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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Investment experts are warning of a potential tax raid on pensions by UK chancellor Rachel Reeves in this month’s Budget, as the UK government seeks to close a £22bn-hole that it has identified in the public finances.

The government estimates the net annual cost of tax relief to be £48bn. But a failure to create incentives for pension investing could store up problems in the future, as ministers weigh up the range of options at Reeves’s disposal.

Where are the biggest gains?

Income tax relief on pensions contributions cost about £27bn in the past financial year, according to the Office for Budget Responsibility, the fiscal watchdog.

One commonly suggested way to raise revenue is to limit the tax benefit on money paid into pensions for additional and higher-rate earners. Tax relief applied at the basic income tax rate of 20 per cent across all contributions could raise about £15bn a year, according to the IFS.  

Relief is set at the marginal rate, so 40 per cent for higher rate and 45 per cent for additional rate. Under current rules, savers can pay up to £60,000 into their pensions each year and receive tax relief at their marginal tax rate. While in opposition, Reeves argued for a flat rate of pensions tax relief. 

However, advisers warn that reducing higher rate pensions tax relief would hit a group of public sector workers the government is unlikely to want to alienate, and drag more people into the £50,270 higher-rate tax band, particularly in the public sector where pension contributions are higher.

Investment consultants Lane Clark & Peacock said that flat-rate tax relief would be “hugely complex to implement and could potentially create millions of losers”.

“This is really one of those ideas that gets worse and worse the longer you think about it,” Isaac Delestre, Institute for Fiscal Studies research economist, posted on social media platform X.

Are there more palatable alternatives?

Advisers said the government was more likely to opt for levying a rate of national insurance on employer pension contributions — a change that would be less politically painful.

Employers currently pay national insurance of 13.8 per cent on earnings of more than £175 a week, but these are exempt for pension contributions. 

The exemption costs the Treasury a headline £23.8bn a year, and encourages the practice of “salary sacrifice”, where an employee accepts a lower salary in return for their employer paying the cost of their pension contributions. 

Stripping out the relief enjoyed by public sector employers — such as schools, hospitals and local employers — the Treasury could potentially raise about £16bn a year from the private sector, according to calculations by pension provider LCP. 

Charging NI on employers’ pensions contributions would allow the Treasury to raise money quickly without savers feeling an immediate impact.

Tom McPhail, a pensions specialist at consultancy Lang Cat, said the policy was “the lowest fattest fruit on the tree”. But such a move could be criticised for failing to support the government’s mission to stimulate growth and encouraging long-term savings plans. 

What about inheritance tax?

The inheritance tax exemption for defined contribution pensions is viewed as one of the most generous pension tax reliefs.

Under current rules, personal pensions can be passed to your beneficiaries free of tax if you die before the age of 75. If you die after 75, beneficiaries will pay income tax on money withdrawn at their marginal rate. 

The chancellor could reintroduce income taxation of inherited pension pots when the person who dies is under the age of 75. Currently, pension pots are not subject to inheritance tax.

Another option is to include defined contribution pensions within estates and therefore make them subject to inheritance tax. 

Christine Ross, client director at Handelsbanken Wealth & Asset Management, said: “I think that there’s a great possibility of inheritance tax on pension funds . . . that’s the one that makes me the most nervous.” She added that many of her clients had built up “very large pensions” under the assumption that they could pass this down to their beneficiaries.

The IFS estimates that bringing pensions within the scope of inheritance tax could raise up to £2bn a year.

And tax-free lump sums?

Pensioners can currently access 25 per cent of their pensions tax-free up to a cap of £268,275.

The proportion that can be extracted tax-free could be reduced, but advisers say it is more likely the government could lower the threshold, perhaps to about £100,000, to raise more money from the wealthiest savers.

However, as few people have pensions worth more than £1.07mn, the potential gains are small. 

The IFS estimates that annual revenue foregone from the system of tax-free lump sums and based on unchanged saving behaviour, is about £5.5bn.

When hiring new employees, employers look beyond just qualifications and experience. There are several essential soft skills and attributes that companies seek in job candidates during the recruitment process. Understanding the key skills employers want allows you to tailor your CV, interview answers and application to show you have these abilities. This article explores the top skills employers look for and how to demonstrate them throughout the hiring process.

