Veteran filmmaker Ken Loach poses at Baftas with sign calling for Gaza ceasefire


Ben Mitchell, PA
Sun, 18 February 2024 

Veteran filmmaker Ken Loach and his long-standing screenwriter Paul Laverty have posed at the Baftas with a sign calling for a ceasefire in Gaza.

The 87-year-old was attending the ceremony at the Royal Festival Hall when he made the gesture while posing for photographers.

Ken Loach attends the Bafta Film Awards 2024, at the Royal Festival Hall (Ian West/PA)

As well as Laverty, who scripted Loach’s The Old Oak – which was nominated in the Outstanding British Film category, the director was accompanied by the film’s stars Claire Rodgerson and Dave Turner, and producer Rebecca O’Brien.




Posting the photograph on X, the Stop The War Coalition stated: “Ken Loach, Paul Laverty and co had a message for the #BAFTAs this evening: #CeasefireNow!”

Loach’s Sixteen Films also reposted the image and stated: “Ceasefire now”

The Old Oak tells the story of a struggling pub landlord in a former mining community in County Durham where tensions rise after Syrian refugees are housed there.

Although the film did not win, Loach was praised by Samantha Morton in her acceptance speech for her Bafta Fellowship award.

She said: “When I first saw Ken Loach’s Kes on a huge telly that was wheeled into my classroom I was forever changed.

“Seeing poverty and people like me on the screen, I recognised myself – representation matters.”

S. Korean government orders doctors back to hospitals

AFP
Sun, 18 February 2024 

Medical staff are seen at a university hospital in Gwangju

South Korea ordered trainee doctors back to work Monday after they resigned en masse to protest medical training reforms, with the government looking at using military medics to cope with shortfalls.

South Korea says it has one of the lowest doctor-to-population ratios among developed countries, and the government is pushing hard to increase the number of doctors, partly to help a fast-ageing society.

But doctors have voiced fierce opposition to a new government plan to sharply raise medical school admissions, claiming it would hurt the quality of service provision. Critics say doctors are mainly concerned the reform could erode their salaries and social status.

On Monday, despite government threats of legal action, hundreds of trainee doctors handed in their resignations and were set to stop work from Tuesday.

But the government said it had "issued treatment maintenance orders for all trainee doctors", Second Vice Health Minister Park Min-soo said at a press briefing, referring to a legal measure to prevent work stoppages by medical practitioners.

Under South Korean medical laws, doctors -- who are considered essential workers -- are restricted from undertaking mass work stoppages.

"I implore trainee doctors to not turn their backs on patients," he said, adding the government would be inspecting hospitals to check whether doctors had joined the strike.

The police warned they could arrest "key instigators" of the work stoppages.

The training reforms call for a 65 percent increase in the number of students admitted to medical schools, starting from 2025.

The plan is popular with the public, who experts suggest are tired of long wait times at hospitals, with a recent Korean Gallup poll showing over 75 percent of respondents in favour, regardless of political affiliation.

But it has drawn fierce opposition from doctors, with the Korean Medical Association saying the government's threats of legal action were akin to a "witch hunt" and claiming the plan would create a "Cuban-style socialist medical system".

Vice Minister Park said the plan was necessary in South Korea's fast-ageing society, with doctors set to be "overwhelmed with exponential demand" down the road if the current quota remained.

"Hospitals are already having hard time finding doctors now, and problems of accessing medical service in time have occurred repeatedly," Park added.

More than 700 trainee doctors have resigned so far, the government said.

The defence ministry said it would open military hospital emergency wards to the public if the doctors pushed ahead with the strike, and was considering dispatching military doctors to civilian hospitals to help cover the shortfall.

kjk/ceb/smw

UK

Boots chemists at war over ‘callous’ pension changes


Madeleine Ross
Mon, 19 February 2024 

Janet Smith, 57, was told it would now cost the equivalent of £4,000 a year to take her Boots pension at 60 - PAUL COOPER

A row has erupted at Boots as changes to the company’s generous pension scheme threaten to upend the retirement plans of thousands of pharmacists.

Those enrolled in the company’s £4.8bn final-salary scheme will be forced to wait an extra five years to claim their pension, after new managers changed rules which allowed for early retirement.

Workers received a letter from new administrators Legal & General about the Boots Pension Scheme in November 2023, which said that the early retirement benefit, which had been “discretionary” and at the decision of the trustee, would be scrapped.


It means those who still want to retire at 60 will not receive a full pension. Some members have said they face losing £18,000 on lump sum payments. Others have said they could be left £4,000 a year worse off in retirement.

Some 53,000 members are enrolled in the scheme.

It comes as parent company Walgreen Boots Alliance is seeking a multibillion-pound sale of the British high-street chemist.

