The integration of supermarkets into personal finance has been quite methodical. Tesco’s first foray into the sector came 13 years ago, with operations originally focussed on insurance. But that has now changed and, along with the emergence of Sainsbury’s Finance and Marks & Spencer Money, there can be little doubt that the supermarkets are here to stay.

Image: Chris would need help reaching the credit cards.

Should the traditional lenders be worried? Well, what the supermarkets increasingly have in their advantage is that consumers consider convenience to be uppermost in their list of priorities when dealing with their finances. With millions coming through their doors on a weekly basis, the appeal of combining grocery shopping with topping up an ISA or applying for a loan is clear.

It surely beats having to rush down to your provider on a lunch break or having to travel to a branch that opens on a Saturday, which could be miles away if you live in a rural location. The vast amount of retail space, already enjoying a huge footfall, means the supermarkets have been able to dodge significant outlay which other new entrants to the personal finance sector will inevitably encounter.

Furthermore, massive profits should also ensure that the supermarkets are easily able to satisfy the Financial Service’s Authority new liquidity requirements, which have been drawn up to protect savers’ funds, making sure that providers could cope with a mass withdrawal of deposits.

All that being said, providers live and die by the quality of their products. To this end, supermarket lenders have started to catch the eye in recent weeks, climbing in a number of the Best Buy charts on Moneyfacts.co.uk.

For a loan of £5,000 to be paid back over the course of three years, Sainsbury’s Finance has a typical APR of 8.8% (equating to monthly repayments of £157.75 and a total of £5,679) – the best on the market. Tesco Bank follows with 8.9% APR (as does Alliance & Leicester). While the 12.9% APR from Marks & Spencer Money is not quite as competitive, it is still one of the best six rates available.

Loans of £10,000 over a five year period tell a similar tale, with Sainsbury’s Finance offering the lowest APR of 7.9% and Tesco Bank close behind at 8.2%. The closest provider is Alliance & Leicester at 8.9%.

The table showing Best Buy 0% purchase credit cards also makes for interesting reading as the supermarkets take positions one, two and three. Tesco Bank offers 0% on purchases for 12 months, while Sainsbury’s Finance and Marks & Spencer Money follow with ten months

Admittedly, these are exceptions rather than the rule, and traditional banks and building societies still make up the majority of the tables on this website. But these product launches, alongside Tesco Bank firmly parking its tanks on the lawns of estate agents by offering to sell homes for a flat fee of £999, are proof that the supermarkets are serious about their personal finance operations.

Let’s hope increased competition benefits the consumer.

James Henderson, Reporter, Moneyfacts Group

Not content with making history in cutting base rate to its lowest ever level of 0.5%, the Bank of England has now left it sitting there for a whole year.

Clyde regretted vowing not to shave until base rate started to rise

Throw in £200 billion of money straight off the quantitative easing printing press and it would seem the economy has been given every chance to find its feet.

Indeed, latest figures show that the recession has officially passed, but at what cost to the finances of Joe Public?

Mortgage borrowers who kept to their lender’s standard variable rate or on a tracker deal are likely to have been celebrating, as each month the Monetary Policy Committee announced there would be no change.

Two year fixed rate mortgage deals remain relatively cheap too, costing on average 4.74% today compared with 6.28% in October 2008, just before the base rate started its descent.

However, with one man’s pleasure often another’s pain, it is savers who have had an unhappy 12 months and more.

Before base rate began to drop, the average rate available on a no notice account stood at 3.71%, but stands at just 0.72% today

Notice accounts have seen their rates fall in that time too, dropping from 3.91% to 1.02%.

Also suffering have been cash ISA rates, dropping from 4.99% to 2.09% during the same period.

A year ago the average cash ISA rate stood even lower at 1.99%, but the slight improvement could soon slip away once ISA season draws to a close on 5 April.

That’s not to say decent savings deals can’t be found, it’s just they’re a little harder to nail down.

In the meantime, savers will be praying for a base rate rise soon, but would be unwise to start holding their breath.

Although the convalescence of the economy appears to be underway, most commentators agree that we’re not out completely of the woods just yet.

Uncertainty still lies round almost every corner. Which direction will house prices go next? Will inflation obediently follow Bank of England predictions and hit its 2% target in the medium term? And what will the outcome be when the ballet boxes are finally dusted down?

All are unknowns which combine to baffle far greater minds than my own.

Most predictions suggest the earliest chance of action would be a base rate rise towards the end of the year.

But your guess is as good as mine, or that of anyone else.

