PERSONAL ACCOUNTS, which are the centrepiece of the Pensions White Paper published later today, could turn into the next big financial scandal, experts have warned the Daily Telegraph.
The new pensions are designed to reach more than 10m people who are mostly low-paid and have no retirement savings but one of the voices Steve Bee, head of pensions strategy at Scottish Life, says the means-testing of state benefits, which deducts 37p in the pound from anyone whose annual income exceeds £5,220, could mean many people who are automatically enrolled into Personal Accounts will be no better off.
"It will be interesting to see how they are going to word the wealth warning to tell millions of low-paid people that £1 invested in a Personal Account might be worth less than £1 in retirement - and in some cases, they might not be a single penny better off as a result of saving,” says Bee.
"Ministers are well aware of this but, unless they do something, personal accounts will be the next big scandal - although it may not hit the headlines until decades hence when the people affected reach retirement,” he adds.
The future of the Eurozone is in doubt today after France's prime minister said in a radio interview he wanted a return to the Franc if not at least new curbs on the powers of the European Central Bank.
Dominique de Villepin's comments have reflected a growing mood in France the project to create a single European currency has fallen out of favour with the public, writes the Telegraph.
The context of the comments is, of course, the upcoming French presidential election. At least one candidate in that race, Gaulist Nicola Dupont-Aignan, has already called for the return of the former French currency on the basis monetary union was forcing an increasing squeeze on the French economy. "Like Molière's doctor, the ECB is killing the patient in order to cure it," the paper quotes Dupont-Aignan.
"Given their obstinant refusal to face up to errors, it is time to prepare for a return to our own national monetary system."
NASDAQ HAS launched a £2.7bn hostile bid for the London Stock Exchange, continues the Telegraph, and documents have been sent to shareholders beginning the 60-day bid process.
The US technology exchange already owns 28.75%c of the LSE but has now gone directly to shareholders and bid £12.43 a share for the rest of the company.
However, the share price has already leapt above £13.20 and analysts are said to be predicting the bid will be unsuccessful.
TAX REVENUES may be under threat if a European Court of Justice decision goes against the government today, reports The Financial Times.
A study by the Oxford University-based Centre for Business Taxation says the case rests on the government's ability to tax foreign dividends as part of reform of interest tax treatment.
The CBT says multinationals have warned any cut to the current 30% rate of relief on tax on interest, say to 15%, would merely lead to the UK becoming a more unompetitive place to do business, and possibly pursuade one or more to relocate overseas, the paper reports.
The link to dividends is seen because if companies can borrow more cheaply in the UK using tax relief only to fund ventures overseas from which profits would be repatriated in the form of dividends, any ECJ ruling forcing the government to stop all tax on such dividends would possibly put a fair dent in Treasury revenues.
GOOD NEWS for advisers with clients overseas as The Times reports the European Commission is set to hit the biggest mobile phone network operators with fines over their international call rates.
Vodafone, Telefonica's O2 business, and Deutsche Telekom are all set to be hit in the New Year with fines possibly totalling more than £68m over their charging practices in the period 1997-2003.
Furthermore, price cuts could be forced on the companies in future if Viviane Reding gets her way. The EU's Information Society Commissioner is considering putting price caps on international roaming rates.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Jonathan Boyd on 020 7484 9769 or email [email protected].IFAonline
An added tier of asset management can of course deliver additional benefits for certain investors, writes Graham Bentley - just be sure you can justify it to the regulator and, especially, the client
The government is "in daily contact" with industry figures over the pensions dashboard as it prepares for the roll-out and its feasibility report, Guy Opperman has said.
Organisation led by Johnny Timpson
From 1 April 2019
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