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Expat Investor : July August 2007
Those people in their fifties thinking about their impending retirement should count themselves lucky -- they will probably be the last generation of 'retire-easies'. A new report from Scottish Widows reveals that over-50s 'retire-easies' realise that they are the lucky ones, as over half (58%) think it will be difficult for their adult children to build up a pension, and the same amount (60%) recognise the problems their children will have in building up any savings at all. Likewise, half (53%) of those over 50 think it was more difficult for their parents to save into a pension, or to accumulate savings (50%). This leaves the lucky generation of 'retire-easies' in the middle, likely to be reaping the benefit of final salary schemes and the results of a property boom, meaning more money to put by, either into a pension or as a nest egg. This feeling is echoed by the younger generation, with half (50%) of today's 20 and 30-somethings thinking it was easier for their parents to save into a pension. The same number (50%) think their parents found it simpler to build up a separate savings pot. Given this, it is no surprise that four in 10 parents (39%) have given or lent their adult children a substantial amount of money from their own savings. Of these, nearly a quarter (22%) handed out money to help their children to pay off debt. A quarter (25%) felt their own children needed the money more than they did, and four in 10 (41%) were concerned that their children needed bailing out. Luckily, the majority (62%) had no specific plans for this money before lending it to their children. Anne Young, savings expert, comments, "Those people that don't fit into the category of 'retire-easies' appear to have a bleak outlook for their retirement and ability to save. Although the research shows that the over-50s seem to have a more positive view of their retirement compared to the generation above and below them, the situation isn't necessarily as gloomy for those under-30 as they may think. It seems their parents are recognising that their children's future isn't as rosy as their own, and so are giving them a financial helping hand." STATISTICS AND ANALYSES Baby boomer generation of 'retire-easies' Where is Britain's wealth? One in 10 could commit insurance fraud A medley of statistics and analyses revealing much about our responses to saving, investing and spending our money. 18.8 million on the move from crime and neighbours from hell, says Abbey According to new research from Abbey,around a third of people in the UK (18.8 million) have chosen to move house in the last five years in order to find a better quality of life for their families. Nearly 5.3 million people said the main reason for the move was that there was too much crime in the area and they wanted to move to somewhere their family could be safer. The survey also found that 4.5 million people moved home to avoid unruly 'neighbours from hell' while a further 2.6 million people moved to fit into a better school catchment area. Nici Audhlam Gardiner, head of mortgages, tells Expat Investor, "When buying a home people have more to consider than just the building itself. People spend a lot of time looking not only for what they want in a home, but for what they need in the area they live in, and more often than not, these requirements are for the greater good of the family. "Crime and family safety is clearly a top priority for most buyers, but moving to get the right school for your children or to avoid unruly neighbours also have an important impact on the selection of a home." Regionally, the research revealed that the Welsh were most likely to move in order to seek a better quality of life in or out of the city, while people in Northern Ireland were most likely to move home because of their nightmare neighbours. The survey also revealed that when asked where people would prefer to live if their job and family were not an issue, the South West and Scotland proved most popular, with the North East and Northern Ireland coming bottom of preferred living locations. expatinvestor.com 4 EXPAT INVESTOR July/August 2007 Prudential, the lifetime mortgages provider, reveals the full extent of the changing nature of Britain's wealth in the findings of its latest study. The survey's aim was to delve into the composition of Britain's individual wealth, highlighting the growing shift in wealth away from traditional financial assets towards an increasing importance of non- financial assets (primarily property). If the existing trends continue, non- financial assets could account for 60% of Britain's wealth by 2009. It's all in the home 1996 was the national highpoint for financial assets, when 58 per cent of UK household wealth was made up of financial assets such as life assurance policies, pension funds, shares and savings -- by comparison non-financial assets, primarily property, made up only 42% -- however there has been a significant change and today, 55 per cent of Britain's wealth is tied up in