Tim Leonard, Senior Reporter, Moneyfacts Group

I seem to have been saying it for over a month now, but the annual ISA season is now well and truly under way. As we at Moneyfacts.co.uk reported last month, providers started making revisions to their existing ISA products and launching new ones up to a month earlier than is usually expected.

Image: Fidel knew when to switch

The reason behind the early kick-off is almost certainly due to increased competition amongst providers that are cash constrained and having to put more thought into trying to attract funds. But from a wider perspective, this scrap should be beneficial to savers, as a desire to secure deposits should equate to attractive rates of interest.

In the last week in particular, we have seen a number of new ISA issues and products achieve Best Buy status in the Moneyfacts.co.uk charts. While it is true that this season is unlikely to offer the headline rates seen in previous years – the Bank of England base rate will see to that – there are still deals that demand attention.

As you may or may not have noticed, the product news section of this website has been updated even more frequently than usual, with ISAs from Santander, Lloyds TSB, Skipton BS and Birmingham Midshires to name but a few all catching the eye. Rates of 3.00% or more can still be had on a one year product, scaling upwards the longer you are prepared to lock away your money.

It is a section worth keeping an eye on in the coming weeks, especially if you’re eyeing up a place to transfer your money.

And with more than nine in ten ISA products allowing transfers in, there really is no excuse for keeping your money in an account with a minimal rate of interest. Clichéd as it may sound, the great majority of us work hard for our money; in turn, we really should be making our money work hard for us.

Admittedly, saving is not fun; most consumers want to spend the minimum amount of time sorting out their finances. But it should be remembered that ISAs were originally devised to offer us a savings vehicle that, as well as sheltering our interest from the tax man, is portable, allowing people to transfer their allowance to leave behind uncompetitive rates and make more of their money.

Even if you are not planning on taking advantage of the new ISA limits – all savers will now be allowed to invest £10,200, with £5,100 allowed in cash – it is still worth having a look to see what is around. At the last count, there were 272 accounts allowing transfers in, so whether you want to lock your money away for a number of years on a high rate or want to give your savings a short, sharp shock, there should be an option for everybody.

James Henderson, Reporter, Moneyfacts Group

Once upon a time the theory behind pensions used to be relatively simple: save extra for your retirement via a personal pension and sit back, relax and ease your worries about living comfortably in your old age

Image: A 72% fall! Rodney was adamant his pension provider was having a giraffe!

Cue images of elderly couples sipping Martinis by the poolside on a sun-drenched tropical island or leisurely taking in a round of golf.

However, the modern day reality of pension saving means such hopes and aspirations may be out of reach, and tomorrow’s pensioners may have to lower their retirement expectations.

For most of us, funding for our retirement consists of two elements: the first involves paying into a pension scheme on a regular basis in order to generate a decent pension pot; the second involves transforming these proceeds into a retirement income (typically via an annuity).

Unfortunately, pension savers have been hit by a double whammy over the last decade, with falling stock market returns diminishing the size of their pension pots, and lower gilt yields and increased longevity forcing annuity rates to historic lows.

The result of all this is a pension income that is almost 72% less than someone who had retired ten years ago. Sounds fair? No, but it is very much a reality and it is time for the pensions industry and consumers to recognise just how desperate the situation is becoming.

To emphasis the scale of the problem, it is worth looking at a simple example. A male who retired 10 years ago and had paid £100 gross per month into a personal pension for 20 years would have built up a pension pot of £103,914. By turning this into an income using a standard level without guarantee annuity, he would have received £8,998 per annum.

By contrast, someone who retired this January having paid in the same contributions over a twenty year term would have built up a pension pot of less than £41,000, producing an annual income of just £2,542.

Whilst it can be argued that the last decade has been exceptionally tough for investors, with the dotcom crash and the credit crisis severely curtailing stock market returns, there are no guarantees that the financial climate will be any more favourable over the next decade. Indeed, few experts believe that we will see any substantial uplift in the annuity rates paid by insurance companies going forward.

So what can you do to increase your chances of avoiding a retirement in poverty?

