MILLIONS of households are being urged to claim a little-known DWP benefit, which could boost their state pension by up to £328 a year.

This warning is directed at unpaid carers who do not earn sufficient income to make National Insurance contributions, thereby risking their entitlement to a full state pension.

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To qualify for any state pension, you need a minimum of 10 years’ worth of NI contributions, and 35 years are required to receive the full amount worth £221 a week.

Career breaks, such as those taken to raise children or care for relatives, can result in gaps in your NI record, potentially reducing your state pension entitlement.

Fortunately, you can claim free credits to fill these gaps before voluntarily buying back any missing years.

Experts at Mobilise, a community for unpaid carers, is urging the nation’s 10million carers to apply for ‘carer’s credit’ to ensure households they can get the full new state pension.

Carer’s credit fills the gap between caring and work.

It ensures any years where you’re not paying national insurance because of time spent caring are still counted.

It doesn’t require any payments to be made and helps unpaid carers continue to build up towards that 35-year target.

Each annual credit missed could cost you 1/35th of the value of your state pension, according to wealth manager Quilter.

So, by claiming the credit, you could potentially increase your state pension by £328 annually – adding up to over £6,000 over the course of a typical retirement.

Suzanne Bourne, care expert at Mobilise, said: “If you start work at 21 and stop working at 51 to care for your partner, you will only receive a partial state pension when you turn 66.

“This could come as a huge shock and could have been avoided with the carer’s credit.

“We’re encouraging everyone to check whether they are eligible as soon as possible.

“Carer’s credit can be backdated to the start of the previous tax year, even if the person we were caring for no longer has care needs or has passed away.

“So it’s vital that you don’t leave it too long to submit your application, if you think you’re eligible.”

Before making a claim, it’s worth checking your NI record.

CHECK YOUR YEARS

If you think you’re missing National Insurance years, the first thing to do is check your state pension forecast.

You can check this and your state pension age through the government’s new ‘Check your State Pension’ tool online at gov.uk/check-state-pension.

The tool is also available through the HMRC app, which you can download free on the Apple App Store and Google Play Store.

You’ll need to log in using your Personal Tax Account login details. If you don’t already have an online HMRC account, you can register at gov.uk.

It shows you how much your state pension could increase by and what NI years you’ll need to buy or free credits to apply for to achieve this.

CHECK YOUR ELIGIBILITY FOR CARER’S CREDITS

Before making a voluntary contribution, it is important to check if the gaps in your contributions can be filled with free NI credits.

For example, carer’s credits can help fill in gaps in your NI record if you’re an unpaid or low-paid carer.

To get carer’s credit you must be:

• Aged 16 or over
• Under state pension age (66)
• Looking after one or more people for at least 20 hours a week

The person you’re looking after must get one of the following:

• Disability living allowance care component at the middle or highest rate
• Attendance allowance
• Constant attendance allowance
• Personal independence payment (PIP) daily living part
• Armed forces independence payment
• Child disability payment (CDP) care component at the middle or highest rate
• Adult disability payment daily living component at the standard or enhanced rate
• Pension age disability payment

Thousands are thought to be missing out on these NI Credits, leaving them worse off in retirement.

You can check the full list of people eligible to claim credits by visiting www.gov.uk/national-insurance-credits/eligibility.

It explains the circumstances where you’ll need to claim and when you’ll get it automatically.

TOP UP YOUR NATIONAL INSURANCE YEARS

If you don’t qualify for free NI credits in some cases, buying back missing years can be really valuable.

Voluntary contributions come at a price.

If you fill gaps between 2006/07 and 2015/16, you’ll pay the 2022/23 rates for contributions.

It is worth £15.85 a week, which means it costs £824.20 to buy one year of contributions.

As the state pension was £185.15 per week in 2022/23, this boost would add £5.29 per week or around £275 per year. 

Although you’d have to pay £8,242 (10 lots of £824.20), the annual state pension boost would be around £2,750.

Someone who was retired for 20 years would get back around £55,000 in total (before tax).

