The Salary Calculator

How to navigate pension scams

by Madaline Dunn

Pension scams are on the rise. According to the Financial Conduct Authority (FCA), over £2 million has been lost to pension scammers in the last year, with victims, on average, losing out on £50,949. This number is double what it was in 2020. That said, small pots and big pots are being targeted, with victims being conned out of £1,000 to £500,000.

Of course, it’s incredibly worrying that such a nefarious scam has seen such an increase. Savers work hard their whole lives to make sure that they’re set for their golden days.

In response to this concerning trend, the government recently announced anti-pension scam plans to safeguard savers.

At The Salary Calculator, we’ll walk you through what the government’s Fraud Action Plan is, what it means for you and some steps you can take to protect yourself from pension scams.

This article will explain:

• Latest statistics from the FCA
• What the Fraud Action Plan contains
• Tips to protect yourself against fraud

A warning from the Financial Conduct Authority (FCA)

According to the FCA, pension scams have become increasingly common due to the pension freedoms introduced in 2015. This gave people much more flexibility around their investments; however, this flexibility also brought with it risk.

Now, the FCA says that pension holders were nine times more likely to accept pension advice from someone online than someone in person. Savers were also five times more likely to be attracted to a free online pension review by a stranger than one offered by a stranger in the pub. Worryingly, out of those surveyed, 28% were aware that this kind of offer was typically the sign of a scam.

As a result, Mark Steward, executive director of enforcement and market oversight at the FCA, suggests that pension holders should challenge themselves and “flip the context”. “Imagine a stranger in a pub offering free pension advice and then telling you to put those savings into something they were selling. It is difficult imagining anyone saying yes to that,” he said.

According to Tom Selby, senior analyst at AJ Bell, men aged 55 and over “who can access their retirement pot flexibly” are one of the main targets for this kind of scam. Of course, the current climate caused by Coronavirus has made people more vulnerable to pension scams too.

The Fraud Action Plan

The UK government recently admitted that it needs to do more to protect people from pension scams. So, it will soon publish its Fraud Action Plan 2022-2025, which will seek to bolster consumer protections by eliminating fraudulent infrastructure.

Reportedly, more emphasis will be placed on tackling ‘secondary scammers’ who go after those who have already been scammed, and the government will also pursue greater gathering and sharing of data relating to pension scams.

Tips to protect yourself

While you may think that you’re too savvy to be at risk of a pension scam, scammers are becoming increasingly sophisticated with the tactics they use to trap victims.

The FCA has warned that overconfidence on the part of consumers puts people at risk. So, it’s always best to make sure that you take some steps to safeguard yourself.

Look out for red flags – As outlined above, those offering free reviews are unlikely to be legitimate advisors, equally those who promise you ‘high returns’ are likely to be pulling a fast one.

Keep yourself informed – In line with the UK’s pension rules, you typically can’t unlock your pension until you’re 55. So, if you’re promised an early cash release, it’s likely that this is a scam. Get in touch with the Pensions Advisory Service if you have any questions or concerns. Pension Wise is another service that can help you stay in the loop.

Be wary of cold calls – Back in January 2019, the government banned cold calling regarding pensions. So, unless you have given your pension provider prior permission to call you, ignore calls and texts regarding your pension because those who get in touch are likely to be scammers.

Take your time – Those who pile on the pressure or give you a limited time offer will likely be scammers. It’s important to take the time to research a provider to make sure everything is above board. Always check the Financial Services Register before making a decision.

Tags: 2021, FCA, pension, Pensions, The Salary Calculator

The best credit card deals out there in 2021

by Madaline Dunn

When it comes to the world of credit cards, there are lots of benefits. A credit card helps boost your credit rating, offers you protection and freebies, and gives you some financial wriggle room.

That said, it can be hard to know where to start, and often people have lots of burning questions that need answering. It’s also important to stay informed about charges and fees.

At The Salary Calculator, we’ll make sure that you’re up-to-date with all the latest credit card deals out there in 2021. Keep reading to find out more.

Reasons you could benefit from a credit card

To some, credit cards can seem intimidating, and many believe it only leads to debt, but they can be helpful in some circumstances. Credit cards can help you with your finances and assist you with building a good credit report. If your credit is in the red, and you’re looking to make a big investment like a house or car, a credit card can push it into the green.

Some credit cards also enable free borrowing and purchase protection, as well as offering reward deals so that you can earn free money too.

