They point out that improved sentiment in the financial markets since the European Central Bank three year long-term refinancing operation in December has persisted.

Whilst the cost of bank financing appears to have fallen since the second half of 2011, it continues to remain higher than it was in 2010 and the first half of 2011.

The MPC looked closely at the continuing crisis in Europe when they met.

Whilst conditions in Europe appear to have improved, particularly in Spain and Italy, investors remain cautious over the levels of debts in these countries which is likely to make them less competitive.

Longer-term interest rates in the UK have risen slightly, reflecting market expectations that the MPC would vote to increase the size of their asset purchase programme at the meeting. As we already know, the market made an accurate assessment and the quantitative easing was in fact extended.

Noting increases in the level of major international equity markets, the Bank found it hard to explain these movements.

They felt it was plausible it could reflect a fall in the risk premium investors required for holding equities, possibly due to a reduction in the downside risks following the European Central Bank action in December.

Global economy

Looking at the state of the international economy, the Bank believed there has been some positive news to consider. The reasons for an improvement in activity remain unclear however.

The minutes go on to review a series of economic indicators from around the globe, before concluding growth in the first quarter of this year is likely to beat previous expectations.

Ahead of their decision to expand the programme of quantitative easing, the Committee noted that money growth had been weak in the final quarter of last year. This remains a volatile indicator which makes it difficult to establish whether the latest quarter of data is a reliable indication of a developing trend.

Cost of credit

One aspect that has never seemed to improve since the global financial crisis is the availability and cost of credit for many households and businesses in the UK.

The Bank noted that further strains in bank funding markets in the second half of last year have now increased the cost of borrowing further still. They do expect bank funding markets to improve which should, in time, reduce the cost of borrowing for British households and businesses.

This improvement in bank funding could of course be derailed. We continue to hold the view that the banks will build their balance sheets and the expense of affordable lending, at least for the foreseeable future.

Inflation, inflation, inflation

Looking at price inflation, the Bank has done a good job of accurately forecasting a recent decline. The Bank outlook for domestically generated inflation now looks rather uncertain.

They do however believe that inflation is more likely to be below target than above it for a good part of the forecast period. If this proves to be accurate, we could expect to see a period of price inflation at under 2% in the coming years.

In terms of the longer term forecast for the UK economy, the Bank believes output is unlikely to surpass its pre-recession level until around five years after the start of the recession. They note that the supply capacity of the UK economy has been growing ‘unusually slowly’ since the start of the global financial crisis.

There should still be sufficient spare capacity in the UK economy, and this will help to keep inflation down despite the Bank pumping more liquidity into the economy.

As we already know, the Bank decided at this meeting to keep interest rates on hold at the historically low rate of 0.5%. We now know from the minutes that this was a unanimous decision.

This reinforces our own belief that interest rates will remain very low for the remainder of 2012 and possibly the whole of 2013 as well, before starting to increase in 2014.

On the vote for an extension to the asset purchase (quantitative easing) programme, seven members of the Committee voted for this and two against. However, the two Committee members voting against the move wanted to increase the size of the programme by £75bn to a total of £350bn.

This vote shows that there was a real appetite for increasing the size of the asset purchase programme and it could still be extended further later this year.

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This is a big one. Greece is being lent more than £110bn in return for agreeing to slash its debt from 160% to 120.5% of GDP by 2020.

Perhaps an even bigger commitment from Greece is the permanent presence of an EU economic monitoring mission in the country.

In addition the loans, private investors with Greek debt have to accept losses of 53.5% on their bonds, with the real losses they will suffer at around 70% of their investments.

For a country that is well and truly bankrupt, getting back 30% of an investment in its debt might seem like a reasonable outcome.

This deal still needs the backing of the Greek government, with a vote expected to take place tomorrow.

Whilst at face value this looks like a decisive deal to save the troubled eurozone, we remain unconvinced that it has solved anything.

The money that is being lent to Greece needs to be paid back. It is money being used to fund existing debt, rather than help Greece grow its economy.

In personal finance terms, this bailout is just like borrowing on a credit card to keep up with monthly mortgage interest payments. It makes no long term sense, it simply avoids short term disaster.

One thing we can be certain of is that this does not represent the end of the eurozone sovereign debt crisis.

This latest bailout deal simply kicks the problem a little further down the road. At some point, Europe is going to have to face up to the financial mess it is in.