Communication Skills

Strong communication skills are one of the most important attributes employers look for in potential hires. They want to see excellent verbal, written and interpersonal skills. This includes being able to express yourself clearly, listen actively, provide constructive feedback, and collaborate effectively with co-workers. Highlight your communication abilities on your CV by giving examples of presentations, reports or proposals you have created. If you aren’t sure how to craft a winning CV, you can use an online CV template. Provide instances of resolving conflict or misunderstandings positively. Use the job interview to demonstrate your interpersonal skills through active listening, thoughtful responses and appropriate body language. Being able to communicate effectively is vital for almost any role.

Problem-Solving Abilities

Employers need staff who can analyse issues, think critically and develop solutions. Problem-solving skills allow you to address challenges logically and with creative thinking. Give examples of problems you have solved in previous roles, whether through process improvements, new initiatives or overcoming obstacles. Use the job interview to describe your problem-solving approach with steps like gathering information, assessing options and implementing solutions. Show how you persevere to resolve issues. The ability to solve problems systematically shows you can handle challenges on the job.

Teamwork Skills

The ability to work cooperatively as part of a team is highly valued by employers. They need employees who can collaborate productively to achieve shared goals. Provide examples of team projects and highlight accomplishments your collaboration achieved. Discuss roles you have taken on teams, whether formal leadership or supporting team members. Use your job interview to share how you build positive team relationships, manage conflicts constructively and motivate teammates to excel. Working well in a team demonstrates you can contribute to an organisation’s success.

Adaptability and Flexibility

Today’s rapidly changing business environment requires employees who are adaptable and embrace change. Employers look for individuals who can adjust quickly when projects or priorities shift. Share examples of how you have adapted to changes in previous roles. Use your interview to demonstrate flexibility by expressing openness to new approaches, systems or responsibilities. Show that you can maintain consistent performance during periods of change. Adaptability allows you to thrive in evolving workplaces.

Time Management and Organisation

Employers need staff who can manage multiple priorities and complete work efficiently. Time management and organisational skills allow you to be productive and meet deadlines. Showcase how you have delivered results on time in past roles. Give examples of techniques you use for prioritising tasks, scheduling time and staying organised. Use the interview to describe your approach to long-term planning as well as responding flexibly to shifting deadlines. Demonstrate how you balance organisation with creativity. Strong time management shows you can juggle responsibilities and deliver results.

Motivation and Initiative

Companies value self-motivated professionals who take the initiative to achieve goals and go beyond basic requirements. Highlight accomplishments and quantify the impact you made in past roles. Use examples that demonstrate how you proactively identified opportunities for improvement. Discuss how you set challenging goals for yourself. During the interview, convey enthusiasm for the company and role. Share ideas you already have for contributing if hired. Showing motivation and drive indicates you are committed to excelling.

Digital Skills

Digital skills are becoming increasingly important for all roles. Employers look for proficiency in relevant software, applications and platforms. Tailor your CV and interview examples to showcase your digital capabilities. Demonstrate skills like data analysis, social media management or CRM systems. Being digitally savvy shows you can thrive in modern work environments. Highlight any experience with programming, website development, analytics tools or other technical abilities. Fluency with essential digital tools indicates you can perform and communicate effectively in a technology-driven job.

Employers look for job candidates with versatile skills like communication, problem-solving and adaptability. Tailor your answers and application to highlight the abilities companies seek. Show concrete examples of using these skills successfully in past roles. Demonstrate them during the interview through your responses, stories and interactions. With strong essential skills and the right experience, you can show employers you are the ideal candidate for the job.

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The writer is US Deputy National Security Adviser for Cyber and Emerging Technology

Ransomware is wreaking havoc around the world. Earlier this year an attack against a US health insurance giant shut down operations at hospitals and pharmacies for weeks, costing the company a reported $872mn. This does not include the $22mn ransom payment that the company made to a Russia-based gang. On the other side of the world, a ransomware attack shut down the Port of Nagoya — Japan’s busiest port — for two full days.

These cases exemplify the thousands of attacks that are taking place around the world. The contours of battle continue to expand. Companies, from small businesses and auto dealers to hospitals and other critical infrastructure such as ports and water systems, are all coming under threat. Since 2021, the US government alone has identified more than 4,900 ransomware attacks with at least $3.1bn paid out in ransoms.

Not only is this money that could otherwise be spent on salaries, taxes and business development but it is money that is going directly into the hands of criminal enterprises and rogue states. 

If ransomware is a cash cow, cryptocurrencies are its grazing pastures. According to the Financial Action Task Force, most jurisdictions do not comply with international standards for virtual assets. Russia is especially concerning, operating as a safe haven for both ransomware attackers and money laundering crypto exchanges like Bitzlato, Garantex, and PM2BTC. The Russian government has applied pressure to prevent the extradition of cyber criminals apprehended overseas.