That said, it’s important to be aware that you shouldn’t rely on credit cards to borrow money, especially if you don’t have the funds for repayments. Plus, when the interest-free period ends, you can be faced with some pretty significant charges. Credit cards also have varying levels of APR, which refers to the rate at which you’ll be charged for borrowing. So, make sure you don’t get caught out by the small print!

Santander All in One Credit Card

Arguably, the biggest plus of this credit card offer is that cardholders can benefit from 26 months interest-free on balance transfers. Other benefits include a 0.5% cashback on all purchases and no foreign transaction fees.

However, it’s not all sunshine and rainbows, and the card does have a £3 monthly charge, which works out to £36 a year. Another disadvantage of this card is that you will also be charged transaction fees if you withdraw money – interest applies here too. Moreover, it has an APR of 23.7%.

To be eligible for this card, you must have an income of at least £7,500 a year and be 18 or over.

Aqua Advance Credit Card

This card is excellent for people who are looking to build credit and requires no credit rating. It has an initial APR of 34.9%, but customers who stick with this card will be rewarded through staggered APR reduction. After 12 months, if you keep up with payments and stay within your limit, your rate could be reduced by 5% each year. This means that the APR can go as low as 19.9%.

This card also offers access to the Aqua Credit Checker, allowing you to view your credit rating and its improvement.

Other benefits include credit limits of between £250-£1,200 and no extra charges for purchasing abroad.

To be eligible for this card, you must fulfil a specific criterion. Applicants must be over 18 with a permanent address. Additionally, you must have a current UK bank or building society account and must not have been registered as bankrupt in the last 18 months. Equally, you cannot have any ongoing bankruptcy proceedings against you.

Finally, eligibility also depends on not receiving a County Court Judgement (CCJ) in the past 12 months. You also cannot already have an Aqua card or have an Aqua, marbles, opus, Fluid card taken out in the last 12 months.

American Express Platinum Cashback Everyday Credit Card 

This is a great card for those looking to get a little more bang for their buck with no annual fee. It offers a 5% cashback on all purchases up to £100 for the first three months. This does, however, decrease over time.

That said, it’s important to note that you need to spend £3000 or more to access cashback offers, and unfortunately, it’s not available for those with a bad credit history. It has an APR of 22.2%,

To be a successful applicant for this card, you must be aged 18 or over and have a clean slate regarding debt. Applicants must also have a permanent UK address and a current UK bank or building society account.

M&S Shopping Plus Credit Card

For those looking for a credit card to spread the cost of large purchases, this is the perfect one for you. With no annual fee, it also boasts a 20-month interest-free period of new purchases. That’s right, no interest at all for 20 months! Accompanying this, the card also offers cardholders an 18-month interest-free period for balance transfers. That said, this only applies within the first 90 days. Also, remember if you opt for this card, you must pay off your balance before the interest-free period ends.

As with everything, there are pros and cons to this card, and the reward points you earn through this card are only available in the form of M&S vouchers. So, this isn’t necessarily a great deal for everyone. It also has an APR of 21.9%.

Eligibility for this card requires that applicants are over the age of 18 and UK residents.

Barclaycard Rewards Credit Card

This is a great travel card for those who want to earn as they spend abroad. With a 0% foreign transaction fee and no annual fee, this is a pretty attractive deal. This card also offers 0.25% cashback on all spending and savings on live events with Barclaycard Entertainment.

However, compared with other credit cards, a 0.25% cashback rate isn’t the best deal and it does not offer a balance transfer option. It also has a 22.9% APR variable.

Applicants must be aged 21 or over, have a personal income of £20,000 or above, and have had a permanent UK address for at least two years. Those looking to get in on this deal must also have at least four years of managing credit, make payments on time and be able to afford repayments.

Lastly, applicants must not have had Individual Voluntary Agreements, CCJs, and must not have declared bankruptcy in the last six years.

Tags: 2021, Credit card, Economy, Personal finances, The Salary Calculator

Changes to pensions in 2021

by Madaline Dunn

The new tax year brings with it some significant changes to finances. One area affected is pensions. 

It’s important to keep in the loop about pension changes because it can mean that either your finances take a hit or you potentially see a boost!