Boots has failed to sell since 2022 when it was put on the market.

The offloading of the pension scheme – which closed to new members 10 years ago – to L&G takes retirement liabilities off Boot’s balance sheet, as its owners look to make it a more attractive proposition.
‘I was six months off retiring – and now I can’t’

Paul Ridley, who was due to retire at 60 this July, said he was going to have to delay his retirement by two to three years as a result of the change.

Mr Ridley said: “My situation is that my wife retired in September last year. For years I’ve been making sure that I get my quotes and making sure I understand where my position is.

“The impact on me is that I cannot retire. I will have to wait at least two or three years. I am six months off when I was expecting to take that full pension,” he said.

The former Boots employee, who left the company in 2002 after 13 years there, said: “It’s really callous, it’s tough.”

James Harris, 58, who worked for the chain for eight years until 2006, said that he was going to have to delay his retirement for the full five years, after he received advice to stay in the final salary scheme.

He said: “It feels like they’ve failed on their obligations, for whatever commercial reasons they’ve decided, probably to offload something they see as a burden.”

Janet Smith, 57, worked for Boots for 23 years and paid into the scheme for 21. She is now a self-employed calligrapher.

She was planning to take her pension from Boots at 60, but was told that it would now cost her the equivalent of £4,000 a year – and more than £20,000 if she took her lump sum payment.

She said: “It’s massive, and if you run that forward to 82, and look at the difference for every year, the overall impact is just over £200,000.”

Mrs Smith said that the note that came from the scheme in November did not include any calculations for how the change would impact retirees.

She added: “I haven’t decided yet how I am going to handle it. I am fortunate that it is not going to mean that I have to live in a cardboard box, but however you look at it, that’s money that would have been useful – and it has been taken away.”
‘This is a brand everyone trusts’

Shanti Flynn, who used to work for Boots as an HR director, said that Boots’ pension scheme had been a major draw for prospective employees of the chemist.

Mrs Flynn said: “One of the things that we would say to people is that: “We don’t necessarily offer the most competitive salaries, but we’ve got this really generous and attractive pension scheme.

“This is a brand that everyone trusts, and thinks, with the white coats and all of that, that they’re not going to screw you later.”

She said that she had planned to use her pension fund to pay her older daughters’ university fees, but that the penalty for taking the lump sum early would be £18,000.

She added: “I had a pension statement in 2001, a year before I left, which didn’t have 65 as a retirement option. It had a column, ‘Age 60’, with where my pension was and 59, when I could have taken my pension as well.”

A spokesman for the Pharmacists’ Defence Association (PDA), a union representing pharmacists, said they were helping members of the pension scheme complain and that they expected concerns to be escalated further.

John Ralfe, a pensions consultant who worked on the Boots Pension Fund until 2002, said there had never been a “right” to retire at 60 under the terms of the scheme.

Instead, requests to retire at 60 on a full pension would be granted at the discretion of the pension trustees, he added.

A spokesman for L&G said: “Changes to the discretionary benefits are a decision made by the trustee of the pension scheme, having consulted with Boots (the scheme sponsor) and after taking the relevant professional advice.”

A Boots spokesman said: “The Trustees firmly believe that this agreement is a positive transaction for members and all decisions were taken in the best interests of the overall membership.

“The agreement with Legal & General delivers the ‘Gold Standard’ level of security and protection for members’ benefits.”

UK
Pret cuts prices of best-selling sandwiches after profiteering accusations

Daniel Woolfson
Fri, 16 February 2024 

Pret prices

Pret a Manger has reduced the price of its best-selling sandwiches after the retailer was hit with claims of profiteering.

Price cuts have been introduced across Pret’s six most popular products, with some sandwiches falling by up to £1.

That includes the price of a tuna baguette, which has been lowered from £4.25 to £3.99, and the Posh Cheddar baguette, which has fallen from £4.99 to £3.99.

A total of 66p has also been knocked off the price of a cheese toastie, which now costs customers £4.99. Egg mayo sandwiches have also been cut from £3.40 to £2.99.

It comes after the sandwich chain was forced to defend hiking prices over the past two years.

The company’s shops and franchise director Guy Meakin said last October that the company had always been “transparent” with its customers.

He told The Grocer: “It’s a really tough market. Energy costs have gone up through the roof, and are now starting to plateau and come down, which is encouraging – but still significantly higher than before.

“But prices are going up, so unfortunately, we are having to pass our prices through to our customers from time to time.”

Pret’s chief executive Pano Christou has also blamed price hikes on inflationary costs, which have impacted labour, ingredients and energy.

It is understood bosses opted to raise prices rather than reduce the size of products.

Pret also increased the cost of its subscription service, which offers customers five barista-made drinks a day, from £25 per month to £30.

