I found particularly interesting.

1) Tesco

In the entire FTSE 100 (UKX) index, there is not a single company with a lower price-to-earnings (P/E) ratio, higher dividend yield and better forecast profit growth than Tesco.

The shares trade on 8.8 times forecast earnings for 2013. The forecast dividend yield is 4.9%.

21 FTSE 100 stocks are expected to pay a higher dividend than Tesco. The same number of FTSE 100 companies trade on a lower forward P/E. Only eight FTSE 100 companies trade on both a higher expected dividend and lower forward P/E than Tesco. None of those eight companies is expected to match Tesco's profit growth. At today's price, Tesco represents a unique proposition of blue-chip value, income and growth.

Much of the investment discussion on Tesco describes the company as "struggling". That pessimism is not matched by the professional analyst community. They expect Tesco to deliver modest eps growth for 2013 of 1.0%, followed by 7.7% growth for 2014. The dividend is forecast to rise 1.2% for 2013 and by another 7.9% for 2014.

Investors may have been encouraged by Tesco's recent announcement that it is withdrawing from the Japanese market. This decision leaves management more focused on the company's core markets. Worryingly, trading statements from rival firms such as Sainsbury's (LSE: SBRY) suggest Tesco is losing UK market share. Tesco's success in the UK market had driven international expansion and shareholder returns. The company's current valuation suggests investors expect Tesco rivals to continue to gain ground on the market leader.

2) Fidessa

Don't be fooled by the current low in Fidessa's share price. The financial software specialist is a great growth story.

Fidessa provides multi-asset trading and analytics software to major investment banks and asset managers.

Fidessa has established itself in an industry where technology solutions have enjoyed increased demand. Fidessa software might be used by a stockbroker to send your trades to the market and then report the transaction back to you electronically. Fidessa's products are also used by the increasingly significant algorithmic trading desks.

In the last five years, the company has delivered compound eps growth of 21.2% per annum. The dividend growth averages out at 22.7% every year.

It would appear Fidessa has suffered some rating compression. Five years ago, the company traded on a forward P/E in the high 20s. Although growth was delivered, the market is now placing a lower rating on Fidessa shares. Today, the company trades at 18.1 times the consensus 2012 eps forecast and 16.7 times the estimate for 2013.

Shares in the company have fallen 21% in the last 12 months. This might be explained by the previous high rating and the fact that analysts are now expecting single-digit growth for the next two years. For the shares to rise from here, either Fidessa will have to deliver better growth or the market will have to start expecting it again.

3) Songbird Estates

Songbird Estates is one of the largest companies listed on AIM. Unfortunately, that means the shares are not eligible for ISA investment.

Songbird's share register is dominated by three overseas investment groups. Their combined holdings total 68% of the shares in issue. As a result, there is not a lot of liquidity in the company's shares.

It appears that the company's small free float and lack of dividend are deterring investors.

The company's operations have traditionally focused on Canary Wharf. Songbird owns a majority stake in Canary Wharf Group, owners of the eponymous tower. The Canary Wharf estate spent a long time being derided as a white elephant. This changed in the mid-90s when the working population there more than doubled in four years. The company is now diversifying beyond Canary Wharf. Such large-scale construction projects are long-term in their nature.

Perhaps it is the absence of a fast payout that is seeing investors send their cash elsewhere. However, for long-term investors Songbird looks to be one of the best ways to get exposure to the multi-decade boom London is enjoying. Other companies looking to exploit London's construction and development bonanza include Capco (LSE: CAPC) and Quintain Estates and Development(LSE: QED).

Warren Buffett buys British! The legendary investor has recently topped up on his favourite UK blue chip. Discover what he bought -- and the price he paid -- within our latest free report!

Further investment opportunities:

• 2 Share Tips For Olympic Gold
• The 12 Fastest-Growing Blue-Chip Shares
• A £332 Billion Problem For UK Investors

> David does not own shares in any of the above companies. The Motley Fool owns shares in Tesco and Halfords.

http://www.fool.co.uk/news/investing/2012/06/20/15-shares-trading-near-52-week-lows.aspx?source=ufwflwlnk0000001