1. Review your pension performance at least annually – Given such depressing statistics, it may be tempting to leave your pension statements to gather dust, but now is the time to ensure that you are not stuck in consistently underperforming funds. The difference between the best balanced managed fund returns and the worst over the last 20 years is a considerable 28%.
2. Consider a SIPP - If you fancy taking greater control of your retirement destiny and want to invest in a wider choice of funds and investments, then a self invested personal pension may be a better option.
3. Increase your contributions – You may be thinking, why throw good money after bad? However, increasing the amount you pay into a pension will substantially improve your chances of producing a bigger pension pot. To achieve the same pension income as someone who retired a decade ago and had been contributing £100 per month gross, those retiring now would instead have needed to save around £355 gross per month.
4. Seek an enhanced annuity - If you are in poor health or a smoker you may be eligible for an enhanced annuity. These typically pay out around 20% more than a standard annuity

Alternatively, if your heart is set on lunch aboard a cruise ship in your golden years rather than a retirement on meals on wheels, then there is one sure fire winner: become a MP!

Richard Eagling is Editor of Investment Life & Pensions Moneyfacts

So Skipton Building Society has decided to scrap the ceiling on its standard variable rate (SVR) and increase the rate from 3.5% to 4.95%.

The promise that mortgage borrowers on the SVR would never pay more than 3% over base rate is no more…well, temporarily no more.

Image: ‘What’s all the fuss about scrapping ceilings?’

The society says that it had to respond exceptional market conditions, ones which have seen the Bank of England keep the base rate of interest at an historic, 315 year low of 0.5% since March last year.

The credit crisis has seen the funding that most banks and building societies rely upon to function become unusually expensive too.

Having had an exceptional circumstance clause written into its contracts since 2002, Skipton is perfectly within its rights to make the change that it has.

What is more, the rate remains below the average SVR of the top ten building societies of 5.12%.

But does this justify an action that will reportedly have a significant financial impact on around 30,000 borrowers immediately and possibly another 35,000 in the coming months?

Some clever people somewhere have worked out that the rate rise means a borrower with a £130,000 interest only mortgage will see £157 added to the cost of their monthly repayments.

Those with a similar sized repayment mortgage would see their monthly outlay rise by £105.

Perhaps the Skipton customers who can’t afford to meet their revised repayments could claim exceptional circumstances too and keep on paying their old amount?

To be fair to Skipton, it has not been the first lender to raise its SVR (other smaller lenders have done so while base rate has remained unchanged), and it is highly unlikely to be the last, particularly now that one of the big providers has broken ranks.

Borrowers with other providers could therefore soon find themselves in the same boat too.

All this suggests the time to move away from the SVR might soon be nigh.

Skipton’s SVR borrowers will undoubtedly be looking forward to the exceptional circumstances soon passing so that the ceiling can be reintroduced.

Let’s hope the ceiling hasn’t fallen in on their home ownership dream before then.

Tim Leonard, Senior Reporter, Moneyfacts Group

Figures showing evidence of up to a million homeowners meeting their mortgage and rent payments should have a real capacity to shock, but it seems the story has almost passed us by, such is the level of desensitisation that more than two years of constant headlines and announcements detailing record levels of public and personal debt has caused.

Image: The ramifications of Seb’s decision quickly became apparent

To recap, research conducted by Shelter has revealed that as many as one million people households have used credit cards to pay for their mortgage or cover their rent in the last year. The problem is not one suffered exclusively by the working class, either, with figures showing that four per cent of middle/upper classes have also resorted to this dangerous method

With the acute possibility of redundancy becoming reality for many, it is understandable that households which once comfortably made their monthly payments are struggling to make ends meet. But paying off one debt, while accruing another, is simply delaying the inevitable for all but the brightest financial minds. After all, if you’re in the position where the mortgage can’t be paid, how on earth are you going to pay of additional credit card debt?

The problem does not appear to be an especially widespread one, the headline number of one million is an estimate based on six per cent of respondents saying they had used plastic to keep a roof over their head. However, those doing this consistently (the survey includes anybody that has done so in the last 12 months, again suggesting that the scale of the problem may be exaggerated) are taking a huge risk, and face the very real prospect of having their home repossessed.

This is because credit card firms are not subject to the same rules as mortgage lenders, Shelter has advised, meaning they can force through a property order in order to push through a property sale.

Statistics show that repossessions were less widespread than was originally predicted in the first nine months of 2009, but the worry now must be that decisions made by those in the upper echelons of the Bank of England could see number jump.

Opinion is divided on when the historic low base rate of interest will be increased. Some experts have said that the measure is unlikely to move above 0.5 per cent until very late in the year or into 2011, but there seems to be a growing consensus that it is more likely to start creeping up in mid-2010. For those on tracker mortgages, a rise in interest rates could be the difference between being able to afford repayments and not, the difference between having a home and losing it.