Price hikes helped Pret return to profit in 2022 after plunging to a £225m loss during the pandemic. Since then, the chain has embarked on an expansion across the UK and international markets.

It currently runs around 450 stores across the UK and is expected to hit the 500 mark in 2024.

As part of its expansion, Pret has been opening stores in more rural areas and commuter towns in a bid to grow its footprint around city centres.

Clare Clough, UK and Ireland managing director at Pret, said: “We’ve been looking at opportunities to bring down our prices where possible.

“Earlier this year, we reduced the prices on six of our freshly made bestselling sandwiches and baguettes by over 10pc on average, including the much-loved tuna mayo baguette and Jambon Beurre.

“Our Club Pret subscribers would also receive an additional 20pc off these products, as well as across our entire menu.”

French energy giant takes £11bn hit on UK Hinkley nuclear plant


Jonathan Leake
Fri, 16 February 2024 

EDF revealed last month that Hinkley is likely to be delayed until 2029 

- AFP

EDF, the French state-owned power giant, has been forced to write-off €12.9bn (£11bn) over its investment in the UK’s Hinkley Point C nuclear power station.

Luc Remont, chief executive, said on Friday that EDF was in talks with the UK government over the “long-term financing” of Hinkley, and the planned Sizewell C project. “We’re obviously having talks with the British government on both projects,” he said.

The writedown comes amid a row between Britain and France over who should pay for the ballooning cost of the power plant which is currently under construction in Somerset.

Last month EDF revealed that Hinkley is likely to be delayed until 2029 or even 2031, and the price could hit as much as £46bn in today’s money. That compares with the initial budget of £18bn and a scheduled opening in 2025.

Despite the writedown, EDF posted a €10bn profit for 2023, compared to a €17.9bn loss a year earlier after several reactors had to be shut down for repairs and as the energy crisis gripped the world.

EDF has said many of the extra costs associated with Hinkley were caused by the UK government insisting on expensive extra safety measures after the 2011 Fukushima nuclear disaster.

Such issues have led to new tensions with the French government whose finance minister Bruno Le Maire has told Claire Coutinho, the UK energy secretary, that Britain will have to stump up extra cash for the project. Britain insists EDF must pay.

The contracts around Hinkley put the onus on EDF to complete construction without any UK bailouts. However, Britain is also relying on EDF to build the planned Sizewell C reactor in Suffolk, adding an extra dimension to negotiations.

Centrica chief executive Chris O’Shea, which has a 20pc minority stake in EDF’s UK nuclear operations, on Thursday confirmed that his company is discussing co-financing Sizewell C.

Mr Remont said: “We’re having talks with the British government and other investors to set up the financing of Sizewell C.”

EDF emphasised its concern over its UK investments, pointing out that it had spent £3.6bn last year but earned only £3.4bn on which it also paid a £600m tax bill.

While it returned to profit last year, the company, which runs all of the UK’s existing nuclear stations, is still carrying €54bn in net debt.

Mr Remont said Hinkley could still be profitable for EDF despite the extra costs and delays, adding that the company wanted to complete it as soon as possible.

EDF’s financial performance improved last year as most of its reactors came back online, with French nuclear production increasing by 41.4 terawatt-hours (TWh) to 320.4 TWh.

Earnings were boosted further because the increased output coincided with historically high electricity market prices. The group said it expects nuclear power output to rise again in 2024.

Mr Remont said in a statement: “EDF has managed a turnaround in 2023, notably thanks to a rebound of its nuclear output. With these good results, EDF has met its financial targets and reduced its financial debt.”

EDF may benefit from a further rebound in its French nuclear production in the coming years as it progresses with checks and repairs of its reactor fleet. Stress corrosion cracks first uncovered in late 2021 have affected pipes at more than a dozen of its 56 atomic units.

Output is also due to get a boost in coming months from the startup of a much-delayed new reactor at Flamanville in northwestern France.

However, Mr Remont has warned that the group’s cash flows will come under pressure again as annual investment rises to about €25bn in a few years, up from €19.1bn last year. That is because the French government wants it to build at least six new nuclear plants and to adapt the country’s grid for rising solar and wind generation.

Mr Le Maire has said EDF must focus on new nuclear projects in France where several new nuclear stations are needed to replace those approaching end of life.

What happened when a country let everyone draw cash from their pension

Malaysians relied on their pensions as ‘cash machines’ during Covid

 “The withdrawals option is not one that should be followed, nor is it one that Malaysia is likely to repeat.”

Noah Eastwood
Fri, 16 February 2024 



When the pandemic hit, and the world shut down, Malaysians were largely left to fend for themselves.

With no furlough scheme and limited help from the government, they were forced to dig into their savings to survive. Many raided their pension pots, after the rules were made more flexible to allow people of any age to withdraw money to survive lockdowns.

