Retire Invest Winter 2020

SAVINGS Savers feel the pinch Those looking for income from their savings face an uphill challenge, with banks and building societies making swingeing cuts to the interest paid on leading accounts. This latest round of rate reductions was started by National Savings & Investments (NS&I), which has imposed brutal cuts to some of its most popular accounts. The interest paid on its NS&I income bonds, for example, has fallen from 1.15% a month to just 0.01%. Returns on ISAs and Premium Bonds have also been squeezed. A wave of similar reductions has spread to the high street with newer providers such as the online Marcus Bank, as well as more established names like the Coventry and West Bromwich Building societies, cutting rates and, in some cases, removing accounts altogether. Income seekers prepared to take more risk with their money also face difficulties. At least 35 FTSE 100 companies have cut, cancelled or suspended their dividend pay outs this year. In many cases this is because revenues have been hit by coronavirus lockdowns – meaning fewer surplus profits to distribute to investors. Savers looking to boost returns need to be nimble when it comes to snapping up best- buys; good rates do not tend to last long. For example, the Skipton Building Society launched a best-buy easy-access account earlier this autumn. Demand meant it closed to new customers after just 48 hours. Savers need to consider all their options. If you can afford to lock your money away you may get a slightly higher rate from a fixed-term bond, although this risks tying up your money at a time when interest rates are at an all-time low. B The value of your investment, and the income from it, can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances. Scams on the rise Fraudsters preying on people’s financial and health fears have been responsible for a sharp increase in scams during the Covid-19 crisis. Criminals are increasingly sending out fake emails or SMS texts disguised as a trusted body such as HMRC, a local council, TV licensing or even the NHS. These messages may claim you are due a rebate or refund. In some cases people have been told they qualify for “Covid relief funds”. Of course, no refunds or rebates are available. In most cases these messages contain links to websites designed to harvest personal and financial information. They are a variant on many existing phishing email scams where you may receive a fraudulent email purporting to be from a high street bank, utility provider or even a tech company, like Amazon, Apple or Netflix. Preying on people’s current health concerns, an increased number of scams claim the recipient has been in contact with someone diagnosed with Covid-19. Again these will link to a site requesting personal data or asking for payment for a Covid test or other health products. Spotting scams Growing sophistication means spotting these scam emails isn’t always easy, but spelling and grammar mistakes, plus unfamiliar links are telltale signs. If you are in any doubt, ignore or block the message, contact the named organisation directly and never disclose personal information such as bank details, PINs or passwords to an unsolicited contact. HMRC and banks will never ask you to share personal information in this way. Much fraud is aimed at making false applications for loans and credit cards, and there is evidence that some of these cloned identities have been used to apply for government Covid support loans. However vigilant you are, personal data can be compromised in a number of ways, so it’s also worth monitoring your credit record for signs of any attempt to clone your identity. You can obtain your record for free through one of the three major credit references in the UK: Equifax, Experian and TransUnion. If in any doubt, caution is the best option. INVESTMENT Credit: Syda Productions/Shuttersetock.com Credit: karen roach/ Shutterstock.com Triple lock protected – for now The government introduced legislation in September 2020 to ensure it could apply the triple lock increase to state pensions next April. The likely increase is 2.5% – comfortably above current price inflation and earnings growth. Strangely, the legislation will only operate for 2021… Working from home? If you have been working from home, don’t forget that your employer can pay you up to £6 a week tax-free to cover your extra costs, such as heating. If your employer cannot or will not pay, you can claim tax relief on the same amount. HMRC launched an online portal where you can make your claim for 2020/21 and also for the final two weeks of 2019/20 after the lockdown started. Relief is given by adjusting your PAYE coding, so this will reduce PAYE over the remainder of 2020/21. B The Financial Conduct Authority does not regulate tax advice, and levels and bases of taxation and tax reliefs are subject to change and their value depends on individual circumstances. Tax laws can change. Spending Review The Chancellor presented a one year Spending Review on 25 November, alongside the Office for Budget Responsibility’s report on the state of the UK economy. With borrowing set to hit nearly £394bn for 2020/21, the focus was on spending to boost the economy, support jobs and businesses, and invest in infrastructure. Tax increases look almost certain for the spring Budget. News round up NEWS IN BRIEF