Money blog: The unloved savings account you 'should seriously be considering' (2024)

Top news
  • Unloved savings account you 'should seriously be considering'
  • Just six months left to boost your state pension with historical top-ups
  • Area where house buyers get most bang for their buck revealed
  • New employment rights - what you need to know
Essential reads
  • Cheap Eats:Weeknight carbonara recipe
  • Does anyone ever actually win big on McDonald's Monopoly?
  • 'We bought our homes for 85p - and you could too'
  • Money Problem:'The vet put down our dog without mentioning a cost - then sent us an invoice'
  • Basically...What are no-fault evictions - and will they be scrapped?

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09:21:10

There are just six months left to boost your state pension with historical top-ups

There are just six months left to fill any gaps in your national insurance records (going back as far as 2006) if you want to boost your state pension entitlement.

New data from HMRC this week shows more than 10,000 payments (worth £12.5m) have already been made through the new digital service since it launched in April this year.

Usually, people can pay voluntary top-ups for the past six years, but the last government opened this up so contributions can be filled in all the way back to 6 April 2006.

The deadline, though, is 5 April next year.

Who can top up?

Men born after 6 April 1951 and women born after 6 April 1953 are eligible to make these voluntary NI contributions to boost their new state pension. You can find out more about making contributions online.

HMRC said further analysis of the use of the online service shows the majority (51%) of customers topped up one year of their NI record, with the average online payment being £1,193.

Why does it matter?

If you reached pension age after 6 April 2016 you need 10 years of NI contributions to get a state pension - and 35 years to get the full £221.20 a week. Before that 2016 date, it's 30 years.

People may have gaps in their record for numerous reasons including being unemployed, on a low income, self-employed, having worked abroad, or having taken a break from work to raise a family.

How much could topping up earn you?

We answered this question for one Money blog reader who had a 10-year gap in his record.

We found it would cost £907.40 to cover all NI contributions from the 2023-24 tax year - each year is different but this was a good guide.

If he then went on to enjoy 20 years of retirement, he would get back £6,000. It would take just three years to get his original £907.40 investment back.

Who might want to think twice?

The first thing anyone should consider is if they'll fill gaps naturally through working - in which case there'd be no point topping up - but check your state pension forecasthereto see if that is the case.

There are lots of other things to factor in and you should seek independent financial advice.

Wealth management firmCharles Stanleysays a key consideration is whether a higher pension would either:

  • Drag you into paying tax when you retire;
  • Mean you no longer qualify for certain benefits.

"You might not benefit from the full amount of extra money as some will be taken in income tax," they say.

"In addition, boosting state pension income can affect entitlements to means-tested benefits. Notably, if you claim pension credit, which tops up the income of very low earners over state pension age, any increase in the state pension would normally reduce an award. This often means that you would be no better off paying voluntary contributions."

Another consideration - and this isn't something most people want to contemplate - is that if you don't think you'll live long enough into retirement (you might be in ill health or have a terminal illness) to benefit from topping up, then it's probably not worth it.

People should alsolook into whether they could transfer contributions from their spouse or civil partner.

One more way to top up

Which? advises: "Ensure that you are getting any NI credits you are entitled to before contemplating paying voluntary NI contributions for a particular year.

"These are free and will apply, say, if you are caring for a child in the family as a parent or grandparent, claiming statutory sick pay or looking after a sick/disabled person."

07:20:45

New employment rights - what you need to know

TheEmployment Rights Billwill beintroduced into parliament today and includes 28 measures to improve worker rights.

The major package of reforms includes granting workers protection from unfair dismissal from the first day of their employment, ending the existing two-year qualifying period.

The measure will be accompanied by a statutory probation period of up to nine months for new hires, during which staff can be dismissed under a "lighter touch" process.

But a consultation required means officials do not expect the measures to reach the statute book until autumn 2026 at the earliest.

Measures in the bill include:

  • The right to statutory sick pay from the first day of illness, ending the current three-day waiting period, and removing the lower earnings limit;
  • Day-one rights to paid and unpaid paternity leave. Currently fathers have to be employed for 26 or 52 weeks respectively to receive the benefits, and there will be a new statutory right to bereavement leave;
  • The right to flexible working. Where employers say no they will have to demonstrate the decision is reasonable against eight criteria;
  • A ban on "exploitative zero hours contracts". Workers on zero or short-hours contracts will have to be offered a contract based on the hours worked in a 12-week reference period, receive notice of shift patterns and entitlement to payment for short-notice cancellation.

Among the measures excluded from the bill is the introduction of a single category of worker, a measure long-promised by Labour and seen by unions as crucial to ending exploitation and inequality in the gig economy.

