The Sunday Times - UK (2022-02-06)

14 The Sunday Times February 6, 2022

MONEY

FIVE THINGS YOU NEED TO KNOW ABOUT... THE PENSIONS DASHBOARD

THE

FIVER

5

1

It sounds swanky, but the pensions dashboard, when it arrives, will actually just be a website (or app on your phone or tablet) where you will be able to see all your pensions in one place. The government has been working on it since 2016 and hopes it will encourage us to save more for retirement.

2

The pensions minister, Guy Opperman, said this week that the first dashboards will be ready by 2023 — four years later than initially planned — but it will be 2026 before all savers can see all their pots on it.

3

Once it is ready, you should be able to use it to submit a “find” request to track down an old pension scheme. Your data will be sent to all pension firms, which will have to check to see if they have your money and give you all the details.

4

It is estimated that there will be as many as 27 million lost pensions by 2035, with more than £20 billion of savings unclaimed.

5

Your state pension, all your workplace pensions and any private pensions you have should be on your dashboard, which will be managed by the government’s Money and Pensions Service. It will show your total savings and calculate how much income you can expect in retirement. Pension firms will also be able to create their own dashboards, with users’ permission. Imogen Tew

CASH ISAS INSTANT ACCESS Provider Account name Min deposit Interest Transfers in Contact Shawbrook Bank Easy Access Cash Isa Issue 19£1,000 0.61% Yes shawbrook.co.uk Cynergy Bank Online Isa Issue 18 £1 0.6% Yes cynergybank.co.uk FIXED RATE Provider Account name Term Min deposit Rate Transfers inContact Shawbrook Bank 1 Year Fixed Rate Cash Isa Bond Issue 541 year £1,000 0.98% Yes shawbrook.co.uk United Bank UK 2 Year Fixed Rate Cash Isa2 years £2,000 1.25% Yes ubluk.com Source: savingschampion.co.uk — 0808 178 5354

CHILDREN’S ACCOUNTS Provider Account name Account type Min deposit Interest rate Contact Dudley BS Junior Easy Saver Regular Saver £10 3.5% dudleybuildingsociety.co.uk Santander^1 123 Mini Current Account Current Account £1,500 2.96% santander.co.uk HSBC^2 MySavings Easy Access £10 2.47% hsbc.co.uk

