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HOW TO BRIDGE THE 142% GAP BETWEEN MILLENNIAL SPENDING AND THE STATE PENSION

Michelle Gribbin, Chief Financial Officer at Profile Pensions.

Touted as the first generation to be in a worse financial situation than their parents, millennials and the state of their finances remains constantly up for discussion with polarising opinions across the board.

While critics claim they have self-indulgent, instant gratification driven spending habits and the millennials retaliate by citing unaffordable housing and an ever-rising cost of living, the reason for the financial struggle this generation face is unimportant. What is important, however, is how they’re going to plan for their financial future.

Michelle Gribbin

Impartial pensions advisors, Profile Pensions, suggests the answer’s as simple as workplace pensions schemes. However, with the auto-enrollment amount rising from a 3 to 5% contribution from employees, many millennials have been tempted to pull out from the scheme altogether and rely on the State Pension.

To illustrate how little the government-provided monthly amount will allow for, the pensions advisor recently conducted a study that calculates the average Brit millennial spend and compares it with the £733 State Pension.

Break Down of Millennial Spend

Rent: Accounting for 118% of the monthly State Pension, millennials spend more on their rent than the entire monthly State Pension. Even if home ownership is expected in this stage of life, knowing that this amount of money will account for total expenses can really hit home.

Nights out & take away: Together these popular millennial expenses make up 49% of the State Pension. This combined expense of £322 may feel like it’s gone without you even noticing, but it would become much more significant if it’s half of all you’ve got.

Groceries, bills and transport: These are necessities you’re going regularly spend on for the rest of your life. Together, costing £484 and 74% of the State Pension, even if rent, nights out and take away are no longer apart of your budget, additional contributions are going to be needed if you want anything besides these basics in your lifestyle.

Coffee & gym memberships: When considering cutting costs, millennials often look to their gym memberships, which cost an average of £40 per month. However, the smaller, everyday costs can have the greater impact. Daily coffees outweigh that cost at £52, so it’s important to look at the spend from a monthly perspective.

Holidays: Millennials aren’t holidaying every month, but a little getaway every couple of months accounts for 4% of the State Pension. Few picture their retirement without even a staycation in the UK, so this £29 expense a month is something you’ll want to keep.

Internet and Netflix: A good way millennials save is by staying in, but evidently this isn’t free either. WiFi and Netflix, the cornerstone of a night in, cost £28 per month, 4% of the State Pension and unlikely to be going anywhere anytime soon.

Cost of Living Comfortably Over 68

As now established, the monthly state pension as of April 2019 is £731 is not enough to sustain your lifestyle. So, what is?

A Modest Pension Pot: The advisors suggest having an allowance of £1200 per month is a ‘modest pension pot’ for retirees to live off. It will provide an adequate lifestyle with the ability to afford the basics in life. Your annual holiday is likely to consist of a self catering break in the UK and you will buy fresh food from budget grocery stores and eat out a few times per year.

A Comfortable Pension Pot: At £2,371 per month, comfortable retirement will allow a few extras: frequently eating out in pubs and enjoying a good range of food, plus an annual package holiday with some UK/European short breaks. In your spare time you might have membership to a local sports club or be a season ticket holder.

Tips on Contributing From the Experts

Take advantage of your company’s workplace pension scheme: Due to auto enrolment, you’ll be saving a minimum of 8% of your salary per month towards retirement. Comprised of a 5% deduction from your pay and a 3% employer contribution, the 3% employer contribution is money you will not otherwise receive that is added to your pension pot for your future self. The 5% you contribute provides added tax relief.

Be proactive and make sure your scheme is best for you: As with many things, the default option may not be what’s best for you. Looking at your pension plan and assessing if it is measured in line with your attitude towards risk could increase contributions without an extra penny from your pocket.

Cook for yourself, rather than take away: It’s a 101 saving tip, but choosing to cook for yourself can be one of the easiest ways to cut costs. The average amount spent on groceries and takeaways together equals over £300 a month, by trading Deliveroo for Tesco, you could be putting aside as much as £110 a month towards your pension.

Enjoy nights out but be savvy about them: The average monthly amount spent on nights out is equal to 32% of the full state pension. While enjoying yourself while you’re young is important, spending less while you’re out, considering cheaper options or just staying in a little more can cut costs in half and save you £100 a month to go towards your private pension pot.

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Finance

2020: THE YEAR OPERATIONAL RESILIENCE AND CYBER-RISK TAKE CENTRE STAGE IN FINANCIAL SERVICES

Miles Tappin, VP of EMEA for ThreatConnect, explores how financial providers can build a cyber security strategy that enables operational resilience

 

Financial institutions are operating in a new digital landscape. New disruptive technologies – from Artificial intelligence (AI) to crypto-currencies and big data – have driven change and innovation. In retail banking, new fintech providers have seized the opportunity to offer personalised services and challenge existing providers. For example, Klarna, has successfully disrupted the payments sector and is now established as Europe’s biggest fintech firm. It has quickly emerged as an alternative to credit cards since bursting onto scene, allowing consumers to shop now and pay later with retailers, such as H&M, Ikea and Zara.

To compete with the rising number of fintech providers and fulfil growing consumer expectations, traditional financial institutions are developing robust digital ecosystems that can deliver omnichannel service models. However, it’s becoming clear that the pace of technological change is a double-edged sword. It enables innovation and change but it is also one of the most destructive forces in the financial services ecosystem today.

 

Financial services emerge as a hotbed for cybercriminals

2020 has emerged as a defining year for cybersecurity in the financial services industry. It started with an unprecedented attack against Travelex where hackers successfully took some of the currency providers offline for nearly a month. Then came Coronavirus which sparked a new wave of malware and phishing threats. Research from VMware Carbon Black Cloud revealed that threats against financial institutions have surged by 238% since the start of the pandemic.

