A nasty shock for pension savers

Tim Bennett rounds up this week’s personal finance news, including: how much you really need to save for your retirement; a credit-card scam; and why you should double-check your travel insurance.

Think you're saving enough for retirement? Think again, says Holly Thomas in The Sunday Times. The financial regulator, the Financial Services Authority (FSA), plans to force pension schemes to adopt more realistic assumptions when estimating the value of your retirement pot.

Funds will be asked to make their projections based on 5% annual growth rather than the 7%-8% used by many schemes. This strikes us as more realistic, but the chances are it'll give a lot of people a nasty shock.

A 35-year-old man saving to provide himself with a £10,000 annual income from the age of 68 (rising each year by inflation) will need to save 43% more every month, or £601, according to Hargreaves Lansdown, using the new realistic' assumptions rather than the old ones.

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Last week we mentioned three scams you should watch out for. Here's a fourth. As Tara Evans reports on Thisismoney.co.uk, firms are approaching people with credit-card debt and offering to write off the whole balance in return for 20% of the amount outstanding paid up front. It sounds too good to be true, because it is. Don't send these firms a penny as the Office of Fair Trading notes, debts cannot legally be sold to a third party without the original lender's consent.

Make sure you consider transfer fees if you are thinking of switching your credit-card debt to another card, says The Daily Telegraph's Kara Gammell. A long interest-only period may come with a hefty fee. For example, a £5,000 debt shifted to the Halifax Balance Transfer Mastercard for a year will cost you £175 (the interest-free period runs for 22 months), whereas switching to NatWest Platinum will cost you £50 (the interest-free period is 13 months).

Double-check your travel insurance, says Jill Papworth in The Guardian. As travellers who had holidays booked to storm-battered New York are finding out, some policies will not refund you if you fail to fly and the Foreign and Commonwealth Office has not deemed a country unsafe.

Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.