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More advice needs to be given to those struggling with debt and finances
Recent comments from think tanks and the government stress that more needs to be done to help the low paid to save as well as provide advice to those in debt and looking for help with pensions. Lack of advice or inadequate advice is seeing many lose out on good interest rates, help to get out of debt and beneficial pension schemes that consumers understand.
The Centre on Household Assets and Savings Management (CHASM) said that the Government should concentrate on providing savings incentives to the poorest in society to stop banks and building societies from defaulting savers to small interest rates. These incentives would also help the 60% of lower and middle income families that CHASM say cannot save leaving them at risk of financial shocks and spiralling debt.
These comments from CHASM come close after findings from Financial Conduct Authority (FCA) which found that, for two years running, a portion of savers were only getting an annual return of 0.01% after defaulting onto low interest rates. CHASM’s report argues that providers should be prevented from putting savers onto these very low rates automatically, instead offering a capped rate.
These recommendations from CHASM focus on helping educate people about savings accounts and better ways to save in order to create a fund of money they can rely on. Currently, those in lower paid roles can benefit from schemes such as Help To Save, available for those earning less than £11,000 a year; but as 16 million people in the UK only have £100 or less savings (Money Advice Service), more does need to be done.
Coinciding with the calls for education on savings schemes came news from the government that the debt and pensions advice bodies they fund are ‘inefficient and confusing’. They have released plans to create a one stop shop organisation which will replace the Money Advice Service (MAS), the Pensions Advisory Service (TPAS) and Pension Wise.
The three services listed above provide free, impartial financial advice, funded by the public, but they are failing to deliver and have come under fire for spending £100m plus on increasing their brand awareness through marketing and advertising.
This new body, which will deal with all debt and pensions advice under one roof, will make obtaining financial help easier for consumers. This, the Treasury feels, is particularly beneficial at a time when millions of people are looking for debt advice and help regarding their retirement investment choices.
The new advisory body will provide pensions and debt advice, coordinate financial education programmes for children and young people and help people to spot and avoid falling victims to scams. The existing services are funded by levies on the pensions industry and financial services and this will continue with the new advisory service.
Speaking to The Guardian about the new service, Simon Kirby, economic secretary to the Treasury, said; “We want to help people take charge of their finances and make the financial decisions that are right for them. This new body will ensure that help is readily available for people who need to access debt advice, information on their pensions or guidance on other money matters.”
The new advisory service is not planned to open until autumn 2018 and as yet there has been no confirmed discussions from the government regarding expanding schemes to help those in low pay to save. If you need advice on pensions and investments, get in touch with Pension Wise, TPAS or an independent pensions advisor. For help with debt and money management, contact MAS, StepChange or speak to one of our advisers to discuss your issues and problems free and confidentially.