National Savings Stamps

I have been thinking about the Government's recent drive to encourage financial education in schools and the use of Child Trust Funds as a way of stimulating a life-long savings habit. The idea of developing savings habits early in life is not new and Governments have tried this before. I wondered whether anyone had experience of saving via the old National Saving's Scheme stamps at school? If so, do you think that this made you a more prudent saver in later life?

Were there other schemes or influences that encouraged you to save as a child and/or young adult?

I would be really interested to hear about your experiences

Lynne

Cutbacks in the recession

A recent article in the Telegraph suggested that despite the recession, people are more likely to cut back on their pension savings rather than curb their spending on clothes or eating out - you will find the link to article and the organisation that produced the survey below

http://www.telegraph.co.uk/finance/personalfinance/pensions/6416142/New-clothes-more-important-than-pensions.html


I wonder whether this is an example of people adopting a 'devil may care' attitude as suggested in the article or, is it more likely that people are more wary of investing in financial products at the moment - especially in view of the very low interest rates and recent instability in financial markets?

What do you think?
Lynne

Age limits and disability benefits

I am a new member of the research team and I am looking at social policy around money and savings.

One of my longstanding research interests is social care and how it should be funded in future. It is a 'hot topic' at the moment and is likely to be a high profile issue in the run up to the 2010 election. You may have seen the news debates about the future funding arrangements for long term care. One of the issues that is being discussed is whether disability benefits that are currently available without a means test, should be added to the general social care funding pot. In the recent Government consultation paper, two main benefits were included (1) Disability Living Allowance for those aged under 65 years and (2) Attendance Allowance for the over 65's. The Government has just announced that it will not include Disability Living Allowance for people under 65 in these proposals but Attendance Allowance is still 'up for grabs' (see the link below). I would be very interested to hear from anyone who receives Attendance Allowance or who has a relative who does, to find out what you think about these proposals?

As the Government increasingly wants people to work longer (e.g. past 65 years) it is going to become harder to justify age differences in benefit entitlements. The age at which people are deemed to be 'working age adults' and 'people who are retired' will become much less clear cut in future. On the one hand, we have anti-age discrimination legislation that seeks to challenge artificial age limits in some areas of policy and others where a distinction is being made on the basis of age (typically 65). Do you think this is fair ?

http://careandsupport.direct.gov.uk/news/2009/10/health-secretary-clarifies-government-position-on-disability-benefits/

Lynne

Older people paying too much tax?

A report by the National Audit Office has just been published which says that a lot of older people pay too much tax. This happens often because older people may have several different sources of income, rather than one simple salary. For example, tax may be deducted at source from interest-bearing accounts and many people are unsure how to claim it back. They have estimated that 1.5 million older people have overpaid tax by an average of £171, although some older people may have underpaid tax. Completing a tax return is complicated enough no matter what age you are, and however simple your income. It is worth finding out if you might be overpaying tax. I have always found the tax people to be very helpful if you phone them. Alternatively there are some sources of tax advice for older people - we are trying to find out which might be genuinely useful.

The NAO report may be found at http://www.nao.org.uk/publications/0809/dealing_with_the_tax_obligatio.aspx

Dinah 23.10.09

Is 'Financial Capability' the solution?

I have attended two conferences this week where the focus was on building 'financial capability' in individuals by education and the provision of information as the solution to the increasing complexity of managing household finances.  The conferences were very different but many of the messages were similar.  The first was on financial exclusion from the mainstream and was run by the Runnymede Trust, and the second on pensions and pension reform, run by the Pensions Policy Institute.  At both, many of the speakers commented on how in today's world it is becoming more and more difficult for people with low or middle incomes to know what to do for the best with their money.  One of (or possibly the only) solution that many saw was to give more and more information to individuals.  While accurate and easy to access information is important, I struggle to see how this will help in many cases or with some fundamental problems.  It will only serve to highlight more risks, uncertainties and insecurities, and won't magic spare money for people on low incomes or whose savings are now giving no interest, or who have put their money into pensions and have now lost large chunks of their life savings because of the problems in capital markets and equities around the world.

“Money : No need to Quarrel Anymore”

When couples first marry there are many excitements but also many adjustments to make.

One of the main adjustments is the arrival of children but also the pressure that it puts on the money available and who should be free to spend it. Some couples create ‘housekeeping’ but even then one spouse may feel free to spend money more readily than the other.

We asked older couples whether they were each free to spend as they wished. Older couples generally said ‘yes’ but there seemed to be limits. This was summed up by one woman who said “We know what we can’t do’.

This seems to reflect several older couples attitude and we wondered whether this is general. Do people in long relationships limit how they spend because they know anything else will lead to a painful quarrel?

How rich do you feel?

Some recent research by the TUC found that people on higher earnings thought they were closer to 'average income' than they really were, i.e. underestimated the extent to which their incomes exceeded average earnings. People on lower incomes did the opposite, i.e. did not realise just how low their incomes really are compared to the national average.

This is interesting because in our research we found that even quite wealthy older people might say that they were finding it hard to manage and felt that 'money was a bit tight', whereas people who were much poorer (e.g. on state pension only, with no significant savings) might say that they 'feel quite comfortable on the money we have'.

Of course, people get used to managing on the amount of income they have (and make commitments according to their income), and it is possible that those for whom investments and savings provide a significant part of their income, have felt squeezed due to the poor performance of the stock market and low interest rates, whereas people on state pensions may not actually have suffered a drop in income. However, we all suffer from rising prices and rising food and utility bills affect lower income households to a greater extent than higher income ones, because these costs make up a higher proportion of their expenditure.

