July Newsletter

Welcome to our July newsletter. Product of the month is van insurance. NS&I to stop paying its winners by cheque. Car Insurance premiums fall and has Covid killed your pension savings habits.

Product of the Month

We have access to van insurance schemes you wont find on the internet, we have deals with the UK’s leading insurance companies to find the best policy for a price that is right for you and your business.

Your van works hard for you and your business. We’ll help you keep it on the road, protect it for business use and potentially reduce your costs.

Whether you use your van for work, deliveries or family trips, we can cover you.

Your van’s your livelihood, you may use it for deliveries, your toolbox, your office or all of the above, so making sure you have adequate insurance protection is high on the priority list. If your van’s out of action, so are you, so a replacement van while yours is in the garage is essential – as is knowing that the quality of repairs will be top notch. You also want to know that when you need help getting back on the road after an accident or theft of your van, it’s there, 24/7. Talk to us today about our comprehensive van cover for established businesses as well as new start-ups.

NS&I ditches plans to stop paying Premium Bonds winners by cheque

NS&I said it will no longer be moving all its customers to having Premium Bonds prizes paid directly to their bank accounts.

Vicky Shaw

Thursday 24 June 2021 17:21

NS&I has ditched plans to stop paying Premium Bond prize winners by cheque.

Previously, NS&I had intended to phase out the use of warrants, which are like cheques, from the December 2020 prize draw.

But in December it said that this will happen instead from spring 2021, after some customers struggled to contact the provider.

On Thursday, NS&I said it will no longer be moving all its customers to having Premium Bonds prizes paid directly to their bank accounts – meaning that customers who receive their prizes by cheque can continue to do so.

In the June 2021 Premium Bonds prize draw, nearly nine out of 10 (88%) prizes were either paid directly into customers’ bank accounts or reinvested into more Premium Bonds.

NS&I chief executive Ian Ackerley said: “We have responded to feedback from some of our customers and we have decided to retain the option for them to receive Premium Bonds prizes through the post.

“We will continue to encourage customers to have their prizes paid directly into their bank account, as many have done so in the last 12 months.

“Having prizes paid directly into bank accounts is quicker, easier and more secure for our customers, while also being more sustainable and better value for the taxpayer.”

Releasing its annual report, the Treasury-backed savings giant said it had missed its net Government financing target last year.

In 2020-21, NS&I delivered a record £23.8 billion of net financing to the Government, helping to boost state coffers to tackle the Covid-19 pandemic.

However, it undershot its revised 2020-21 target to raise £35 billion, within a £5 billion range either way of £30 billion to £40 billion.

Its figures showed a gross outflow of £64.6 billion last year.

Sarah Coles, a personal finance analyst at Hargreaves Lansdown said savers “grabbed their money and ran” when NS&I announced rate cuts on its savings products last year.

NS&I’s report said that last summer, it had appeared that the inflow of cash was going to be higher than the Treasury required.

But after the rate cuts were announced, savers had moved “more quickly than has typically been the case to withdraw funds”.

The provider has a responsibility to balance the interests of savers, taxpayers and the broader financial services sector – and it decided to cut rates after its products had moved to the top of “best buy” tables.

The provider, which has 25 million customers, also drew criticism last year as customers struggled to get through to staff.

The report said NS&I’s legacy IT systems were not set up to enable the majority of customer-facing staff to work from home and staff availability was reduced by illness and the need for some to shield.

At times, there was a reduction of up to 60% capacity in its call centres and non-customer facing operations due to Covid-19 public health measures.

However, it had implemented a recovery plan, including deploying additional staff and introducing a chatbot.

Customer satisfaction fell from 84.3% in 2019–20 to 76.1% in 2020–21 – against a target of at least 85%.

Some 0.05% of transactions resulted in a complaint, compared to 0.03% in 2019–20.

The report said: “One of the many tragic consequences of Covid-19 was that it led to a rise in the number of contacts related to bereavements.

“We received many requests for access to savings held by a loved one who had died. We sought to prioritise requests for those in urgent financial need.

“We also dealt with higher numbers of vulnerable customers, and where appropriate invoked special rules to release customers from product terms if they were facing urgent need or distress.”

We are in a better position now, despite the ongoing pandemic, but there is more to do in the months ahead

Ian Ackerley, NS&I

NS&I said in total it had missed six out of 11 service delivery measures, including its net financing target and measures relating to operational delivery, customer satisfaction, fraud management and diversity.

On the very rare occasions where a customer faced a financial loss as a result of fraud, through no negligence of their own, the provider said it had compensated them in full.

Mr Ackerley, said: “In a hugely challenging year, I regret the impact of operational issues on our customers, and apologise that they did not receive the levels of service that they have come to expect from NS&I.

“We are in a better position now, despite the ongoing pandemic, but there is more to do in the months ahead.

“Despite the challenges faced, I am proud of what we have achieved in an exceptional 12 months. We have delivered unprecedented levels of financing for Government and served millions of savers, as well as evolving our operation so that we can learn from this year and build a stronger and more resilient business that continues to attract the loyalty of millions of savers.”

Car insurance premiums down by 8.4% annually, research finds

Telematics policies and a quieter period for claims in 2020 have helped to push the cost of car insurance down, Consumer Intelligence said.

Vicky Shaw

Monday 12 July 2021 00:01

Car insurance premiums have plummeted by 8.4% annually, with the average policy costing £779, according to analysis.

Premiums are on a downward trend generally across all age groups, data consultancy Consumer Intelligence said.

It said motorists aged 25 to 49 have seen a 2.1% fall in premiums over the past three months, while over-50s and under-25s have seen decreases of 1.5% and 1.1% respectively.

The average cost of car insurance for the under-25s is now £1,735.

