Monthly Archives: February 2012

A draft report of how elderly patients are being treated in hospitals and care homes stresses that ‘fundamental changes’ need to happen across the board to improve dignity in care.

An inquiry set up by a commission consisting of bodies representing the NHS and local councils along with the leading charity, Age UK, has said that recruitment of doctors, nurses and care workers should focus as much on compassion as it does exam results.

Reforms to the criteria used for employing and appraising nursing and care staff should ensure that employees have the values and the capacity to engage with elderly patients, along with the relevant qualifications.

The call for improvements to patients’ dignity comes after a series of reports and investigations exposed the shockingly poor level of care in many hospitals and care homes.

A draft report of the Commission on Dignity in Care, said that “fundamental changes to culture, leadership, management, staff development, clinical practice and service delivery” need to happen to improve the level of care received by older patients.

Chairman of the NHS Confederation, Sir Keith Pearson, said were too many cases of failings in the care system. “We want this report to be a call to arms to the whole health and social care system. We need to work together to earn back public confidence.”

The report calls for an end to the “command and control” NHS management style which has taken away ward responsibility from nursing sisters.  The commission asks that ward teams hold daily discussions on the feedback they receive from patients and their relatives, and to write regular detailed reports for the trust boards.

The commission also wants to see residents and relatives of those in care homes to have a say in how their care home is run, along with a national care quality forum to be established in order to look at all aspects of the staffing of care homes, including pay and qualifications.

The report says that most of its recommendations could be brought in with minimal cost.  It uses the University Hospitals Birmingham foundation trust as an example, where a successful “dignity for all” program has been introduced with little resources

The Pensions Regulator has warned against people trying to release cash early from their pension funds.

It is concerned about the number of unauthorised companies offering ‘pension liberation’ schemes which could leave the person with a seriously depleted pension when they do retire.   

Due to tax charges and unregulated investments abroad, people could find that their pensions have dwindled down to almost nothing. In addition to this, most of these companies are located overseas so people are not protected by UK compensation schemes.

The pension release schemes work by transferring money from a legitimate pension scheme into one which the scam company has set up.  It lends the client 50% of the value and takes a fee out of the other half.  The remainder is then invested in its own projects, which are outside of the UK.

Pensions Regulator Bill Galvin, explained on the Radio 4’s show, Money Box, how the scam works.

“For example, if you have a pension pot of £20,000, schemes will offer you access to half of that. They’ll take a commission of around £4,000 – 20% – leaving you £6,000 in your pension fund and often invest that in offshore vehicles you might never see again.”

He went on to warn that most of the returns could be taken by HM Revenue & Customs in taxes.

“HMRC can come and say ‘This is an unauthorised payment and we will tax you 40% and another 15%,’ leaving the customer with £4,500.”

The standard charge for an unauthorised payment from a pension scheme to someone under the age of 55 is 40%.  An additional 15% tax is also added if the payment exceeds more than 25% if the total value of the pension fund.

These companies do explain the tax implication of their schemes so people only discover this when the HMRC instigates charges.

Because these companies are not based in the UK, they cannot be regulated by the Financial Services Authority (FSA).  Head of Unauthorised Business at the FSA, Jonathan Phelan said:

“They are largely untraceable. So the message is, if you get one of these calls out of the blue offering to unlock your pension that is something that you should be extremely wary of doing.”

He went on to say that the FSA were having some success in taking down some of the firms’ advertisements in the UK.

“We do ask internet service providers to close down websites where we know there are illegal activities going on. And depending on the jurisdiction where that provider is, especially in the UK, we do have a decent success rate.”

The Pensions Regulator estimated that £200 million had been lost from British pensions by the end of 2011 and gave this stark warning:

“Immediate financial gain might sound tempting. But don’t be taken in. You are likely to face substantial tax charges and will be poorer in retirement.

“Transferring your pension to one of these questionable investment models could result in losing your entire pension.”

Pension firms should be banned from selling annuities and the government should set up a fair play annuity service to help retirement savers find good deals, an MP has urged.

Tory David Mowat, representing Warrington South, put forward a five-point plan to improve the annuity market for over 55s in a Parliamentary debate.

He claimed consumers miss out on extra income because the annuity market is too confusing.

Instead, he told the Commons, the government should consider:

• A nationalised annuity service on the lines of the NEST scheme for workplace pensions due to start later this year

• Investments directly in to gilts cutting out middlemen and their fund management charges

• A ban on pension providers from selling annuities to avoid mixed messages and conflicts of interest

• A rule requiring IFAs to sign off on annuities to ensure retirement savers gdet independent investment advice

• A review of annuity products to streamline the offerings to reduce confusion in the market

“A nationalised provider would be an organisation that was a hallmark for fairness and best practice,” said Mowat in the debate.