(^1) Interest paid on balances between £1,500 and £2,000 (^2) 0.25% paid on balances above £3,000
JUNIOR ISAS
Provider Account name Min deposit Interest rate Rate Contact
The Family BS Cash Junior Isa £3,000 2.4% Variable familybuildingsociety.co.uk
Coventry BS Junior Cash Isa (2) £1 2.25% Variable coventrybuildingsociety.co.uk
Tesco Bank Junior Cash Isa £1 2.25% Variable tescobank.com
Source: savingschampion.co.uk — 0808 178 5354
Best Buys
FOREIGN
CURRENCY
Interbank rates at 5pm
on Friday, which show
where the market is
trading. They are not
indicative of the rate
you could get.
EURO
GBP>EUR
1.18
USA
GBP>USD
1.35
SWITZERLAND
GBP>CHF
1.25
AUSTRALIA
GBP>AUD
1.92
ENERGY DEALS
Table shows the cheapest fixed tariff now available
from the three cheapest suppliers. Excludes tariffs of
less than 12 months’ duration, tariffs that do not have
national coverage and tariffs where payments are
taken in advance of supply. Variable rate tariffs are
set by Ofgem’s price cap and may be lower.
Supplier Average annual bill Rate Contact
OVO £2,150 Fixed 0330 303 5063
So Energy £2,209 Fixed 0330 111 5050
EDF £2,354 Fixed 0330 200 5100
Phone numbers provided will call through to theenergyshop.com switch support team. Source: theenergyshop.com — 0800 448 0205
SAVINGS ACCOUNTS
INSTANT ACCESS
Provider Account name Min deposit Interest rate Contact
Aldermore Double Access Account Issue 1 £1,000 0.75% aldermore.com
Investec Online Flexi Saver £5,000 0.71% savings.investec.com
Cynergy Bank Online Easy Access Account Issue 44 £1 0.7% cynergybank.co.uk
NOTICE ACCOUNTS
Provider Account name Notice period Min deposit Interest rate Contact
Shawbrook Bank 120 Day Notice Personal Account Issue 50120 days £1,000 1.08% shawbrook.co.uk
DF Capital 120 Day Notice Account Issue 1 120 days £1,000 1.05% dfcaapital.co.uk
Charter Savings Bank 95 Day Notice Account Issue 41 120 days £5,000 1.02% chartersavingsbank.co.uk
FIXED-RATE BONDS
Provider Account name Term Min deposit Interest rate Contact
Tandem Bank 1 Year Fixed Saver 1 year £1,000 1.39% tandem.co.uk
Charter Savings Bank 2 Year Fixed Rate Bond 2 years £5,000 1.62% chartersavingsbank.co.uk
Raisin 3 Year Fixed Term Deposit (provided by UBL UK)3 years £1,000 1.85% raisin.co.uk
DEALS ARE LISTED ONLY IF THEY ARE COVERED BY THE UK FINANCIAL SERVICES COMPENSATION SCHEME (FSCS) OR A EUROPEAN EQUIVALENT
Source: savingschampion.co.uk — 0808 178 5354
MORTGAGES
2-YEAR FIXED RATES
Lender Rate Scheme Deposit Fee Notes Contact
First Direct 1.39% Fixed for 2 years 40% £490 LV 0900 482 448
Santander 1.39% Fixed to 02.05.24 20% £999 NPV 0800 065 6064
HSBC 1.89% Fixed to 30.04.24 10% £0 PV 0800 494 999
3-YEAR FIXED RATES
Barclays 1.45% Fixed to 31.05.25 40% £999 LV 0333 202 7580
Virgin 1.82% Fixed to 01.06.25 15% £0 R 0345 605 0500
Nationwide 1.84% Fixed for 3 years 10% £999 PV 0800 302 010
LONG-TERM FIXED RATES
First Direct 1.54% Fixed for 5 years 40% £490 LV 0800 482 448
Santander 1.69% Fixed to 02.05.27 20% £999 NPV 0800 068 6064
HSBC 2.19% Fixed to 30.04.27 10% £999 PV 0800 494 999
Lloyds 1.66% Fixed to 31.05.32 40% £995 RS 0800 783 3534
TRACKERS / DISCOUNTS
HSBC 1.24% Tracker + 0.74% for 2 years 40% £999 ELV 0800 494 999
Nationwide 1.74% Tracker + 1.24% for 2 years 10% £999 EPV 0800 302 010
Newbury BS 1.69% 2.26% discount for 5 years 25% £850 LV 01633 555 5777
First Direct 2.44% Tracker+1.94% for term 25% £490 ELV 0800 482 448
FIRST-TIME BUYER / LOW DEPOSIT
Hinckley & Rugby BS2.5% Fixed for 2 years 5% £199 V 0800 744 499
Yorkshire BS 2.79% Fixed to 30.04.27 5% £995 NPV 0345 166 9510
Barclays 1.56% Fixed to 31.05.27 25% £749 HPV 0333 202 7580
BUY TO LET
Skipton 1.69% Tracker + 1.19% for 2 years40% £995 ELV 0345 850 1755
Leeds BS 1.41% Fixed to 30.04.24 40% £999 LV 0345 045 4049
Virgin 1.82% Fixed to 01.06.27 25% £995 CR 0345 605 0500
Early repayment charge applies unless otherwise stated. Most deals track Bank of England base rate.
C = £500 cashback for purchases; E = No early repayment charge; F = £500 cashback for first-time buyers; H = Help to Buy;
L = Free legal work for remortgages; M = £300 cashback for purchases; N = £250 cash back for purchases; O = £250 cash back;
P = Purchases only; R - Free legal work and valuation for remortgages; S = Remortgage only; V = Free valuation
Source: landc.co.uk — 0800 373 300
CURRENT ACCOUNTS
CREDIT INTEREST
Provider Account name Account fee Reward Balance (for reward) Contact
Halifax Reward Current Account None £5 a month – 0345 720 3040
TSB Spend & Save None £5 a month – 0345 975 8758
Virgin Money M Plus Account None 2.02% AER Up to £1,000 0800 678 3654
OVERDRAFTS
Provider Account name Account fee Interest rate^1 0% overdraft limit Contact
Starling Bank Current Account None 15% £0 starlingbank.com
First Direct 1st Account None 39.9% £250 0345 600 2424
Virgin Money M Plus Account None 19.9% £0 0800 678 3654
(^1) Equivalent annual rate.

