Pensions might seem a long way off when you haven’t even started work but things have changed.

People have got used to the idea that when they retire they will be live on a decent pension, but we’re all living longer so pensions cost lots more.

Just think…

How much longer can you expect to live if you are a boy or a girl born in 2004 compared with 1994?

How does life expectancy for girls compare with boys?

Female life expectancy shows a similar pattern

Why do pensions cost more if people live longer?

Why do you think pensions have hit the headlines recently?

Where do pensions come from?

Most people get a pension from:

- their employer because they have contributed to the pension scheme

- the state if they have paid enough National Insurance.

Both employees and the government have started worrying about how they will pay the pension bill.

Most businesses have changed the way they pay pensions so people don’t get as much when they retire.

Lots of people work for themselves and have to make private arrangements by paying into their own pension fund.

Others want to make sure they have a comfortable retirement and set up their own private pension scheme to top up whatever else they receive.

The government is still trying to work out what to do. There are all sorts of suggestions including making people work until 67 before they get a pension from the state. The main idea is to encourage people to look after themselves.

Just think…

What are the alternative ways of receiving a pension?

Who pays for pensions?

When the state pays people’s pension - we are all paying for it. It comes out of taxes.

- When you buy almost anything you pay Value Added Tax.

- If you are working you pay Income Tax.

- If you buy cigarettes or alcohol you pay Excise duty.

- If you buy a house you pay Stamp duty.

If pensions cost more, we pay more taxes. Governments worry about increasing taxes because people might not vote for them at the next election. It’s all a challenge - and voters seem to want the impossible. They want good pensions from the government - as well as all sorts of other things like good schools and health care - but they don’t want to pay more in taxes. It doesn’t add up!

Just think…

Why does the government want to limit the amount it pays out in pensions?

Pensions - and you…

It may seem a long way off - but it’s important to know how to look after yourself.

There have been big changes and there will be more.

People often used to go to work for one business or organisation when they left school and stayed there all their lives - so it was quite straightforward. Today people change jobs quite often so have more responsibility for making sure they have enough to live on when they retire.

Prices tend to rise. It’s called inflation. A pension that looks good today might not be worth much if prices have gone up lots so it’s important to build up a pension that will grow as you grow older.

Just think…

When you get a job, what questions will you ask about the pension scheme?

Why is important to think about your pension as soon as you start work?

Originaly from

Science Daily — Arthritis is common among elderly Americans, and as the population ages it is expected to increase. At the same time, disability is increasing in patients with arthritis and the racial/ethnic composition of the U.S. is changing; minority populations are forecasted to increase from 30.6 percent of the population in 2000 to 49.9 percent by 2050.

A new study published in the August issue of Arthritis Care & Research examined the rates at which different racial groups develop disability, how differences between groups can be accounted for, and the significant risk factors that predict the development of disability among older adults with arthritis.

Led by Jing Song of Northwestern University Feinberg School of Medicine in Chicago, IL, researchers examined data from the 1998-2004 Health and Retirement Study (HRS), a national study of noninstitutionalized older Americans. Using information from 1998, 2000, 2002 and 2004, their analysis included 7,257 respondents who reported arthritis and were initially disability free.

The group was comprised of 85.5 percent whites, 9.3 percent African Americans, 2.4 percent Hispanics who spoke Spanish and 2.9 percent Hispanics who spoke English. Respondents were questioned as to whether they had arthritis, and disability was established by an inability (after the initial interview) to perform at least one task in the activities of daily living (ADL) as defined by the HRS: dressing, walking across a room, getting in or out of bed, bathing, eating and toileting.

The results showed that 1 out of 6 people reported disability in at least one ADL task over the 6-year follow-up period, but there were substantial differences across race/ethnicity groups. The rates of ADL disability among African Americans and Hispanic/Spanish were almost twice that of whites; Hispanic/English had rates similar to whites.

The study differentiated between Hispanics who spoke English and those who spoke Spanish in order to consider whether adapting to a new culture (as measured by language) can affect health status. The authors note that language barriers may limit educational and occupational choices, and social stress related to poverty may contribute to the greater disability experienced by the Hispanic/Spanish group.

The study investigated the influence of health and medical access on racial/ethnic differences in developing disability and found that the differences were due to other chronic health conditions, functional limitation (such as an inability to walk several blocks), and health behaviors (such as smoking, alcohol consumption and regular exercise).

Medical access also substantially influenced differences in the development of disability. In addition to having fewer economic resources, minorities were more likely to be uninsured or rely on Medicaid coverage. The authors note that lack of private insurance may indicate poorer quality of health care received and that those with lower tier health plans commonly have fewer choices regarding health services, which can compromise their quality of care.

