Unions demand National Insurance hikes for top earners in exchange for rescuing Labour from bankruptcy

TRADE union leaders are drawing up a shopping list of policy demands - including tax hikes for the middle classes - in exchange for rescuing Labour from bankruptcy.

Senior union figures are highlighting 'cuddly' measures such as more flexible working rights and free school meals for all primary school children.

But behind the scenes they are also pressing for new rights to strike - and, most explosively, National Insurance hikes for middle earners.

The GMB union is understood to want the upper earnings limit on National Insurance to be abolished, making higher earners pay far more.

National Insurance is charged at 11 per cent on an employee's income between ?5,460 a year and ?40,040 a year, and 1 per cent on anything earned above that.

Gordon Brown will fiercely resist such a move as electoral suicide. But the unions are ready to flex their muscles at a time when the Prime Minister is politically vulnerable and the Labour Party is in desperate financial straits.

Gifts from individual supporters have collapsed in the wake of the cash-for-peerages affair and Labour's catastrophic slump in the polls.

With Labour almost totally reliant on them for funding, the unions want to push for a detailed list of policies in crunch talks with ministers next month.

Labour has had its annual accounts signed off by auditors and they have now been sent to the Electoral Commission for publication.

The figures will show that the party remains about ?20million in debt.

Party sources insisted the role of the unions in keeping the party solvent had been 'massively overstated'.

Instead, a string of wealthy businessmen who loaned the party millions of pounds are understood to have agreed not to call in their money now.

One party source insisted: 'As for this so-called list of union demands, it's made abundantly clear to anybody that gives us money that they don't get anything in return except a greater possibility of a Labour government.'

The unions are proposing several measures designed to appeal to Labour's core vote.

Unite, the largest union, suggests that employees are given more rights to flexible workplace leave.

The public services union Unison wants all primary school children to get free school meals and the GMB wants to instal environmental workplace 'shop stewards' to encourage green workplaces.

The GMB - headed by general secretary Paul Kenny - has already voted to cut funding to a third of the 108 Labour MPs it sponsors, saying they have failed to back its policies.

Union leaders are said to be wary of explicitly demanding traditional workers' rights at this stage, for fear of unnerving the Government ahead of next month's talks.

But Unite, which gave ?2million earlier this year to Labour, is also said to be preparing a campaign to overturn the ban on secondary strike action, which was introduced by Margaret Thatcher.

Other possible demands include a provision enabling unions to ballot their members by phone or email.

Yesterday former Labour Party treasurer Baroness Prosser warned the party's finances were 'a worse situation than we have been in ever'.

She claimed some donors had abandoned the party because they were only prepared to support 'something that's a winner'.

Lady Prosser said Mr Brown was 'not exactly a sunbeam' but insisted there was no alternative leader who could attract more donors.

Life Insurance - At last Children attained the Attention

Summary: Life insurance policies are available to cover the life of children. This article gives a first hand information regarding the advantages and terms of these policies.

Children avail least life coverage by insurance companies. All most all insurance companies have a few policies designated specifically for children . The objective of these insurance plans is to provide financial security to children, additional savings along with life coverage.

Broadly there are two types of children policies available in the insurance sector. In one type the child is the life is insured whereas other loan plan ensures the earning parent or guardian of the children. In policies like like Jeevan Kishore or Komal Jeevan( product of LIC) the child is the target audience. These policies are also considered as disciplined investment plans to make money at predetermined future dates. Being a conventional insurance policy, the monetary returns from this type of plan may not be such lucrative.

Other life insurance policies are available with few specific benefits for children . In all these insurance policies, the parent is the life assured. Some insurance companies offer plans where any one of the living parents can be the life assured and any one named as beneficiary of the sum insured. If there is an unfortunate event like the death of the insured the child or the appointee ( if the child still remains a minor) is paid the full sum. In such case, further premiums are waived. The insurance company owes the burden of paying the premium for the remaining tenure and at the end of the term the child receives another sum assured with full accrued bonus amount.

If the life assured survives till the end of the life insurance policy, the child is paid the maturity benefit as per policy terms and condition. These insurance plans are available as a conventional endowment type plan or Unit Linked Plan from most of the insurance companies. The most popular among the life insurance policies for children, are Jeevan Chaya from LIC and Smart Kid and Youngstar from Pru ICICI and HDFC SL .These insurance policies not only ensure that money is available to the child when required but also provides the financial assistance if the bread winning parent die premature. This policy is equally useful to parents who have more than one child. Such parents can manage with one policy and make the mother nominee who can ensure appropriate distribution of the funds.

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Parents cautioned against baby extravagances

HAVING a baby is one of life's greatest experiences but can also be one of the most financially frightening.
As well as the prospect of losing one partner's wage for weeks, months or even years, expectant parents have a multitude of new costs to think about.

Clothing, nappies, food, formula, furniture and childcare are among the items that need to be considered, but experts say that planning and shopping around can result in significant savings.

According to research released this month, four out of five Australian parents worry about baby expenses, a figure which includes households earning more than $100,000 a year.

The independent research commissioned by online shopping website eBay found that 87 per cent of new parents were confused about what baby items were a necessity and what were simply nice to have.

Two-thirds of parents bought more expensive versions of baby items and later wished they had shopped around, it found.

In South Australia, the biggest cause of financial stress was that the household was going to lose one income, followed by the fact that there are so many baby items to buy.