Ransomware attacks are also one of the most profitable forms of cyber crime in North Korea’s repertoire. When combined with cyber attacks against cryptocurrency platforms and infrastructure, they form a source of overseas revenue that evades international sanctions and generates more than $3bn.

Addressing these threats requires co-operation via global partnerships. This week, the White House convened 68 member countries, international organisations, and industry leaders for the fourth annual Counter Ransomware Initiative conference in order to explore novel approaches to the problem. 

This organisation has become the most effective and largest international cyber partnership, with members from every corner of the globe. As part of it, the US is launching a fund, comprising industry and member contributions, that will strengthen cyber security capabilities via joint assistance in the wake of a cyber attack. It will provide targeted support to improve skills, policies and response procedures. 

We in the US are clear-eyed about the enormous scope of this challenge, and the hard work ahead. Enhanced co-operation within government and between countries, civil society and private industry is a critical first step; but we will also need companies to step up and play their part in the boardroom. 

The White House has identified a small set of practices, including maintaining and testing backups, encrypting data and deploying network monitoring and multi-factor authentication, that have an outsized impact on the risk of a successful ransomware attack, and the prospects for containing one. Chief executives and corporate boards should codify and implement them immediately, for the health of their own enterprises and their national economies. This is especially true of companies with a nexus to critical services, such as healthcare, whose disruptions can have severe impacts on communities and vulnerable people.

The insurance industry can also play a constructive role, by, among other thing, requiring and verifying implementation of effective cyber security measures as a condition of underwriting its policies, akin to the way fire alarm systems are required for home insurance. Some insurance company policies — for example covering reimbursement of ransomware payments — incentivise payment of ransoms that fuel cyber crime ecosystems. This is a troubling practice that must end. 

The scourge of ransomware will not end on its own. Cybersecurity must improve, as countries around the world unite to disrupt ransomware actors and pressure safe haven jurisdictions to take action to stem this destabilising activity. As the battleground shifts, so must our defences. Criminal activity crosses borders and targets public and private sectors in every country. Our solution must do the same.

Good morning and welcome to your Morning Briefing for Friday 4 October 2024. To get this in your inbox every morning click here.

FCA’s advice guidance boundary review ‘is a huge mistake’

While realising I am probably in the minority in this industry, I fear the Financial Conduct Authority is about to score a major own goal that will have dire consequences, writes Ian Mckenna, founder of FTRC.

Changing the advice guidance boundary will cause a huge dilution of consumer protection. It will make it easier for manufacturers and others to sell products without advice, avoiding the inconvenience of being responsible for the consequences of their actions.

This risks setting consumer protection back decades. I passionately believe the advice guidance boundary is in the right place. Now is exactly the wrong time to change it.

Solving ‘vacuum’ caused by cost disclosure rule removal

The recent announcement by the Treasury and the FCA that it will temporarily ban the “double counting of costs” for investment trusts was welcomed by the sector.

However, the immediate removal of the requirement to provide costs disclosures has left a “potential vacuum”, according to Abrdn.

The company has released a ‘Statement of Operating Expenses’ (SOE) template as an interim measure to deal with this issue.

The new template document is for disclosing expenses incurred by investment trusts.

Honesty is key to staff retention

Being honest with your employees is key to staff retention, Cairn Independent operations director Laura Young has insisted.

She was responding to an audience question about the best way to keep people within advice businesses at the Lang Cat’s HomeGame 4 event in Edinburgh yesterday (3 October).

“In terms of retaining the team, the only constant is change,” Young said.

“People’s needs and wants evolve, and what they initially say they want might not be the same as what they desire by the end of the process.”

Quote Of The Day

No one seems to be talking about inflation anymore, and that could be a mistake. While attention is on the ECB and the Fed, investors ought to look more closely at developments in China.

-Eric Vanraes, head of fixed income at Eric Sturdza Investments, says the ECB’s policy of monetary easing risks allowing recession to take hold.

In Other News

Bupa has launched its health and wellbeing subscription service, Bupa Well+ Silver, to UK consumers. It provides fast access to affordable digital healthcare services.

The Silver tier subscription service follows the launch of Bupa’s GP subscription service – the Bronze tier in Bupa’s Well+ portfolio, in June.

Alongside the access to digital GP and nurse appointments, customers with Bupa Well+ Silver will be able to book digital consultations with physiotherapists and mental health specialists, starting from £20 per month.