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The £1.5m fine was specifically for failing to confirm to investors under which circumstances the investment schemes would be covered by the Financial Services Compensation Scheme (FSCS).

Despite customers querying the provisions for FSCS cover in late 2008, it took Santander until January 2010 to clarify the position.

Santander sold around £2.7bn of structured products to their customers during this time.

They have been fined £1.5m for “breaching skill, care and diligence in business, as well as communication with clients”.

Reading the FSA Final Notice for Santander, several issues relating to structured investment products are apparent.

Banks love selling these products to investors with no or very low appetite for investment risk. This is probably because structured products are seen as a ‘safe’ way to participate in stock market returns without risk to capital.

In reality, the capital risk in a structured product investment is simply transferred to other forms of risk, particularly counterparty risk where the security of capital is dependent on the financial strength of the product backer.

There is no escaping the unbreakable link between risk and reward. Structured products attempt to break this link, but instead transfer capital risk to counterparty risk. If this is not clearly explained and understood by investors, there is a real danger unsuitable investments will be made.

The Final Notice also reveals what a massive cash cow these structured products can be for the banks.

If Santander received a typical 5% commission on the £2.7bn of structured products it sold to customers in this period of a little over one year, it would have generated commissions of around £135m.

Whenever we see any financial product being sold in these sorts of volumes, we are immediately concerned about its suitability for such a mass market.

Whilst FSA action like this and the impending Retail Distribution Review will both help to reduce bank reliance on the sale of structured products to customers, they do appear to remain a very popular product option for ‘advisers’ working in banks.

Most retail investors probably would not want a structured product, if they understood the risks and limitations of these schemes.

Only by speaking to an independent financial adviser with no ties to the products they are offering as solutions to financial objectives can an investor get the impartial advice they deserve.

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The front page article suggests we will see higher rate tax relief on pension contributions scrapped and the taxation of the pension commencement lump sum (commonly known as ‘tax-free cash’).

This “double-whammy” would represent a massive blow for savers as the government encourages us all to take more personal responsibility for our income in retirement.

Whilst there is undoubtedly great pressure on public finances, an overt attack on pensions like this would be terrible news for the UK savings culture.

We also suspect it would go against Tory principles. If higher rate tax relief or tax-free cash availability is cut, it would most likely be the result of pressure from their Lib Dem coalition partners.

One way the government could limit higher rate tax relief would be to lower the annual allowance for tax privileged pensions savings from the current level of £50,000. We would not be surprised to see this cut to around £35,000, as was originally suggested when the annual allowance was introduced.

There is also the option to include the annual ISA allowance within the £50,000 annual allowance figure, effectively reducing it by a little under £11,000, although this would create an even more complex system of allowances.

An attack on tax-free cash would be harder to implement.

It could be introduced by lowering the percentage of pension funds available as tax-free cash from the current level of 25%. This approach might even include a reference to the Standard Lifetime Allowance, limiting total tax-free cash to a percentage of this.

One potential issue with this approach is that many people plan to repay their interest-only mortgages using the tax-free cash from their pension savings.

Any attack on higher rate tax relief or tax-free cash would damage confidence in pensions as a savings vehicle.

What pensions really need is a spell of consistency in terms of rules and regulations.

We have regularly called for the government to hand responsibility for all pensions policy over to an independent committee, much like interest rate decisions are now the responsibility of the Bank of England.

We can hope that the Express is wrong on this issue. Rumours such as these tend to circulate ahead of every Budget, with the current economic climate adding more weight to them this year.

If you were planning to make a large pension contribution or take tax-free cash from your pension at some point this year anyway, taking this action ahead of the Budget on 21st March could be advantageous. Speak to your adviser.

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UK stocks closed higher on Friday after a strong day of trading, helped along by positive news from the European Central Bank regarding a ‘debt swap’ to ease the eurozone debt crisis.

Over a year the FTSE 100 has fallen from 6,087.40, a fall of 182.33 points or -2.30%.

£1 is currently worth $1.58280 US or €1.20460 Euros.

Brent Crude Oil Futures is currently priced at $119.58/barrel. Gold is $1,732.00/ounce and Silver is $33.48/ounce.

The UK Bank Rate is 0.5% and CPI inflation was 3.6% for the year to January 2012.

The latest figures from the Alliance Trust Economic Research Centre show that, despite a fall in the rate of inflation in January, elderly households continue to experience the highest levels of price inflation.