They took out billions of pounds, using their pension as a cash machine. Now, Malaysians teeter on the brink of disaster. Many have exhausted their retirement savings and now face living out old age in poverty.

This loosening of pension rules is exactly what think tank the Resolution Foundation recently called for in a major new report.

It argued that British savers should be allowed to borrow from their pensions to weather financial hardship – an idea that will appeal to lawmakers who are concerned about Britons’ low household savings and who want to reduce reliance on benefits.

Over £114bn has accrued in workers’ pension pots since automatic enrolment came into force 10 years ago, according to official figures, suggesting a healthy balance sheet for a future government to play with.

But while schemes in America and South Africa, which allow cash withdrawals for any reason and loans to be secured against lifetime savings, have largely been successful, increasing pension flexibility in Malaysia has left the nation grappling with a retirement crisis.

A flexible pension pot

On paper, Malaysia has one of the best state-run pension schemes in the developing world.

Workers put in 11pc of their salary and employers more than match it, making defined contributions of at least 12pc. It is also considerably more flexible than those of many higher income countries.

The “two pot” system has a second account, worth just under a third of the total, which can be used to buy a house or pay for education and medical expenses. The rest is locked away until it can be drawn down at age 55.

During the pandemic, millions of Malaysians were permitted to make four rounds of cash withdrawals from their pensions, totalling RM145bn (£24bn).

The Employees Provident Fund (EPF), the main Malaysian retirement fund for private sector employees, saw total assets dip 15pc after more than eight million savers made withdrawals to survive the financial shock of lockdown.

With each round of pension raids the public demanded more, amid limited direct government support.

Now, millions face being unable to afford to retire. The median savings in EPF accounts for all Malaysians fell by approximately 50pc from 2019 to 2022, when they stood at just RM8,100 (£1,347).

It means retirement savings for around half of savers will provide a monthly income well below the nation’s poverty line, with only the wealthiest 2pc having enough for a comfortable retirement, according to EPF figures. And unlike the UK, there is no equivalent state pension.

‘A recipe for disaster’

Geoffrey Williams, an economist at the Malaysian Institute for Economic Research, said that the failure of Malaysia’s experiment with super-flexible pensions should serve as a warning to other countries.

He said: “The example from Malaysia shows that withdrawals from pension funds leads to widespread pensions inadequacy and old-age poverty. At best it requires full-scale evaluation; at worst, it is prima facie a recipe for disaster.

“For reasons of choice for housing or education or for factors outside people’s control like illness, public health crises or unemployment the option to raid your pension becomes too compelling and funds withdrawn are almost never replenished.

“This has caused millions of people in Malaysia to have nothing saved for retirement and no state pension to fall back on.

“In the UK, it would likely lead to millions having inadequate savings and becoming reliant on the state pension and benefits with obvious implications for government spending, borrowing and higher taxes.

He added: “The withdrawals option is not one that should be followed, nor is it one that Malaysia is likely to repeat.”

The Malaysian government has since restructured EPF, adding a third account to limit instant withdrawals to only smaller payments, while major reforms to the nation’s savings could be needed in the future to guarantee an above-poverty line income to the poorest retirees.

Even before the pandemic, Malaysia’s two pot pensions, designed to help savers cover the costs of essentials during their working life, were severely depleted, in part due to an over reliance of the withdrawal feature for housing and other expenses.

In 2019, over 50pc of those with one year left to work before retirement had less than RM50,000 (£8,323) or just RM200 (£33) per month for retirement, meaning they likely will need to work well into later life.

A similar scheme in the UK would benefit from the safety net of the state pension system, a guarantee Malaysia does not have, but could see more savers relying on this income if they use up private savings while working and fail to replenish them.

As many as one in three working age people in the UK live in families with less than £1,000 in savings, leaving them unprepared for sudden financial hardship, according to the Resolution Foundation’s research.

The think tank’s report calls for savers to be able to have a “borrowable” fund in their pensions, of £15,000 or 20pc of their pot, whichever is lower, to be paid back across with interest over a period of several years. It would essentially give every worker a “rainy day” fund to fall back on.

Under the UK’s current rules, an individual accessing their pension pot before the age of 55 (rising to 57 by 2028), unless they are terminally ill, will incur a tax charge of up to 55pc.

Australia also created a pension cash-out scheme during the pandemic, which allowed millions of typically young workers to cash out AUD36.4 billion (£17.6bn) from their pensions early to cushion financial hardship.

UK

How the Tories turned pensioners into cash cows

Lauren Almeida
Fri, 16 February 2024 

Tories Pensions

No government has ever taxed pensioners more than the one currently sitting in Westminster. Over the past decade, thousands more pensioners have been dragged into paying tax each year, hit by high rates and shrinking tax-free allowances. Since the Conservatives have been in power, the average income tax bill for retirees has risen by £400.