Anyone under 73 can make voluntary pension contributions, as it’s assumed everyone under this age will claim the new state pension.

If you’re below the state pension age, you can check your state pension forecast by visiting www.gov.uk/check-state-pension to determine if you’ll benefit from paying voluntary contributions.

You can also contact the Future Pension Centre by calling 0800 731 0175.

If you’ve reached state pension age, contact the Pension Service to find out if you’ll benefit from voluntary contributions.

You can contact this service in several different ways by visiting www.gov.uk/contact-pension-service.

You can usually pay voluntary contributions for the past six years.

The deadline is April 5 each year.

For example, you have until April 5, 2030, to compensate for gaps in the tax year 2023 to 2024.

The deadline has been extended for making voluntary contributions for the tax years 2016 to 2017 or 2017 to 2018.

You now have until April 5, 2025, to pay.

Find out how to pay for your contributions by visiting gov.uk/pay-voluntary-class-3-national-insurance.

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A UK-based activist fund has taken a stake in one of Japan’s biggest property groups and is calling for divestments and a strategy overhaul, as foreign investors continue to pressure the country’s boardrooms.

Palliser Capital has taken a position in Tokyo Tatemono to become a top-15 shareholder, according to people familiar with the fund.

The real estate company, founded in 1896 and owner of some of the country’s most prominent buildings, including Otemachi Tower in the capital’s business district, is the latest in a lengthening line of property groups targeted by activists. Japanese companies have been under growing pressure to improve market valuations, raise corporate governance standards and increase returns on equity.

People familiar with Palliser’s thinking said the fund saw a yawning discount between Tokyo Tatemono’s intrinsic value, which Palliser put at $6.4bn, and its market capitalisation of $3.3bn. It recognises some attempts by the property group to address this discount but aims to press for an acceleration.

Palliser is said to want a clear road map for identifying non-core assets, disposing of unnecessarily held properties and unwinding a significant portfolio of equity stakes in other listed companies. The largest of those cross-shareholdings is a roughly 5.3 per cent stake in Hulic, a Japanese property group with close ties to Tokyo Tatemono.

Palliser is expected to unveil its investment at the 13D Monitor annual activist investor gathering on Tuesday in New York. The fund, said the same people, has compared Tokyo Tatemono’s position to that of Japan’s biggest property group, Mitsui Fudosan, targeted by US activist Elliott Management this year.

Palliser believes the two companies share similarities in terms of asset mix, low asset turnover and potentially unrealised gains, but Mitsui’s valuation has increased since Elliott’s campaign and the company’s decision to launch a new strategic plan and a shareholder capital return programme.

Despite the public pressure being brought to bear, contact between the Palliser and Tokyo Tatemono’s top management has been constructive, said the people familiar with the activist investor.

It is the fund’s second big investment in Japan in the past 12 months, after it targeted Keisei Electric Railway, which runs trains in Tokyo, including one of the main lines from Narita airport into the city centre.

In a recent report on the continuing rise of investor activism in Japan, CLSA’s chief Japan equity strategist Nicholas Smith noted that in the first three months of 2024, the number of activist events was 156 per cent higher than in the same period a year earlier. Crucially, there had been a qualitative change in activism, he said.

“Activism is . . . now about unbundling directionless conglomerates and agitating for mergers in mature sectors with diffuse market share,” said Smith. “Both are critical issues for the Japan turnaround story. Prominent activists have demonstrated leaving companies in better condition than they found them, so have government support.”

Palliser declined to comment on the stakebuilding. Tokyo Tatemono did not immediately respond to a request for comment.

I went to see a band called The National at the Eden Project with my sister, brother-in-law and their friend in the summer.

We’d booked standing tickets months before. Then my sister and brother-in-law found out they were expecting (very exciting), so my sister would be five months pregnant at the gig.

At around the same time, I found out I had narcolepsy (see my online Weekend Essay, 3 May 2024). It also so happened that the friend we went with had mild schizophrenia.

