Monthly Archives: March 2013

UK children below the poverty line

Most UK children below the poverty line by 2015

Grandparents can take steps now to protect their grandchildren and great grandchildren from joining the majority of UK children below the poverty line.  Not a quick fix, but reviewing the information on the Home Protection Plan could make all the difference for future generations.

Here is the TUCs Press Release on the subject of UK children below the poverty line:

Government welfare and tax changes, together with lower than forecast wage growth, will leave the majority of children in the UK living in families below the poverty line by 2015, according to new TUC research published ahead of its A Future For Families rally in central London later today.

Tax and welfare reforms alone – both existing and future changes – will be responsible for nearly half a million more children living below the breadline, says the TUC.

A Bleak Future For Families – a TUC report based on analysis by Howard Reed of Landman Economics – examines the current and future impact of various benefit and welfare changes, including Universal Credit, direct and indirect tax changes and real wage growth since 2010 on the incomes of different households and family types.

The research finds that the cumulative impact of government policies and slower than forecast wage growth over the course of this parliament will mean that 690,000 more children will be living below the minimum income standard – the level of income needed to achieve a minimum acceptable standard of living in the UK – by 2015.

Minimum income standards (MIS), widely accepted and established by the Joseph Rowntree Foundation in 2008, vary by family type. For example, the current MIS for a single pensioner is £12,623, rising to £23,992 for a single parent with two children and £24,643 for a couple with one child.

Tax and welfare changes, including tax credit cuts, the VAT rise and the increase in the personal allowance, will have the biggest net impact in terms of increasing the number of children whose families are struggling to make ends meet – pushing 460,000 more children below the breadline by 2015.

Slower than initially forecast wage growth over the course of this parliament pushes another 170,000 below the minimum income standard, while the pay freeze and cap for public sector workers will see 80,000 more children falling into hardship.

When all these changes are taken into account, Universal Credit – the government’s flagship welfare scheme designed to tackle poverty and make work pay – will only lift 20,000 children above the MIS, says the research.

The research shows that an extra one million families will be living below the minimum income standard by 2015, compared to where they would have been under the policies and forecasts the government inherited in 2010. The majority (54.4 per cent) of children will be living below the MIS in two years time, says the TUC.

A Bleak Future For Families shows that nine in ten families will be worse off by 2015, with only the poorest ten per cent of households better off – and then only by a measly 57p a week. A middle income household will be nearly £1,200 a year worse off by 2015 – a 6.6 per cent cut in their income – with the biggest single loss as a result of tax credit cuts (-£505).

The research shows that while all bar the top ten per cent of households are net gainers as a result of changes to the personal allowance and the primary threshold for national insurance, all these gains are wiped out by the VAT rise in 2011. The poorest ten per cent of households gain just a penny a week from direct tax cuts but lose £3.38 by the VAT rise.

While the government has justified welfare cuts by saying that they target those out of work, working families are also hit hard by government austerity policies, says the research. Working lone parents are set to lose the equivalent of 8.2 per cent of their total income – far more than the median household loss of 6.6 per cent – mainly as result of tax credit cuts.

Households in Wales (-7.2 per cent) and Yorkshire and the Humber (-6.9 per cent) will suffer the sharpest loss in incomes. This is partly due to the higher than average concentration of public sector workers in these regions, who are facing the biggest real terms cut in their wage packets.

The research comes ahead of a TUC-organised rally in central London this evening, in which various union leaders and campaigners will urge the Chancellor to deliver a Budget next week that prioritises jobs, growth and families.

Speakers at the rally – which takes place at the Emmanuel Centre in Westminster between 6-8pm this evening – include TUC General Secretary Frances O’Grady, Shelter Chief Executive Campbell Robb, Child Poverty Action Group Chief Executive Alison Garnham and Deputy Leader of the Labour Party Harriet Harman MP.

TUC General Secretary Frances O’Grady said: ‘Families are suffering the tightest squeeze in their living standards in nearly a century. On top of wages that do not keep up with prices, government policies are making life even more miserable for millions of low to middle-income families through tax increases and cuts in benefits and tax credits.