It comes as Rishi Sunak and Jeremy Hunt are under pressure to deliver tax cuts in next month’s Budget.

The Tories have long promised to be on pensioners’ side, with one policy over them all: the triple lock on the state pension.


The triple lock, which guarantees that the state pension will rise by the highest of inflation, wage growth or 2.5pc, means that the full new state pension is on track to hit £11,502 in April. The increase in payments is expected to cost the Treasury an extra £2bn.

But each year the value of the triple lock is eroded by the Treasury’s deep freeze on tax thresholds. The personal allowance – the amount that anyone can earn without paying income tax – has been stuck at £12,570 since 2021 and, under current plans, will remain so until 2028.

Meanwhile, the average state pension payment is on track to hit £10,406 this spring – and will represent 83pc of the personal allowance, according to analysis by the consultancy LCP. It means any retiree who is paid anything over £180 from their private pension each month will trigger a tax bill.

The Government is facing renewed calls to increase the allowance. Steve Webb, a former pensions minister and now partner at the consultancy LCP, said: “The tax free personal allowance, particularly at an enhanced rate for pensioners, used to keep millions of pensioners out of the tax net. But the headroom between the typical state pension and the tax-free allowance has dropped dramatically.

“Without any explicit policy announcement, millions of pensioners on modest incomes are now finding themselves having to deal with HMRC at a time in their lives when they could do with being free of bureaucracy”.

Baroness Ros Altmann, another former pensions minister, also urged the Government to increase the personal allowance to stop millions more pensioners from being dragged into paying income tax.

She said: “Ideally, the Chancellor will raise the personal allowance so it remains above the full state pension,” she said. “If not, it seems odd that the Government will be giving with one hand and taking back with another.

“It will be a worry to many of the lowest income pensioners that they will have to pay some tax on their state pension.

“Of course, millions of pensioners do already have incomes above the £12,570 personal tax threshold, but that will normally be because they have other income on top of their state pension.

“However, if those who have nothing else end up facing tax bills, they may not realise they are liable for tax and suddenly find they receive demands from the Inland Revenue, possibly with interest charged for late payment.”

This stealth tax raid is expected to hit almost one million people next year alone, as the personal allowance freeze means people claiming a married couple’s tax break will pay a levy on their state pension for the first time.

The marriage allowance lets one half of a couple transfer a tenth of their personal allowance to the other, which can save them up to £252 a year if the other is a basic rate taxpayer. Around 40pc, or 900,000, of the 2.28 million people who claim the relief are pensioners, according to HMRC data.

Caroline Abrahams, of Age UK, said the charity was particularly worried about the impact of the frozen personal allowance for older people with relatively modest incomes.

She said: “Some will have to start paying income tax from April while others will face an increase in tax.

“Many in this situation have been hit hard by rises in energy and other essential costs but will feel, with justification, that they miss out on additional support they could badly do with, simply as a result of the pension savings they made during their working lives.

“Age UK firmly believes it’s time for the Government to return to indexing personal allowances from April 2024.”

Joanna Elson, of the charity Independent Age, added that should the state pension exceed the personal allowance, hundreds of thousands of vulnerable people would suffer. “A staggering one in five single pensioners have no other income outside of the state pension and benefits,” she said. “This group is already struggling to make ends meet and taxing their low income could risk pushing them further into poverty.”

The charity regularly receives calls from older people that have been forced to make dangerous cutbacks to survive.

“Callers have shared that they are washing in cold water to save energy, reducing the amount of food they eat, and going to bed early as it’s the only place they feel warm.

“There are currently 2.1 million older people living in financial hardship, and a further 1 million precariously living on the edge. These numbers are far too high. People in later life that are financially insecure should be supported, not forced to make a reduced income stretch even further.”

Yet the Government continues to treat this age group as an endless resource of tax revenue: the proportion of over 65s who have to pay income tax has risen from 50pc in 2010/11 to 68pc last year, according to analysis from the Institute for Fiscal Studies, a think tank – accelerated by the Tories’ so-called “granny tax” in 2012.

George Osborne, who was chancellor at the time, reversed a century-old tax break introduced by Winston Churchill: an age-related allowance used to let pensioners start paying tax at a higher income level than workers. Mr Osborne scrapped it in his second Budget, in a move that was condemned as an assault on retirees.

Persistent tax raids on pensioners’ wealth comes despite wide inequalities within the age group: although this generation is more likely to own property compared with their children and grandchildren, most have relatively modest incomes to fund their day to day lives.

A freedom of information request last year found that nine out of 10 pensioners who pay income tax do so at the basic rate of 20pc. Yet even those on modest incomes have been forced to hand over more in tax over the past decade – a pensioner earning £25,000 each year would pay £2,093 in 2010/11, according to analysis by the IFS. In the 2024/25 tax year, this will be £2,486.

