More than half (56 per cent) admitted to having no idea what level of income they would need to lead a comfortable retirement.

Money is biggest source of rows for middle aged

Money is the biggest cause of rows for most middle-aged couple, ahead of staying out late and a partner's choice of friends, a survey has suggested.

When couples were asked if they knew what level of income they would need to lead a comfortable retirement, more than half admitted to having no idea Photo: ALAMY

9:54AM GMT 05 Dec 2011

New research found that money is the biggest cause of arguments for 27 per cent of couples over the age of 40.

The figures suggest that the state of their finances is more likely to cause couples to fall out than disagreements over housework, staying out late or their partner's choice of friends.

The study, which looks at how co-habiting couples over the age of 40 are planning for their retirement, also found that nearly one in five (17 per cent) say that they don't feel comfortable talking about finances with their other halves.

Twenty per cent of the 2,000 people surveyed by finance giant Prudential have never had a conversation with their partner about the income they think they will need in retirement.

And while the majority of couples have discussed their pension incomes in the last year, a third (34 per cent) of them only talked about it for half an hour or less.

RELATED ARTICLES

• Private investor: 'Why I am buying gold' 
  30 Nov 2011
• Turn your home into a business 
  29 Nov 2011
• Cyber Monday: shoppers flock online 
  05 Dec 2011

When couples were asked if they knew what level of income they would need to lead a comfortable retirement, more than half (56 per cent) admitted to having no idea.

Vince Smith-Hughes, head of business development at Prudential, said: "There is no hiding from the fact that sometimes our finances are a tough topic to talk about. It is all too tempting to put off conversations about the money we'll need in the future."

http://www.telegraph.co.uk/finance/personalfinance/8935620/Money-is-biggest-source-of-rows-for-middle-aged.html

Tip: Check your saving account rates and if they are derisory, move on. Look for the latest saving deals.

Savings

A bank adviser was recently caught out in a Which? investigation when he told the undercover researcher: "Let's face it, the major banks aren't going to go under."

Employees who worked at Lehman Brothers would testify otherwise and it makes sense to take any risk of it happening on British soil out of the equation.

So don't hold more than £85,000 with any one banking institution: this is the maximum that the Financial Services Compensation Scheme (FSCS) would repay should a bank go under. This is a per-person limit, so those with joint accounts can have up to £170,000 fully protected by the FSCS.

Remember that many banking institutions, such as Lloyds, run more than one brand – but most will cover only a maximum of £85,000 across the group.

Tip: The number of savings accounts paying interest of 0.1pc has increased by 23pc over the past year, according to Which? Check your rates and, if they are derisory, move on. See page 9 for the latest savings deals.

http://www.telegraph.co.uk/finance/personalfinance/investing/8932939/Eurozone-crisis-surviving-the-second-credit-crunch.html

Tip: Overpay your mortgage if you can.

Mortgages

The record low Bank Rate has been the saving grace for many households. And it is likely to be a saviour for a good while yet. The dire state of the economy has increased the likelihood that it will remain at 0.5pc for the foreseeable future – perhaps even until 2014, many economists suggest.

However, the downside for borrowers is that house prices are falling and they have done so for 10 months consecutively, according to Land Registry data. It is the price slide that borrowers need to consider when applying for a home loan.

Check out the lender's standard variable rate (SVR) before falling for a cheap two-year deal, as you could end up paying more over the long term. Once the deal is up, you could be stuck on a lender's high SVR for years, if prices have fallen and erased any equity you may have had in your home. This will make it difficult to remortgage.

Ray Boulger of John Charcol, the mortgage broker, suggested that if you were already on an SVR of 3pc or less, you should stay put. He added: "If you want to opt for a fixed-rate deal or a tracker mortgage, don't consider a two or three-year deal."