Customers will also be able to use digital wellness services including gym classes and wellbeing programmes like guided meditation.

Sacker & Partners LLP has announced that Andy Lewis will be joining the firm as a partner.

Lewis joins the specialist law firm for pensions and retirement savings from Travers Smith.

He is well known in the industry as an ESG, sustainability and productive investment expert and is also a strong supporter of EDI initiatives. He trained and qualified at Hogan Lovells before moving to Travers Smith where he became a partner in 2019.

David Saunders, senior partner at Sackers, said: “Andy is a highly regarded pensions lawyer in the DB and DC space, with extensive experience of advising the trustees and sponsors of large pension funds. He is a perfect fit for Sackers, and we are delighted he approached us.”

Pension funds rethink hedging tactics after UK crisis (Reuters)

Italy seeks to raise more windfall taxes from companies (Financial Times)

Carmakers dangle £2bn in EV discounts to boost UK sales (Bloomberg)

Did You See?

The cost-of-living-crisis is the single biggest driver of people seeking financial advice or guidance, a new report from St James’s Place (SJP) has found.

Major life events or milestones are the biggest prompts for people to seek financial advice or guidance, SJP’s Real Life Advice Report shows.

Almost half (48%) of those who have accessed advice or guidance – 12.5m people – did so following a key moment.

This includes buying a property, getting married, or dealing with an unexpected change like divorce.

My personal style signifier is my jewellery, which is somewhere between Sammy Davis Jr and Mr T. I have a pile of ivory bracelets that I bought when I was in Africa in the ’70s. And I have a combination of clamshell beads called wampum that were tender under Native Americans here in Martha’s Vineyard. On my other wrist I have five gold bracelets made by my mother, who became a jeweller at 70, and today I’m wearing a coral necklace. Most of my jewellery comes with history; I collect stories.

The last thing I bought and loved was a piece of blackamoor jewellery, which I know is very controversial these days. It’s an ebony and ivory head of a man, a watch seal, who has been done so delicately and – I think – with love. There are historians who might differ with me, but I’m going with my story. To me, it presents a kind of regalness and dignity.

The place that means a lot to me is where I am now in Martha’s Vineyard, in a house my parents bought when I was nine years old; I have one friend I’ve seen every summer since. I call it my watermelon house, and I have a stained-glass watermelon piece I commissioned a local artist to make. I’m in Oak Bluffs, which has been a summering spot for African-Americans for more than 100 years. It’s my happy place.

My tastes were arrested in the third grade, so I like gummy bears. My dentist loves me

On my Instagram “For You” page you’ll find all kinds of strange things: cat videos (I’ve had Siamese cats most of my adult life), food videos and, for some bizarre reason, Nigerian weddings. Then I get all of the strange animals: Brindabella the wombat; the newly adopted elephant at the shelter; and a strange bald parrot who shows up periodically. @drjessicabharris

One of the best books I’ve read in the past year was from my favourite shop here, Portobello Road. I found a first edition of Giovanni’s Room by James Baldwin, who was born 100 years ago: I had the honour of knowing him. It’s part of the LGBTQ+ canon, it’s part of the African-American canon – and it’s certainly part of the American canon. Something that brings all three of those things together is sorely needed at this point in time.

In my fridge you’ll always find wine – pinot noir or burgundy – butter, salad greens, bacon and too many condiments: chutney, pickles and all of that, which makes for a very full fridge. They live in the back and make their way forward, usually in time to be thrown out. 

My style icon is a composite of folks. Diana Vreeland, bizarrely: she wasn’t a beautiful woman, but she understood style; Schiaparelli would also come under that heading. I like the jewellery style and something of the personal style of Millicent Rogers. And, of course, Josephine Baker goes without saying.

The best gifts I’ve given are food or alcohol – lots of bottles of wine, and recently a nice Calvados. Many of my friends are my age, so they don’t need another thing to dust. And they have their own personal style, so I don’t want to buy them something I think is gorgeous but they’re going to look at and go, “Hmm.”

And the best gift I’ve received recently is about 14 pounds’ worth of fish from The Martha’s Vineyard Fishermen’s Preservation Trust, all iced down, scaled and gutted. On the Vineyard it’s what we call scup; in other parts of the US, it’s called porgy. I’m going to distribute some of it to friends; some of it I’m going to freeze; and some of it I’m going to eat fairly immediately: an old-fashioned fish fry or steamed with ginger, scallions and a drizzle of soy sauce.