For the 25-to 49-year-old age bracket the average cost is £586, and for over-50s an annual policy typically costs £345.

Looking at reasons for the downward trend, Consumer Intelligence said there has been an increase in telematics quotes. Telematics policies can help drivers access cheaper policies, by rewarding them for good driving habits.

While they are often used by younger drivers, the availability of telematics products for older age groups has also increased, according to the research.

With the coronavirus lockdowns also resulting in fewer cars having been on the roads, insurers benefited from a quiet year of motor claims in 2020 and have been able to pass savings onto customers, the report said.

It added that some brands are also pricing competitively ahead of Financial Conduct Authority (FCA) rule changes which will come into force from January 1 2022.

The new rules will mean renewal quotes for customers are not more expensive than they would be for new customers.

Harriet Devonald, product manager at Consumer Intelligence said: “We are seeing a downward trend for premiums across the board – in all of our age and regional segments – and it’s not just the uptick in telematics quotes behind the plummeting premiums.

“With the FCA’s pricing remedies coming in at the end of the year, some brands are looking to gain volume while they can. Others, who benefited from a quiet year of motor claims in 2020, have been able to pass savings onto customers, whilst other brands are following the market downward in order to remain competitive.”

Prices have now fallen 18.2% from a September 2017 pricing peak and are now around levels last seen in 2016, Consumer Intelligence said.

Drivers in London (£1,456) continue to be the most expensive drivers to insure typically, with the North West of England (£994) following in second place.

At the other end of the scale, the South West (£517) is the cheapest region for car insurance, followed closely by Scotland (£524) and the East Midlands (£532), the report said.

Here are the annual changes in premiums across Britain, with the average of the five cheapest quotes in May 2021, according to Consumer Intelligence:

– East Midlands, minus 6.6%, £532

– Wales, minus 6.6%, £742

– London, minus 7.2%, £1,456

– South East minus 7.6%, £662

– Scotland, minus 7.8%, £524

– Eastern England, minus 8.1%, £615

– Yorkshire and the Humber, minus 9.4%, £767

– North West, minus 9.6%, £994

– West Midlands, minus 10.0%, £738

– South West, minus 10.1%, £517

– North East minus 10.9%, £714

How Covid killed your pension savings habits

But as we emerge into the light of a new normal, the effects of some of the emergency financial decisions we made last spring are only just making their presence felt.

When the extraordinary events of 2020 hit home we did exactly the right things. We reined in the spending, cut out every direct debt and standing order we could and kicked the longer-term money matters into the long grass – just for a while.

Now, with stark warnings emerging over the effects of those changes if left unresolved, it’s time to unravel our emergency measures, especially when it comes to retirement savings.

The average working adult has around £33, 800 set aside for old age. It sounds like a decent chunk but pension specialists recommend that someone retiring at 67 should have at least £237,000 saved for a reasonable retirement, so the average Brit’s pension stands at just 18 per cent of what we need.

A fifth of the population has no private or workplace pension at all.

Millennials have £17,175 saved on average, Gen X-ers have £35,175 saved, while baby boomers have £61,546 in their pension pot.

Zoe Stabler, of Finder, says: “The pandemic has been extremely tough in many ways, with a lot of people having to take unprecedented steps in order to stay afloat financially. It is understandable that some Brits have reduced, or paused, payments in order to direct money to more immediate priorities.

“However, if you are someone who has had to do this, it is vital that you look at replacing this money or at least starting to pay into your pension again. The power of compound interest means that what you pay in now could be a life-changing amount if you’re able to leave it for decades.

“As an example, £10,000 paid in now, earning an interest rate of 5 per year, would be worth £25,330 in 20 years, £41,259 in 30 years and £67,207 in 40 years.

“If you opted out of your workplace pension in order to save money during the pandemic, you should look to rejoin it as soon as you can. If you contribute 5 per cent of your salary each month towards it, your employer is obliged to pay a minimum of 3 per cent on top of this, which is effectively free money topping up your pension!”

So what should we be aiming for, how and by when?

Nathan Long, senior analyst for Hargreaves Lansdown, says: “You should ideally have a retirement savings vehicle, such as a pension or lifetime ISA, where you can put money away each month and benefit from a government bonus or tax relief.

“If there’s a pension scheme at your work and you’re not paying in, why not? And if you’re self-employed but aren’t saving for retirement, why not?”

A moderate annual income in retirement is £20,200, according to the Pensions and Lifetime Savings Association, with £9,339 of that provided by the state pension if you receive the full benefit.

The general rule is to save 12 per cent of our income, including tax relief and employer contributions every year, but few people start at 18, which that figure assumes along with the expectation that we all retire at 68.

Mr Long suggests a few actions to take according to age:

18-34 year olds:

Find out where your money is invested. A default fund is a broad fit for many but it can be quite conservative, so taking a bit more risk with a more adventurous fund is a great opportunity to boost your returns when you’re young.

Pay in more if you can. If you’re able to contribute more to your pension you could get extra tax relief and possibly more money from your employer too.

35-54 year olds:

It’s tidy-up time. You may have several pension pots by now so consider consolidating them to save the admin headache (it may lower the costs too).

You may be at peak earnings in your career now so try to boost your pension contributions – you’ll get more tax relief and possibly extra cash from your boss.

55 years +:

Get to know your pension, like really know your pension. How much is in there? Do you need to turbo-charge your contributions to give it a final boost before you finish work? And how can you take money out when you retire?

Consider when and how you’ll retire. Where do you want to live? Would you like to reduce your hours and go part-time in the final years before retiring? If you have a partner, schedule a time to discuss these things.

MoneyHelper, run by the government’s Pension Advisory Service, provides free and independent advice on retirement savings including pension saving calculators to give individuals a clearer picture of how their current savings and savings habits will translate into income in old age.