The renewed interest from cyber criminals comes at a time when regulators are paying close attention to the resilience of the sector. After a string of IT failures and breaches, financial organisations in the UK have been given a mandate from regulators to improve operational resilience. This means ensuring business models can withstand disruptive events from hackers or adversaries and quickly recover to protect the stability of financial systems.

In December 2019, the UK’s financial regulators published a series of consultation papers outlining their proposed approach to achieving greater operational resilience. The proposals suggested that financial institutions will be required to map out the systems and processes that support business services in order to identify any potential vulnerabilities that would pose a risk to the stability of the UK financial system or the firm’s standing.

 

A mandate for change

Where cybersecurity used to be a classic back-office concern, it’s now a central part of digital strategies and a key pillar of both reputation and customer retention – financial legislation leaves no room for failure. All financial institutions need to ensure they have full visibility of their systems and can detect any potential threats.

The challenge for financial institutions is making the security tools they have purchased separately work together in tandem. Security teams buy a firewall, an email filter, threat intelligence feeds, antivirus software or enhanced endpoint protection, and whatever else they need individually. Each of them does a good job but they don’t talk to each other and valuable time is lost tending to individual systems that become a burden to run. At the same time, running multiple security systems is expensive. The more systems you have, the more highly skilled staff you need to manage them, and they’re few and far between.

 

Improving intelligence sharing across borders and communities

To reduce complexity and simplify decision making, financial organisations need to unify processes and technology to harness the security intelligence that comes from across their own security programmes and external sources to drive down risk. However, no financial institution can tackle the problem alone. Experienced threat actors using advanced techniques are constantly targeting the financial sector. The industry needs to come together as a whole to foster a sense of collaboration and data sharing.

In the same way that financial institutions have introduced open banking to deliver a fairer service to customers, the same needs to apply to security – all parts of the financial ecosystem need to unite and share information to learn from one another and succeed in the fight against adversaries that operate across borders.

By sharing alerts on cyber hazards and risk across financial institutions and with law enforcement, government agencies and other relevant authorities, it’s possible to build industry specific insights into cyber security threats and quickly pivot to gain more information on those specific threats and threat actors. By working together, a picture can be painted on threats coming from all manner of malicious activity, from malware to ransomware, to phishing and software vulnerabilities.

 

Breaking down barriers

Having the right intelligence is not enough to ensure that intelligence is turned into action. Breaking down information and process silos across security teams allows financial organisation to analyse and act on the most pertinent information. Everyone has access to the risk and threats that matter most, and orchestration and automation of response helps overwhelmed security teams prioritise response plans and improve efficiencies in their security programme.

Integrating internal security tools and technologies, while also connecting to external sources of intelligence, creates a single source of intelligence that feeds operations and enables organisations to direct action against the threats that matter most. The outcomes of those actions further feed intelligence, providing the ability to further refine the efficacy of the entire security lifecycle.

This approach provides a continuous feedback loop for the people, processes and technologies that make up the security programme. It allows financial institutions to keep up with threat actors that have consistently adapted their methods to profit at the expense of the financial industry. Something that won’t stop anytime soon.

 

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Finance

GROWTH OF FINANCIAL MARKETS AND TECHNOLOGY

Ashish Jain,CEO, Future FX

 

The economic development of any nation completely depends on its financial structure both in long term and short term. The financial system and its efficiency determines the success of the nation in terms of economic growth.

As most of the sectors are taking advantages of the technology evolved since 1980, financial sector has also transformed immensely.

The Bombay Stock Exchange (BSE), dating back to 1875, started as a broker’s forum under a tree on Dalal Street, and is Asia’s oldest stock exchange. For over a century, registered brokers have made trades happen.

The National Stock Exchange (NSE) came up in 1994 to provide screen-based electronic trading. It gave fibre-optic access to brokers in other cities who could join the trading in the centralized exchange located in Mumbai.

Dematerialization of shares started in the late 1990s and online trading began at the turn of the millennium where investors could buy and sell shares through electronic brokers such as ICICI Direct and Sharekhan.

As more and more elements of the stock market get digitized, it increases its potential to attract a new generation of investors.

Online financial services company Zerodha brought “discount broking” to India in 2010, applying a flat fee of ₹20 on a trade whatever its size. This attracted young investors who could do a trade in less commission. Now, we have all the marketing and trading apps on our phones and we can easily make trades.

The insurance sector has eliminates the role of broker and now anyone can buy insurance through mobile phones. Some such apps are HDFC ERGO insurance, Insure, Caringly Yours, etc.

Trade has always been shaped by technology but the rapid development of digital technologies in recent times has the potential to transform international trade profoundly in the years to come.

From the moment we wake up to check how the markets performed overnight until the time we go back to bed before doing another check of how the market is set to open on the other side of the globe, technology now plays a critical role in everything we do and the way we do things.

For the financial markets, the coming of advanced technology has been the key factor behind the transformation in the way things are done. Technology is also at the core of how companies operate and maintain their competitive edge in this vicious environment.

While forex trading and trading in general used to be the domain of institutional and corporate players, today even retail and private investors consider forex an essential component of their overall portfolio. And this is no doubt due to the ease of access and price transparency offered on the electronic platform.

Nowadays, providers need to have the latest technology all the time. They need to add new and build more features to their platform to attract and retain clients.

Traders are now able to monitor their trades from anywhere as long as there is an internet connection. This gives traders more freedom, mobility and flexibility.

The trading in global markets has thus become easy and convenient like never before.

 

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