Local housing agencies, charities and councils must do all in their power to educate homeowners that sticking their heads in the sand is not the answer and that help is at hand. It is help that should be sought, and sought quickly.

James Henderson, Online Reporter, Moneyfacts Group

On the face of it, the Government’s move towards scrapping the default retirement age is a welcome one. After all, it doesn’t seem right that once people get to a certain age, they are deemed past it, fit only for the scrapheap.

Image: Terrence was insistent that he wasn’t over the hill just yet

However, a cursory glance at the state of the public finances suggests that the government review is a route Harriet Harman and her colleagues have been forced down.

The first provision to provide a state pension in the UK was passed over 100 years ago, with the Old Age Pensions Act 1908, entitling those aged 70 or over, of good character and not considered as lunatics to claim five shillings a week, about £20 in today’s money. The amount was actually quite low, as the Government, while recognising its duty to provide for its citizens in old age, were keen people made their own provisions. Some things never change.

The point is that when the idea of a state pension was first mooted, the take up was low as many were not eligible as they earned too much (only those earning less than £31.50 a year benefitted) or, with a life expectancy of 52, they died before they could claim their five shillings.

Today, state pensions can be claimed from 65. With life expectancy now at 77, the weekly entitlement up to £90.20 and around 12 million claimants compared to 500,000 in 1909, it does not take a mathematician (and believe me when I tell you I am not) to see that the Government is being put under far more financial pressure than the initiative was originally designed to do.

The current state pension system is based on a model that is over a hundred years old and is buckling under pressure it was never designed to withstand, in the same way that age-old copper wire has proven unable to cope with the demands of super-fast, super-modern broadband.

As we’re looking back, it can be no coincidence that as the generation of post war baby boomers approach 65, the Government gives them the power to stay in work, further contributing taxes to the Treasury and, hopefully, deferring their state pension to build up higher payments.

But the old maxim still applies, whether the default retirement age is scrapped or not. People will leave employment for the good life when they can afford it, so those in a position to drop down a gear will continue to do so, regardless of any new legislation that is passed.

The move towards discussion on pensions is encouraging, as evidenced by the unveiling of auto enrolment which will follow New Zealand’s model of shifting the emphasis from opting into a scheme to opting out of one. But there are still real issues to be tackled; if the default retirement age is scrapped, then the requirement to take an annuity by 75 must be looked at, for instance.

And, with the public purse more strained than a Darren Anderton hamstring, how much longer can final salary schemes, much loved by civil servants and MPs, be sustained?

James Henderson, Online Reporter, Moneyfacts Group

With the new year only a week old, some of you may already be struggling to stick by your new year’s resolutions.

Giving up smoking or losing weight might seem a good idea on 1 January. However, return to work and all the daily frustrations which a cigarette or chocolate helps to temper come flooding back.

Image: Bang goes the diet for another year

Indeed, according to recent research, over three quarters of people who promise to make a positive change in the new year eventually fail in their attempts to do so.

Despite this, it is encouraging that a separate study by Which? has just revealed over half of people (56%) who have made a resolution this year have made money-related ones.

Research on what the Government’s new year aims might be is limited, but it has been told that tackling the pensions crisis should be near the top of its list.

Pension provision in the private sector has continued to deteriorate over the past year and with seven million people in the UK still not saving enough for their retirement, urgent action is required.

The Government’s great white hope is the personal account, or National Employment Savings Trust (NEST for short), as it has just been renamed.

Due to come into effect from 2012, the accounts will provide a simple, low-cost pensions savings vehicle, giving all employees the right to a good quality workplace pension with a contribution from their employer.

Key to the regime, however, is that employers will have a duty to enrol their eligible employees into the scheme automatically (provided they are not already in a better one) and make payments if the employee doesn’t opt out.

While the initiative is sure to bring more pension savers on board, concerns persist that some employers will struggle to absorb the cost of implementing the scheme. It is also feared that some will take the opportunity to level down the benefits available from their existing pension schemes merely to meet the minimum requirements.

Indeed, according to the Association of Consulting Actuaries, around six in ten employers intend to review their arrangements ahead of 2012, while a quarter are considering benefit reductions to offset the cost of increased membership through auto-enrolment.

Despite this, if workers with little or no pension saving are encouraged to start putting something aside, then the scheme will surely have been a success.

However, if your resolution was to sort out your finances in some way, it’s worth remembering that there is no time like the present to start saving for your retirement. Why wait until 2012, when you could be getting a head start right now?