For all firms, large or small, the challenge is to try and relate things to each customer

I remember my brother-in-law telling me about the call he had to make to the Eden Project to get us into the accessible area: “Er, yes, my wife is heavily pregnant, my sister-in-law has narcolepsy and my friend has schizophrenia…. Can we have seats, please?”

I bet they were looking forward to our arrival.

I tell this anecdote because it highlights how quickly vulnerabilities can present themselves. We had booked our tickets in April and, just three months later, my sister and I both needed accessible seating.

It also highlights the extent to which vulnerabilities such as disability can be invisible.

Recognition

It’s easy, when one hears the word ‘vulnerability’, to say, ‘That’s not me.’ My dad has asthma, Type 2 diabetes and high blood pressure, but he still insisted he should take his turn to make a trip to the supermarket during the Covid-19 lockdowns.

This is just one of many issues advisers face when identifying vulnerability in their client base.

We encounter many situations when a client might need support but there isn’t a PoA in place

The Financial Conduct Authority’s definition of vulnerability refers to customers who, due to their personal circumstances, are “especially susceptible to harm”, particularly when a firm is not acting with “appropriate levels of care”.

The regulator has also emphasised the fact people should be referred to as being “in vulnerable circumstances” rather than as “vulnerable clients”.

In its guidance it says: “Firms should think about vulnerability as a spectrum of risk. All customers are at risk of becoming vulnerable and this risk is increased by characteristics of vulnerability related to four key drivers: health, life events, resilience and capability.”

Even with this definition in mind, however, there are so many ways a person can display vulnerability. Plus, life events and health issues affect people in different ways.

There is a knowledge base and a gap that can be filled

“The problem with discussing vulnerability is that it’s quite difficult to define,” says Evelyn Partners head of investment management Chris Kenny.

“Rather than having a series of very clear benchmarks or KPIs [key performance indicators], the industry is trying to find its way, to some extent.”

And, he says, it is not just about defining vulnerability but also about recording and showing that you’re “doing the right thing”.

Struggling firms

Financial services firms of all sizes are “struggling” with several areas, adds Kenny.

“One is the issue of consent,” he says. “What is it that we can get, and how can we do it?”

For all firms, large or small, the challenge is to try and relate things to each individual customer

There is also the question of identification as it is very unlikely that clients will self-identify.

The FCA says that, to deliver good outcomes for vulnerable customers, firms should understand their needs and circumstances. Therefore, the regulator expects firms to “actively encourage” customers to share information about their needs or circumstances, where relevant.

It also expects firms to develop their own method of identifying vulnerability where appropriate, through the data they hold or other means such as external research, customer surveys or panels.

And, as if that weren’t enough to contend with, vulnerability is not a permanent state.

“Advisers need to think: is there a period of time during which there’s a risk of vulnerability, as opposed to it being a state that a client is always in?” says Kenny.

“It could be during a divorce or a short-lived illness, for example.”

Regular and in-depth contact allows the advisers to assess when things are changing and evolving in an individual’s life

Then there is the matter of recording vulnerabilities.

“In our regulated industry, if something isn’t recorded it essentially doesn’t exist,” warns Kenny.

“And finally there’s the question of support — what should we be doing? This causes some concern for advice firms because, even if they manage to clear the first three hurdles, they wonder, ‘Am I doing the right thing?’”

The FCA is keen to get firms up to scratch on all of this. It is expected to make a speech on the matter later this month.

It flagged vulnerability as an issue at the beginning of the year when it launched a review of firms’ understanding of consumer needs, the skills and capability of staff, product and service design, communications and customer service, and whether these supported the fair treatment of customers in vulnerable circumstances.

The industry is trying to find its way, to some extent

This followed a Dear CEO letter to wealth managers and stockbrokers in November 2023 — telling them to reassess the vulnerability of their customers — after the regulator had found that 49% of portfolio managers and 69% of stockbrokers had not identified any vulnerable consumers in their customer bases.

FCA head of department in consumer investments Nick Hulme says: “Vulnerability spans all four of the Consumer Duty outcomes, so getting it right is fundamental to firms ensuring their customers ultimately get a good outcome.”

