Pensions ‘require funding boost’

31 August 2010 Last updated at 05:42 ET

Workers may need to pay more for their pensions amid a continuing picture of fund deficits, two surveys suggest.
Employees of large firms could have to invest more because of the costs of a new system to include more people in company pensions, actuaries warned.
Four in 10 companies would reduce future scheme benefits to pay the additional costs, the Association of Consulting Actuaries’ survey found.
Meanwhile, KPMG said business growth could be hit by pension costs.

The accountancy firm said that its analysis showed the UK’s largest firms were facing a growing pensions shortfall.
‘Cut back’
The poll of large firms conducted by the Association of Consulting Actuaries (ACA) found that 41% of employers said they were “likely” or “highly likely” to cut back the benefits of existing deals.
This was because they needed to meet the cost of a new scheme - being brought in from 2012 to 2017 - to automatically enrol some workers into a company pension.
Exactly the same proportion of small businesses said they might cut their existing pension scheme entirely and replace it with a government-sponsored scheme, when the ACA conducted a poll last year.
The government is currently reviewing the auto-enrolment plan. Companies will initially only have to pay in 1% of a worker’s earnings, rising to a minimum of 3% by 2017.
Individuals will have to contribute 4% of their salary to their scheme, with the government topping this up with 1%.
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The pensions outlook for those aged 45 and over no longer looks quite as spectacularly good as it did”

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HOUSE PRICE CRISIS: Nightmare on YOUR street

By Liz PhillipsLast updated at 2:53 PM on 28th July 2010

Homeowners are facing a doomsday scenario of property prices diving by up to a quarter by the end of 2012.
This huge plunge could wipe more than £42,000 off the value of the average home.
For the 3.3million who bought in the high-cost years of 2006 and 2007, as well as those who have bought this year, the spectre of negative equity and repossession could loom again.

Even those who put down larger deposits could find themselves stranded as their equity is eroded. If they try to borrow with depleted equity they could face massive fees and high interest rates.
The devastating prediction comes from consultancy Capital Economics, which believes house prices could be down 5 per cent by the end of this year and continue to fall another 10 per cent next year and, a further 10 per cent in 2012. 
 

PricewaterhouseCoopers has also delivered a gloomy forecast. The accountancy firm believes that by 2015 property prices are likely still to be below their 2007 peak once inflation is taken into account. It says homeowners face a decade in the doldrums as prices will not start picking up until 2020.
Other forecasters are less downbeat. But, after three months of price falls, they are predicting a tough 12 months ahead, with prices falling as the year continues and remaining flat next year.
ROLLERCOASTER RIDE
House prices have been on a rollercoaster ride since 2007, as our graphic shows. Then the average price, according to Nationwide, peaked at £186,044 before falling back to £147,746 by February.
A surge then pushed this average up to £170,111 by this summer, leading some to believe we were entering a new boom period. But now most indices show prices are falling again, though many sellers are failing to accept this.
This is causing a gulf to open between asking prices and selling prices. In some regions, homes are being overvalued by as much as £70,000, according to analysis by Henry Pryor of the Housing Expert website.
The difficulty is that house prices across the UK are 6 to 9 per cent higher than a year ago, even though they have been falling for the past three months. This rise was driven by a shortage of properties on the market, causing desperate buyers to scramble for the few homes available.

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Dubai’s debt-laden private equity group faces closure

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Dubai’s ambitious attempts to build an overseas investment empire to rival Europe’s biggest private equity firms could soon come to an embarrassing end.
Dubai International Capital (DIC), the international investment arm of the Dubai government that once tried to buy Liverpool football club, could be forced to wind itself up.
DIC has debts of $2.5 billion (£1.7 billion). A $1.2 billion loan is due this month but the fund has asked creditors to approve a three-month extension. Its lenders, which include HSBC, are expected to push for the fund to sell its assets to raise the money. The banks have appointed Deloitte, the accountancy firm, to advise on their options. DIC owns several big companies in Britain, including Travelodge, the budget hotel chain, and Doncasters, the engineering firm.
DIC is unlikely to be bailed out by the Dubai government, which is facing its own debt crisis. In 2009, Dubai World, the state-owned conglomerate, caused chaos when it admitted it was unable to repay its debts. Abu Dhabi, its oil-rich neighbour, was forced to step in with $20 billion of bailout loans.