Based on overdraft of £500 for 7 days a month. Some accounts require minimum funding/direct debits to open or receive rates shown.
Source: moneyfacts.co.uk
CREDIT CARDS
INTRODUCTORY RATES
Provider Card type Introductory purchase APR^1 Reward Contact
Barclaycard Platinum All-rounder V 0% for 24 months 21.9% No 0800 151 0900
Tesco Bank Clubcard Purchases MC 0% for 23 months 20.9% Yes 0345 300 4278
MBNA Transfer Purchase MC 0% for 23 months 21.9% No 0345 606 2062
BALANCE TRANSFERS
Provider Card type Introductory purchase Transfer fee^2 APR^1 Contact
MBNA Long 0% BT MC 0% for 33 months 2.69% 21.9% 0345 606 2062
Sainsbury’s Bank Balance Transfer MC 0% for 32 months 2.24% (min £3)21.9% 08085 405060
Tesco Bank Clubcard BT MC 0% for 32 months 2.59% 21.9% 0345 300 4278
CASHBACK CARDS
Provider Card type APR^1 Cashback Contact
American ExpressPlatinum Cashback 29.8% 0.75%-1.25%. Intro 5% for 3 months 0800 917 8047
American ExpressPlatinum Cashback Everyday24.5% 0.5%-1%. Intro 5% for 3 months 0800 917 8047
Halifax Cashback MC 19.9% 0.25-0.5% 0345 944 4555
1 APR = annual percentage rate, dependent on credit rating.^2 Fee charged on the amount of each balance transfer during the introductory period.
Source: moneyfacts.co.uk
Special Situations, which
holds the insurers Legal &
General and Aviva, the car
retailer Inchcape and the
marketing firm DCC.
He also likes the Artemis
UK Select fund, which has
had £430 million of net
investment in the past two
years according to
Morningstar.
Hollands said that the fund
invests in “undervalued
growth stocks”, including the
technology provider Oxford
Instruments, the betting firm
Entain and the bank Barclays.
For investors keen to stock
up on the shares of smaller
UK companies, Mick Gilligan
from Killik, the research firm,
said that investors could look
for funds investing in cheap
shares. He said that the
shares of smaller companies
can continue to do well over a
long period as Covid becomes
endemic, but over a shorter
timeframe the road could be
tricky, with inflation and
interest rates rises clouding
the outlook.
Therefore he thinks that
investment trusts buying
cheap small company stocks
— rather than those investing
in more expensive growth
shares — should do well if he’s
right, but not suffer too much
if he’s wrong.
He highlights Aberforth
Smaller Companies trust,
which invests in the van hire
firm Redde Northgate and
offers a dividend yield of
2.4 per cent, and River &
Mercantile UK Microcap
Investment Company,
whose biggest holdings are
the life sciences technology
firm Instem and the nutrition
provider Science in Sport.
option. Jason Hollands from
the investment manager
Tilney agreed. “As equity
valuations in many markets
have ballooned, there is now
more of a hunt for below-the-
radar opportunities,” he said.
He said that UK firms were
starting to reinvest in their
businesses again and 2021’s
acquisition spree from
foreign buyers may continue
this year too. “This could
create opportunities for
special situations funds.”
Hollands rates Fidelity
+2.2%
Increase in the
FTSE 100 index
in 2022
-5%
Fall in its US
equivalent, the
S&P 500
-1 1 %
Fall in the Nasdaq
index of US tech
shares this year
There is one big winner from
the Bank of England’s base
rate rise on Thursday: banks.
Their shares are likely to
perk up further on the back
of the Monetary Policy
Committee’s decision, after
already decent gains over the
past 12 months and the
previous rate rise in
December.
NatWest shares are up
61 per cent in a year, Lloyds
Banking Group is up 50 per
cent, Barclays has risen
47 per cent and HSBC is up
39 per cent, while the wider
UK stock market has grown
16 per cent.
Jason Hollands from the
wealth manager Tilney said:
“Over the past decade shares
across the UK banking sector
have delivered a meagre total
return of 30 per cent, way
behind the wider market
return of 111 per cent. Now
there’s a spring in the step of
banking shares again, and so
it could be time to reassess.”
Lloyds and NatWest are in
the top 10 biggest holdings of
the £570 million Fidelity UK
Select fund, which now has
higher exposure to the
banking sector than at any
time in the past 15 years.
The fund’s manager Aruna
Karunathilake has also
bought HSBC in the past few
weeks. He said: “Banks are
likely to fare well as we move
to an environment of rising
Holly Thomas rates, which will boost profits
made on their deposit bases
after suffering from years of
continually falling rates.
“We are about to enter a
Goldilocks environment for
banks with rates going up
enough to boost profits but
not so much so as to slow the
economy enough to cause
unemployment and loan
losses.”
Simon Adler, a fund
manager at the investment
house Schroders, said that
the valuations of UK banks
are one of several factors that
makes them very attractive.
HSBC has a price-to-
earnings ratio of 9.5 times
earnings; Barclays and Lloyds
Banking Group’s ratio is 7
times and NatWest’s is almost
9 times. A high ratio suggests
that investors are expecting
higher earnings growth in the
future. A low ratio can
indicate that a company may
be undervalued. The market
valuation for the MSCI UK
Index is about 15.7 times
earnings. Tesla’s is 172.
“The fact that valuations
for banks are at this level is
extraordinary. Banks have
