Saturday, January 25, 2020

State pension payments are rising in 2020 - how much more will you be able to get?

Both the basic and the new state pension rises each year, according to the triple lock. This means that it rises every year by whichever is the highest out of the average percentage growth in wages in Great Britain, the percentage growth in prices in the UK as measured by the Consumer Prices Index (CPI), and 2.5 percent.

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The changes will comes into effect in April 2020, when the full rate of the UK’s new State Pension will increase by 3.9 percent to £175.20 per week.

Currently, the full new state pension is £168.60 per week.

This increase means those getting the full new state pension will get an extra £6.60 per week – which works out at an additional £344 a year.

Meanwhile, the full weekly rate of the basic State Pension is set to increase by £5.05 per week from £129.20 to £134.25 per week.

However, not everyone will be able to get the full state pension.

The new State Pension takes National Insurance records into account, and some people will receive more and others less than the full amount.

For those who retire overseas, it’s possible to claim the state pension in most countries.

However, the state pension will only increase each year if the claimant lives in:

  • The European Economic Area (EEA)
  • Gibraltar
  • Switzerland
  • Countries that have a social security agreement with the UK (but a person cannot get increases in Canada or New Zealand).

Gov.uk states that a person will not get yearly increases if they live outside of these countries.

Should they return to live in the UK, the recipient’s pension will go up to the current rate.

The Government has confirmed that other payments are set to rise in April 2020, confirming that it would not extend the benefits freeze which was due to end next year.

From April 2020, working-age benefits will rise by 1.7 percent, in line with inflation.

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  • Universal Credit payment will change in 2020 – will you get more cash?

According to the DWP, around 2.5million people on Universal Credit will see their payments rise by this amount, with the increase estimated to benefit more than 10million people.

Working-age benefits such as Jobseeker’s Allowance, Employment and Support Allowance, Income Support, Housing Benefit, Universal Credit, Child Tax Credits, Working Tax Credits and Child Benefit, have remained at the same level since April 2015.

Despite the upcoming rise, research from the Resolution Foundation has found that some people affected by the freeze will still be hundreds of pounds worse-off by.

According to the Foundation’s analysis, the freeze reduced the real-terms value of working-age benefits by six percent since 2015, and left the average couple with children in the bottom half of the income distribution £580 per year worse-off.

But while the benefit freeze is over, its impact is here to stay with a lower income couple with kids £580 a year worse off as a result.

Adam Corlett, Senior Economic Analyst at the Resolution Foundation

Commenting on the rise by inflation rates back in October this year, Adam Corlett, Senior Economic Analyst at the Resolution Foundation, said: “Today’s inflation figures have confirmed that working-age benefits received by millions of families are set to rise in line with prices by 1.7 percent next April.

“This is their first cash increase in five years.

“But while the benefit freeze is over, its impact is here to stay with a lower income couple with kids £580 a year worse off as a result.

“And because benefits will only keep pace with rising prices, the social security safety net will continue to erode – falling further behind earnings and the state pension.”

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Thursday, January 23, 2020

Explainer: Central bank digital currencies - Moving towards reality?

LONDON (Reuters) – Central banks are looking at creating their own digital currencies – a stark contrast to the ethos of cryptocurrencies that seek to subvert mainstream authority over money.

As Facebook’s efforts to launch its Libra cryptocurrency pour fuel onto debates over who will control money in the future, major economies have started to examine how so-called central bank digital currencies (CBDCs) could become reality.

Here are some key questions on the rise of central bank digital currencies and their progress in entering the mainstream.

ARE CBDCs DIFFERENT TO CRYPTOCURRENCIES?

Yes – and fundamentally so.

CBDCs are traditional money, but in digital form; issued and governed by a country’s central bank. By contrast, cryptocurrencies like bitcoin are produced by solving complex maths puzzles, and governed by disparate online communities instead of a centralised body.

The common denominator is that both cryptocurrencies and CBDCs, to a varying degree, are based on blockchain technology, a digital ledger that allows transactions to be recorded and accessed in real time by multiple parties.

While some retailers accept bitcoin as a form of payment, cryptocurrencies are not recognised as legal tender – which CBDCs, by definition, would be.

And unlike central bank money, both traditional and digital, the value of cryptocurrencies is determined entirely by the market, and not influenced by factors such as monetary policy or trade surpluses.

AND WHAT ABOUT ELECTRONIC CASH?

The rise of technology like contactless debit cards has made it easier for consumers and businesses to use electronic cash, or e-money, to pay for goods and services.

But this also differs to CBDCs.