Tip: Overpay your mortgage if you can. Based on taking out a 25-year home loan of £100,000, overpayments of £300 a month would pay it off 12 years early. You would pay back £123,084 rather than £146,988 – a saving of £23,903.

http://www.telegraph.co.uk/finance/personalfinance/investing/8932939/Eurozone-crisis-surviving-the-second-credit-crunch.html

The adage is that if you are going to panic, it's best to panic early. When did you last review your investments?

Investments

The stock market's ups and downs have spooked investors. One survey said that the majority of investors hadn't changed their allocations – 72pc had kept their UK investments as they were, while 88pc had left their eurozone allocation untouched.

"Some people seem to be caught in the headlights, "unsure what to do as financial losses bear down on them, said Nicholas Boys Smith of Lloyds TSB International Wealth, which carried out the survey. Experts say avoid making knee-jerk reactions. The adage is that if you are going to panic, it's best to panic early.

But if you can't remember the last time you reviewed your investments, or your financial adviser hasn't been forthcoming, now is the time to give your portfolio an overhaul.

Tip: The bestselling multi-manager team at Jupiter expect markets to be resilient. Not surprisingly, their portfolios are light on European equities. They remain overweight in funds such as Invesco Perpetual Income, Newton Asian Income and First State Asia Pacific.

Algy Smith-Maxwell of Jupiter said: "My advice is to invest in high quality businesses that have a proven track record of paying healthy dividends. A dependable income stream should keep a cautious investor patient while the financial system undergoes a painful period of structural reform."

http://www.telegraph.co.uk/finance/personalfinance/investing/8932939/Eurozone-crisis-surviving-the-second-credit-crunch.html

Global house prices hit by credit crunch and eurozone crisis but the rich are OK

By Ian Cowie Your Money Last updated: December 2nd, 2011

166 Comments Comment on this article

House prices could soon start to fall around the world as a result of the credit crunch and eurozone crisis, one of the biggest global estate agents has hinted.

Knight Frank, which operates in 43 countries, across six continents and claims to have sold property worth US $817bn or £498bn last year, can scarcely be accused of talking the market up. It reckons the average house price edged higher by only 1.5pc last year – little more than the margin for error across such a large sample.

The Knight Frank Global House Price Index includes fast-growing emerging markets where double digit increases were widespread until recently, but even these constituents showed more sluggish growth in the third quarter of this year.

As a result, the index remained flat for the last three months. Residential analyst Kate Everett-Allen said: “Looking forward, house prices are likely to show little improvement in the final quarter of 2011, given that much of the unravelling of the eurozone sovereign debt crisis took place post-September and has yet to be reflected in the index results.”

More than half the 51 countries covered by the index – which is based on government or central bank statistics – showed falling house prices during the last quarter. Hong Kong topped the global property table, with house prices 19pc higher than a year ago. The only other countries to deliver double digit gains over the same period were Estonia (14pc);India (14pc) and Taiwan (13pc). Mainland China lagged in sixth place with growth of less than 9pc with fears of house prices falling by 20pc next year.

At the other end of this year's global index, Ireland showed house prices falling furthest. The average was more than 14pc lower than a year ago,with some properties being offered for auction with asking prices of only £18,000. Russia was second from bottom of the table with prices nearly 11pc lower, following Ukraine (-8pc) and  Cyprus (-7pc). The latter Mediterranean island is popular with many British pensioners because of low rates of income tax on retirement income.

Britain ranked 30th in the table with an annual decline shown as just 0.5pc, despite this week’s figures from the Land Registry, based on tax paid by homebuyers, that show prices fell by 3.2pc. Britain’s sovereign status outside the eurozone has not protected it from global economic gloom. Ms Everett-Allen said: “With politicians seemingly helpless to get to grips with the eurozone debt crisis, this has reawakened fears of a double dip recession, not just in Europe but around the world. Unsurprisingly, this economic uncertainty has been reflected in the performance of the world’s housing markets.”