The authors acknowledge that the study included self-reported arthritis, did not include information on the severity of the condition, and that the findings might have been influenced by unmeasured factors such as occupation, job demands, poorer living conditions and segregation. Nonetheless, the results showed that among older adults with arthritis, differences among racial groups in developing disabilities was largely due to differences in health status and medical access.

"At the clinical level, not only should treatment of comorbid conditions be considered, but also disease prevention, prevention and treatment of functional limitations, and promotion of healthy behaviors should be a priority for all patients with arthritis to prevent the development of disability," the authors conclude. "Future research should be directed at how to more effectively deliver such programs especially to minority populations."

Article: "Racial/Ethnic Differences in Activities of Daily Living Disability in Older Adults with Arthritis: A Longitudinal Study," Jing Song, Huan J. Chang, Manasi Tirodkar, Rowland W. Chang, Larry M. Manheim, Dorothy D. Dunlop, Arthritis Care & Research, August 2007; (DOI: 10.1002/art.22906).

Note: This story has been adapted from a news release issued by John Wiley & Sons, Inc.. Read more…

Ferry operator Caledonian MacBrayne has been given the go-ahead to cut costs by exploiting a tax loophole.

The firm is considering transferring crews to an offshore company, saving more than 1m a year in National Insurance payments.

CalMac said it would help to defend its Clyde and Hebrides ferry routes.

The Scottish Executive has confirmed its approval of the move, but the Conservatives have objected to a state-owned company avoiding payment.

Transferring crews to an offshore company would avoid employers’ National Insurance contributions.

The question is how we account for public money and it seems that the Treasury has changed direction on this very quickly Eleanor Laing Shadow Scottish Secretary

It could help the company compete with private operators when the executive goes ahead with plans to put ferry routes out to tender.

While it was thought that Treasury regulations ruled out the tactic for public bodies, CalMac has now been given the all-clear.

Shadow Scottish Secretary Eleanor Laing said it was illogical for the government to stop itself paying into the Treasury.

She intends to take the matter up with the Chancellor of the Exchequer.

Change of direction

Ms Laing told BBC Radio’s Good Morning Scotland programme: “Of course we know how important CalMac is and how important its services are to many communities around Scotland.

“But that’s not the question here, the question is how we account for public money and it seems that the Treasury has changed direction on this very quickly.

“At the very least I think we need to know more about it.”

CalMac has insisted it is doing nothing wrong.

CalMac sails to 22 Scottish islands

Spokesman Hugh MacLennan said: “We are a company limited by guarantee and we work within the law.

“We are wholly owned by Scottish ministers and would not do anything without the approval of our shareholder.

“We were given the go-ahead for this many months ago.”

The executive said legislation regarding concessions for National Insurance payments was introduced by the UK Government back in October 2003.

It came as part of a package to allow British companies operating in sea waters to compete internationally and to protect jobs.

A spokesman said: “Scottish ministers welcome the Treasury’s confirmation that CalMac could, if it so wished, introduce offshore crewing arrangements, which confirms Scottish ministers’ own understanding of the position.”

Why does CalMac feel the need to make such a controversial move at this stage? Stephen Boyd STUC

The Scottish Trades Union Congress (STUC) branded the current situation “entirely unacceptable”.

Assistant secretary Stephen Boyd said: “The transport minister assured parliament that tendering is on hold until he visits Brussels once again to press the case that tendering isn’t necessary.

“We are now treated to the grotesque spectacle of a state owned company avoiding paying tax in order that it can compete in a tendering exercise that no-one in Scotland wants.

“Why does CalMac feel the need to make such a controversial move at this stage?”

He added that the body and the CalMac trades unions would continue to campaign against the tendering process.

Originaly from

As prime minister he had the awesome responsibility of having to take decisions on issues such as whether to go to war on Iraq. He took that decision in all integrity, he suggested.

It was the right decision to have taken and he was unapologetic for it, yet he did not disrespect those who believed they had been misled, he said.

It is an answer he has rehearsed time and again and is not about to re-write in the second half of the general election campaign.

Similarly, he was not about to confess to having misled voters about his intentions on taxation at the last election.

Extra spending

Four years ago, in a similar interview, he had rejected Mr Paxman’s suggestion that it was clear from all he had said that he would raise National Insurance contributions if he was re-elected.

There is another well-rehearsed answer to this one - he was only led to increase NICs after a post-election report indicated such levels of extra spending were necessary for the health service.

Mr Paxman revived concerns over the war

So couldn’t he do the same again, if he wins a third time, when, for example, the Turner report into the pensions black hole is delivered.

He was not about to be drawn into mapping out budgets at this point, he declared.