Electronic cash, defined by the Bank for International Settlements as a store of value for making payments to retailers or between devices, is usually held at banks or on pre-paid cards or digital wallets such as PayPal.

CBDCs would not merely be a representation of physical money, as is the case with electronic cash, but a complete replacement for notes and coins.

SO WHAT ARE THE ADVANTAGES OF CBDCs?

Central banks think CBDCs could make payments systems, which are often time-consuming and costly, more efficient, reducing transfer and settlement times and thus stoking economic growth.

Some central banks think CBDCs could also counter the rise of cryptocurrencies issued by the private sector such as Libra, planned for launch in June 2020.

Bitcoin and other virtual currencies, hampered by wild volatility, have presented few realistic threats to central bank control over money. But central bankers fret that Libra could reach billions and quickly erode sovereignty over monetary policy.

CBDCs, they think, could address problems like inefficient payments that cryptocurrencies seek to solve, while maintaining state control over money.

In an era of negative interest rates, CBDCs are also seen as offering a tool to encourage businesses and people to spend money and invest, the argument goes, as they could be used to charge households and businesses to hold cash.

ARE CBDCs CLOSE TO BECOMING REALITY?

Increasingly so – though most CBDC projects are still in very early or conceptual stages.

A growing number of central banks are likely to issue their own digital currencies in the next few years, the Bank for International Settlements (BIS) has found. Most of those launching pilot schemes are from emerging markets. [L4N29R45W]

Among major economies, China is closest to becoming the first to introduce a CBDC. While details of its project to build a digital renminbi are scarce, it will be powered in part by blockchain technology and will initially be issued to commercial banks and other financial institutions.

The central banks of Britain, the euro zone, Japan, Sweden and Switzerland said on Tuesday they will share experiences in a group assisted by the BIS as they examine the case for issuing CBDCs.

ARE MOST MAJOR CENTRAL BANKS SUPPORTIVE?

Caution and scepticism exists in many quarters.

The U.S. Federal Reserve, for example, was notably absent from collaboration with the initiative by the European and Japanese central banks to look at CBDCs.

Fed Chairman Jerome Powell said in November the bank was monitoring the digital currency debate but not actively considering its own amid a host of legal, regulatory and operational questions.

Others, such as the Bank of Japan, have warned that uncertainties over the impact of CBDCs on commercial banking must be addressed. The BOJ has also scotched the idea that CBDCs could boost the effectiveness of negative interest rate policies.

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Wednesday, January 22, 2020

Allied Tech CEO, CFO to assist in CAD probe

SINGAPORE (THE BUSINESS TIMES) – Allied Technologies’ chief executive officer Clement Leow Wee Kia and chief financial officer Ong Lizhen will be “providing assistance” to the Commercial Affairs Department on an investigation, the company said on Wednesday night (Jan 22).

The Catalist-listed precision engineering firm had made headlines in May last year when news broke that $33 million of its funds parked with JLC Advisors had gone missing while JLC managing partner Jeffrey Ong’s whereabouts were unknown.

That same month, CAD seized documents from Allied Tech relating to the company and three of its subsidiaries as well as the JLC escrow account. CAD also interviewed Allied Tech’s executive director Kenneth Low Si Ren.

CAD has not disclosed to the company further details of the probe as at Wednesday, Allied Tech said.

Allied Tech added that it intends to cooperate fully with CAD on the investigation and will provide further updates to shareholders on subsequent material developments.

Separately, Ong from JLC has been slapped with 26 charges, having been arraigned last October on four fresh counts, including the most serious criminal breach of trust offence.

Trading in Allied Tech shares has been suspended since early May, amid concerns raised by auditor Ernst & Young over the company’s financials.

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Told to behave, sides in Trump trial to make their case

WASHINGTON (Reuters) – The Republican-controlled U.S. Senate will hear opening arguments in President Donald Trump’s impeachment trial on Wednesday, beginning several days of argument on whether to remove Trump from office.

In Davos, Switzerland, Trump said allowing current and former top administration officials such as John Bolton to testify at the trial would present national security concerns.

In a 13-hour battle over trial rules that lasted until the wee hours of Wednesday, Republican senators rejected requests for subpoenas seeking the testimony of Bolton, Trump’s former national security adviser, and three White House officials.

Trump was impeached last month by the Democratic-run House of Representatives on charges of abuse of power and obstruction of Congress for pressuring Ukraine to investigate former Democratic Vice President Joe Biden, a political rival, and impeding a congressional inquiry into the matter.

The president denies any wrongdoing.

