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Expat Investor : January February 2008
The state of the UK economy is putting a strain on families as Brits are increasingly becoming financially indebted to their nearest and dearest. According to fresh research from Skipton Building Society, Britons are currently owed over £25bn by their families -- an increase of 82% on the £14bn they were owed 10 years ago. Unsurprisingly, this financial debt is having an adverse affect on relationships with nearly one in five (17%) falling out with loved ones as a result. Borrowing large sums of money from those close to you is quite common -- half (51%) of Brits have given a hand-out to a member of their family during the last 10 years with 11% of these lending over £5,000 and 4% over £10,000 as a single payment. And while it's often parents financially supporting their offspring - with 47% lending the largest single amount of money during the last 10 years to their son or daughter - the tables are turning for many grown- up children with more than one in 10 (12%) lending funds to their mum and dad. Coming to the rescue of their parents, a third (31%) of children who have lent money are paying off bills their mums and dads have accumulated, with 8% shelling out for household repairs. The cash is also being used for investment purposes, with 5% lending their parents money to purchase a property and 7% to buy a car. However, loaning money to family members does make people feel they should have a say in how it is spent -- and how it shouldn't be spent. One in 20 (6%) said they felt disheartened as they believed their money had been used unwisely. Feeling as though their relatives have taken advantage of them, nearly one in 10 (7%) said they felt it took too long for them to get the money back with 7% reporting that their family had made no attempt to repay them at all. Brits' generosity to their nearest and dearest is certainly causing resentment to fester. One in 10 (10%) said they felt their family took them for granted with 9% admitting they were reluctant lenders in the first place and were pressured into the loan. STATISTICS AND ANALYSES Cash quarrels put pressure on families A rose-tinted financial future? A medley of statistics and analyses revealing much about our responses to saving, investing and spending our money. 8.5m risk financial future to start second life Honesty the only policy as insurance companies uncover more frauds More than 8.5m Brits are risking their savings, pensions and financial future when they split with one partner and begin a 'second life' with someone else, according to a major new report from Standard Life. The research found the financial cost of such a major life change to be substantial, setting people back an average of £20,000 purely to 'start again'. And for more than three- quarters of Brits affected (83%), the financial impact of ending a relationship and starting again was as stressful as -- or more stressful than -- the emotional fall-out. The research found that after a live-in relationship came to an end, a third of 35- to 65-year-olds had no pension to their name. Of those with a pension, one in 10 either had to give away part of their retirement nest-egg, or received some from their ex-partner. A small number of women come off far better than men when inheriting a pension from their partner, but nearly half of the women questioned confessed to having no pension at all when splitting from their spouse. The research also revealed that six in 10 of second lifers had sold their shared home and split the proceeds. The money, after potentially paying off existing debts and any legal fees from the separation, then became the means to start their new life. More than half (55%) of those who have started afresh have entered a new relationship. A third of those cohabiting (33%) have started a new financial commitment by buying a property with their new partner. Standard Life lists these key points to consider before starting a 'second life': don't take your pension before you need to. The sooner you take it, the longer it will have to last and the smaller it will be. if you dream of taking a career break at some stage, try putting more into your pension while you are working so the break does not have such an impact on your final pension fund. if you have moved jobs frequently it is easy to lose track of your pension benefits. Write to old employers, or contact the Pensions Tracing Service to find out what you might be entitled to. if you are nearing retirement, or your circumstances have changed, it's useful to get an idea of what you can expect to receive when you reach state pension age. You can get a state pension forecast from The Pension Service. there are many demands on your finances - a mortgage, car, credit cards, debt, savings. Working out when, how and the best way to save can be daunting. Taking professional financial advice can help clarify your priorities and your short, medium and long-term financial goals. Insurance companies are uncovering and preventing fraudulent insurance claims worth over £1m every day, according to latest research from the ABI (Association of British Insurers). The ABI's latest research into general insurance fraud reveals that: insurers are uncovering and preventing fraudulent claims worth £480m a year, or £1.3m every day. This is three times the amount detected in 2003. one in 11 claims -- around one million -- are in some way fraudulent. Of these, 85% involved exaggerating the value of a genuine loss. nearly a half of all detected fraud was on household insurance. Typical scams exposed include deliberately damaging carpets then claiming the damage was caused accidentally. Nick Starling, Director of General Insurance and Health at the ABI, says, "Fraudulent insurance claims cost £1.6bn, and add £40 a year to the premiums paid by honest customers. But the industry is fighting back. "Insurance cheats are more likely to be caught than ever before. "And cheats will pay a high price, as future insurance and credit will be more expensive and harder to obtain." Some of the more unusual fraudulent claims uncovered by insurers include: a man claimed for 'recovery expenses' following a heart attack suffered while on holiday in West Africa, which was for the services of a local brothel. a woman reported her husband for exaggerating his injuries following a car accident hours after he left her, having collected a £385,000 compensation settlement. a keen amateur footballer claimed to be unable to work following a back injury. His fraud was exposed when a local newspaper carried his picture after he was named as his local football club player of the year. a cash-strapped policyholder pushed his car over a cliff then claimed it had been stolen so he could pay his debts. January/February 2008 EXPAT INVESTOR 5 Plastic's fantastic, say Brits Eastern Europe has been voted the favourite plastic surgery destination outside of the UK. Almost one million (918,000) image conscious British adults are planning to borrow a whopping £1.4bn to pay for plastic surgery, according to the research from Abbey Loans. Watching celebrities showing off, more Brits appear concerned about perfecting their curves and honing their six packs. Indeed, breast augmentation is the most common cosmetic procedure sought, accounting for 27% of all surgery, followed by tummy tucks with 25%. Rhinoplasties, or nose jobs, were cited as the third favourite area to go under the knife with 17%. The major reason people want to alter their appearance is to gain more confidence in themselves according to 51%, a further 32% claiming it is for medical purposes. Tw o per cent go plastic fantastic after being egged on by a friend, and one per cent do so as to stop people teasing them about a particular part of their body. Females account for two-thirds of Britons wanting plastic surgery. Three-in-five procedures are planned by those between the ages of 18-34. The UK is still the most desirable location to undergo plastic surgery, with 83% opting to stay close to their home comforts. Six per cent opt for Eastern Europe, where surgery is cheaper, and two per cent of Brits head to the US -- presumably taking advantage of the cheap dollar. Research by AEGON has revealed many people in the UK have a rose- tinted view of their financial futures. The survey has identified a 'reality gap' between what people are expecting in their retirement and what they are actually saving for. Malcolm Flanders, Director of Individual Pensions at AEGON reports, "Many people are still expecting to retire before age 65 and lead a comfortable lifestyle. The fact is a large swathe of the UK population risks being financially impoverished in retirement. "Our survey suggests that many people are still expecting to rely solely on state benefits, or are gambling on the prospect of their children taking care of them. But we believe it's important that people take action now and plan sensibly for their retirement." It's not just retirement planning that revealed worrying results. When asked about critical illness and life insurance, nearly 40% said they thought protection products are too expensive. Mr Flanders points out, "People can buy some valuable protection for £10 or £20 a month. The more likely reason people are not buying enough protection is because they don't like to think about their own mortality. Our industry must try and get the message across that protection is the bedrock of sound financial planning -- and affordable too." Despite many people acknowledging they are not saving enough to secure a brighter future, the research also found that one third of those surveyed would not seek financial advice on pensions, investments and protection. "We need to take off our rose- tinted glasses and take responsibility for properly planning our financial futures. We would urge people to act now before it's too late and take control of your financial future," concludes Mr Flanders.