And there was more but, it has to be said, despite some persistent probing, there was nothing particularly surprising in the answers.

And the prime minister may well feel he emerged with few bruises from the encounter with one of the toughest boys on the block.

Originaly from

“Fundamental flaws” in the way Whitehall shares out money helped cause this year’s record council tax rises in the South, a top spending watchdog has said.

The Audit Commission says the government and regulators deliberately favoured the North and the Midlands when sharing out the cash.

But many councils did not look hard enough to save money instead of raising the burden on the taxpayer, it says.

The watchdog refuses to pin the blame on either side for the 12.9% average council tax in England this year.

The rises ranged from 13% in Oxfordshire and Poole, Dorset, up to a whopping 19% in Southampton.

This came despite the government hailing a record 5.9% increase in grants.

‘Unusual pressures’

The commission’s new report says there was a direct link between higher council tax rises and areas which did worse out of the way Whitehall distributed cash.

“A general pattern emerges which shows that regions in the South with lower grant increases had higher average council tax increases,” says the report.

Council tax explained In graphics

And councils in the Midlands and the North with higher grant rises generally had lower tax hikes.

Among the “unusual spending pressures” faced by councils this year were the government’s increase in National Insurance contributions, pressure to fund national targets in areas like schools and local priorities such as highways spending.

“Work by council auditors found the increases in spending in local government - which averaged 9% - justifiable; but they were not in all cases unavoidable,” says the report.

“Peer pressure” on councils to keep council taxes down was weak because of the changes to way Whitehall shares out the money.

But council taxes were not affected by which political party was in power locally.

‘No transparency’

Councils’ reliance on central government for three-quarters of its funding means any spending over the grant produces even higher rises in council taxes, says the report.

Prescott has warned he will cap high tax rises

Audit Commission chairman James Strachan said: “There are fundamental flaws in the current system. The funding system lacks transparency…

“It is good that councils have ambitious plans to improve public services,” he continued. “But these need to be matched both by efficiency and by taxpayers’ desire and ability to pay for them.”

The report says it is too early to say whether this year’s rises will be repeated.

But lower cost pressures and another grant increase give councils more flexibility to meet budget pressures without putting up council tax, says the report.

‘Mixed blame’

The commission urges the government to allow councils to raise more of their own funds.

And it says “public engagement” is likely to get a better balance between council tax rises and local services than ministers capping council taxes.

Local Government Minister Nick Raynsford said people should read the report as a whole.

“It identifies a range of contradictory factors, some of which are the responsibility of central government and some of which are the responsibility of local government,” he said.

Mr Raynsford said the government was already doing much of what the commission recommended.

And a review of the balance between money raised locally and centrally in funding councils was already under way.

Rethink

But the Local Government Association (LGA) said council taxes were set for another inflation-busting rise next year and an overhaul of the system was urgent.

LGA chairman Sir Jeremy Beecham said: “This report nails on the head any belief that councils have been frivolous, careless or politically motivated when taking hard decisions on council tax.”

Conservative shadow local government secretary David Curry called the findings a
a “damning and devastating indictment” of Deputy Prime Minister John Prescott.

“It is not too late for Labour to get a grip and act now before we see more
council tax rises next year,” he said.

Liberal Democrat local government spokesman Edward Davey said the council tax was now living on “borrowed time”.

“Ministers have tried to run away from the blame for high council tax rises. This report has left them with nowhere to hide,” he said.

Originaly from

When you are starting your first business, the last thing you want to have is hassles over how much tax you should be paying.

Small business expert George Derbyshire looks at how a new businessman or woman can most easily approach dealing with their tax returns.

QUESTION

Rachel, UK

I am a student of engineering, currently studying in my third year of five.

As a hobby I make jewellery, as presents for friends, but also to sell.

I don’t make very much from this. In fact, I don’t think I have made a net profit at all yet. Do I need to make some kind of tax declaration?

ANSWER

George Derbyshire, chief executive of the National Federation of Enterprise Agencies

If you are currently working and paying income tax and national insurance, any revenue generated by your own business can be treated as “additional income” on your tax return.

This will be your total earnings from sales less all your associated expenses.

On the other hand, if you are self-employed and this is your sole income, you are not required to make contributions until your profit exceeds the threshold, currently 4,465.

You are advised to contact your local HM Revenues & Customs office, as you have to complete the Small Earnings Exemption Form (CF10) if you do not wish to make National Insurance contributions.

For more specific advice relevant to your business, you should contact your local Enterprise Agency. Many of them can offer a free consultation session.

You can search for your nearest agency on the National Federation of Enterprise Agencies website (link on the right), or ring us on 01234 831623.

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