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Our pensions timebombis the worst in the world
UK WORKERS are worryingly under-prepared for retirement, data outthis morning has revealed, withmany predicted to run out of savings just seven years after leaving work. The UK came at the top of a table of the world’s worst savers, with theaverage Briton facing a financialshortfall of 63 per cent over the 19 years they are expected to live afterretiring. The report by HSBC ranked UK savers behind France, the US, Egypt,China and Mexico. The global average is a shortfall of 44 per cent, with just 10 years out of an expected 18 years of retirementcovered by current provisions – a fig-ure that is expected to worsen as lifeexpectancy continues to rise in devel-oped and developing economies.“This is yet another wake-up callfor people to start thinking about where their later life income is com-ing from,” pensions campaigner Ros Altmann told
“There is nomoney tree for retirees.” According to HSBC, nearly one infive people working in the UK today saves nothing at all, while 56 percent are not preparing well enough.Fifty-seven per cent of UK workerssaid they would prioritise going onholiday over saving for retirement,compared to two-fifths worldwide.
Big Anglo-French buyout planned
A British-based private equity consortiumis preparing a €3.5bn bid for Frenchcatering company Elior in what would bethe biggest buyout in continental Europesince Lehman Brothers collapsed in 2008.CVC Capital Partners and BC Partnershave teamed up to launch a buyout ofElior, underlining how confidence isreturning to Europe’s private equitysector. Their bid would be for the whole ofElior, not just the €2bn catering unit itsprivate equity owner Charterhouse hadinitially planned to offload.
Esure speeds up stock market launch
Esure has appointed the brokers Numisand Canaccord as the motor insureraccelerates plans for a stock marketlaunch. The group is considering filing anintention to float within days, the latestsign of a revival in London’s IPO market.
Warner Music in deal with indies
Warner Music has struck a deal with twogroups representing independent recordlabels to secure their support as it seeksregulatory backing for its £487m deal forEMI labels such as Parlophone, home toColdplay and Pink Floyd.
FBI investigates Heinz deal
The Federal Bureau of Investigation hasopened a criminal inquiry into allegedinsider trading before Warren Buffettlaunched his $28 billion takeover bid forH.J. Heinz.
Not enough tenants for Heron Tower
Gerald Ronson and an Arab consortiumthat backed the development of theHeron Tower in the Square Mile may haveto inject tens of millions of pounds offresh equity with lettings disappointing.
Cameron embarrassed over bribery
David Cameron has suffered anembarrassing public intervention fromIndia over a bribery scandal involvingFinmeccanica, an Italian defence firm withmajor British interests.
Bullying blamed for horse meat crisis
Cattle producer body The National BeefAssociations has pinned the blame for thehorse meat crisis on supermarkets andaccused them of “short-sighted, price-led,purchasing tactics”.
Parties trade blame for looming cuts
With less than two weeks to go before thelatest fiscal face-off, members of bothAmerican political parties yesterdayexchanged fire in a bid to shape publicopinion about it.
Apple attacked by hackers
Apple said some employee computerswere infiltrated by hackers, adding to thewave of companies recently reportingcyber attacks, although customer datawas not compromised.
ENERGY groups yesterday calledfor more technological investmentto solve the UK’s looming crisisafter warnings from regulators afuture squeeze on production willcause price hikes for consumers.The chief executive of energy watchdog Ofgem, AlistairBuchanan, yesterday warned a fallin the UK’s power production overthe next few years would lead tomore energy imports and risingprices.The UK is slowly closing its coal-fired power plants and turning to gas, but this is coming at the sametime as a squeeze on international gas supplies.The chief executive of trade body Energy UK Angela Knightsaid: “It is essential that theauthorities pay close attention tothe transition such as assessing what capacity is needed and whatheadroom is required.”Simon Harrison, a chair at theInstitution of Engineering andTechnology, said: “A stable policy regime and confidence arounddecarbonisation targets isrequired to bring [...] investmentforward.”Senior Conservative MP Tim Yeo yesterday said the last Labour government was to blame forneglecting energy policy.
UK trade bodiescall for solutionto energy crisis
Ros Altmann, pensions campaigner, warned that “there is no money tree for retirees”
BY MICHAEL BOW
MARKETS hit their highest levelsfor five years yesterday, asoptimism on further big M&Adeals and bullish Germansentiment ignited confidence.The Dow Jones index rose to14,035.67, the highest level seenfor more than five years, while theFTSE 100 reached its highest levelsince the financial crisis struck,reaching 6,379.The pound was driven down,however, hitting its lowest valueagainst the dollar since last July.
