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Checking & Savings, Financial, Financial Management, Financial Services, Financial Solutions, IVA, Money, Personal Finance, Retirement

Debt Advisers Direct Have Emphasised The Importance Of Joining A Pension Scheme As A Means Of Securing An Income And Staying Out Of Debt When It Comes To Retirement

Responding to a recent report regarding the growing pensions divide in the UK, Debt Advisers Direct (http://www.debtadvisersdirect.co.uk) advised workers to ensure they are planning well financially for the future, and warned anyone approaching retirement with debts to take action as soon as possible.

The report from the Office for National Statistics (ONS) showed a growing gap in pensions contributions between the public and private sectors. Private sector membership of final-salary pension schemes – in which companies pay a percentage of the employee’s final salary throughout retirement – fell from 3 million in 2006 to 2.7 million in 2007.

Instead, many private sector employers are opting for money purchase schemes, in which workers pay into a retirement fund which is usually invested in the stock market. When the employee retires, the fund is used to buy an annuity – a financial product that provides an income for the rest of their life. The size of the pension depends on how well the retirement fund performs and on the annuity rates available at retirement.

The public sector, on the other hand, showed a rise from 5.1 million to 5.2 million members of final-salary pension schemes last year.

The statistics highlight a clear difference between the two types of pension. The ONS report shows that on final-salary schemes, workers paid an average of 4.9 per cent and employers 15.6 per cent of the worker’s salary in the last year. For money purchase schemes, workers paid an average of 2.7 per cent and employers 6.5 per cent.

Many experts agree that workers should save at least 10% per cent of their total income to ensure an adequate income throughout retirement.

A spokesperson for Debt Advisers Direct said: “The findings highlight two important things: firstly, the need for workers to save adequately for their future, and secondly, the importance of being on the right pension scheme.

“The statistics show that final-salary schemes contribute over 20 per cent of the worker’s salary, whereas money purchase schemes contribute just over 9 per cent. It’s better than having no pension at all, but workers should consider whether a money purchase scheme will cover them fully for retirement.

“Most people do not usually associate retirement with debt, but in fact statistics show that increasing numbers of people are now retiring with debts to their name, or falling into debt because their pension doesn’t cover their outgoings.

“Our advice to people with debt problems is to seek expert debt advice as soon as possible, before they get too close to retirement age. There may a number of debt solutions that could help them clear their debts, and in general, the sooner they act, the more options they’ll have – as they approach retirement age, they may find they simply no longer have access to certain debt solutions.”

As long as the individual acts in time, a debt management plan or debt consolidationloan could simplify their finances and reduce their monthly outgoings by spreading out debt repayments over a longer period of time (although, in general, the longer the repayment terms, the more they are likely to pay in interest).

For people with debts of around £15,000 or more, an IVA (Individual Voluntary Arrangement) may be more suitable. An IVA is a legally-binding agreement between an individual and their creditors, in which they repay only what they can afford over a period of (normally) five years. Once the IVA is successfully completed, the remaining debt is written off.

Lasting for a specified time period, an IVA can be a particularly suitable debt solution for people approaching a deadline such as retirement. However, IVAs do represent a substantial financial commitment and can require homeowners to free up some equity. As with any debt solution, an IVA should never be entered into until the borrower has discussed all the alternatives – and the pros and cons of each – with a professional debt adviser.

Debtadvisersdirect.co.uk helps people with financial difficulties, providing free advice and tailor-made debt solutions.

Via EPR Network
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Gregory Pennington Has Warned That The Recent Growth In Retail Sales Should Not Be Taken As A Sign Of Market Recovery

Responding to the recent news that retail sales growth enjoyed an unexpected rise in July, debt management company Gregory Pennington (http://www.gregorypennington.com) has warned that this should not be taken as a sign of market recovery, and that consumers should still be looking to protect themselves against a potential downturn at some point in the future.

Despite the Office of National Statistics’ predictions that retail sales growth would fall by around 0.2%, July in fact saw a rise of 0.8% compared to the previous month – a figure which, according to a Gregory Pennington spokesperson, may prompt some to “underestimate the danger that lies ahead for the economy”.

The figures follow June’s sales growth actually falling by around 4.3% – the largest decrease for several years. But the Gregory Pennington spokesperson says that this simply reflects the volatile nature of the retail market. “It’s important to look at the bigger economic picture,” he says. “Inflation is at a 16-year high, costs of living are increasing, and unemployment is rising – all of which are likely to affect the retail market negatively in the long run – but the full impact is yet to be seen.

“The retail market has seen several years of fluctuating growth – even when the economy was very strong. The rises and falls are rarely any bigger than two per cent, which is minimal in the scheme of things, and is probably coincidental.

“June’s fall of 4.4% did raise some concerns for the market, but the fact that it’s gone straight back up by 0.8% shows that this was just a particularly wild fluctuation.”

The spokesperson added that consumer caution is still necessary, highlighted by the recent year-on-year increases in people experiencing debt problems – which can be partly attributed to overly relaxed lending and high consumer spending.

“Statistics show that the number of people seeking debt help has been steadily increasing for well over a decade now – with the most distinct rise coming in 2007, when the credit crunch began to hit the economy,” he said. “Since problems with debt tend to filter through over a long period of time, we would expect this pattern to continue well into 2008 and 2009.

“Realistically, a continued slump in the retail market would in fact be a good sign for the economy, since it would show that people are taking the economic downturn and risk of getting into debt very seriously, as well as helping to bring down inflation.”

The spokesperson went on to say that if people do find themselves struggling in the coming months, they should seek debt help from an expert as soon as possible. “It’s looking like the downturn we are facing will be quite severe, and we would expect people with existing debts to suffer more than most – not to mention many people may be forced into debt as money gets tighter,” he said.

“If that is the case, it’s essential you seek debt help from a professional debt adviser. Lenders and consumers alike will feel under pressure over the next few months, so your debt adviser should be able to help come to an agreement that suits both you and your lender.”

Gregory Pennington (http://www.gregorypennington.com) are a debt management company based in Salford Quays, Manchester. They offer a wide range of debt help and solutions, including debt management plans, debt consolidation and IVAs.

Via EPR Network
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