This email was sent to Money Box subscribers on 6 January 2012

Dear Listener

Happy New Year.

It’s been a bad week for final salary pension schemes. First the Association of Consulting Actuaries said that nine out of ten of such schemes were now closed to new members and that four out of ten were frozen for existing members too. In addition a fifth of employers were planning to spend less on pensions despite a new obligation to enrol all staff in a scheme – which starts for biggest firms this October.

And today one of our biggest companies, Shell, announced that it would close its final salary pension scheme to new recruits from 2013. Shell is the last FTSE100 company with an open final salary pension scheme. The decision was taken to reflect “UK market  trends” rather than because of fears about the cost or the risk – Shell’s scheme is thought to be fully funded.

Regular listeners shouldn’t be too surprised. Our Money Box Special last April was called ‘The Death of Final Salary Pension Schemes’. In the private sector at least, it is being proved right. Refresh your memory here http://news.bbc.co.uk/1/hi/programmes/moneybox/9469419.stm.

***IN MONEY BOX THIS WEEK***

From this week – 1 Jan in fact – a new EU law should mean that all payments to and from banks, building societies and credit cards happen more quickly. The EU standard is called D+1 which means you give the instruction on day D and the money reaches its destination +1 days later. Though ‘day’ means ‘working day’. So Thursday for Friday, and Friday for Monday. In fact in UK we do not have a D+1 system – ours is either same day faster payments or the much slower D+2 BACS payments. So to meet the new law all payments should go through the faster payments system and arrive almost immediately. However (and you knew there would be a however!) it may not be that simple in every case. We explain the big idea – and the small niggles.

A major insurer is giving car insurance customers extra legal protection cover free – for three months and then it will charge them, even if they have already said ‘no thanks’. Esure defends itself against charges of unfair trading.

Absolute return funds aim to give positive investment returns even when stock markets are falling or really really messy and volatile. But in 2011, when there were all those things, very few managed to achieve that aim, losing on average 1%, and if you picked the wrong one as much as 16% of your money. So what does ‘absolute return’ really mean? And is it a misleading name? No fund would come on Money Box – but we find someone who will….

Around 14,000 customers with a Bank of Ireland mortgage are being shifted – willy nilly – to a subsidiary of Nationwide called The Mortgage Works. The Bank of Ireland’s standard variable rate is a friendly 2.99% whereas The Mortgage Works has a hardly market leading SVR of 4.79%. No date has been set to raise the rate – and some are protected on a fixed rate for a while – but when it comes the change would add nearly £100 a month to the cost of a £100,000 repayment mortgage or £150 a month to an interest-only loan. Nationwide won’t talk to us but we get a mortgage specialist to give his view.

That’s our four item agenda and we hope to squeeze in one or two short news items in our usual 24 minutes. Listen to the finished article on Radio 4, Saturday at midday and repeated Sunday at 9pm. Or listen online anytime www.bbc.co.uk/podcasts/series/moneybox - or download the most popular business podcast (ours) through iTunes.

There is more information on our website www.bbc.co.uk/moneybox where you can also download transcripts of past programmes and send us ideas or problems you want us to look into in 2012.

This newsletter is available at bbc.co.uk/moneybox/newsletter around the time it hits your inbox (tell your friends who don’t subscribe). And you could join more than 20,400 people who now follow me on Twitter to enjoy (or rant about) my random but timely thoughts on money and a few other things whenever I’m awake at twitter.com/paullewismoney.

Wills and Inheritance Tax is our topic on Money Box Live on Wednesday at 3pm. Call with your question anytime after 1pm on that day on 03700 100 444 or email through the website http://news.bbc.co.uk/1/hi/programmes/moneybox/9671985.stm. Or of course just listen.

Best wishes,

Paul

PS. I will be on Breakfast on BBC One around 0845 on Saturday with a programme trail and back on Breakfast later in the week, probably on Thursday and usually around 0640 and 0820 talking about a money story and answering emails and tweets. But the time, and occasionally the day, can vary.

 


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