EBay's research also found that seven out of 10 South Australian parents admitted buying expensive baby items when they knew they could have obtained a better deal by shopping around.

The main reasons given for not shopping around were difficulty and lack of time.

EBay spokeswoman Sian Kennedy said baby goods was one of the most popular categories on its ebay.com.au website, with a baby item selling every 27 seconds.

Financial planner and author of How to afford a baby, Justine Davies, said planning ahead and shopping around were the keys to real savings. ``Shopping for baby can be quite emotive - it's one of the first experiences of parent guilt,'' she said.

``Wanting to do the best for baby though, doesn't have to mean spending the most.''

About Finance director Karen Bruce, who specialises in finance and lending for women, said when a baby was on the way, the extra pressure both financially and emotionally could be overwhelming if there was no plan in place.

"So much time is spent preparing for the birth and reading about pregnancy that it is almost an afterthought that financially life is going to be very different,'' she said.

"For many couples, going from two incomes to one brings about the realisation that budgeting is essential and a little planning would have gone a long way.''

AMP financial planner Darren James said extra stress could be avoided if people thought about family planning and financial planning as going hand in hand.

"There are so many things people should consider, such as the loss of an income and the addition of hospital and specialists' bills, and health, life and disability insurances to protect their loved ones,'' he said.

BANKROLLING TIPS

Money Editor ANTHONY KEANE asks the experts for tips on making the arrival of a new baby as financially painless as possible.

NEW parents have so much on their plate - such as sleep deprivation and coming to terms with a strange little creature that completely dominates their lives - that financial matters often take a back seat.

However, failing to plan for a huge variety of new expenses - not to mention the disappearance of one income, in many families for an extended period of time - can be very dangerous.

"I think many people have a `we'll be right' attitude and in fact they won't,'' said About Finance director Karen Bruce, who specialises in finance and lending for women.

"The decrease in income and extra costs associated once the baby is born is something that needs to be well thought out and planned,'' she said.

"Budgeting is always a good idea and even more so when you are looking after every dollar. I have advised clients to live on one wage for at least eight months before the arrival of a new baby, and a change in spending habits can ensure the adjustment is seamless.''

Ms Bruce said another tip was to visit government websites to work out your income entitlements for payments such as Family Tax Benefit A and B.

"Planning a post-baby budget needs to include all the extra costs per month, including nappies, formula, baby wipes, baby food, bottles, bibs and unknown costs like chemist trips and doctor visits,'' she said.

"I would estimate at least $50 per month at the chemist, not including money for nappies and formula.''

AMP financial planner Darren James said disposable nappies for a new baby would add about $30 a week to the grocery bill, or $1560 a year, while formula for bottle-fed babies would set parents back about $20 a week, or more than $1000 in the first year.

"The importance of re-doing the budget before the arrival of a baby can't be overstated - there is a lot more to consider than a new little mouth to feed,'' he said.

"A budget is the cornerstone of good financial planning and it can relieve some of the monetary stress surrounding this life-changing event.''

"Online budgeting tools can help people consider their income and how far this has to stretch to cover all expenses. Such tools will also assist people to work out what's really important and what could realistically be put aside to cover child-rearing costs.''

Mr James said new parents should make their savings work for them, by investigating different bank accounts that paid high rates of interest but still provided flexible access to their money.

"It may sound obvious, but people should only buy the things they need and can afford,'' he said.

"Careful use of credit cards is a must. By limiting spending and paying off the balance each month, people can avoid interest charges and reduce their fees.''

Financial planner Justine Davies, the author of How to Afford a Baby, said budgets were a boring but necessary part of preparing for maternity leave.

People should list all their baby-related expenses, she said.

"Start writing down what you will need, and look at some ways to accumulate them cost-effectively.''

Ms Davies also recommended people investigate available government assistance and also check their work-related benefits.

"There are certain benefits that you will have, irrespective of who your employer is, and these basic parental leave entitlements are covered on the government website www.workplace.gov.au.

"But in addition to legislated rights, your employer, if you are lucky, may offer additional benefits such as a period of paid maternity leave,'' she said.

Another important factor in financial planning for a new family is reviewing your insurances.

"If you have personal insurance cover such as income protection you may need to advise your insurer in writing that you are taking leave,'' Ms Davies said.

"Also, now that you are going to have a family you may need more life, TPD (total and permanent disability) and trauma cover as you have your child's care and welfare to consider in the event that one of you is disabled or no longer there,'' she said.

The biggest expense faced by most people - with or without children - is their home loan, and there are several strategies that can help people navigate mortgage payments and a new child.

National Australia Bank state general manager retail banking Ann-Marie Chamberlain said the most important thing was not to over-commit yourself at the time of taking out a home loan.

"This applies equally to all home buyers, but carries even more weight if you think you will be going from two incomes to one for a period of time,'' she said.

"If your budget will be stretched to the limit, it may be worth reconsidering how much you're prepared to spend on a home.''

Making voluntary payments off a home loan before the baby arrived could also help, Ms Chamberlain said.

"If you're far enough in front, this may give you the flexibility to lower your repayments for a period of time while you're living on one income,'' she said.

"Another option is to convert to an interest-only loan. This means you will only be required to repay the interest owing on your loan, which will lower your repayments. However, home owners do need to be aware that if they are only making interest repayments, they will not be reducing the loan principal.''