“The government should consider setting up an equivalent of the NEST pension scheme, specialising in the low cost provision of annuities. The government should enforce OMO access via legislation to stimulate competition in the annuity market.

“The government should consider making it illegal for the organisation that administers the saving regime to also provide an annuity. We would get new entrants to the market which are likely to be smaller, hungrier and more efficient.”

Employment minister Chris Grayling told MPs that the Department of Work and Pensions fully supported improvements to the annuity market.

He added that the Association of British Insurers (ABI) and the National Association of Pension Funds (NAPF) was working on a code of conduct to make comparing annuities easier for retirement savers.

New figures have emerged that reveal that up to 1.6 million of pensioners in the UK are not claiming Pension Credit. With some of the country’s worse-off pensioners missing out on an average of £33 a week.  

The Department for Work and Pensions (DWP) said that approximately £2.8 billion of Pension credit is currently unclaimed, meaning that between 1.2 and 1.6 million pensioners are out of pocket.

The Pension Credit is means tested and is designed to top-up weekly state pensions.

Pensions Minister, Steve Webb, said that despite the Government’s “best efforts”, the vast quantity of unclaimed credit “demonstrates the systematic failure of means testing for basic living expenses in retirement”.

He said: “Pension Credit is not getting to over a million people who are entitled to it, despite millions spent by successive governments to encourage take up and the Coalition’s trial scheme that paid the benefit to some people without the need for a claim.”

“The goal is for people to retire on decent income, which is why we are bringing in automatic enrolment and have consulted on proposals to reform the system to provide a simple state pension set above the level of the basic means test.”

Director General of the charity Age UK, Michelle Mitchelle, said the revelation of just how much benefit money was unclaimed is “staggering”, adding that a figure of £2.8 billion going unclaimed showed how little the Government had progressed in terms of making pensioners aware of their entitlements.

“It is very disappointing that there has been no progress in older people not claiming the benefits they are owed. There are still 1.8 million people in later life living in poverty and claiming pension credit can make a huge difference to someone’s income and quality of life,” said Ms Mitchell.

The Deputy Governor of the Bank of England, Charlie Bean, has said that quantitative easing (QE) has not hit pensioners as hard as they think. 

The statement made by Mr Bean to the Scottish Council for Development and Industry is likely to upset pensioner groups who argue that QE is harming their retirement income.

Director General of Saga, Ros Altmann, said yesterday that: “QE has permanently impoverished more than 1m pensioners, and thousands more annuity purchasers will receive reduced pensions every week.”

Mr Bean did acknowledge that pensioners’ incomes have been harmed by QE, but added that the Bank of England’s initiative to print an extra £350billion has actually raised the asset value of their pension portfolios and will aid the financial recovery of the country.

He said: “Someone with a £100,000 pension pot, who could have expected that to yield an annual pension of a little under £7,000 three years ago, would now get just under £6,000. That is a rather substantial income loss. But it is only part of the story,”

“Those pension funds will typically have been invested in a mix of bonds and equities. The rise in asset prices as a result of QE also raises the value of the pension pot, providing an offset to the fall in annuity rates.”

He also said that the elderly couldn’t expect to be unaffected by the economic downturn.  Savers have suffered because of record low interest rates, working households have taken a 7.5% hit in terms of real income and there has been an increase in unemployment.

“Real household income declined a total of 2.5pc in the two years after output troughed, whereas in normal conditions it might have been expected to rise about 5pc in that time,” Mr Bean said.

He added: “Savers have every right to feel aggrieved at losing out; after all, they did nothing to cause the financial crisis. But neither did most of those in work, who have seen a substantial squeeze in their real incomes. And unemployment, particularly among the young, has risen. There have been few winners over the past few years.

“Treating serious medical conditions often has unwanted side-effects. But treatment is invariably better than the alternative. The immediate consequences may be unpalatable, but the sooner we can get the economy on the mend, the sooner we can return policy to more normal settings and the better it will be for all of us – savers, businesses and employees alike.”

The Bank of England announced that another £50billion of QE would take place in February, bringing the total to £325 billion since the start of 2009.  This figure is approximately one-third of the entire stock of Government debt.

Mr Bean stressed that QE was working as there were signs of growth in the economy, and that households were beginning to see the squeeze on their incomes ease.  However, he also said that “the continuing headwinds from the unwinding of excessive debt and the Government’s continuing fiscal consolidation mean that the pace of recovery is likely to remain moderate by historical standards”.