Currently there are broadly three categories - employee, worker and self-employed, with many gig-economy providers such as food delivery and ride-hailing apps classifying workers as self-employed, denying them access to sick pay and other benefits.

The "right to switch off", which would have prevented employers contacting staff outside working hours, has also been left out, and will instead be subject to an agreed code of conduct.

06:20:21

The unloved savings account you should 'seriously be considering'

For this week's Savings Guide,Savings Championco-founder Anna Bowes has a round-up of the top notice account rates to target. She writes...

A relatively unloved and overlooked area of the savings market, notice accounts often offer higher rates than easy-access accounts, but have greater flexibility of access than a fixed-term bond.

Although the rates on notice accounts have not been immune to the current rate-cutting climate, there are plenty of accounts that are still paying more than 5% AER, so they are currently beating many of the top rates on any fixed-term bonds. But of course, the rates on notice accounts are variable, so are likely to be affected by any further base rate cuts.

As the name suggests, notice accounts require you to give notice in order to access your money without a penalty, with usual notice periods ranging from 30 to 120 days, although there are some accounts on the market that require six months or even a year's notice.

While you need to give the required notice to access your cash on the majority of notice accounts, some will allow immediate access with a penalty equivalent to the notice period, although this is less common. This penalty can be taken from the capital if insufficient interest has built up before access, so it's important to plan carefully as you could end up with less money than you put in.

It's also important to note that when rates decrease, the amount of notice given to customers varies from provider to provider. Some providers will give customers the full notice period before any rate reductions take effect – in essence, allowing clients to give notice and withdraw their funds from the account before the new, lower rate takes effect.

Other providers may only give a set amount of days, less than the notice period itself, which means your money would be stuck earning a lower rate for an amount of time.

This is particularly pertinent to base rate tracker accounts, as the rates will fall immediately or soon after a base rate cut.

As there is no hard and fast rule on this, it is important to check the terms and conditions of the account so you know what situation you will be in when rates start to fall.

For some people, not being able to access their money immediately is important to help them to resist dipping into their savings and it could also be a way of getting a higher return on money that you know you will not need straight away – so should be a serious consideration for many cash savers.

06:20:10

Area where house buyers get most bang for their buck revealed

When it comes to buying a home, we all want as much space as possible for the best price - so where in the country will you get the most bang for your buck?

According to new research by Zoopla, Hartlepool in the North East is the cheapest area for prospective homeowners, with buyers paying £118 per square foot on average.

That falls below the £300 average across the UK - and is far less than the most expensive area of Kensington and Chelsea in London, where buyers will be forking out around £1,373 per square foot on average.

The study by Zoopla also reveals that terraced homes tend to offer the best value for money, with prices ranging from £225 to £235 depending on how many bedrooms there are.

There are "substantial differences" in prices between different regions of the UK, the property site said, with location affecting the cost per square foot as well as the property type.

For example, in London, the average price per square foot is £585 - £285 above the national average - compared to the North East (£145) and Scotland (£175) where you'll tend to get a lot more for your money.

Izabella Lubowiecka, senior property researcher at Zoopla, said: "In many other countries, buyers often pay more attention to floor space and the cost per square meter or foot when searching for their next home and they are right in doing so.

"Looking at this measurement is a far more logical way to assess value for money, allowing buyers to compare different homes without having to step a foot inside a property."

18:40:01

Water firms have been fined millions - but does that mean my bill will go down?

Yesterday we reported that water companies have been told to hand a collective £157.6m back to customers for underperformance.

They were penalised for failing to reduce the amount of sewage flowing into rivers and for not lowering the number of leaks (they promised a 16% reduction since 2019 in leaks and only delivered on 6%).

Does this mean my bills will go down?

It's not that simple.

The biggest penalty was handed to Thames Water, at £56.8m, but this will only equate to a few pounds off each customer bill.

Separately, Ofwat has also proposed allowing firms to hike bills by an average of £94 per customer over the next five years (the final decision on that is due in December).

So, despite the missed targets, any discounts will more than be cancelled out by the yearly rises.

Is anything being done to change things?

Labour has suggested sweeping new laws that could see bosses jailed for up to two years, but nothing has yet to come into force.

It's unclear if these fines will make much of a difference - the total £157.6m penalty faced by the whole sector is less than one company (Thames Water) paid out to its shareholders in dividends last year.

For many companies, the fines are just a "drop in the ocean", says James Wallace from River Action.

17:30:01

'Misconceptions' around understanding of APR have 'potential to cause real harm'

There are "significant gaps" in consumers' understanding of APR and interest rates, a study has found.

New research by credit card company Yonder reveals that nine in 10 Britons can't explain what representative APR tells them - even though its very purpose is to help people understand credit card deals.