The trial, the third presidential impeachment trial in U.S. history, was due to resume at 1 p.m. ET (1800 GMT). On Tuesday – effectively the trial’s opening day – Democrats argued that more witnesses and records were needed since the Trump administration had not complied with requests for documents and urged officials not to participate.

Arguments became so heated that Chief Justice John Roberts, who is presiding over the trial, admonished both the defense and prosecution.

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Representative Adam Schiff, leading the House Democrats’ prosecution team of “managers,” said the evidence against Trump was “already overwhelming” but further witness testimony was necessary to show the full scope of the misconduct by the president and those around him.

Trump is almost certain to be acquitted by the Republican-majority 100-member chamber, where a two-thirds majority is needed to remove him from office. But the trial’s effect on Trump’s November re-election bid is unclear.

Trump said he would prefer a longer trial so that current and former top administration officials could testify, but that having them appear would present national security concerns.

“The problem with John (Bolton) is that it’s a national security problem,” Trump said at the World Economic Forum in Davos.

“He knows some of my thoughts, he knows what I think about leaders. What happens if he reveals what I think about a certain leader and it’s not very positive?” he told a news conference.

Republican senators have not ruled out the possibility of further testimony and evidence at some point later in the trial but they held firm with Trump to block Democratic requests for witnesses and evidence.

“They insist that the president has done nothing wrong, but they refuse to allow the evidence and hearing from the witnesses … and they lie, and lie and lie and lie,” Representative Jerrold Nadler, another Democratic impeachment manager, said of Trump’s lawyers in remarks to the Senate.

White House counsel Pat Cipollone fired back.

“Mr Nadler, you owe an apology to the president of the United States and his family,” Cipollone said. “You owe an apology to the Senate. But most of all you owe an apology to the American people.”

REMEMBER WHERE YOU ARE

That back-and-forth led Roberts, the chief justice of the United States, to admonish both men.

“I do think those addressing the Senate should remember where they are,” he said.

During a debate that finally wrapped up near 2 a.m. (0700 GMT) on Wednesday, senators rejected by 53-47 votes motions from Senate Democratic leader Chuck Schumer to subpoena records and documents from the White House, the State Department, the Defense Department, and the Office of Management and Budget related to Trump’s dealings with Ukraine.

Senators also rejected requests for subpoenas seeking the testimony of acting White House Chief of Staff Mick Mulvaney, White House aide Robert Blair and White House budget official Michael Duffey.

Under the rules, lawyers for Trump could move early in the proceedings to ask senators to dismiss all charges, according to a senior Republican leadership aide, a motion that would likely fall short of the support needed to succeed.

The Senate trial is expected to run six days a week, Monday through Saturday, until at least the end of January.

Trump and his legal team say that there was no pressure on Ukraine and that the Democrats’ case is based on hearsay. Cipollone described the Ukraine investigation as an illegal attempt to remove a democratically elected president and avert his re-election.

No president has ever been removed through impeachment, a mechanism the nation’s founders – worried about a monarch on American soil – devised to oust a president for “treason, bribery or other high crimes and misdemeanors.” One president, Richard Nixon, resigned in the face of a looming impeachment.

Source: Read Full Article

Tuesday, January 21, 2020

Business leaders see the light of 'moral capitalism' at Davos

There is a tendency, probably with good reason, to be cynical about the sight of a conga line of plutocrats lining up in a Swiss ski resort to espouse the virtues of "green finance" and proclaim their commitment to progressive environmental, social and governance agendas.

The theme of the World Economic Forum at Davos that got underway on Tuesday is "stakeholder capitalism," with a particular focus on climate change and how big business is responding to it.

Bank of America chief Brian Moynihan says his investors are telling the bank to invest in companies ‘doing right by society’.Credit:Bloomberg

While it is right to be cynical of the apparent abrupt conversion of former followers of Milton Friedman – who in an article in The New York Times in 1970 argued "companies must obey the law but, beyond that, their job is to make money for shareholders," – to what Bank of America chief executive Brian Moynihan has termed "moral capitalism", there is a compelling reason why that cynicism actually supports the substance of the conversion.

If the starting point is that businesses and their senior executives act in their own self-interest and are in the business of making as much money, for themselves and their shareholders, as they can, then the embracing of sustainable investment agendas is helps protect their licences to operate, maximise their companies’ profitability and value and enhances their own net worth.

BofA’s Moynihan, who’s in Davos, said the bank’s investors were telling it to invest in companies "doing right by society". The bank plans to invest $US300 billion ($439 billion) in sustainable business projects over the next decade.

Ahead of the conference, in his annual letter to CEOs, BlackRock’s Larry Fink caused a stir by writing that climate change had become a defining factor in companies’ long-term prospects and that he believed the world was on the edge of a fundamental reshaping of finance, with a significant re-allocation of capital to occur in the near future.