The Lang Cat consulting director Mike Barrett says: “For all firms, large or small, the challenge is to try and relate things to each individual customer.

“Having a blanket tick-box approach doesn’t achieve that. That’s the poor practice the regulator is trying to stamp out.”

Barrett suggests small firms naturally have more in-depth relationships with clients.

“Regular and in-depth contact allows the advisers to assess when things are changing and evolving in an individual’s life,” he says.

‘Firms should think about vulnerability as a spectrum of risk,’ says the FCA

But smaller firms may lack the capacity to recognise vulnerability.

Kenny says there is a lot more that larger firms and providers can do to help smaller advice-led businesses do “a great job for their clients”, above just trying to compete on price.

He says: “There is a knowledge base and a gap that can be filled.”

Royal London director of policy Jamie Jenkins agrees. He says the need to support vulnerable customers is, rightly, getting more attention, but vulnerability can be difficult to recognise and quantify.

“We work closely with advisers to help them identify situations that might indicate vulnerability, including offering regular webinars,” he says. “We also provide pension and protection insights through our business development managers network.”

Jenkins suggests that advisers can help by putting a power of attorney (PoA) in place with clients “sooner rather than later”.

The problem with discussing vulnerability is it’s quite difficult to define

He adds: “This will really help them to help their clients navigate their finances when they aren’t able to do so themselves.

“We encounter many situations when a client might need support but there isn’t a PoA in place and there is no authority to deal with the third party trying to manage their finances on their behalf.”

Finding the answer

There is no easy answer to identifying and serving clients in vulnerable circumstances. But it is, arguably, one of the most important things a financial planner can do.

After all, if you cannot serve the most vulnerable in society, how can you expect to be trusted by anyone else?

This article featured in the October 2024 edition of Money Marketing. 

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A MAJOR airport has been forced to cancel all departing flights today.

Brussels South Charleroi confirmed the cancellations due to ongoing strike action, affecting around 16,000 passengers.

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While arrivals will be unaffected, all departing flights will no longer go ahead.

Ryanair is one of the major airlines to use the airport, and has said passengers will be rerouted or refunded.

Hundreds of Brits are expected to be caught up in the strike with the following departures cancelled today:

• FR5328 12:30pm to Manchester
• FR7323 2:35pm to Edinburgh
• FR3223 6:25pm to Manchester
• FR3239 8:55pm to Manchester

A statement on their website said: “Due to another security staff strike at Brussels South Charleroi (CRL) Airport, we have been forced to cancel a number of flights departing this airport on Tues 22 Oct.

“Flights arriving in Brussels South Charleroi are unaffected by the strike and will operate as scheduled.

“Passengers affected by these cancellations have been notified of their options of reroute or refund via email.”

They apologised for the inconvenience that was “out of their control”.

Flights departing the UK from Edinburgh and Manchester for the airport are expected to still go ahead.

Other airlines that fly to the airport include Wizz Air and Pegasus although UK passengers will not be affected by these cancellations.

Some of these flights are instead being diverted to Brussels Airport, around 45 miles away.

Brussels Charleroi said on their website: “Passengers scheduled to depart on this day will be contacted by their respective airlines within the next few hours to either rebook their flights or request a refund.”

Normal operations are hoping to go ahead as planned from tomorrow.

The strike, conducted by the airport’s security staff, is the third strike in the last two months.

The walkout is due to requests to improve staff working conditions.

It’s not the only flight cancellations that have affected Brits in recent weeks.

Flight compensation rules

A look at your rights if a flight is delayed or cancelled, when your entitled to compensation and if your travel insurance can cover the costs.

What are my rights if my flight is cancelled or delayed?

Under UK law, airlines have to provide compensation if your flight arrives at its destination more than three hours late.

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If you’re flying to or from the UK, your airline must let you choose a refund or an alternative flight.

You will be able to get your money back for the part of your ticket that you haven’t used yet.

So if you booked a return flight and the outbound leg is cancelled, you can get the full cost of the return ticket refunded.

But if travelling is essential, then your airline has to find you an alternative flight. This could even be with another airline.