Markets reachfive-year highs
BY JAMES TITCOMB
SPANISH real estate company Reyal Urbis filed for insolvency yesterday after failing torenegotiate debt with its creditors,the latest victim of Spain'sproperty market crash.The move takes the property developer closer to becomingSpain's second-largest bankruptcy after Martinsa Fadesa, whichdefaulted in 2008. Dozens of property companies havecollapsed in Spain, where houseprices have dropped 40 per centsince their 2007 peak.
Spanish buildergoes bankrupt
BY CITY A.M. REPORTERBY BEN SOUTHWOOD
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o what, exactly, could thechancellor do to boost growth?He is, of course, hamstrung by two conflicting realities: the factthat the budget deficit remains huge,and may even increase this year, as well as by the realities of coalitionpolitics. But unless he changescourse, and is willing to take a majorrisk, proper rates of growth areunlikely to return in the near future, which guarantees that the Tory party,already behind in the polls and facingan unreformed electoral system biased in favour of the Labour party, will face catastrophe at the 2015general election.For a given level of total demand,companies and individuals will investmore or less depending on theirreturn to capital. There is a straight-forward way of boosting this: slashcorporation tax and axe capital gains
Time to take drastic action to reboot Britain’s feeble economy
WEDNESDAY 20 FEBRUARY 2013
tax entirely. While this sounds dras-tic, this would immediately up thereturns on capital from all UK invest-ments; at a stroke, it would becomesignificantly more profitable forfirms to invest and operate in Britain. There is a catch, however: in the shortterm at least, this would increase the budget deficit. Unfortunately, there isno alternative: our rocketing nationaldebt is reaching the sorts of levels where any chance of growth will soon be snuffed out; but without a drasticimprovement to incentives, compa-nies won’t start investing.Regrettably, therefore, the deficit willneed to go up temporarily by up to 1.5per cent of GDP, though some of this would need to be cancelled out by accelerating Osborne’s spending cuts.His deficit targets are toast anyway sohe might as well go for it.Before any changes in behaviour areaccounted for, slashing corporationtax to a symbolically low level of 11per cent, below Ireland’s 12.5 percent, would reduce tax revenues by around £20bn a year; when takingaccount of increased investment and jobs over time, the revenue loss wouldend up being significantly less.Repealing capital gains tax wouldreduce revenues by £4.6bn; that would need to be accompanied by stricter rules to define what isincome, to prevent avoidance fromalternative to a compulsory living wage. He should also make it clearthat he believes in across the boardincome tax cuts, albeit at a later date.On top of these tax changes, weneed to allow energy firms to kick-start a shale gas revolution; planninglaws need to be torn up to allow amass privately-financed housebuild-ing programme, with homes forowner occupiers, private investors butalso for a new generation of profes-sional, corporate landlords. We alsoneed new roads and airports; the pri- vate sector would build many of theseif it were allowed to do so. A lot moreneeds to be done; I haven’t eventouched on demand-side reforms. Butthat would be a great start to gettingthe economy moving again.spiralling out of control. Countriessuch as New Zealand, which don’thave a CGT, have managed this, sothere is no reason why we can’t. These reforms would transform theUK into the most competitive destina-tion for company locations of any developed economy; it would elimi-nate at a stroke much of the avoid-ance issues. The psychological impact would be explosive: Britain would betruly open for business. Every busi-ness leader in the world would standup and take notice. The chancellor should alsoannounce that he will, over time,increase the personal allowancemuch more significantly. Nobody who earns the minimum wageshould pay national insurance orincome tax. This will take years toachieve but would boost incentivesfor the low paid and be a job-friendly Despite this lax attitude to saving,people in the UK think they need aretirement income of around 73 percent of their current earnings to enjoy a comfortable standard of living.“The UK needs to do more to face upto saving for its old age,” warnedNational Association of Pension Fundschief Joanne Segars. “For millions of people that will mean working longeror saving more, or both.”But Segars said that the report didnot directly include workplace pen-sions, which pay an income untildeath and so could go some way toovercoming the 12-year savings short-fall highlighted by HSBC.She also said the government’srecent auto-enrolment scheme couldhelp ease the severity of the shortfall by nudging people to save more.Meanwhile Altmann, who recently stepped down as Saga director-general, blamed the lack of financial planningon a pensions system that “automati-cally disincentivises you from saving”.Means-testing currently guaranteeseveryone gets at least £142.70 in statepension per week, though there is aprovision designed to boost saving. Butthis is set to end in 2017 with the onsetof the universal state pension.