‘By the 2015 election, the majority of children in Britain will be living below the breadline. For any civilised society, that should be shaming.

‘But while the Prime Minister says there is no alternative, the truth is that support is growing for a new approach. The Budget should start from recognising that what Britain faces is a growth, jobs and living standards crisis. Rather than targeting tax cuts at millionaires, cutting VAT would benefit everyone, and would help poorer households far more than raising the personal allowance.’

Extra Retirement Income for 200,000

Extra Retirement Income

200,000 each year miss out on extra retirement income worth £237m.

We think that’s a crime, and we urge everyone who is retiring to consult a financial adviser to see if extra retirement income can be extracted from pension funds and other investments.   If you don’t have a financial adviser, feel free is contact us and we will happily introduce you to one who may well able to generate extra retirement income for you.   But the earlier you do this, the greater the possibilities.   But don’t forget your Home Protection Plan!

But here is the MGM article on the topic:

£237,000,000 is a conservative figure…it could be as high as £715m

MGM Advantage, the retirement income specialist, has revealed the true cost of baby boomers1 not shopping around for their annuity this year. Around 50%1 of people retiring each year do not shop around when it comes to choosing their annuity and collectively could be losing out on income worth more than £237m2 over a typical 22 year3 retirement.

Andrew Tully, pensions technical director, MGM Advantage said: “Having saved hard for retirement, it seems a cruel blow to lock into an annuity with your pension provider unaware you could have shopped around the market to get the best rate. Our research shows there is an entrenched lack of awareness of the ability to shop around for not only the best annuity rate but also the most appropriate product for individual needs.

“The lost income over a typical retirement can add up to thousands of pounds, although we think the numbers are actually on the conservative side. A significant number of people could qualify for a better annuity rate because of existing health or lifestyle conditions, and yet only 4%4 of people buy an enhanced annuity from the provider their pension savings are with. We have also only looked at the annuity rates from providers competing in the open market. Many providers choose not to publish the rates they offer internal customers.

“The size of the prize is quite staggering as the numbers only relate to the number of people retiring this year. As the baby boomer bubble retires, more and more people will be looking to turn their pension savings into a retirement income using an annuity.

“We welcome the ABI OMO Code of Conduct and other industry initiatives which will make a difference. However these numbers show there is significant progress still to be made. The value of seeking independent financial advice is highlighted by the additional income advisers can generate for clients.”

According to Retirement Nation 20125, 42% of the over 55s have not heard of the open market option.


1. Source: ABI. 400,000 people a year purchase an annuity, 50% of whom do not shop around.

2. Source: Analysis by MGM Advantage of Money Advice Service annuity data, based on an average £40,000 pension pot at retirement before tax-free cash. Loss of income is based on the difference between the average annuity rate and best annuity rate (as at 7.3.13), grossed up for the number of people retiring in 2013 and unlikely to shop around for their annuity.

3. Source: average life expectancy from GAD.

4. Source: analysis of ABI market data for 2012.

5. Source: MGM Advantage Retirement Nation 2012. The research was conducted by Research Plus+ who polled 2,003 people over the age of 55. Fieldwork was conducted during 13-19 July 2012.

6. Table shows the difference in income for someone aged 65 retiring with an average £40,000 pension pot (£30,000 net purchase price after 25% tax-free cash taken). Nil guarantee, level income in arrears, no spouse benefit. Rates from Money Advice Service (7.3.13) and MGM Advantage (7.3.13).

Annual income at best standard rate Annual income at worst standard rate Annual income at average rate Annual income on enhanced rates (mild impairment) Total difference in income over 22 year retirement
£1,668 £1,513 £1,614 £1,823 £1,188 (av. conventional rate and best conventional rate)£3,410 (worst conventional rate and best conventional rate)

£4,598 (av. conventional rate and MGM Advantage enhanced rate for those who might qualify for enhanced rate)

 Extra retirement income.