Three in four people say they don't know what APR actually stands for (annual percentage rate), despite the UK's financial watchdog making it a requirement for credit advertising.

Bola Sol, financial adviser and money expert, said: "This research shows that it isn't just frustrating; it has the potential to cause real harm."

Are you confused about what APR means? It's a little complicated at first glance, but we've done our best to break it down for you in our Basically... explainer here...

16:35:01

Google faces threat of being broken up

US officials have confirmed they are considering breaking up Google's "illegal monopoly" of internet searches.

The tech giant could face restrictions on its own products - including its Chrome browser, Play Store and Android operating system, the US Justice Department said.

It comes after a judge found in August the company had broken anti-trust laws to ensure its dominance of online searches.

Read the full story here...

15:34:40

'£1,700 a month to be happy in retirement? Rubbish!'

It's been a busy day in our inbox - here are a few of your comments relating to our posts about how much monthly income the happiest pensioners have, and whether anyone ever actually wins on McDonald's Monopoly (they do).

£1,700 a month for retirement, that's rubbish. £2,000 minimum - council tax, energy bills, food, car costs, house maintenance, insurance, holidays, just to name a few that has to be paid each month. £1,700 wouldn't touch the sides!

Monkee knows best

If you live in a bedsit and you don't drive.

Nick R

I recently won £1,000, was stressful as you need to send the sticker away to McDonald's and they didn't confirm until a couple of weeks later with the money coming in the week after that.

MCM114N

Around 12 years ago my son did actually win an Xbox on the McDonald's Monopoly. We were really shocked as we thought it was all a big con, his win proved us all wrong.

Miss Sharon Hodgson

Question: Does anyone ever actually win big on McDonald's Monopoly? Answer: McDonald's.

"Donald McRonald"

Never ever heard of anyone winning anything from it! Pretty sure a few years ago it was also surrounded in a largescale scandal….. 🤔

The monopoly guy

15:15:01

Two big lenders withdraw cheaper rates

Markets are currently expecting the Bank of England to cut the base interest rate next month, yet - as we reported yesterday - there are fears the downward trend for mortgages could be halted.

Swap rates (which dictate how much it costs lenders to lend) rose at the end of last week due to concern the conflict in the Middle East could impact oil prices.

If oil prices rise, so could inflation. If that were to happen, the Bank of England may take longer to cut the base rate.

We reported yesterday that smaller lenders had begun to withdraw some of their lowest rates - now bigger names are acting.

Coventry BS has announced hikes from Friday and Co-operative Bank will withdraw some of its lowest rates Thursday night.

David Hollingworth, associate director at L&C Mortgages and Money blog regular, said: "The mortgage market has seen rates falling in recent months but that may be coming to an abrupt halt."

Swap rates, he said, are good indicators of fixed-rate pricing, and these have "bounced back up".

"If that persists, fixed-rate improvements will be brought to an abrupt halt and edge back up."

He said borrowers may have been lulled into a false sense of security "with round after round of rate improvements but this is a reminder that things can change".

"This isn't a cause for panic but those that have been tempted to wait for lower rates may want to consider locking into a deal in case we see further increases," he said.

"If expectation eases again it's still possible to review rates."

14:28:28

Study claims to show how much you need to be happy in retirement

How much money do you really need to retire comfortably?

It's a question many of us will have thought about at some point in our working lives - and one study claims to have the answer.

According to new research from Legal and General and the Happiness Research Institute thinktank, the happiest retirees have an average monthly income of £1,700 - equating to a pension pot of around £221,558 at retirement.

How on earth have they come to this conclusion...

...you, like us, may have asked.

The Happiness Research Institute used guidelines and benchmarks from the Organisation for Economic Co-operation and Development (OECD) and United Nations (UN) to measure people's happiness.

They studied the lives of 3,000 retirees, exploring things like social connections, health and income to analyse the role money plays in a happy retirement.

A key factor of happiness in retirement was found to be financial status. But while higher incomes do coincide with greater happiness among retirees, the boost they bring begins to level off as income surpasses about £2,000 a month.

Many people don't get this much in retirement

The report found that fewer than two in five (38%) retirees receive this monthly income or more, with a "significant number" living on much less.

One in five people of retirement age (22%) live on less than £1,000 a month - lower than the Pensions and Lifetime Savings Association's (PLSA) £1,200 minimum standard for covering essential costs in later life, the study found.

The research found that just over a quarter of people in retirement find their finances unpredictable, while one in five have been unable to meet the cost of housing (18%), food shopping (20%) and utilities (21%).

Money blog: The unloved savings account you 'should seriously be considering' (2024)
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