America ranked 39th in the table with an average decline in American house prices shown at 3.9pc. Obviously, the average price changes conceal wide variations at either extreme. Knight Frank’s research suggests luxury property is holding its value better than more modest homes, as the global rich continue to regard property as a safe haven for capital preservation while the squeezed middle and poorer people bear the brunt of tax hikes and government spending cuts.

http://blogs.telegraph.co.uk/finance/ianmcowie/100013552/global-house-prices-hit-by-credit-crunch-and-eurozone-crisis-but-the-rich-are-ok/

The hard financial facts of retirement today in UK.

Pension deficits soar by 33pc as Nick Clegg proposes to punish savers

By Ian Cowie Your Money Last updated: December 5th, 2011

137 Comments Comment on this article

Nick Clegg (right) and David Cameron

Pension fund deficits – or the difference between the promises they have issued to members and the assets they have available to pay for them – ballooned by a third last month as the shortfall soared from £60bn to £80bn.

That is the daunting conclusion of new calculations by actuaries atMercer, which demonstrate the difficulty of saving to fund old age. It’s a timely warning, coming as it does just as Deputy Prime Minister Nick Clegg proposes new ways to punish people who save for their old age.

He wants to means test benefits that pensioners currently receive on the basis of their age alone and says this is necessary to balance the books. Free bus passes and TV licences are among the targets of Mr Clegg’s cost-cutting brain wave. Such dismal cheese-paring suggests this callow Cabinet Minister must really be running out of ideas.

But the inevitable unintended consequence if Mr Clegg’s weekend wheeze staggers any further toward fruition will be to discourage saving, encouraging more people to live for the moment and forget about the future. That’s not a plan to dig our way out of a debt crisis; it’s a description of how we got here.

Just how hard it is to build up sufficient capital to provide an income for retirement is set out by Mercer’s latest survey of defined contribution or money purchase schemes run by FTSE 350 companies; a broader measure of British industry than the FTSE 100 giants. Unlike unfunded or underfunded defined benefit or final salary public sector schemes, these pensions attempt to match assets and liabilities. But deficits soared to their highest level in 2011 last month.

Bad economic data were to blame. Corporate bond yields, which are used to discount liabilities – or put a present value on funding future promises -  fell during November and long-term inflation expectations increased. Ali Tayyebi, a partner at Mercer, said: “We are beginning to see the bad economic news catch up on the accounting numbers which had so far been relatively protected in the midst of the general economic turmoil.

“The relentless fall in gilt yields, due to the eurozone debt crisis and quantitative easing the UK, is now also pushing down the real yield on high quality corporate bonds. If November 30 conditions are mirrored at December 31, then many companies will be seeing an increased deficit on their balance sheet at the year end.”

That’s a dismal prospect which should serve as a reality check and put public sector pension strikes in perspective. While trade unions protest about diminishing inflation protection, losing linkage to the Retail Prices Index and switching to the Consumer Prices Index, fewer than 5pc of private sector pension savers who buy an annuity can afford any inflation protection at all. Meanwhile, 8m of the poorest people in the workplace have just been told they must wait another year before they are given the legal right to any company pension.

Those are the hard financial facts of retirement today. People saving to pay for their old age need all the encouragement they can get; not means-tested deterrents from doing so. Mr Clegg’s mean-minded proposals merely demonstrate that there is no problem so bad that politicians’ intervention cannot make it worse.

http://blogs.telegraph.co.uk/finance/ianmcowie/100013608/pension-deficits-soar-by-33pc-as-nick-clegg-proposes-to-punish-savers/

HSBC fined £10m for mis-selling to pensioners

HSBC has been hit with a record £10.5m fine for mis-selling investment products to elderly customers needing long term care.

HSBC has been hit with a record £10.5m fine for mis-selling investment products to elderly customers needing long term care. Photo: IAN JONES

By Emma Simon

11:17AM GMT 05 Dec 2011

87 Comments

HSBC has been hit with a record £10.5m fine for mis-selling investment products to elderly customers needing long term care.

This is the biggest ever fine issued by the Financial Services Authority to a retail financial services company. It has ordered HSBC to pay almost £30m compensation to those affected.