been rehabilitated from
problems now behind them,
including the huge sums they
had to pay in compensation
for mis-sold payment
protection insurance (PPI).
“While in the financial
crisis in 2008 banks were the
problem, today they are the
solution, helping people
through the pandemic with
mortgage holidays. The
impact of rising interest rates
will make banks even more
interesting.”
Adler, who co-manages the
£1.1 billion Schroder Global
Recovery fund, holds
Standard Chartered, Barclays
and NatWest and has also
recently added HSBC.
Dividend lowdown
After losing out during 2020
when the regulator banned
banks from paying £8 billion
worth of dividends to ensure
they retained enough capital
Tech is tumbling
— it’s time to go
back to those
boring banks
Shares in UK companies have
done well in 2022, but
investors are avoiding funds
that hold cheap UK shares
that have the potential to
increase, which could
potentially offer bigger
rewards.
The FTSE 100 index of the
UK’s biggest companies has
risen 2.2 per cent this year,
compared with a 5 per cent
fall in its American
counterpart, the S&P 500.
“Special situations” funds
investing in UK companies
are also likely to do well.
These funds look to invest in
cheap and unloved stocks
where they see a catalyst that
could result in a higher share
price, such as a change in
management team or the
belief that the firm could
become an acquisition target.
They are different to pure
“value” funds, which invest
in cheap shares in the hope
that they will eventually
increase in value: this can
require extreme patience.
Special situation funds
investing in the UK have not
been popular since Brexit,
with investors pulling more
than £600 million out of the
nine funds with special
situations in their name since
then, according to the data
provider Morningstar.
Now could be a good time
to invest, though.
Richard de Lisle from De
Lisle Partners, a fund
manager, thinks that stocks
trading on high valuations,
like the big-name technology
shares, will keep falling,
making shares with low price-
to-earnings ratios a better
David Brenchley
Why you have to think small
if you want a bigger profit
become prolific dividend
payers in coming years.
Susannah Streeter, an
analyst at the investment
platform Hargreaves
Lansdown, expects Lloyds to
benefit most. “There are
forecasts for the dividend
yield to rise above 5 per cent
next year,” she said.
“Lloyds has spades of
excess capital and
opportunities for growth
through increased digital
services. Lloyds relies on
traditional lending more than
other banks, so rising interest
rates would be even better
news than for those with
more alternative sources of
income. Across the board,
there are signs that
consumers and businesses
are starting to borrow more.
This means more lucrative
conditions should be on the
horizon. However, if there’s a
sharp cooling off in the
housing market those with
large mortgage books will be
exposed.”
Ways to bank a profit
Investing in banks through a
fund can help to spread the
risk. Hollands likes Artemis
UK Select, which holds a
third of the fund in financials,
with holdings in Barclays and
NatWest as well as Virgin
Money and Standard
Chartered.
Dzmitry Lipski, the head of
funds research at Interactive
Investor, suggested Jupiter
UK Special Situations,
which has about 10 per cent
in banks. It has returned 23
per cent over five years. He
also likes Artemis SmartGARP
Global Equity, which also has
about 10 per cent in banks.
Hollands suggests a play on
the recovery in banks and
financial stocks as a global
theme with Polar Capital
Global Financials Trust,
which has about two thirds of
the portfolio invested in
global banks. It has returned
35 per cent over five years.
Laurence Wood, 77, from
Leeds, is returning to
backing banks (Holly
Thomas writes).
Wood, now retired,
recently bought shares in
Standard Chartered and is
about to buy a stake in
Lloyds Banking Group — all
through his Isa, which he
holds with the platform
Interactive Investor.
“I got my fingers badly
burnt in the financial crisis
when I lost money on my
shares held in a handful of
banks. But banks are the
staple of our economy and
I would be foolish not to
have some exposure. I’ve
since been in and out of
Lloyds but am about to get
back in. Banks are heavily
regulated, now very well
capitalised and fared
extremely well through the
pandemic. Interest rates
rising will have a very
positive impact on banks
as an investment so I hope
to capture part of that.”
Laurence believes
Thursday’s base rate rise
will help Lloyds and
expects healthy dividends.
“I’ve always been a fan
of dividends — reinvesting
them is an important part
of long-term investing.”
‘I THINK LLOYDS
WILL PAY GOOD
DIVIDENDS’
to see them through the
pandemic, payouts returned
in 2021. The outlook for this
year is hopeful. Banking
stocks are forecast to release
more cash to shareholders as
the bounceback continues
and higher interest rates buoy
expectations of bigger profits.
Dividends are due to be
announced alongside full
year results, which are
released from the middle of
this month.
Karunathilake said: “Banks
have come through the
pandemic well, are well
capitalised and should

The Sunday Times - UK (2022-02-06)

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