02/11/2013 Your Money


02/11/2013

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said, not so fast. Hello and welcome to Your Money `

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your weekly guide to making the most of your cash, here every weekend on

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BBC News television, available all week on the BBC iPlayer. Capping

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pension charges. We'll look at the Government's plans ` to let you keep

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more of your savings for yourself. Defective clutch. Faulty brakes.

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Kevin Peachy looks at complaints about second`hand cars and how you

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can protect yourself from a dodgy dealer. Keeping the roof over your

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head after a divorce. We've got news on how mortgage companies deal with

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child support payments ` they're not all the same. And there's advice on

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how mothers can protect themselves and their children. And another way

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for the energy companies to put up your bill. We've got the details on

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that. If you're working ` and you're saving for your old age in one of

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the new Government`backed pension plans ` you pay someone to look

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after that money. You might not realise it, but you do ` it's called

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a management charge. The Government says it wants to cap those charges `

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at somewhere between 0.75% and 1%. That may not sound like a big

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number, but let me show you how it all adds up. The Government says if

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you save in a pension for 46 years, starting with ?100 pounds a month `

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and increasing the amount you save by 4% every year, a 1% charge would

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cost you ?170,000, taken out of your pension pot. That calculation

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assumes the fund grows by 7% a year. The pensions expert Malcolm Maclean

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is with me ` he's a consultant at the firm Barnett Waddingham.

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When we talk about these management charges, what percent of what? Of

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the fund. You put money on by way of the fund. You put money in by weird

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contributions, your employer puts money in, the government gives you

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tax relief and then you are old pension ought. Every year, there is

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an annual management charge on that. If the charge is 1%, and you have

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?10,000 in the box, 1% of that is ?100. The second year, that happens

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again. At the end of year two, you are

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paying charges on what was paid in and year two and years three, GPU on

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your one and year to end US lead. Yes, because the service is ongoing

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and the fund managers and pension administrators have to be paid every

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year. But they are helping themselves year after year to money

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they have managed already. Yes, but with investments, you constantly

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have to check on the months which them, but most people don't actually

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understand this. He raised a good point. When you talk about 1%,

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people think, that leaves 99% for me. But it makes a big difference in

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long`term investments. If we spammed this over 40 years, there is a lot

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of money coming out and the government is getting a little bit

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worried about it. Now is the time to look at this and see if it should be

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capped will stop the cap, if it goes ahead, it will come in from next

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April. I think it is probably likely to happen. And this will only apply

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to people saving in the new Government backed workplace pension

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schemes, the scheme the people were signed up for this they didn't have

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their own plans already. Yes, that is being phased in and not everybody

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is in it yet. It will cause problems, because some employers

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have planned scheme already and will have to unscramble it to take

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account of any new cap coming in. You do wonder why they did not have

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the cap in place will stop we have been talking about this for years.

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But there is a problem. Many of the new schemes brought in recently are

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not charging 0.75%, they are only charging 0.5%. What would worry me

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slightly about bringing in a cap, is that if your scheme charges only

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0.5%, it is likely that the charges might be increased. You mean the

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pensions industry would use the cap as an excuse to put the prices up?

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It might just happen. One of the things worrying people is that

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ultimately the employer chooses the scheme. We started with the big

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employers and are moving through to the smaller employers. Many of them

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don't understand pensions and are not interested in them, and could

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sign up to something that doesn't fit the individual. There are

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downsides to this, but I think it is going to happen. It

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Well, it wouldn't be an edition of Your Money without some mention of

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energy bills. This week we have two. Don't like your energy prices?

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The Government says switch to a cheaper company. And now you'll be

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able to do that faster. The Energy Secretary, Ed Davey, says we should

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be able to change companies within 24 hours. At the moment, it can take

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up to five weeks. If you're organised and pay your energy bill

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quickly ` five of the big six energy firms will give you a discount. It

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can be as much as 40 quid a year. Well, now they're all getting rid of

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it. The companies blame new rules from the energy watchdog. The

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Government's scheme to help people with little savings buy a house or a

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flat has had its first success. The Financial Times says the first house

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purchase under phase two of the Help`to`Buy scheme was completed

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last Wednesday ` a ?153,000 two`bedroom flat in Dartford in

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Kent. The borrower had a 5.5% deposit. Under the scheme, the

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Government guarantees to pay up to 15% of the loan to the lender` if

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the borrower gets into financial trouble. New plans to attract

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Islamic finance to the UK. The Prime Minister says Britain will become

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the first non`Muslim nation to borrow money by issuing an Islamic

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bond ` under the rules, the Government can't pay interest like

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it normally does, but it can pay a profit. He also announced plans for

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a new Islamic index on the London Stock Exchange. Islamic investments

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are thought to be worth ?1.3 trillion a year.

