The FTSE 30 index has been running for 75 years.  It was originally started in 1935 as a measure of the frequency of trading of its listed constituents.   Those shares which were most frequently traded had a greater influence on the index.

There are only two of the oringinal constituents Tate and Lyle formed from the merger of Tate which refined sugar and Lyle which made treacle.  The company is now global operating in more tha 45 countries.

The other constituent is GKN the technology and engineering company.

The FTSE30 index was joined in 1984 by the FTSE100 index.  This is now the most frequently quoted.  Its constituents are weighted in the index according to their capital size.  Thus when the BP share price halved in value this had a dramatic effect on the FTSE100 index.

The Treasury have announced a consultation on pensions in drawdown.  In particular they are looking to make ASP ( alternatively secured pension) to be much more flexible.  Mark Hoban is looking at continuing the USP(unsecured pension) regime beyond the age of 75.

He is also proposing that unused funds in ASP will only attract tax a 55% rather than the penal rate of 82% which exists at the moment as unused ASP comes into the estate for Inheritance Tax purposes.

He is also proposing to make the drawdown fo income more flexible so that pensioners can take a greater income than that currently allowed providing they have suffcient income outside the pension to ensure that they do not become dependent on the state.

The consultation period is due to finish on September 10th.  Watch this space!

The government has said that state pensions will increase by a minimum of 2.5% per annum from next yhear.  This increase however only relates to the basic state pension.  Any pension from the State Earnings Related Pension Scheme (SERPS) or State Second Pension S2P will be frozen next year.

Currently those people who are lucky enough to belong to a final salary pension scheme have their benefits in payment increased by the Retail Price Index (RPI).  The government has indicated that from Jamuary these increases could use the Consumer Price Index (CPI) instead.  The current figure for RPI is 5.1% whereas the CPI is 3.4%. 

Hargreaves Landsdown have worked out that someone earning £100,000 a year wiht 30 years service could expect to have a pension of £50,000 at 65.  With RPI in force this would rise to £97,370 by the age of 85.  With CPI this would be £84,970.   A reduction of over £12,000. To counteract this people need to save more, possibly outside pensions.

The ruling will also affect those who have deferred pension benefits because the increases in their deferred beenfits will be correspondingly lower.

It is now possible to by a flat pack house from Tesco for £9,999. For a little extra you can add underfloor heating!

Shareholders who lost all their money when Bradford and Bingly was taken over by the government in 2008 have been told that there will be no compensation.  Peter Clokey who was appointed by the Treasury to assess whether there should be any pay-out has concluded that the bank had no value when it was taken over.

Had the goverment not intervened the bank would have gone into administration and once debts and charges had been paid there would have been no surplus for shareholders.

The shareholder action group have been fighting for a payment of 100p per share claiming that the bank was adequately capitalised and solvent when it was taken over by the government at the height of the financial crisis in 2008.

The shareholder group is now seeing whether it has any ground for appeal.

The Office of Fair Trading has issued a statement saying that banks must speed up the process of transferring cash ISAs with a maximum time limit of 15 days! 

In the days of elctronic transfer this should not be difficult, but we shall see.

Banks seem to have the same mentality as Insurance Companies, many of whom still work on a 10 workingday turnaround.

Capital Gains Tax

George Osborne's budget was well received, all breathed a sigh of relief when it was stated that the Capital Gains Tax allowance would not be reduced to £2000, which was in the Liberal Democrat Manifesto.  It remains at £10,100 for this year.  In addition the 18% rate was kept for basic rate tax payers with those paying higher rate tax having to pay a rate of 28%.

For entrepreneurs, the capital gains rate of 10% was extended to the first £2000 of profit.

Income Tax

The personal allowance is to rise to £7475 for under 65 year olds from next April with the aim to raise it to £10,000 over the life of the parliament.  The top rate of 50% is to remain for the time being.

Pensions

The government have realxed the rule requiring people to buy an annuity at 75 years.  This has been increased to 77 years and will be reviewed after consultation with the industry.

The complicated rules surrounding pension contributions for high earners have been scrapped and new rules will be announced later.

State pensions are to be increased in line with earnings rather than the retail price index(rpi) with a minimum increase per annum of 2.5%

Child Trust Funds

These are to be reduced to £50 for any baby born after August 1st and will cease all together in December.  The ability for relatives to contribute to a fund for children, up to £1,200, will still be allowed until a year after the last trust fund is granted.  This will be December 31st 2011.

For further information why not download our summary.

On June 1st 2010 we moved into our new purpose built offices at 81 Hatherley Road Cheltenham.

This gives us a wonderful meeting room overlooking the garden.  We hope eventually to run small seminars here as well.

Last Friday, May 28th, after the London Market closed, Fitch Ratings agency managed to spook the American Market by downgrading Spain's credit rating from AAA, the top grade to AA+.  This came after Standard & Poors also downgraded Spain from its rating of AA+ to AA last month.  The reason given was that Spain's economy will take longer to recover than other countries in the Eurozone.  This will make borrowing more expensive for Spain as it will need higher yields on its sovereign debt to attract investors.

June 16th

The FT reports that Spanish banks are finding it difficult to get funding from international markets. The expectation is that Spain will need to tap in to the new fund established in May by the European Stabilisation fund set up to help Greece and other members of the European Union who are in financial difficulties.  The Spanish savings banks, the cajas, which are local concerns have been badly hit by exposure to the ailing property market.

The bond yields on Spanish debt have remained at a reasonable level, benchmark 10 year bond yields are currently yielding 4.73%, this is a far cry from the Greek bond yields which rose above 10% at the height of the Greek debt crisis.