The last item of clothing I added to my wardrobe was part of my addiction to Hermès cashmere and silk scarves. My favourite one is by Kermit Oliver who, to my knowledge, is the only African‑American artist to have designed scarves for Hermès. He used traditional American themes – this one is of Native American dancers – and they’re lovely. 

The last music I downloaded was “Put a Woman in Charge” by Keb’ Mo’, featuring Rosanne Cash. It’s a wonderful song. And it’s really – what should we say? – appropriate right now. 

I have a collection of arcane antique tableware: a Victorian fish slice and fork from Blarney Castle in Ireland; grape scissors; fruit forks and knives. If it collects dust, I collect it. My favourite thing is what the French call a manche à gigot: a handle that goes over the bone of a leg of lamb so you can slice the meat against the grain. I haven’t done a lot of entertaining recently because I’ve been too busy working and crazy, but I like setting a table.

I don’t know if I believe in life after death. I kind of do, but it’s kind of “Up in the Air, Junior Birdmen”, touchy-feely. I mean, I’ve met people I know who I’ve never met. So there’s some kind of spiritual something going on there.

An indulgence I would never forgo is caviar. I like Sevruga because I can’t afford Beluga. It’s my New Year’s ritual: I buy as much as I can afford, and as the clock strikes midnight, I spoon it in. I don’t worry about blinis or crackers or anything like that. It’s the way I pamper myself. 

The best way to spend $20 is on candy. My tastes were arrested in the third grade, so I like gummy bears, wine gums and liquorice allsorts – all that kind of stuff. My dentist loves me. 

My favourite room in my house is my living room. I have a chair I call “Command Central” where I spend most of my day writing. My computers are in a box next to it and there’s ginormous pile of books that I periodically have to cull.

The artist whose work I would collect if I could is Romare Bearden, an African-American artist who did a lot of collage. I’ve been thinking about trying to buy one: it’s in the realm of possibility, but not immediate reality. In the realm of total impossibility are Goya or Toulouse-Lautrec; I like the theatricality of their works. 

The beauty staple I’m never without is perfume. I’m not a make-up wearer, but I love fragrance. Right now I’m wearing Diptyque’s citronelle and geranium scent, which is supposed to repel mosquitoes; L’Artisan Parfumeur’s Tenebrae; and Hermès’ Eau de Pamplemousse Rose. Artisan Parfumeur Tenebrae, £205 for 75ml. Diptyque Citronnelle & Geranium Body Spray, £48 for 100ml. Hermès’ Eau de Pamplemousse Rose, £100 for 100ml

My favourite website is Wordle. I’ve also discovered, to my surprise, that there is a French version: Le Mot. I always start out with the same word, so unless “adieu” is the word, I’m not going to get it in one. I’m one of those down-to-six-letters kind of people.

The things I couldn’t do without are friends. As an only child, they’re what sustains me. We sit and talk; we eat together. All of it. But sometimes it doesn’t necessarily require conversation. It may just require presence. 

The best souvenirs I’ve brought home – if we take “a souvenir” in the French form of the word, meaning a memory – are times in Paris with my French family. As a student in college I did a year abroad and I lived with a family of 38. It was a very different and wonderful experience. I lost touch with them, but I went back after 20 years and we reconnected. Now I go to Paris every year in January and on my last night I have dinner with my French family at Brasserie Lipp.

A way to make me laugh is wordplay – sometimes it’s an awful pun, sometimes it’s just a great turn of phrase. Recently I saw the film Thelma, where the heroine is played by a 96-year-old actress. It’s the first time I’ve consciously laughed out loud in a long time: there’s one scene where they talk about what she does during the day, and it’s her putting pills into her pill container. The older you get, the more it will resonate.

In another life, I would be doing something closer to what I’m doing now. I was a college teacher for 50 years; writing was what the kids call a side hustle. Getting around to being a writer has been a big switch for me. On my Instagram page it says, “enjoying a retirement renaissance”. That pretty much sums it up.

I am inspired by just about everything. Honestly, I’m an idea generator. I just want enough time to take care of all of them! 

The best bit of advice I ever received takes us back to Baldwin. I remember him saying, “Step out on the water. Who knows, you may find out you can walk on it.” I think that’s incredibly encouraging and kind of wonderful.  

A Kwanzaa Keepsake and Cookbook: Celebrating the Holiday with Family, Community, and Tradition by Jessica B Harris is published by Scribner on 5 November