Yet so far pensioners have been left out of tax cuts – at the Autumn Statement last year, a widely expected income tax cut was ditched in favour of a reduction in National Insurance rates. While this saved the average worker £450 in a year, it did nothing for those over the state pension age, who no longer have to pay towards NI.

All this is set against a system that easily, and often, overtaxes private pensions. Since pension freedoms were announced in 2015, pensioners have had to reclaim £1.2bn in overtaxation – clawing back £3,200 each on average from the tax office.

This is because under an emergency tax code, HMRC treats a saver’s first pension withdrawal as if it were going to happen each month. It therefore divides the saver’s personal allowance of £12,570 by 12, and then assesses the excess against 1/12th of each of the income tax bands.

It means a £50,000 single withdrawal would lead to a tax bill of almost £21,000, if this were a saver’s only earnings subject to income tax. If this were taxed on an ordinary basis, the bill would be just £7,486.

The true overtaxation figure is likely to be substantially higher, as those on lower incomes who are less familiar with the self-assessment process are not as likely to challenge the tax office on the bill.

A government spokesman said: “Pensioners whose sole income is the new state pension and who have not deferred or receive protected payments do not pay any income tax, and this year we provided the biggest ever cash increase to pension payments, a 10.1pc rise.

“Our tax burden remains lower than any major European economy – and by increases to personal thresholds since 2010 we will have taken three million people out of paying tax altogether.”

UK
Post-pension freedoms record for annuity sales set last year, says ABI

Vicky Shaw, PA Personal Finance Correspondent
Fri, 16 February 2024



Sales of retirement annuities reached a post-pension freedoms high last year, according to the Association of British Insurers (ABI).

Annuity sales soared in 2023 with a total sales value of £5.2 billion, a 46% increase compared with 2022, the association said.

This is the highest annual value since 2014, when the pension freedoms were announced which granted retirees more flexibility over how to access their retirement savings.


The freedoms, which came into force from 2015, gave over-55s a range of options over how to use their defined contribution (DC) pension pot. Generally, people can take up to 25% of their pension as a tax-free lump sum.

Before the freedoms, many would have bought an annuity, which provides retirees with a guaranteed income. Annuities had become controversial because of disappointing rates and concerns that not enough people were shopping around to get the best deals for their needs.

The ABI suggested strong sales reflected higher interest rates, as more people have been looking to secure a reliable retirement income.

Last year included a bumper fourth quarter which saw £1.5 billion in annuity sales, off the back of a strong third quarter when sales totalled £1.4 billion, the ABI said.

Level-only annuities, which pay the same income every year but can be vulnerable to inflation, remained the more popular version of the product, the ABI said. This type of annuity has a higher starting income than an escalating annuity – which provides an income that increases every year.

Last year also saw nearly two-thirds (64%) of annuity buyers shop around – taking an annuity from a different provider from the one they held their pension savings with.

However, only 29% of customers who bought an annuity did so with the help of professional advice.

Rob Yuille, head of long-term savings policy at the ABI, said: “Securing a guaranteed income for life remains an important part of the mix of options for people to consider at, and during, retirement, and it’s great to see more people taking advantage of the protection they have to offer.

“It is also encouraging to see more people exploring the market to secure a higher income.

“However, we’d like to see more people taking advantage of professional advice and new forms of targeted support for consumers to ensure they can enjoy the best possible retirement.”

Stephen Lowe, group communications director at retirement specialist Just Group, said: “It’s good to see the majority are finding their way to the best deals which is a significant improvement on the past, but there are too many people still missing out.”

Pete Cowell, head of annuities at Standard Life, part of Phoenix Group, said: “Annuities have benefited from rising interest rates and it’s clear that customers and advisers are responding to this, and seeing the benefits of having a guaranteed income as part of the wider mix of retirement income solutions.”

He added: “While an annuity cannot be changed once it’s set up, there are various annuity options available and different ways annuities can be used. Annuities can also be purchased in stages throughout retirement or later in life, to help combat the effects of inflation on hard-earned savings.

“Average annuity rates are currently over 6.6% for a healthy 65-year-old (a £50,000 pension pot with no additional benefit features) and people should remember the importance of shopping around when looking for the best rate.

“While people can always consult a financial adviser to help them start to make decisions around which annuity types are most suitable for their needs, there is also free impartial guidance available from Pension Wise, a service from MoneyHelper.”

Sir Steve Webb, a former pensions minister who is now a partner at consultants LCP (Lane Clark & Peacock), said: “Whilst pension freedoms rightly gave people choice about whether to buy an annuity, it remains the case that the certainty of an annuity will be the right answer for some people.