Tim Leonard, Senior Reporter, Moneyfacts Group

I can’t believe it’s Christmas already, but it is. There is no denying the fast-paced, busy, busy world in which we live. Yet, most people relish slowing down, enjoying the moment, the courtesy and friendliness of times gone by. For me, the demise of the cheque is just one more nail in the coffin of personal contact.

Image: Tyson longed for the days of cheques in the post; his teeth had not been the same since the advent of parcels.

It is not that long ago that the telegram was replaced by a much faster means of communication; email. But those that remember telegrams will recall that although not personally given, they had a very personal feel. There was no misinterpretation with tone or message and they became the recognised form of congratulations from monarch to centurion.

The advent of digital transfer has in effect caused a similar demise for cash that the email caused for telegrams. These days few of us pay cash for big purchases preferring the convenience of a card transaction.

The cheque in many ways is comparable to a birthday card. It is a personal, hand written communication. It is also a promissory note, just like paper currency, it promises to pay the bearer a set monetary sum.

True, cheques are used less and less these days and the Payments Clearance Council, which is heading this initiative, told me that they expect banks to save £200 million a year by not having to process cheques, a saving that obviously can’t be sneezed at. Therefore the withdrawal of cheques looks sad but inevitable.

What does the future hold in a world without cheques? Will aunties and grannies have to give vouchers in future? If you’re going to have to go to a specific shop for a voucher, you may as well go one step further and buy the present.

Oh dear, I see a future with extra long queues at return tills up and down the country. I see confused marketers trying to fathom our spending habits but being thwarted by incorrect purchases such as a Joe McEldrey CD instead of the current teen favourite RAGE AGAINST THE MACHINE.

What do you think?

Sylvia Waycot - Publisher, Moneyfacts Group

It’s tempting to suggest that, had Alistair Darling stood at the dispatch box when recently delivering the Pre-Budget Report and announced that that he had managed to clear the global deficit, voices of dissent would still have made themselves heard, both inside and outside the House of Commons.

Image: Has the Chancellor pulled a rabbit from the hat, or is he pulling the wool over the public’s eyes?

So, by increasing National Insurance by 0.5p from 2011 for those on £20,000 or more – dubbed an ‘extra tax on jobs’ by the CBI – and implementing further restrictions to pension relief for higher earners, the Chancellor ensured reaction was, shall we say, mixed.

Mr. Darling built his address around the notion of fairness and coaxing the economy out of recession, rather then stunting impending growth. He told the Commons: “Those on modest incomes are protected. Those on middle incomes will pay more depending on their earnings. The biggest burden will fall on those with the biggest shoulders.”

The one off levy of 50 per cent on any bank bonuses of £25,000 or more has made headlines as it was designed to do, but seems to have done little to appease a general public that is already hearing of multi-million pound figures being given to bankers on top of their salaries, all while the UK remains in recession.

There was some talk of hitting any bonus over £10,000 with this one-off tax, although this didn’t come to fruition, as was the case with the windfall tax that the banks had feared, a decision which will no doubt rankle amongst rank and file workers who count themselves fortunate to still be employed.

But enough about me. Other key points included a pledge to help young unemployed people back into work, tax rebates for wind farms and electric cars and a household boiler scheme, which will look to pick off where the car scrappage scheme left off. Also noteworthy was Mr. Darling’s decision not to extend the Stamp Duty holiday, a move that many housing bodies had called for in the weeks leading up to the announcement.

It remains to be seen if this inaction will slow the apparent upturn in the sector; an accusation the Chancellor will be loath to attract following his assertion that his announcements were designed to aid any recovery, not wreck it.

The decision to freeze the individual Inheritance Tax allowance at £325,000 for the next year has also been condemned, with accusations that the lower limit has not moved in line with soaring property values over the past decade.

And what of pensions? Well, the Chancellor will surely point to the 2.5 per cent increase – or a four per cent real-term increase if you prefer – in the state pension which will come into effect with the new tax year. However, his decision to extend the limitation on higher rate tax relief has come under intense scrutiny and criticism, as has the announcement that personal accounts will be phased in as part of cutbacks that have been designed to save £5 billion.

No shortage of criticism then, not least from the Conservative Party, which accused Labour of failing to take tough decisions and delivering a Pre-Election Report. In the face of such national debt, similar sentiment is likely to be replicated when the Budget is unveiled in April. However, George Osborne may not have to wait too much longer to get the chance to prove he can do better in reversing the fortunes of public finances.

Let us know how the changes detailed in the Pre-Budget Report will affect you.

James Henderson, Online Reporter, Moneyfacts Group