At The Salary Calculator, we’ll make sure you’re up to date with all the latest information. In this article we’ll explore:

• What annual allowance is
• Whether any changes have been made to pension tax relief
• What changes have been made to lifetime allowance (LTA)
• Whether state pensions have been boosted
• How employer contributions work

What is Annual Allowance?

Annual allowance refers to the total amount of pension contributions an individual can make each year while receiving tax relief. This includes contributions made by the individual, employer, and any other third party.

The annual allowance is capped at £40,000. If you exceed this amount, you will be taxed at the highest rate of income tax that you pay.

The Tapered Annual Allowance (TAA) was introduced back in 2016 and applies to high earners. For the tax year 2021/2022, the limit for threshold income and adjusted income is being increased to £200,000 and £240,000, respectively.

Are there any changes to pension tax relief?

Pension tax relief is applied to any governmental top-up contributions made to your pension.

If you are eligible for pension tax relief, the amount of relief you will receive is determined by the highest rate of income tax that you pay. So:

• Those who are basic-rate taxpayers receive 20% pension tax relief
• Those who are higher-rate taxpayers receive 40% pension tax relief
• Those who are additional-rate taxpayers receive 45% pension tax relief

Those who earn under the Personal Tax Allowance (£12,570) are not eligible for pension tax relief.

No changes have been made to pension tax relief.

What are the changes to Lifetime Allowance (LTA)?

When it comes to pensions, the good news is that you can save as much as you want for your golden days. 

The amount of money you accumulate from all pension schemes in a lifetime before taxation is called your pension lifetime allowance (LTA). This was introduced back in 2006, and from 2021 through 2022, the LTA is £1,073,100.

In March, it was announced that LTA would be frozen at this limit until 2026, and it is estimated that the Treasury will generate £990m from this freeze.

Of course, LTA does not apply to everyone. An individual can work out whether or not it is relevant to them by calculating the expected value of their pension payout. To make this calculation, head over here.

If your pension pot exceeds the LTA, you will be charged 25% if it’s withdrawn as income. Alternatively, if it is withdrawn as a cash lump sum, it will be taxed at 55%.

Have state pensions been boosted?

In line with the triple lock ruling, state pensions have been boosted. On 6 April 2021, the state pension increased by 2.5%. That’s an increase of £4.40, bringing the weekly total to £179.60. Annually this works out as £9,339.20.

That said, you will only receive the full state pension amount if you have 35 years of National Insurance (NI) contributions.

Those who reached the state pension age before 2016 will receive the basic state pension, which is slightly less and boosted from £134.25 a week to £137.60.

How do employer pension contributions work?

In line with the Pensions Act 2008, an employer must offer a pension scheme to eligible employees and automatically enroll them once they have commenced employment. Employers must also make contributions to their employees’ pension scheme.

Currently, the minimum amount that an employer must contribute is 3%, and this has remained unchanged.

 

Tags: April 2021, Pensions, personal allowance, tax rates, The Salary Calculator

Updated for April 2021

by Admin

The Salary Calculator has been updated with the tax rates which take effect from 6th April 2021. Some of these rates are still subject to confirmation by the relevant governments, but the calculator will be updated if any of them change.

The biggest change is the introduction of “Plan 4” student loan repayments, for Scottish students. If your undergraduate loan is administered in Scotland and due for repayment you will start repaying under Plan 4 from April 2021, even if you have been previously repaying under Plan 1. Those already repaying their loans will switch from Plan 1 to Plan 4 repayments in April. This change does not affect students in England, Wales or Northern Ireland, and nor does it affect repayment of postgraduate loans.

If you would like to see the effects of this change, and any others from April 2021, try out The 2021 Salary Calculator by choosing the “2021/22” tax year from the drop-down box.

Tags: April 2021, budget, income tax, national insurance, Pay As You Earn, student loan company, student loans, tax rates, The Salary Calculator

Job Support Scheme

by Admin

As I mentioned in an earlier post, the Pro-Rata Calculator had the details of the Job Support Scheme added to it. This scheme was meant to come in to effect on 1st November but at the last minute it was put on hold and the Furlough scheme was extended. At the time, I left the Job Support Scheme on the calculator in case it might be useful for people to see what the effect of it might be in the future. However, it is uncertain whether this scheme (in its current form) will ever return – so I have removed it from the calculator in order not to add confusion. The Furlough calculator is still available.

Tags: coronavirus, covid-19, furlough, job support scheme, Jobs, Pay As You Earn, The Salary Calculator