“In particular, managing a pension drawdown pot into your 70s and 80s is likely to be increasingly challenging, especially when you have little idea how long the pot needs to last.

“For many people a mix of the flexibility of drawdown and the security of an annuity is likely to be a good outcome, especially with improved annuity rates, so it is welcome to see renewed interest in these guaranteed income products.”

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown said: “Annuities had a bumper year in 2023 hitting £5.2 billion in sales according to the ABI. It marks a year where this product once relegated to the sidelines took centre stage once more as soaring interest rates pushed incomes skyward.

“Annuities should always be part of the discussion when you need a level of guaranteed income in retirement but their reputation for being inflexible and offering poor value for money put many people off.

“However, as interest rates soared so did annuity incomes. In the aftermath of the mini-budget they hit a peak of £7,586 per year for a 65-year-old with a £100,000 pension according to data from HL’s (Hargreaves Lansdown’s) annuity search engine.

“They’ve since pulled back a little – the same person can get up to £7,117 – but they still offer good value so we can expect interest to remain high.”

THATCHER PRIVATIZED WATER

Thames Water debt crisis threatens taxpayer with multibillion-pound bill

ONTARIO PUBLIC SECTOR PENSION FUND; OMERS, 

IS A MAJOR SHAREHOLDER

Ben Marlow
Fri, 16 February 2024 

Thames Water

The debt crisis at Thames Water risks a bill for taxpayers running into the billions of pounds, according to contingency plans being drawn up to avert disruption to supplies.

It is feared that regulatory rulings will prompt the company’s shareholders to pull the plug in the coming months.

Sources close to the situation said that by refusing to invest they would force Thames Water into special administration, where it would immediately require a hefty slug of public money to keep contractors on the job and supplies flowing.


The concerns are being stoked by the belief that the industry regulator Ofwat is poised to block a request from Thames Water to hit one in four homes with a 40pc jump in bills.

The company’s shareholders, which are led by the Canadian pensions giant Omers and the Universities Superannuation Scheme, have made further investment dependent on approval.

Thames Water has asked its backers for a cash injection of £3.3bn. Ofwat could also hit the company with hundreds of millions of pounds of fines, however.

Without the shareholder cash there are concerns that Thames Water would be unable to service its giant debt pile at a time when the beleaguered utility must find billions of pounds to repair its leaky network of pipes and sewers.

The mounting crisis is already prompting moves in Whitehall. Water company insolvency laws are currently being amended to make it easier for the Government to step in, including on the grounds that it has fallen short of performance targets.

If Thames Water is put into special administration, it is estimated that as much as £5bn of financial support would be needed from the outset “just to keep the lights on”, according to a Whitehall source. Without immediate Treasury guarantees, critical contractors could down tools, it is feared.

Sources close to the discussions cautioned that they remain at the contingency planning stage and administration could be averted if Ofwat gives the green light to ramp up bills over the next five-year cycle, starting in 2025.

A decision is expected by June. The special administration regime has been used before when the energy supplier Bulb went bust in 2021. It was eventually sold to Octopus Energy.

Thames Water is struggling under the weight of borrowings of nearly £19bn. Last year its auditor warned it could run out of cash by April.

Its troubles have spooked the debt markets, prompting a sell-off of its bonds that has left prices at all-time lows. The value of a bond linked to an entity in Thames Water’s sprawling corporate structure has crashed to less than 39p in the pound. Seven months ago the IOUs were changing hands for 87p.

Thames Water previously announced that it had secured an initial £750m of new equity into the company by 2025 subject to conditions. However, in December, finance director Alastair Cochran was forced to admit that the funds were still to be confirmed.

“Investors are looking for some comfort from Ofwat that it will support that business plan,” Cochran said at the time. “They will take a pragmatic view depending on the feedback they get.”

Investors have also asked Ofwat to agree to less punitive fines for missing pollution and other performance targets.

In October, it was named among the industry’s worst performers in the watchdog’s annual review for a third year. It came just weeks after Thames Water was hit with a £101m fine for “lagging” in its efforts to clean up pollution, plug leaks and improve customer service. The penalty was later reduced to £73.8m.

Ofwat is also investigating whether Thames Water broke a new licensing agreement by paying a £37.5m dividend that ultimately ended up with the company’s parent.

If it is found to have breached the rules it could face a fine equivalent to 10pc of turnover. The company reported revenue of nearly £2.3bn last year.

A Thames Water spokesman said: “We take our licence obligations very seriously, including those relating to the declaration and payment of dividends. Our plans assume no external dividends to shareholders until at least 2030, to support our turnaround.”

On Friday, Sir Adrian Montague quit as chair of Thames Water’s parent company Kemble. Regulators had reportedly raised concerns that the board of Kemble and Thames were not sufficiently independent from each other, particularly with Montague chairing both companies.

