Sneaky Preview of The Questions to Brown, Cameron & Clegg et al blog discussion

Former_MSE_Archna

This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.

Read Martin's "Sneaky Preview of The Questions to Brown, Cameron & Clegg et al" Blog.

Please click reply to discuss below.

atypical

The link is broken on Martin's blog post. It should be:

[noparse]http://forums.moneysavingexpert.com/showthread.[/noparse]html?p=32046831#post32046831

Re the questions I'm not sure on the purpose of the savings accounts question. What new practical measures are required to 'help' savers? Best buy tables are printed in all the major newspapers and there are plenty of comparison websites. If people rely on interest to boost their income, shouldn't they be taking responsibility for it themselves?

Government has a responsibility to care for the vulnerable, but to care for the apathetic is a step too far. This post summarises the issue well.

DarkConvict

I agree, the link is broken, you just get page not found.
http://forums.moneysavingexpert.com/showthread.php?p=32046831#post32046831

http://forums.moneysavingexpert.com/showthread.html?p=32046831#post32046831

To answer the questions, simply there is a range of answers, the real question should be will do actually do anything that makes an impact!

[Deleted User]

Hi Martin,

Some excellent questions here but some thoughts on one of them:

"The cut in base rate has left many savings accounts paying pitiful rates, leaving many savers losing money in real terms due to inflation. Will you introduce any NEW practical measures to help savers, especially those that rely on interest to boost their income?"

I don't want to do the politicians' jobs for them, but doesn't the wording of this question defeat the argument you're trying to put forward? If you have actually saved enough to receive interest of any worth, then chances are you are earning enough where you don't actually rely on interest to boost your income.

That is to say, the situation for savers is so dire that actually few people save very much at all. If you're a cash-strapped family then the likelihood is that you won't be able to put much away and so even at decent interest rates, the interest you'll get is minimal. Contrast that with wealthier savers and chances are that the interest they receive on their savings is still - relatively - pitiful compared to their earnings (even if the interest is not pitiful per se). Does that make sense?

Old_Wrinkly

From the way the article is worded, it seems that these questions will not be put in person to the Party Leaders. So how do we know the replies will come from them personally?


Do we care?

atypical

Deleted_User wrote: »

If you have actually saved enough to receive interest of any worth, then chances are you are earning enough where you don't actually rely on interest to boost your income.

I'm sure it was a reference to OAPs, some of whom rely on interest from savings in retirement to supplement their income.

MSE_Martin

Deleted_User wrote: »

Hi Martin,

Some excellent questions here but some thoughts on one of them:

"The cut in base rate has left many savings accounts paying pitiful rates, leaving many savers losing money in real terms due to inflation. Will you introduce any NEW practical measures to help savers, especially those that rely on interest to boost their income?"

I don't want to do the politicians' jobs for them, but doesn't the wording of this question defeat the argument you're trying to put forward? If you have actually saved enough to receive interest of any worth, then chances are you are earning enough where you don't actually rely on interest to boost your income.

That is to say, the situation for savers is so dire that actually few people save very much at all. If you're a cash-strapped family then the likelihood is that you won't be able to put much away and so even at decent interest rates, the interest you'll get is minimal. Contrast that with wealthier savers and chances are that the interest they receive on their savings is still - relatively - pitiful compared to their earnings (even if the interest is not pitiful per se). Does that make sense?

Actually there are huge numbers of retired people who rely ontheir savings for income and aren't big earners - so im not sure i agree

jamesd

For savings there's an interesting challenge that you might try to solve. How you handle risk of unemployment.

There's a significant incentive not to save because savings count against the means test for benefits. Save and you get to lose your savings down to the means test limit before getting any means tested benefits. That delivers a very large negative return on investment.

This is a particularly severe penalty for those who are likely to be regularly switching between living on benefits and having low paid, seasonal or otherwise irregular employment.

This is an incentive to use pensions, which aren't included in the means test, but young savers are not so likely to use this method because it blocks access to the money for mortgage deposits and similar key life expenses.

The disincentive to save continues at least until the point at which you accumulate enough savings so that your income from them is higher than the means tested benefit value. For a single person that takes at least £50,000 of savings, an amount that's non-viable for those of long term low earnings.

One possible useful approach that wouldn't modify existing structures too greatly is to allow withdrawing of some portion of pension capital for a property deposit. Possibly with some tax charge, perhaps 10%, to disincentivise doing it casually. This might have the useful effect of increasing the interest of young people in pensions and strengthening their property buying position.

Access to a limited portion of the pension pot for direct payment only to mortgage lenders when facing repossession from a mortgaged property may also be of value. This would increase the incentive to use pensions because it would decrease the risk of losing access to the money in the short term.

For low earners who are regularly on means tested benefits some alternative solution that allows accumulating savings might be required instead.

There's a related strong disincentive: exposure of savings to creditors in case of bankruptcy or IVA. Again a risk primarily for those of low income that produces a very strong disincentive to accumulate capital that's at risk if there is serious financial trouble. Pensions are already exempt from this risk, at least until age 55. One possible approach to resolving this might be some permitted amount of non-pension savings that is not considered in insolvency. Possibly the limit for unemployment-relate benefits or half of that limit. Care needed over loopholes like borrow, go insolvent and keep much of what you borrowed, effectively using the rule to steal from the lender.

WallyBird

I was disappointed not to see a question about the 10% tax rate, or the relative unfairness of the tax system to lower paid workers. I know Nick Clegg has talked about this, but I would like to understand why a Labour government has allowed the gap between rich and poor to increase so much. I thought they were supposed to help poorer people?!! I think this is relevant to money saving - as it is the reason many people actually have less money in the first place.

WB.

pawlala

when do the questions get answered?

MSE_Martin

We're just about to publish this

http://www.moneysavingexpert.com/banking/MSE-Leaders-Debate