Millions of retirement savers want better hands-on management of their pensions through their mobiles phones, computers and cash machines, according to new research.

Harnessing technology to let savers top up their pensions with small amounts would prove a big hit, says pensions firm Friends Life.

The firm asked a 1,000 people of all ages what would make saving for retirement easier – and they came back with three ideas:

• 32% would like to put pay cash in to a pension at a cash machine

• 59% want a phone app or access via the red button on a TV that let them check pension values and expected retirement income

• 48% would like to pay small irregular contributions and a way to adjust contributions up or down at any time

Friends Life claims the ideas could help millions to save for their old age and help the UK avoid a looming savings crisis.

They are among several in the report ‘Pensions- The solutions’ by think tank Future Foundation that looks at innovative ways to address the national pensions black hole.

Martin Palmer of Friends Life, said: “The growing appetite for pension ATMs reveals a desire for people to have more opportunities to increase the amount they save. Although this solution would be complex to implement, there may be some lessons here for the industry that would allow us to develop solutions that give individuals more flexibility to change their pension contributions.

“The industry could also look into using the red button on their TV remote controls, effectively bringing pensions into people’s living rooms. This might enable savers to investigate how additional top-ups of pensions saving would affect the overall pot – or it might even be used to make contributions from bank accounts.”

Budgeting was also an important consideration for many – 46% of 18 -24 year olds and 37% of 25 -34s would like a financial application that would show how their spending habits affected pensions and savings.

A lack retirement savings is making thousands of over 55s work well in to their 70s, according to the latest government statistics.

A pension trends report from the Office of National Statistics showed 12.5% of women and 10% of men do not give up work until they are between 70 and 75 years old.

The figures also revealed two-thirds of the work force do not have a company pension and those that have earn just an average £1,400 a year from their lifetime savings.

Retirement ages started rising in 2004, when the average age for men to stop working was 63 years 10 months old and that for women was 61 years and two months.

By 2010, the age increased to 64 years 7 months for men and 62 years and four months for women.

The forecast is a child nine years old now will not collect a state pension until 2075, when they will be aged 73.

Other sections of the report show that although men and women can expect to live longer, they might not enjoy good health.

By 2051, 24% of the population will be aged 65 or over – compared with 17% today and 14% in 1975.

Statisticians ‘profile’ a 65 year old man and woman living in England today.

He can expect to live another 17 years and 10 months – until around the end of 2028 – with good health for 10 years – until 2021.

A woman should expect to live 20 years and five months, with 11 years and eight months in good health.

Pensions Minister Steve Webb said: “We can no longer look to our grandparents’ experience of retirement as a model for our own. We will live a lot longer, will need to save more and many of us will continue working beyond the traditional retirement age.

“This is why we abolished the outdated laws that allowed employers to sack someone when they reached 65 and why getting people into workplace pensions will be so transformative.”

The crisis in pensions has forced many people to continue to work well into their 70s rather than retire.

New figures released from the Office for National Statistics show that 1 in 8 women and 1 in 10 men, are still working past the age of 70.  

The findings reveal that 12.5% of women and 10.1% of men hadn’t left the workplace until they were between the ages of 70 and 75.

Industry experts expect these numbers to grow as only a third of people employed in the private sector have company pensions. Of the workers who do have company pensions, the average ‘pot’ is worth just £1,400 a year.

The report also shows that the average retirement age has risen sharply in recent years; in 2004 the average age a man retired was 63 and 10 months, the latest figures taken in 2010 show that has risen to 64 and 7 months.

It is a similar story for women; they have risen from 61 and 2 months in 2004, to 62 and 4 months in 2010.

More and more people will be pushed into working longer as the state pension age increases.  In 2020 the state pension age for both men and women will be 66, rising to 67 between 2026 and 2028.  It has been predicted that a child who is 9 years old now will not be drawing their state pensions until they are 73 years old.

The ONS report also predicts that the number of the UKs pensioners will grow hugely.  In 1975 only 14% of the population were 65 or above, this year that figure is 17.2%.  It is expected to be approximately 24% of the population by 2051.

The report warns that although people will be living longer, a large chunk of their later years will be spent in poor health. Typically a 65 year old man living in England can expect to live for another 17 years and 10 months, however he will only be in ‘good’ or ‘very good’ health for 10 of those years.  The rest he will be in ‘bad’ or ‘very bad’ health.

Women aged 65 living in England will live for another 20 years and 5 months, but will only be in good or very good health for 11 years and 8 months.