BlackRock chairman Larry Fink belives a fundamental reshaping of finance is occurring.Credit:Bloomberg

If Fink is right and there is a fundamental reshaping of finance underway, then capital will flow towards those companies with sustainable and moral business models and away from those with a narrower and more traditional profit-maximising vision.

There are more than enough investors, customers and governments that are committed to responding to climate change that it has become just good business to protect the long-term sustainability of companies – and their competitive access to capital – by prioritising the broader sustainability issues those stakeholders are concerned about.

There could be a lot of shareholder value to be created, or lost, if the shifts in community expectations of business, and the flows of capital, are permanent.

With traditional market capitalism under attack from the emergence of aggressive populism, nationalism and protectionism in the post-financial crisis era, there has been a general distrust of big business and its traditional focus on near-term profitability.

There are real risks for businesses and shareholders from climate change and what might be called amoral capitalism.

The Bank for International Settlements has talked about the potential for climate change to generate “green swan” events that could cause the next systemic financial crisis.

One only has to consider the condition of the four major banks in the Australian market and the consequences of their misconduct in their efforts to maximise profitability, to see the consequences for the corporate hierarchy and shareholders.

The llenders have been hit with massive costs, more intrusive and aggressive regulation, increased corporate and individual liabilities and the evictions of former senior executives and directors.

Coal miners would be very aware that, at the very least, the pool of investors – the demand for their shares – is going to shrink as the focus on responses to global warming and climate change intensify.

The sudden burnishing of big businesses’ environmental, social and governance (ESG) credentials at Davos might have an element of "greenwashing" but it is also a pragmatic and self-interested recognition that the nature of the capitalism acceptable to communities is evolving inexorably.

If the corporate heavyweights at Davos want their companies to survive and prosper and to continue to collect the big bucks, their understanding of the range of stakeholders and priorities they serve will have to evolve too. It seems like it is.

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Billionaire founder of Lotte Group leaves no will? Let the plotting begin

(BLOOMBERG) – It was once a great blessing for an emperor to have a son. But if he has more than one, succession could threaten to unravel the empire – especially if his grip was weak.

Over six decades, Shin Kyuk-ho built a chewing-gum business into South Korea’s fifth-largest conglomerate, spanning hotels, shopping malls, movie chains and cafes. It’s no secret that the founder of Lotte Group was near the end of his life: He died over the weekend at 97 after slipping into dementia years ago. While the patriarch involved his children in the family business, Shin never established a clear heir apparent. Miraculously, he didn’t even leave a will, Korean media has reported.

In South Korea, family-run conglomerates tend to control their labyrinthine holdings with the minimum possible capital outlays. While Hong Kong tycoons typically maintain 40 per cent to 50 per cent stakes to keep their crown jewels close, Korean billionaires often hold around half that. This approach can create a host of problems when there’s a transition of power, and investors are already profiting from a potential palace coup. Lotte Corp, the holding company, rose as much as 20 per cent on Monday before closing 5.9 per cent higher.

Things are getting even hairier now that traditional family structures are getting tested. At SK Group, South Korea’s third-largest conglomerate, an ugly billion-dollar divorce could strip chairman Chey Tae-won of control if his wife gets the stake she’s seeking. And while primogeniture once went unchallenged, younger brothers and sisters are now clamoring for their share.

That’s certainly the case with Lotte. Five years ago, Shin’s two sons – Shin Dong-joo, the elder, and Shin Dong-bin – were already jockeying for power as their father’s health declined. In July 2015, Dong-joo said Shin had ordered the removal of Dong-bin from the board of Lotte Holdings of Japan. That very day, Dong-bin convened a board meeting and stripped his father of the chairman title. Lotte Corp’s conglomerate discount widened to 45.8 per cent, or roughly US$1.5 billion in value, under Dong-bin’s reign, estimates CLSA.

Now the elder brother, Dong-joo, has little hope of regaining his power. Directly and through firms he controls, his younger brother, Dong-bin, has a 21.2 per cent stake in Lotte Corp, estimates Sanghyun Park, an analyst who writes for Smartkarma. Even if Dong-joo inherited his father’s shares and spent all his cash buying Lotte Corp’s shares, his ownership would be just 19.07 per cent.

But all isn’t lost for Dong-joo. The wild card is an 11.1 per cent stake in Lotte Corp held by Hotel Lotte, which is controlled by Lotte Japan. The elder brother could significantly boost his indirect stake in the conglomerate’s Japanese operation by winning over an employees’ union that holds a 28 per cent share. This could put Dong-joo in a position to renew his bid for Lotte Corp’s crown. Lest we forget, he wouldn’t even be a contender if his younger brother had amassed a few more shares over the years.

