A weekly column by Scott Woods
Firstly, findings have been published surrounding the mandatory ‘auto-enrolment’ company pension schemes that I wrote about recently.
According to a study from pension consultants Towers Watson, nine out of ten auto-enrolled workers are staying in their company pension plans. The study is based on data from more than 90 per cent of FTSE 100 employers.
“Take-up at this rate is a huge success,” said a Towers Watson senior consultant. “It is still early days, with auto-enrolment still to roll out to mid-size and small employers, but the result is far better than hoped for.”
This is great news because it means that more and more people will be benefitting from employer contributions into their pension pots and improving their retirement income accordingly.
If you are an employer or employee and need more information concerning how you will be affected by the new-rules, then please get in touch.
Secondly, to the not new, but still topical potential problem of interest-only mortgages.
Industry regulator, the Financial Conduct Authority (FCA) has revealed that the mass problems envisaged by the industry regarding defaults caused by the ‘ticking time bomb’ of interest-only mortgages have failed to materialise.
Its long-awaited review into the state of the interest-only mortgage market found that 90 per cent of customers had a repayment strategy in place. However, it also found that 37 per cent of consumers had a “definite or possible” shortfall based on their own estimates, with the average client owing approximately £22,000.
The modelled data, carried out for the regulator by research company GFK, revealed that 34 per cent of mortgages that will mature before 2022 could experience a shortfall of £50,000 or higher.
Martin Wheatley, chief executive of the FCA, said: “By acting now we are aiming to nip this problem in the bud.”
He highlighted the recent trend among lenders to contact their most at-risk customers with a wake-up call to highlight the report’s findings and tell them what they needed to do without delay.
Again, if you have an endowment shortfall or are worried about repaying your interest-only mortgage, then seek advice, because the problem is unlikely to go away on its own.