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When am I not entitled to compensation?

The airline doesn’t have to give you a refund if the flight was cancelled due to reasons beyond their control, such as extreme weather.

Disruptions caused by things like extreme weather, airport or air traffic control employee strikes or other ‘extraordinary circumstances’ are not eligible for compensation.

Some airlines may stretch the definition of “extraordinary circumstances” but you can challenge them through the aviation regulator the Civil Aviation Authority (CAA).

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Will my insurance cover me if my flight is cancelled?

If you can’t claim compensation directly through the airline, your travel insurance may refund you.

Policies vary so you should check the small print, but a delay of eight to 12 hours will normally mean you qualify for some money from your insurer.

Remember to get written confirmation of your delay from the airport as your insurer will need proof.

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If your flight is cancelled entirely, you’re unlikely to be covered by your insurance.

Last Saturday, dozens of flights were cancelled in the UK due to Storm Ashley, affecting airports such as Leeds and Belfast.

And earlier this month, all flights to and from Florida were cancelled due to Hurricane Milton.

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UK public sector borrowing increased in September and was higher than official forecasts, underlining the scale of the challenges facing chancellor Rachel Reeves as she prepares to raise taxes in next week’s Budget.

Borrowing — the difference between public sector spending and income — was £16.6bn in September, £2.1bn more than in the same month last year and the third-highest September figure since monthly records began in January 1993, the Office for National Statistics said on Tuesday.

The figure was lower than the £17.5bn expected by economists polled by Reuters but above the £15.1bn forecast by the Office for Budget Responsibility, the UK watchdog.

Alex Kerr, economist at Capital Economics, said that the figures “highlight the limited scope the chancellor has to increase day-to-day spending without raising taxes”.

Kerr noted that the latest figure meant that borrowing was on track to overshoot the OBR’s forecast for the fiscal year 2024/25.

ONS deputy director for public sector finances Jessica Barnaby said: “While tax revenue increased [in September], this was outweighed by increased spending, partly due to higher debt interest and public sector pay rises.”

In the first six months of the fiscal year to September, borrowing was £79.6bn, which was £1.2bn more than in the same period in the last financial year and higher than the £73bn forecast in March by the OBR.

Darren Jones, chief secretary to the Treasury, said that the Budget would “require difficult decisions to fix the foundations of our economy and begin delivering on the promise of change”.

Reeves has identified a £40bn funding gap, some of which is likely to be filled by tax rises.

She has ruled out increases to income tax, VAT and national insurance for employees, but is expected to raise capital gains and inheritance taxes and extend the income tax threshold freeze beyond 2028.

Not adjusting the tax thresholds for the impact of inflation pushes people into higher tax brackets as they receive pay increases — a phenomenon known as “fiscal drag” — and increases government revenues. Other possible tax rises include raising national insurance contributions for employers and rises on fuel duty.

Rob Wood, economist at consultancy Pantheon Macroeconomics, expects a range of tax increases, but he also forecasts that the chancellor will borrow more to boost investment.

Higher capital spending could boost economic growth and could be helped by tweaks to one of the government’s fiscal rules, which pledges to reduce public debt as a share of GDP between the fourth and fifth years of the forecast.

Using a broader measure of public debt from the current one would give the government about £50bn of additional headroom to borrow, he noted, adding that Reeves’s focus on balancing the current budget “demonstrates a commitment to sustainable finances — unlike during the Liz Truss episode, which saw borrowing to fund an inflationary sugar rush of tax cuts”.

The other self-imposed fiscal rule involves balancing the current budget, which excludes investment, during the forecast period, which will end in 2029-30.

Public sector net debt, or borrowing accumulated over time, was 98.5 per cent of GDP at the end of September, the highest level since the early 1960s, the ONS said.  

Cara Pacitti, economist at the Resolution Foundation, a think-tank, said: “Today’s data highlights the scale of the public finances challenges facing the chancellor as she grapples with overspending today, the need to avoid austerity in the future, and having to fund extra public service spending through tax rises.”