Podcast Summary
LinkedIn's Role in Small Business Hiring: LinkedIn is a crucial platform for small businesses to find passive job seekers, as over 70% of its users don't visit other major job sites. Prioritizing pension policies that protect the oldest and poorest retirees can help address their unique needs, as the current triple lock system may not be sufficient.
LinkedIn is a valuable resource for small businesses looking to hire professionals, as it hosts a large number of passive job seekers who may not be actively looking for new opportunities but could be open to the right role. Sandra, the professional mentioned in the discussion, emphasized that over 70% of LinkedIn users don't visit other leading job sites, making it an essential platform for discovering top talent. Additionally, the discussion touched on the potential impact of pension policies on retirees, with former pensions minister Ros Altman advocating for a double lock system to better protect the oldest and poorest pensioners. The current triple lock, which guarantees the state pension will rise by the higher of inflation, average earnings, or 2.5%, may not be effectively addressing the needs of these vulnerable groups. Overall, the conversation highlighted the importance of considering alternative hiring methods and pension policies that prioritize the well-being of those most in need.
Triple Lock System's Affordability and Impact on State Pension Age: The triple lock system, ensuring pension rises based on inflation, wages, or 2.5%, may need reconsideration due to affordability and unequal protection for various state pensions.
The triple lock system, which guarantees that the state pension rises in line with inflation, wages, or 2.5% every year, may need to be reconsidered due to its affordability and potential impact on the state pension age. The Cridland report highlights the trade-offs between retaining the triple lock and avoiding significant state pension age increases. However, it's important to note that the triple lock doesn't apply equally to all state pensions, as the new state pension is protected more than the old one, and the pension credit, which is for the poorest pensioners, isn't covered at all. The political construct of the triple lock may become a contentious issue during elections, but its limitations in protecting all state pensions equally should be recognized.
UK pension system's future uncertain beyond 2020 triple lock: The UK pension system's future beyond 2020 triple lock commitment is uncertain, and pensioners may face financial insecurity due to unintended consequences of pension freedoms, including stricter lending criteria and declining annuity rates.
The state pension system in the UK is facing uncertainty beyond the 2020 triple lock commitment, and pensioners' financial security may be impacted by the unintended consequences of pension freedoms. The triple lock promise, which guarantees pension increases based on wages, inflation, or 2.5%, may not be extended beyond 2020. Additionally, the pension freedoms introduced in 2015 have allowed retirees more control over their pension savings but have also made it harder for them to secure mortgages due to stricter lending criteria and the decline in annuity rates. These factors may require a reevaluation of pension protection policies to ensure fairness for pensioners.
Challenges for lenders in assessing mortgages for older borrowers: Despite some progress, older borrowers face challenges in securing mortgages due to lenders' rigid affordability tests and lack of innovation in assessing less predictable sources of income.
The increasing trend of older borrowers seeking mortgages presents challenges for lenders due to less predictable sources of income such as pension drawdowns and cash lump sums. While some lenders, particularly smaller ones like building societies, are more open to lending to older individuals, larger banks often rely on computer algorithms to assess risk and may deny mortgages to older borrowers. The regulator has urged lenders to become more innovative in assessing mortgages for older borrowers, but the main issue remains the affordability tests, which have not been significantly changed. This could limit the ability of older individuals to secure mortgages, even with the human touch of smaller lenders. The regulator's push for innovation and the recent actions of some lenders suggest that change is on the horizon, but the full impact on older borrowers remains to be seen.
Alternative way for small companies to borrow money: Mini bonds offer fixed returns but come with higher risks than equities, especially for unproven, disruptive companies
Mini bonds can be an alternative way for companies, especially small, entrepreneurial, high-risk ones, to borrow money directly from investors through crowdfunding websites. However, investing in mini bonds comes with higher risks compared to buying equities, as the companies issuing the bonds are often unproven and disruptive. The return on investment is usually fixed, and the risk of losing your investment is significant if the company fails. Analysts advise considering the level of risk and potential returns before investing in mini bonds, and buying equities might be a simpler and potentially safer option for some investors.
Understanding the Risks of Company Investments: Examine a company's financial history, debt repayment plans, and asset security before investing in equities or mini bonds to minimize risks.
Investing in a company comes with risks, whether it's through buying equities or taking on a mini bond. While a mini bond may offer a fixed rate of income, there's still a risk of losing your money if the company doesn't succeed. On the other hand, buying equities carries the risk of losing everything, but there's also the potential for massive gains. To make an informed decision, it's crucial to examine the company's financial history, their plans for paying back any debt, and the security of any assets backing the bond. Investing in a well-established company with a long history of steady returns and a solid financial plan may be a safer bet. However, investing in a new company comes with significant risks and requires extra caution. Overall, it's essential to weigh the potential risks and rewards before making any investment decisions. For more insights, be sure to read Amy's column on this topic in the FT Money section.