People using the pension freedoms known as Drawdown to draw income from a pot of investments may be taking more risk than they realise, says the Telegraph.
Citing research by actuaries, it said that in almost a third of cases people’s money could run out years before they died. This is because these ‘drawdown’ strategies involve consuming some capital, and unlike annuities this exposes you to investment risk. With a typical balanced strategy, an annual return of 3.6 per cent would see a 65-year-old man’s capital last until age 90 – but over a third of men now aged 65 are expected to live beyond that age. Experts advised covering essential spending with annuities or other income sources so that invested capital would last longer.
Japan: on the up, and cheap
Japan’s economy is on the up, says the Telegraph. It has recorded six consecutive quarters of economic growth and the stock market – which accounts for 9 per cent of the value of all shares globally – has hit its highest level since 1996. Unemployment is virtually non-existent and companies, which used to be stingy with dividends, are increasing their profits and paying more out to shareholders. By comparison with the US and Europe, Japanese shares are cheap, so the market could march on upwards.
Changing options in travel insurance
The losses people incurred on the failure of Monarch Airlines are prompting changes in travel insurance, says the Times. Less than a third of policies cover such failures as standard, but more are offering it as an add-on. This cover is more valuable now that the costs of accommodation are often far greater than the cost of the flight. There are also new policies that enable you to top up the cover you have with your current travel insurance.
Parents still missing out on free childcare
Thousands of parents are still missing out on the 15 hours of extra free childcare promised by the government, says the Sunday Times. To be eligible for the full 30 hours, parents of 3-4 year-olds must work at least 16 hours a week and earn less than £100,000 each. But they also have to get a validation code and thousands are still trying to get one – and will not be able to claim for any childcare costs they have already incurred. Experts said there was a shortage of places made worse by a gap between what the government pays per hour and what childcare providers charge.
Heads they win, tails you lose
When it comes to inflation, changing definitions means the government wins and you lose, says the Financial Times. The Retail Prices Index, which normally runs at a higher level than the Consumer Price Index, is used to benchmark things like train fares, alcohol taxes and student loan costs, but the newer CPI is used for most benefits and pensions. The costs of both students’ and retired people’s typical spending may be rising significantly faster than the CPI.
Dice loaded in favour of HMRC
A mere 14 per cent of cases taken to tax tribunals to taxpayers are decided in their favour, says the Financial Times, with the rest being decided in favour of HMRC. In a third of cases heard since 2009, the judgements included penalties for taxpayers, mostly on account of late filing of tax returns. Researchers say there is “very narrow scope” for challenging penalties imposed for failing to submit returns or pay tax on time.
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