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Seven million second`hand cars are sold in the UK every year, but

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buyers don't often like what they find under the bonnet. Consumer

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groups say used cars bought from independent traders top the list of

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consumer complaints. Kevin Peachy steers us through this story.

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Used`car dealers are often depicted as lovable rogues. The epitome of

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ducking and diving salesman. But data from citizens advice shows

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there are more consumer complaints by far about second`hand cars than

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any other product. 22 postgraduate Natasha bought a Nissan Micra for

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thousands of pounds, almost with a clutch to feel within two weeks. She

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was given a replacement. But then on the way back, the brakes failed. I

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want my money back, I don't want to buy a second`hand car again. Now the

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government says it is time to tackle the rogue traders. They are going to

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find that action is being taken against them. That consumers will be

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informed about how to get the rights. They will have to shape up,

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because they are not going to get away with it stop but then industry

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trade body says that reputation is unwarranted. Used`car dealers are a

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charismatic people in many cases. They call a spade a spade, but they

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are the salt of the Earth and quite honest people in many cases.

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Unfortunately, there is a nucleus of rogue operators, which there are in

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any sector, and those operators should the identified. We work very

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hard to drive those people out. Now all sides of the debate will have a

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say, because the Government is looking at the source and solution

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to these used`car rights. They will report back in the spring. In the

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meantime, the message to anyone buying a car is to triple check you

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are not buying a wreck. Cross`reference the documents and

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use a database to check the history. Take an expert with you to look over

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the technical aspects of the vehicle. If the seller is part of an

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approved scheme, there is more chance of getting help. What are

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your rights if you discovered a problem that wasn't pointed out? If

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something goes wrong within the first few weeks of buying it, we

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would see you're to repair or money back. If something happens six or

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seven or eight months down the line, you have to prove the fault

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was there at the time of the sale. If you fall in love with that card,

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remember to do your homework before you buy it or you could be left

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heartbroken. Talk about excess`ss`ss baggage.

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According to the Belfast Telegraph ` Passengers on a plane got a shock

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when they realised one of their fellow travellers had taken a snake

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on board. EasyJet said the animal was harmless and those on board were

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not in any danger. You do wonder what the Ryanair charge might be for

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that. If you split up from your partner, you could be forced to keep

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your ex's name on the mortgage if you're with a lender that doesn't

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count child support payments as income. Sarah Pennells, editor of

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the personal finance website Savvywoman. The rules vary from

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lender to lender, but what is the basic story? The problem is there is

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not any basic story, because the couple of lenders will not take

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child support into account a tall as income. A couple of others will take

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about half of the value into account. The majority of lenders we

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spoke to which take child support into account if it was backed by a

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payment order or court order. The problem is dumb parents make a

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private arrangement between them, in which case they would not fall into

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that category. Going back ten steps, there will be some parents, mostly

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mothers, for whom child`support payments may be the only income they

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have in which case how do they keep up payments? They might get child

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benefit or tax credits on top, but again, some lenders take a different

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approach as to whether or not they take tax credits into account. For

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those mothers, the option is not to have a mortgage or get someone to

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guarantee the mortgage for them, which is where the ex`husband might

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have to be left on the mortgage or appearance. That is not an option

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for all couples getting divorced, so it can be a serious problem. You may

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not be aware of your lender has that bothers you, because it is not

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something you check when you are in wedded bliss and taking out the

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mortgage between you and you think everything is going to last for

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ever. That is exactly the point, because although lenders will have

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information on their websites about it, but if you have no thought of

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getting divorced when you do get the mortgage, why would you check out

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their policy on child support? One lender ignores it completely and

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another lender accept it if you have banks take on showing it has been

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paid for three months. It is not the kind of thing you check until you

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get divorced and you may realise you're stuck with the wrong lender

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and your options may be limited. What were you saying about

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separating parents making private arrangements? This is something that

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has become more popular. The child support system is changing. The

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Child support agency is going to be replaced. Part of the Government's

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policy is to get more parents to make private arrangements between

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them. In future, parents would have to pay to use the service, so there

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is an incentive to do it, but they might be penalised by their lender.

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That's all from Your Money for this week. Keep up to date all week long

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` with the Your Money pages on the BBC's website. You can get updates

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by following our feed on social media ` we're @ BBC Your Money.

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We're back next week. Bye for now.

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Weekly round-up of news about mortgages, savings, credit cards, bank accounts and pensions. Helpful tips and advice on how to get the best deals, consumer rights and making your money work harder for you. With Declan Curry.


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