Please post a comment about this, if you have any ideas!
Dinah 9th September 2009

Web Survey

We are starting to publicise our web survey and hoping that many people will fill it in - this is very different to other surveys that I have carried out, where I have always known how many people we are sending the survey to, and had a good idea of the anticipated response rate. We are trying to gather qualitative information from this survey and so of course accept that the people who fill it in will not be 'representative' in the sense that we use it in survey research. This has had me thinking rather a lot about the web, and who it reaches, and who it doesn't.

I have become really conscious, through doing this research, of divisions in society based on our increasing use of internet and web technology. I was told this week by one of our respondents that applications for a swap with their housing association are now all done online, and she is supposed to log on every week to register her continued interest. This is a complete impossibility for them as they do not have access to the internet, and help and assistance, or an advocate to do this for them, are not available. They need a swap as the stairs to their flat have become impossible to manage. This echoes much of the exclusion that we heard about the banking sector in the focus groups that we ran. I do feel very angry about this, and about the way in which things are organised for the convenience of the bureacratic organisation rather than the citizens we are supposed to serve.

I do see that by setting up a web survey we are guilty of this ourselves, and am torn by the ability that the web offers to reach large, dispersed numbers of people and automate the collection of information, as against those who we do not reach by using this format. I suppose that this is the reason that we are using a number of methods to gather data for this project, including the focus groups and interviews, and the ELSA dataset, where information is collected by personal appointments with thousands of households. But the other side of this is to remember that millions of older people do have internet connections and computers and that we need to be careful not to create a discourse that paints everyone over 65 as a helpless, disconnected, disenfranchised person. The message is to cater for all people, to recognise diversity, and to work out what people need and want for different purposes. I am sorry that we are only running this survey on the web but at the same time, I hope that it will reach some of the millions of those who do have internet connections.

Credit and the generations

As we've been doing the interviews with older couples, one recurring theme is the perception of fundamental changes to attitudes towards possessions, between the generations we are interviewing, and their children's and grandchildren's generations. Many of our sample have remarked to the effect that 'In my day we saved up - if we didn't have the money, we didn't get the thing we wanted' whereas there is the belief that nowadays, people firstly seem to consider as necessities things that the older generations considered luxuries (such as a washing machine, or new furniture as opposed to second hand) and that they are prepared to borrow money to finance these purchases, rather than save up for them.

My perception (based on years working in financial services marketing, as well as my own life experience) is that the growth of the credit industry, particularly in the 70s and 80s, meant that people got used to the idea of getting things instantly ("Buy now pay later"). Indeed one credit card marketed itself with the line "Take the waiting out of wanting." Further, the inflation of the 70s particularly meant that there was little point in waiting: if you tried to save up, the price of the item would have put it beyond your reach, so much better to buy on credit and have the thing at the lower price.

Now though, we have low inflation: so are these generational differences just due to the formation - at key stages of life - of different habits which persist into later life, or are there some other factors at work here? Why are older people so (apparently) afraid of credit? Why are younger people so relaxed about it, even when it costs them a fortune?

Income and Poverty in Later Life

I attended the launch of a new report today at the Pensions Policy Institute. The report is 'Retirement Income and Assets: Do Pensioners have sufficient income to meet their needs'. In keeping with the PPIs excellent reputation, it is a thorough and thought-provoking piece of research, and the launch event was too. The report covers many areas relating to income and poverty of older people but highlights what I think is one of the most problematic areas in the way that we think about income, poverty and older people. This is, what does it mean for your income, your quality of life, and your experience of hardship, if you or your partner, or both of you, develop ill health or become frail or unwell in later life? In official low income statistics, we have no way of accounting for the increased costs associated with disability, frailty and ill health. Some increased costs are pretty obvious - like if you have to heat your house all day to keep warm, or if you have increased washing to do and so on. But to really keep the quality of life that you had before, or as close to it as you can get, requires paying for things that are not so obvious - so for example, if you took great pleasure from your garden, but can no longer do the gardening, then to maintain that quality of life you would now have to pay a gardener. If you can no longer walk to the bus, then to get out as much as you used to, you may need taxis, or even to hire a car and a driver for example if you live in a rural area where there are no taxis. If you can no longer take routine exercise, then you may benefit strongly from having regular physiotherapy which you would have to pay for. I don't think governments really recognise that when older people adjust to a much reduced lifestyle, this may in fact only be the result of not having suffucient money to maintain their earlier lifestyle - it's not a preference. Their health problems have made them poorer. We have no poverty measures that take account of this. This is compounded in official statistics because in the UK, any disability benefits, which are meant to help towards these additional costs of disability, are counted as income BUT no account is taken of the additional costs that those benefits are meant to help with. The PPI report concludes that many pensioners will struggle to cope with health-related costs as they age. I think this is a topic that deserves much more research attention than it currently gets.

For Richer For Poorer Website Development

I have spent some time this week on developing the website. This has made me wonder about the process of qualitative research and how thoughts and findings slowly emerge from the process of research - we are putting these on the website, but is this the right thing to do? If one of the respondents looks at the website between recruitment and interview, does it 'contaminate' the data in any way to tell potential respondents what it is you are thinking? Or is it just a more honest way of communicating those higher level thoughts that are in your mind as you constantly refine your interview schema as you progress through the research? Either way, you are testing out your ideas about how the world works with the people who are informing you about how the world works. I feel pretty comfortable with it, but I do wonder what the purist methodologists might think.