The move to wind up DIC would be the latest blow to Dubai’s international ambitions.
DIC was set up in 2005 to compete for deals with Europe’s biggest buyout houses. It snapped up a string of companies in its attempt to build a portfolio that would rival established private equity firms.
However, many assets were bought at high prices at the top of the boom. DIC was one of the private equity firms hardest hit by the crunch. Deals structured with large debt packages and little equity soon ran into trouble and DIC was forced to inject fresh capital into, among others, Travelodge and Doncasters.
As well as its move for Liverpool in 2007, DIC acquired Alliance Medical for £600m and Almatis and Mauser in Germany for $1.2 billion and $850m, respectively.
The banks are unlikely to push for a fire sale of assets, preferring to wait until prices rebound, when they will stand a better chance of recouping their cash.
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Lloyds’ Antler deal raises ‘conflict of interest’ questions

“This is a state-owned bank and we are concerned about the amount of debt
it is converting into equity. I did ask Eric Daniels [Lloyds chief
executive] this question at the Treasury Select Committee meeting in January
but he did not have a clear answer.”

Mr Fallon said that UKFI – which manages the Government’s stakes in the banks
– needed to account for the way executives were being paid at Lloyds and for
their lending practices.

“UKFI is ultimately responsible not only for managing the Government’s
stake [in Lloyds] but also ensuring that we get the best results. They are
accountable and they will come up before the Treasury Select Committee once
Parliament is reconvened.”

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Higher taxes for a million as George Osborne’s emergency Budget hits investors

By Rosa Prince, Harry Wallop and Myra Butterworth


Published: 10:32PM BST 17 May 2010

The Chancellor is to increase duty on capital gains even though the plan was
not included in the Conservatives’ election manifesto.

CGT on “non-business assets”, including second homes, buy-to-let properties
and shares, could rise from the current 18 per cent flat rate to a top rate
of 40 or even 50 per cent, to fall in line with the higher rates of income
tax.

The move could double tax bills for hundreds of thousands of investors and has
been denounced as “legalised theft”. There has been speculation that the
changes may be backdated to stop a “fire sale” of second homes and other
assets.

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‘Repo 105′ at the heart of Lehman report

By Sean Farrell

Published: 8:11PM GMT 12 Mar 2010

Mr Valukas finds what he calls “colorable claims” that could support
a court decision against the former executives and the accountancy firm.

At the heart of his findings is “Repo 105″, an accounting ruse that
was instead used to try and keep the bank alive.

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Savers’ dilemma: to fix or not to fix

By Kara Gammell

Published: 6:20AM GMT 09 Jan 2010

Savers have endured a pitiful year, with interest rates falling to a 300-year
low of just 0.5pc.

Rates on instant access accounts, including cash Isas, have been even lower,
with many paying a worthless 0.1pc. Anyone looking for a half-decent rate of
interest of more than a couple of per cent has had little choice but to
consider accounts that lock savings away for a specified period, either one,
two, three or five years.

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Copenhagen climate deal: London faces carbon trading challenge from New York

By Rowena Mason, City Reporter


Published: 12:02AM GMT 21 Dec 2009

Political leaders signed a watered-down agreement this weekend with no future
roadmap to international emissions trading.

However, President Barack Obama is likely to use the US’s commitment to
lowering its emissions as a way of forcing his cap-and-trade bill through
the Senate in the spring.

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Zurich loses data on 51,000 UK customers

The personal account details of 51,000 insurance customers of Zurich Insurance
in the UK have been missing in South Africa for more than a year, the Swiss
insurer revealed today as it launched a full investigation into the loss of
a data tape.

Bank and general insurance policy details of a further 550,000 customers in
South Africa - its entire general insurance customer base in the country -
and 40,000 clients in Botswana have also been lost since August last year,
after the tape went missing, Zurich said.

Depending on the type of policy, in some cases the lost data includes personal
contact information including addresses and telephone numbers.

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SFO opens criminal inquiry into ‘Beano’ Levene

The Serious Fraud Office (SFO) today announced it was opening a criminal
investigation into Nicholas Levene, the bankrupt City trader.

Mr Levene, who is nicknamed Beano and is the former vice chairman of Leyton
Orient Football Club, is alleged to owe clients £200 million and is already
being investigated by Deloitte, the accountancy firm.

The SFO said today: “The SFO, having received complaints about the business
activities of Mr Nicholas Levene, has now opened a formal criminal
investigation.”

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