Chief Executive of the National Association of Pension Funds, Joanne Segar, said: ‘Some people will enjoy working into their 70s but sadly many will find it a slog.

‘They would rather be enjoying their retirement instead of clocking on.

‘Unfortunately too many people reach retirement age only to find their savings and pension are not enough, and so they have to keep working for years longer than they imagined.

‘The UK is not saving enough for its old age so this trend is likely to increase.’

The ONS based their calculations on male and female employees who were aged 51 to 75, and looked at the age that they ‘leave’ their jobs.

Pensions Minister, Steve Webb, said: ‘We can no longer look to our grandparents’ experience of retirement as a model for our own.

‘We will live a lot longer, will need to save more and many of us will continue working beyond the traditional “retirement age”.

‘This is why we abolished the outdated laws that allowed employers to sack someone when they reached 65 and why getting people into workplace pensions will be so transformative.’

Pension and finance firms have written off helping thousands of over 55s who will enter long term care over the next 20 years.

The message from financial firms is they will have to fund the cost of their own care because it’s too late to make improve their retirement savings now.

Association of British Insurers assistant director for health and protection Nick Kirwan told the All Party Parliamentary Group on Housing and Care for Older People that the over 55s who can afford to make provision for their long term have already done so.

He urged the politicians to act on the recent Dilnot Commission findings to introduce an insurance-backed with a cap on long term care contributions.

Dilnot suggests a £35,000 cap, while the government has floated a higher cap of £55,000 – £60,000.

The ABI is also calling for regulation of the sector to make advice more available and accountable.

“Alongside a government social contract for care, we need to build in at the design stage requirements for information and advice,” he said.

“We support the Law Commission in its call for a statutory duty on local councils to oversee and ensure delivery of professional advice.

“This does not mean they deliver it, but that they are able to to ensure independent advice is available to people.

“People also need access at a range of stages both as they are about to enter the social care system or even in advance, so that they are able to plan.”

Kirwan pointed out that the government could not expect retirement savers to plan for their long term care if they have no stable and clear system to work with.

“We need to know clearly what is available from the state so that there is clarity on the gap that is people’s own responsibility,” he said.

“It is important to remember that almost everyone who will enter care in the next 20 years has already done all the saving that are going to do. And in the main they have not prepared in advance.

“Dilnots proposals have an important effect; that if people are going to have care costs metered, whether they are a self funder, there is an interest in having that meter switched on and that is a fantastic opportunity to have a strong signal to say to people get financial advice.

“Whether Dilnot’s recommendations come into being or not, the industry need regulatory changes to ensure that people get financial advice and ensures people have more flexible tools to meet their financial needs.”

More than a million pensioners are now facing living out their golden years in poverty due to the Bank of England’s decision to inject more cash into the economy.

Each day, 1,500 pensioners are drawing a retirement income that has reduced because of Quantitative Easing.  QE is brought in to help ease the wider economy but its negative impact on retirement income is permanent.    

In addition to their pension funds reducing, retirees have been forced to rely more and more on their savings.  Savings which have already suffered due to the record low interest rates.  It is estimated that pension nest eggs have had £41billion stripped off their value.

This combination has left many elderly with just a few thousand pounds left from a savings pot that they have contributed to their entire lives.

When Quantitative Easing occurs, the Bank of England buys Government debt, or gilts, from banks.  This gives the banks more spare cash to lend to kick start the economy.  Since 2009, £325million has been introduced into the economy; with £50billion pumped in last week.

The extra money filters through the economic chain and gets passed onto customers and small businesses in the form of lowered borrowing rates.

Additional money in the economy helps businesses to grow. However, when the Bank of England buys gilts it increases their price, which in turn lowers the interest that they pay.  These same gilts are also purchased by pension funds to pay for annuities.

90% of annuities rate will give you your income for life at the starting rate of interest.

Since the QE measures were bought into place, pensioners have had their incomes cut by 15%. This has cost the average 65 year old male more than £23,000 over his lifetime.

For example: A 65 year old man with a £100,000 pension might have had an pension income of £7,093 back in March 2009, today he would only receive £5,923.

Chief Executive of the National Association of Pension Funds, Joanne Segars, says: ‘Our priority has to be a stronger economy, so we understand the Bank’s case for more medicine. But this short-term stimulus is leaving pensioners and pension funds in long-term pain.

‘People retiring now will get a smaller pension than they expected. Retirees who get locked into a weak annuity will find that the Bank’s money printing leaves them out of pocket for the rest of their lives.’

Another negative effect of QE is that it increases the cost of living, compounding the misery for most pensioners.