Industry sources believe Thames Water could also be facing a steep penalty for storm overflow failures.

A Government spokesman said: “We prepare for a range of scenarios across our regulated industries – including water – as any responsible government would.”

Ofwat declined to comment.

Why Britain cannot break its addiction to foreign labour

Migration will stay high as long as the demand from businesses for foreign workers remains.


Tim Wallace
Sat, 17 February 2024 

immigration arrivals

A record number of foreign-born workers are employed in the UK, in the latest sign that Rishi Sunak’s efforts to break Britain’s addiction to migrant labour are not working.

A total of 6.9 million people born overseas were working in the UK at the end of last year, according to the Office for National Statistics (ONS). That is up by more than 400,000 over the past year alone and extends a long trend of high migration.

The number of overseas workers employed in Britain has risen by three-quarters since 2010, despite years in which the Government promised to get net migration down to tens of thousands a year.

The Conservative Party promised to reduce net migration in its 2019 manifesto and a pledge to “stop the boats” illegally crossing the Channel is a key part of Rishi Sunak’s election campaign.

The latest figures show net long-term migration stood at 672,000 in the 12 months to June 2023, down from 2022’s high of 745,000 but none the less far above anything the Government wanted. It compares to 184,000 when the Tories made their 2019 manifesto promise.

Events have conspired against Sunak. Large numbers of arrivals from Ukraine and Hong Kong have boosted net migration, most likely temporarily, while the pandemic delayed a wave of students coming to study in Britain. They have now come all at once, inflating the numbers.

But there are deeper-seated problems that suggest the Prime Minister will struggle to break the country’s addiction to foreign labour even as these temporary factors subside.

The Government is effectively “filling large numbers of vacancies in the care sector by importing huge numbers of people”, says Rob McNeil, deputy director of the Migration Observatory at the University of Oxford.

This is hard to avoid. Even with migration, there are still 167,000 vacancies in human health and social work, according to the ONS. The number of job openings has not fallen below 100,000 at any point since 2014.

It is hard to escape the conclusion that Britons do not want to do these jobs.

“The Government is not prepared to stump up money to pay for people to do these jobs,” says McNeil. “Increasing wages in the care sector might well create an environment where you have more British people willing to do those jobs.

“The challenge that you have got is that you are probably going to have to increase those wages by quite a lot in order to make a role that has not traditionally been seen as massively attractive more attractive, and who pays for that?”

The care sector is the tip of the iceberg: companies across the economy are advertising more than 900,000 vacancies, yet are struggling to find anyone to do the jobs without bringing in staff from overseas.

Adding to the challenges of weaning Britain off immigration is the sheer scale of worklessness. There are 9.3 million people of working age who are economically “inactive” – neither in work nor looking for work. It is forcing companies to look abroad to get the workers they need to grow.

Baroness Ruby McGregor-Smith, former chief executive of outsourcer Mitie and author of a new report for the British Chambers of Commerce, says the skills required for many new and growing industries simply do not yet exist in the UK. She gives nuclear power, now back in vogue because of net zero, as just one example.

“If you think about other countries that have been building nuclear for many, many years, from a skills perspective they have individuals all the way through their supply chains that have built a number of nuclear reactors,” she says.

By contrast, Britain is reliant on France’s EDF to build Hinkley Point C and Sizewell C.

“There is a skills shortage,” Baroness Ruby says. “If we need the skills, we should be able to bring them in while we are growing our own [local skills]. That should be an important principle to help grow the economy. And at the moment we don’t have that.”

The British Chambers of Commerce is pushing for more, not less, migration. It wants visa costs to be reduced and migration rules made more flexible, particularly to enable smaller companies to hire foreign workers until the domestic workforce can be trained up.

Similarly, the Confederation of British Industry has called for the Government to give more resources to the Home Office to speed up the processing of visa applications to get workers in faster.

Currently, the Government is moving in the opposite direction, raising the salary threshold at which most migrants can gain a visa from £26,200 to £38,700 from April.

McNeil suspects the move will make little difference – professionals are often paid more than £40,000, he says, while care workers are exempt from the cap.

Migration will stay high as long as the demand from businesses for foreign workers remains.

Efforts to train local workers have long been promised but have yet to produce meaningful results.

“The bottom line with all of this is that symbolic policies – where you make a big, bold promise to achieve some arbitrary number – tend to be more rhetorical than realistic,” says McNeil.

“An honest debate around migration would involve the Government saying they only have limited control.”

The Migration Observatory’s projections indicate that, after current temporary factors subside, an extra 350,000 migrants will come to the UK each year over the long term. That is similar to the level pre-Brexit, when the Government was widely deemed to have lost control.