The FSA said that between 2005 and 2010, a subsidiary of the bank, NHFA (previously known as the Nursing Home Fees Agency) advised 2,485 customers to invest in investment bonds, and other asset-based products, to fund long-term care costs. The average age of these customers was 83 – and a sample review suggested that almost 90pc of these cases were mis-sold.

In total the amount invested in these products was close to £285m – meaning the average amount invested per customer was about £115,000.

The FSA ruled that this advice was unsuitable, because these products were designed to be held for a minimum of five years; but many of these customers were not expected to live this long. A combination of capital withdraw, and high product charges meant that people's money was reduced far faster than if they had been recommended alternatives – such as a high-interest fixed-rate account, or an Isa.

RELATED ARTICLES

• HSBC record fine: how to claim compensation 
  05 Dec 2011
• The 10 biggest Financial Services Authority fines 
  05 Dec 2011
• 'Give basic account holders access to cash machines' 
  02 Dec 2011
• No such thing as free banking says top banking supervisor 
  25 Nov 2011
• Dont rely on your bank to give you a good deal 
  25 Nov 2011
• Banks 'give poor investment advice' 
  16 Nov 2011

In addition the FSA said it was also apparent that the banks advisers had failed to consider the tax status of customers before making these recommendations.

Tracey McDermott, acting director of enforcement and financial crime said: "NHFA was trusted by its vulnerable and elderly customers, It breached that trust to sell the unsuitable products. This type of behaviour undermines confidence in the financial services sector.

"This penalty should serve as a warning to firms that they must have the right systems and controls in place to manage and identify risks when they acquire new businesses. A failure to do so can lead not only to detriment to their customers but to significant reputational and regulatory cost."

She added that the FSA viewed the as particularly significant because NHFA's customers were very vulnerable, due to their age and health. NHFA was also the leading supplier in the UK of independent advice on long-term care products with a market share in recent years approaching 60pc.

Separately, HSBC announced that it would cut 330 jobs in the UK due to "the very challenging economic environment".

"HSBC is today announcing some proposed changes to various areas of our business that will result in the loss of approximately 330 roles in the UK ... in response to the very challenging economic environment and the bank's need to ensure it is working as efficiently as possible," a statement said.

Irish PM warns of pain ahead for country

Ireland's prime minister, Enda Kenny, makes the first televised address to the nation in a quarter of a century, saying many of its citizens' financial situations would get worse before they got better.

10:16AM GMT 05 Dec 2011

Follow the Telegraph's live debt crisis coverage

Speaking ahead of the Irish government's first budget, Mr Kenny warned it would be the harshest of its five-year term and admitted that no one inIreland would be left unaffected by the austerity drive.

"I wish I could tell you that the budget won't impact on every citizen in need. But I can't," he said.

"I know this is an exceptional event but we live in exceptional times and we face an exceptional challenge."

The speech was made under 2009 legislation that allows the prime minister to address the nation on television in the event of a major emergency. The last time this happened was in 1986.

RELATED CONTENT

• Ireland's Enda Kenny warns of need for more austerity

Mr Kenny was swept to power with a record majority in February on a wave of voter anger over the country's economic collapse and the harsh rescue terms laid down by its European partners.

His predecessor Brian Cowen was widely criticised for not addressing the nation on the financial crisis that led the state to take on tens of billions of euros of debt from private banks and eventually to a EU-IMF bail-out.

Since its election in February, the government has broadly maintained its support, with an opinion poll on Sunday giving Mr Kenny's centre-right Fine Gael party 32 per cent, down from 36 per cent in the election.

http://www.telegraph.co.uk/finance/financialcrisis/8935137/Irish-PM-warns-of-pain-ahead-for-country.html

Italy welfare minister breaks down in tears as government agrees austerity measures

Italy welfare minister breaks down in tears as government agrees austerity measures


Elsa Fornero, the Italian welfare minister, broke down in tears as the technocratic government adopted an aggressive €30bn (£26bn) austerity package in a bid to stave of the crisis enveloping the country.

