Credit Action News Round-up (30 September 2011)

Minimum wage rises to break through the £6-an-hour barrier: From 1 October the minimum wage will rise, affecting 900,000 workers, the majority of which are women, according to union leaders. The adult rate will see a rise of 15p to £6.08 (2.5% increase), the rate for 18 to 20-year-olds will rise by 6p to £4.98 (1.2%), for 16 and 17-year-olds it will go up by 4p to £3.68 (1.1%), and the apprentice rate will rise 10p to £2.60 (4%). The increase in the adult minimum wage should benefit public finances by £230m as tax and national insurance revenues increase and the benefits bill falls, according to the Trades Union Congress (TUC). However, as the current Retail Prices Index (RPI) inflation measure is 5.2% it means that in real terms the increase is not a raise. General secretary Brendan Barber said: "This rise will put extra cash in the pockets of the UK's lowest-paid workers when they can ill afford to have their pay squeezed by inflation.”

OFT cracks down on rogue operators: The Office of Fair Trading (OFT) has cancelled the licences and closed 62 debt management firms in the past year. This follows the issuing of warnings to 129 fee-charging firms by the OFT last September. Firms were criticised for a number of reasons including providing misleading information about charges, giving incompetent advice, cold calling and for disguising themselves as charities.  Debt management firms have to be licensed under the Consumer Credit Act in order to offer their services to those suffering debt problems. The various firms have been refused licences, have had their licenses taken away, or have surrendered them to the OFT.

A third of Britons stop making pension contributions: A Prudential survey has shown that more than a third of working age British adults have cancelled their pension contributions. Of the 35% of British working adults who have stopped paying into a private pension, a third gave the fact that they are no longer working as a reason, whilst over a quarter said they could no longer afford the payments. The insurer’s study revealed that more than two-fifths of those who have cancelled payments do not plan to re-start them. A saver who misses a gross contribution of £2,400 a year could see their final pension fund reduced by £7,000, according to Prudential. The head of business development at Prudential, Vince Smith-Hughes, said that people should stop making pension payments only as a “last resort”.

Inheritance to increase fivefold by 2050: As the generation of baby boomers pass their money down to their children, the amount of inheritance is set to increase fivefold by 2050. A report by HSBC shows that the average amount received as inheritance today stands at £46,000 (although half of all people who inherit receive under £10,000). By 2047, it is predicted that the average amount left as inheritance will increase to £238,000, an all-time high, as those aged between 45 and 55 pass on their estates. However, it is expected that by 2062 this figure will drop to £155,000.

House prices down by 0.3% from last year: Property in the UK is just 0.3% lower in value this month than September 2010. Figures from the Nationwide building society show that prices rose 0.1% during September. The average house price in September was £166,256, compared with £165,914 in August. Prices for the three months to September compared with the previous quarter remained static. Robert Gardner, Nationwide’s chief economist said “Sentiment towards major purchases is depressed, as a result of weak labour market conditions and ongoing pressure on household budgets from above-target inflation.”

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