In March, the coronavirus outbreak seemed to steal all the headlines, giving us almost hourly updates as it transformed our lives, and made the word ‘unprecedented’ feel like an understatement. Inevitably, there has been a serious impact on world stock markets, which have suffered their worst quarter since 1987.
Anything the Chancellor announced on 11th March was almost immediately superseded by events and – when this is finally over – another Budget seems inevitable. Like other countries, the UK will, one day, have to pay for the rescue package and the unprecedented increase in Government borrowing.
The rest of the UK news is, inevitably, dwarfed by the impact of the crisis. Business confidence fell during March, and credit rating agency Fitch dropped the UK from AA to AA- adding the country’s economic output would fall by almost 4% this year.
Some good news: Nissan announced that it was investing £400m in its Sunderland plant to build the new Qashqai – and two days later the Chinese firm Jingye completed the takeover of British Steel, safeguarding 3,000 jobs. Then, on the morning of the Budget, the Bank of England cut base rates from 0.75% to 0.25%.
None of this, of course, could do anything to stop the stock market’s slide in March. The FTSE 100 index of leading shares fell 14% in the month to close at 5,672 and is down by 25% for the year as a whole. The pound fell 3% in the month to end March at $1.2415, down 6% against the dollar for the year to date.
The state owned savings bank has dropped planned cuts to variable interest rates on savings and other products to “support savers” during the pandemic. The government savings organisation says planned interest rate reductions on NS&I variable rate products, including Premium Bonds, will not go ahead. The move is designed to help savers coping with the impact of Coronavirus. NS&I says planned interest rate reductions on NS&I variable rate products – announced in February and due to take effect on 1 May – will not now be implemented.
ABI Pension Warning
The financial services trade body has urged pension savers to get authorised financial advice before making any decision about a pension. The body is concerned that many people will use the Pension Freedoms to take cash early from their pensions.
The Association of British Insurers said today: “With lockdown causing financial worries for many families, the ABI is warning people not to see their pensions as a quick way of raising cash, and to think twice before making any rash financial decisions during this uncertain time.”
The body is particularly concerned about over 55s using the Pensions Freedoms to take cash now “without thinking through the longer term consequences, or falling prey to pension scammers out to rob savers of their pensions.”
An Aegon study out this week found that 55-64-year-olds were the most anxious about their personal finances and the impact of Coronavirus.
Recent ABI research highlighted that, even before Covid-19, if the average amount that was being withdrawn from pension pots continued, many people risked running out of money in their retirement.
It points out that a man aged 55 can expect to live, on average, for a further 24 years and a woman at the same age can expect to live, on average, for a further 27 years.
The ABI says savers should:
• Think twice before taking money out of a pension. Other sources of income, such as cash savings, should be used instead.
• Get authorised financial advice or guidance before making any decision. This could include Pensions Wise (part of MAPS) or paying to see a Financial Planner or other regulated adviser.
• Remember that pension savers close to retirement and in a workplace pension will, in most cases, have had their pension moved into less risky assets than shares.
• Beware of scammers and do not respond to unsolicited phone calls, texts or online offers of pension reviews. It urges pension savers thinking about changing pension arrangements to check the FCA Register or call their helpline 0800 111 6768.
Yvonne Braun, ABI’s director of policy, long-term savings and protection, said in a message to consumers: “Lockdown will not last forever, but the decisions you make today about your pension could impact on your standard of living for years to come. Now, more than ever, it is important to think longer term, consider your options, and seek advice and guidance – whether from the Money and Pensions Service or a financial adviser – before making any decisions.
“And don’t fall victim to scammers – shun any unexpected approaches; and remember: if a deal seems too good to be true, it almost always is.”
People struggling with payday loans, car finance and pawn shop borrowing will be granted a payment holiday under plans by the City watchdog.
The Financial Conduct Authority (FCA) said the measures would help borrowers who are experiencing money problems amid the Covid-19 outbreak.
The FCA wants motor finance firms to grant a three-month freeze.
It is also asking firms specialising in rent-to-own, buy-now-pay-later and pawnbroking loans to delay repayments. Those people with a payday loan will be given a one-month reprieve under the FCAs plan
Last week, the watchdog announced a three-month freeze on loan and credit card repayments.
“We are very aware of the continued struggle people are facing as a result of the pandemic,” said the FCA’s interim chief executive, Christopher Woolard.”These measures build on the interventions we announced last week and will provide much-needed relief to consumers during these difficult times.”
The FCA will consult with finance firms and expects to finalise proposals by 24 April, “with them coming into force shortly afterwards”.