Investors have learned to brace for these family feuds. The stock price of conglomerate Hanjin Kal Corp, whose units include flagship carrier Korea Air Lines, has been on a roller-coaster ride since the chairman’s death last April. Since then, the eldest daughter – Heather Cho, who first gained global notoriety for her “nut rage” incident in 2014 – has criticized her brother now in charge of the family business. She even met with activist private equity funds.

With the economy flagging, there’s a growing sense that chaebol reform, which swept President Moon Jae-in to power in 2017, is losing steam. But with inevitable deaths, expensive divorces and family theatrics, the president may not need a “chaebol sniper” to unravel these overly complex corporations after all.

Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron’s, following a career as an investment banker, and is a CFA charterholder.

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Monday, January 20, 2020

Down Town Association looking to add floors to landmark HQ to make room for hotel

A blueblood Wall Street-area social club wants to raise the roof of its century-old, landmark headquarters at 60 Pine St.

It would put the storied organization on firmer financial footing by letting it use less space in the building to make room for a fancy new hotel.

But some members of the Down Town Association are down in the dumps over a possible two-year closure that would force them to find alternate places to meet and eat around town.

The intensely private organization — whose members include publicity-shy financial and legal powerbrokers — first received Landmarks Preservation Commission approval to add three floors to its five-and-a-half-story home in 2010.

But the Association, whose past members have included Franklin D. Roosevelt, former New York State Gov. Thomas E. Dewey and statesman John Foster Dulles, couldn’t build due to tough financial times. Now, under a deal being negotiated, its landlord would build the new floors and use them and part of existing floors to create a high-end boutique hotel.

The hotel would be run by an outside operator yet to be named.

The Association no longer needs all of the building’s 57,000 square feet, and reducing its space would save it what a source called a “significant” percentage of its current rent, although it isn’t known how much it’s paying.

The Romanesque Revival-style structure stands in the shadow of next-door 70 Pine St., the landmarked Art Deco skyscraper that was converted from offices to apartments by Rose Associates — and where the Association leases 33 members’ bedrooms on the tower’s second floor.

The 60 Pine St. building was designed by prominent 19th Century architect Charles C. Haight and opened in 1887. It was expanded in 1910 by Warren & Wetmore, the architects of Grand Central Terminal.

The interior, rarely seen by outsiders, boasts elegant white oak paneling, a four-story cast-iron lobby staircase, and Gilded Age-era dining rooms with noble arched windows.

But the club was beset by rising costs and reduced dues from a shrinking membership.

According to its 2017 tax return posted on the state attorney general’s charity registry, expenses that year exceeded revenue by $4.02 million, twice as much as in 2016.

In 2018, the Association sold the building for $28 million to Great Empire Realty — an obscure partnership which club members refer to as “the doctors.”

A source said it is not the firm of the same name run by Chinatown developer Benny Fong, as was widely reported at the time.

The club leased the building back from the buyers. The deal brought the Association much-needed cash as well as a $4 million line of credit.

The club even installed a new gallery where works by Andy Warhol, Willem de Kooning and Paul Gaugin are on display.

So members were stunned in 2019 to learn of the hotel-building plan, which would force them to find other facilities until the job was finished. The landlord would use the three new floors as well as parts of other floors for a 66-room luxury inn.

“Not all of us were happy with the sale and then the hotel came out of the blue,” one source told us.

In September, the Landmarks Commission again blessed the expansion. It noted that many social clubs “have a tradition of expanding with rooftop additions” and that the 60 Pine St. extension “will be set back from the primary facade and will not be visible” from the street.

The redesign would relocate within the building some of its major historic features including its dining room, bar, and reading room.

A stylish, ground-floor bar for hotel guests would be added to the first floor, which club members could use at discounted prices.

At a December meeting, Association president Mark Altherr, a former director of Credit Suisse Securities and Citigroup, addressed members’ concerns.

Club trustee Thomas Boucher, a managing director of investment-management firm Ingalls & Snyder, cited some members’ fears that they “wouldn’t receive full value” of their dues for 2020 if the club shut down before year’s end.

No start date has been set for construction.

But Altherr promised that members “will be treated fairly during closure through credits upon reopening and with use of other places.”

The Association has reciprocal arrangements with other clubs, including the Harvard, Yale and Lotus clubs in Manhattan.

Neither Altherr nor representatives of Great Empire Realty could be reached for comment.

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