6:30AM GMT 05 Dec 2011

Mario Monti, the Italian prime minister, declared the package of tax hikes, budget cuts and pension reforms a "decree to save Italy", at a press conference following after a cabinet meeting.

Italy will "put its deficit and debt under strong control" so that the country is "not seen as a suspicious flash point by Europe," he said.

He also warned that Italians had to make "sacrifices" and said he was renouncing his own salary as prime minister in a gesture of solidarity.

The three-year package includes a controversial pension reform that will increase the minimum pension age for women to 62 starting next year and fall into line with men by 2018, by which time both will retire at 66.

The number of years that men have to pay contributions to receive their full pensions will also be increased from the current level of 40 to 42.

RELATED ARTICLES

• Greece turns anger for economic crisis on rating agencies 
  04 Dec 2011
• Eurozone leaders need to agree on a plan for deeper fiscal union 
  04 Dec 2011
• Pimco: It's fiscal union or bust for eurozone 
  03 Dec 2011
• Merkel and Sarkozy to unveil eurozone rescue package 
  04 Dec 2011
• Can France and Germany keep the euro alive? 
  03 Dec 2011
• Euro was doomed from the start 
  02 Dec 2011

Ms Fornero, whose proposals have already been criticised by Italy's main trade unions, broke down as she outlined the changes.

"We had to... and it cost us a lot psychologically... ask for a..." Ms Fornero said, but was unable to complete her sentence as she wiped tears from her eyes.

Mr Monti finished the sentence for her, speaking the word "sacrifice" that she'd been unable say.

The package also increases taxes on housing and luxury items and raises value-added tax - which has already been raised by one percentage point this year - by two percentage points to 23 percent from the second quarter of 2012.

Final approval of the reforms in parliament is expected before Christmas.

The crucial government meeting had been scheduled for Monday but it was brought forward by Monti in a bid to finalise the budget reforms before the markets open in a crucial week for the future of the euro.

A former top European Union commissioner who came to power just three weeks ago after the flamboyant Silvio Berlusconi was ousted by a wave of panic on financial markets, Monti said Italy was at a dramatic crossroads.

"We're faced with an alternative between the current situation, with the required sacrifices, or an insolvent state, and a euro destroyed perhaps by Italy's infamy," he said.

Italy is under intense pressure from its eurozone neighbours and international investors to introduce draconian measures to rein in its public debt ahead of a crucial European Union summit on Thursday and Friday.

Rome has already adopted two austerity packages this year but the European Commission indicated that the eurozone's third largest economy would fail to reach its target of balancing the budget by 2013 without more belt-tightening.

Italian unions voiced their opposition, even though a planned overhaul of labour laws to make it easier for companies to fire workers has been postponed to a future date.

Susanna Camusso, head of Italy's largest union, the CGIL, said the measures were aimed at "making money on the backs of poor people in our country."

"There is no equity" in the proposed package, she said, adding that all the main unions should team up to evaluate their response to the measures.

Economists are worried that the toxic mix of high borrowing costs, massive debt and low growth could push Italy - the eurozone's third largest economy - towards insolvency within months.

The government has denied persistent rumours that it is preparing to accept a credit line from the International Monetary Fund (IMF), following in the wake of bailouts for fellow eurozone members Greece, Ireland and Portugal.

But the IMF and the EU have been keeping Italy under special surveillance through teams of auditors to ensure it implements long-delayed reforms and a reduction in a debt mountain equivalent to 120 percent of output.

France and Germany say a debt blow-up in Italy could kill off the entire euro area and observers warn Italy is "too big to bail" in case of a default.

Angelino Alfano, the leader of Berlusconi's People of Freedom party, the biggest party in parliament, also put the situation in stark terms: "The choice is between a harsh plan today and the risk of bankruptcy tomorrow."