non- financial assets. Since 2001, the value of non- financial assets has grown by 12.8 per cent, compared to a growth of only 1.3 per cent in financial assets. If these growth rates were to continue, the balance would shift so that by 2009 non-financial assets would represent 60 per cent of total assets. Equity held in homes The report reveals the estimated amount of equity held in Britain's homes and shows that it varies significantly across the different regions. People in the South East, on average, hold £210,077 in equity, followed by homeowners in the East (£183,805) and London (£169,477). The North East, North West and Scotland are the regions with the smallest amount of equity held. Despite the fact that the value of homes is significantly higher in the South of England compared to the North, a look at the amount of equity held in homes across different regions shows that there is a new trend emerging. The North East, Wales and Scotland have seen the highest percentage increases in the amount of equity held in the home from 2004--2006. Interestingly, if these trends are projected forward, then Wales could witness a 30% increase by 2011 with the average amount of equity in the home extrapolated to £440,057. Far from highlighting potential 'property wealth hotspots', these figures reveal, perhaps more tellingly, that the current rise in the value of homes is likely to be unsustainable. Ali Crossley, Prudential's director, comments, "This is good news for people who are considering using their property as part of their retirement planning portfolio, especially for those who will need to supplement their state and work pension. The equity tied up in their homes could prove crucial in boosting their funds, and allowing them to live the retirement they desire." Talk of rising house prices is finally subsiding, with the council tax replacing as the most talked about financial topic amongst British adults. Almost two-thirds of people (65%) say this is the issue they discuss most with family and friends, according to the latest findings from Unbiased.co.uk. The latest TaxAction report, which focuses on the UK's tax wastage, sees council tax topping the financial discussion bill, closely followed by rising house prices and the so-called 'death duty' (IHT). Most talked about Percentage financial issue Council Tax 65% House Prices 63% Inheritance tax 24% Congestion charge 20% Airport tax 15% However, Unbiased.co.uk points out, despite talking about ever-increasing taxes -- over £7.9bn is set to be wasted in 2007 by people not taking action, with 74% admitting they do nothing to reduce the money they give to the taxman. This suggests that in 2007 UK adults will be throwing away an average of £160 each on tax, a rise of 68% in five years from £95 per person in 2002. Nearly one in ten adults (8%) admits to making fraudulent insurance claims, according to a recent consumer survey by Experian, the global information solutions company. The UK insurance industry pays out around £54m a day in general insurance claims. However, more than one-fifth of the population (21%) believes that everyone exaggerates when making an insurance claim. The survey aimed to uncover consumer attitudes towards insurance fraud and has found that the majority of the population (91%) firmly believes that insurance fraud is a serious offence, but only a relatively small proportion (14%) would definitely report someone who had actually committed insurance fraud. David Murby, managing director of Experian's insurance services division, says, "The survey revealed that people are well aware of what constitutes insurance fraud and consider it a fairly serious crime, which is not victimless, but they see it as a crime against an organisation rather than an individual and, as a result, appear less likely to report it. "In fact, there appears to be a deeply entrenched impression that insurance fraud is commonplace in the UK, but the desire to do anything about it is not strong. Despite two- fifths of the population claiming to know someone who has committed insurance fraud, the public is not inclined to report fraudulent activities. "Therefore, it becomes even more important for insurers to be the ones taking steps to protect themselves and their customers from fraudulent activities. "In addition, it would appear that the insurance industry collectively needs to raise the awareness amongst consumers of the impact of these crimes, and work together to change the attitude people have about insurance fraud." AVERAGE EQUITY HELD IN HOMES Value in £ 2004 2006 % change 2004-2006 Projected equity in 2011 Scotland 51,555 78,793 23.6% 194,741 North West 90,583 101,604 5.9% 135,329 North East 58,089 102,129 32.6% 418,665 West Midlands 82,722 103,772 12.0% 182,882 Wales 68,263 116,267 30.5% 440,057 East Midlands 92,169 133,757 20.5% 339,822 Yo rkshire & Humberside 94,067 141,453 22.6% 391,800 South West 130,565 144,898 5.3% 187,588 London 142,876 169,477 8.9% 259,567 East 149,401 183,805 10.9% 308,329 South East 168,507 210,077 11.7% 365,296 Source: Datamonitor, MORI Tax talk