Over 75 year old households faced price inflation of 4.3% in January, down from 5.1% in December.

This now represents the lowest level of price inflation for these elderly households since December 2010. Despite this, inflation at this level is quickly eroding the buying power of fixed pension incomes and savings.

Inflation tends to be highest for elderly people due to the nature of the goods and services they consume.

It is important to plan for this as inflation can quickly erode the purchasing power of incomes and savings in later life.

One aspect to carefully consider is care fees inflation.

We often find that the annual increase in the cost of care fees will consistently outstrip price inflation in general and even price inflation for elderly households.

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“Well, if it is on the credit card it doesn’t matter does it because I’ll find another card when the rate is up.”

But what happens when you look back and all your little slips and moments of weakness accumulate? Financial diabetes.

A moment on the lips, a lifetime on the hips! Or, a moment on the credit card, a lifetime on the “life is hard”.

So opt for the financial diet. Give up on those little treats and have your money work harder by saving and investing.

Be fit to retire when you want; avoid having high mortgage pressure and low wealth esteem.

Don’t follow the fads and don’t believe the hype. Ignore the ‘buy while stocks last’, ‘double digit returns with no risk’ type investments. Investing, like dieting, is about simple principles repeated. Know what you are trying to achieve, have a plan to get you there and keep it simple.

Most importantly, stick with it.

There will be times when it doesn’t seem to be working, the money scales are going in the wrong direction, other people are having quicker results.

Who cares? A painful crash is probably around the corner.

Your plan based on sound principles and patience will have you looking good on the beach while the fad followers are still flitting between the next big thing and ‘working-out’ how to get off that career treadmill.

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In addition to IFA of the year, Martin has been shortlisted for social media adviser of the year and best blogger of the year.

The ninth annual Unbiased.co.uk Media Awards look to recognise the valuable contributions of individual advisers to the public image of independent financial advice and professional advice in general.

One of Martin’s roles at Informed Choice is media relations and he enjoys helping journalists with expert commentary and analysis for their features.

Last year, Martin spoke to over 500 journalists from the trade and consumer financial services press, ensuring that Informed Choice was featured in the national press on more than 120 separate occasions.

He is a prolific commentator in the industry press, where his opinions help to shape the direction of retail financial services and prompt healthy debate.

At the Media IFA of the Year Awards 2011, Martin was named best IFA individual and best social media IFA, with Informed Choice winning best IFA firm.

Our congratulations go to all of the shortlisted individuals and firms. Looking at the finalists for these awards, we are conscious that Martin faces some very stiff competition this year!

The awards will be held at a central London venue on the evening of 7th March 2012.

Of those planning to put off their retirement, around one-third say they do not want to stop working yet.

Two-thirds of those deferring retirement in 2012 say they are postponing their retirement because they cannot afford to retire at this time.

Despite these pressures on retiring on time as planned, early retirement remains an aspiration for many.

According to the survey, the average age of people planning to retire is age 60 and this remains unchanged from the survey last year. It is on average seven months younger than the planned retirement age in 2010.

This research raises a couple of important points.

Firstly, the current economic environment is making retirement an increasingly challenge practice in 2012.

Record low Gilt yields have driven down annuity prices. Falling stock market values have also depressed pension fund values, leaving less available to secure an income in retirement.

Secondly, plans for an early retirement need to be adjusted as life expectancy continues to improve.

A selected retirement date needs to be realistic. With all of us living on average for longer, it is no longer realistic to retire at age 60 unless you are prepared to build a substantial pension fund during your working life.

Retirement objectives differ between individuals. The old notion of ‘retirement’ as your 60th or 65th birthday where you finish work for the rest of your life is probably no longer realistic for most of us.

What is important is a robust plan for retirement which is integrated within your wider Financial Plan.

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The Consumer Prices Index (CPI) measure of price inflation now stands at 3.6%, down from 4.2% the previous month.

The Retail Prices Index (RPI) measure of inflation also fell, from 4.8% in December to 3.9% in January 2012.

VAT falling out of the calculation appears to have been the biggest contribution to these inflation falls.

In January 2011, the main rate of VAT increased from 17.5% to 20%. This had an inflationary impact on prices at the time.

CPI inflation now stands at a 14-month low, although it remains above the government established target of 2%.

Whilst there is little prospect of any interest rate rises this year, these falling inflation figures will bring some hope to savers who have seen the real value of their cash eroded in recent years.

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