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Social care faces annual deficit

An increasing amount of individuals are underestimating the growing costs of social care by £7 billion per year, research claims.

Independent think tank the Centre for the Modern Family polled more than 2,000 adults on behalf of Scottish Widows and found, on average, people estimate residential care would cost £549 a week.  

However, in real terms it would cost on average £866 for a place in a nursing home – leaving a shortfall of £317 per week.

In addition, 25% have no idea on how to cover social care costs for themselves or a relative, while just 15% were saving on a monthly basis to pay for their own social care.

Around half (49%) of adults would have to rely on a relative to help cover care costs, with 42% having £2,000 or less in savings – enough to fund less than 3 weeks of care.

Jane Curtis, chairwoman of the Centre for the Modern Family, said: 

“The number of people in care in the UK will almost double by 2035. Our research shows an over-reliance on relatives and the state could put families in serious financial difficulty. 

“It can seem difficult to know how to prepare for the future, but to avoid a financial care crisis we all need to have an honest discussion on later life care as early as possible so no one is left footing a bill they can’t afford.”

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Savers likely to increase pension contributions

75% of 25 to 34-year-olds with a workplace pension said they would increase their pension contributions in line with a pay rise.

Insurance company Royal London polled 1,500 ‘millennials’ and found 40% plan to increase their monthly contributions next year.

Employers are required to make a minimum contribution into a workplace pension, which is currently 1%. This will increase to 2% in 2018/19 and 3% from 2019/20. 

A further 74% of respondents would continue to save into their workplace pension if total contributions increased automatically to 5%, with 3% from their employer and 2% from them. 

However, if total contributions increased to 8% (employee paying 5% and employer paying 3%) only 62% of people would continue to save into their workplace pension.

If contributions were matched (employer and employee paying 4% each), 76% would be willing to continue saving into their pension.

Jamie Clark, pensions business development manager at Royal London, said:

“It’s great to see that automatic gradual increase in contributions, perhaps in line with pay rises, is potentially viewed by millennials as a way to help lessen the financial impact.

“However, although saying they are saving, there is the risk some may still sleepwalk into poverty in their retirement by not regularly reviewing their savings and not taking advantage of opportunities to increase their pension savings when possible.”

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Digital spending for SMEs passes £1.2bn

Small businesses have benefitted from the government spending £1.2 billion on digital services since 2012, according to official figures. 

Almost half of total spend – or £1.39 in every £3 – has gone to small and medium-sized enterprises (SMEs), which boosted the technology sector.

Public sector spending on cloud storage and IT support for businesses of all sizes reached a total of £2.6 billion over the same period.

The cash is being provided by public bodies through the Digital Marketplace, which is available for SMEs to source technology or people for digital projects in the public sector.

This has helped SMEs obtain government contracts to deliver efficient public services, often at cheaper rates than previously provided by multi-national suppliers. 

Caroline Nokes, minister for government resilience and efficiency, said:

“Small businesses have an important role to play in helping the government to spend taxpayers’ money wisely.

“That is why we continue to find ways of improving how the public sector, schools and hospitals, for example, puts money back into services for those they look after.”

Warren Smith, director of the Digital Marketplace, added:

“We are continually focused on breaking down the barriers to entry for SMEs to do business with government, for example, by simplifying the application process.”

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Generous grandparents hand out £37bn

The Bank of Gran and Grandad has lent more than £37 billion to their grandchildren, according to a study.

Insurance company Saga polled 5,529 grandparents and found that the average donation was £9,365.

Grandchildren in London and the South East received the largest deposits, while grandparents in Yorkshire were the most likely to donate.

More than half the grandparents would prefer seeing their relatives spend the money rather than leaving it as inheritance.  

40% said they were happy for the money to be spent on whatever the recipients liked, with other grandparents earmarking cash to go towards:

  • education (23%)
  • holidays (13%)
  • driving lessons (12%) 
  • house deposits (9%).

Alex Edmans, head of product at Saga Money, said:

“Most of the money grandparents are gifting is coming from their cash savings, so whatever small amount of interest they are missing out on is clearly outweighed by the joy they get by seeing their grandchildren benefitting from the money.

“Our customers are increasingly turning to gifting money through equity release in order to help grandchildren onto the property ladder.  On average they take £33,000 out of their property in order to give to family.”

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Employers fret over future of economy

31% of employers expect the economy to worsen in the coming months as business confidence fell in July 2017, according to a study.

601 employers were polled by the Recruitment and Employment Confederation (REC), who also found 28% still expect the economy to improve.

40% need to take on more permanent staff to meet additional demand, while 19% said they were planning to hire new workers in the next 3 months.

Confidence in hiring and investment decisions remained at 10%, its lowest for the past 12 months.

The biggest concern among employers was the lack of skilled candidates available, particularly in the construction industry.

Kevin Green, chief executive of the REC, said:

“Businesses are continuing to hire to meet demand, but issues like access to labour, Brexit negotiations and political uncertainty are creating nervousness. 

“The government must do more to create an environment where businesses have clarity. 

“That means clearly laying out what Brexit plans look like and how employers can keep recruiting the people they need from the EU.”

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