The following’s a transcript of a bonus episode of The Pension Confident Podcast - Pension tips from the experts. You can listen to this bonus episode or scroll on to read the conversation.

PHILIPPA: Hello and welcome to another bonus episode of The Pension Confident Podcast. We know how complex pensions can seem, so this time, we’ve rounded up 14 pension saving tips from the podcast so far. So, wondering how inflation and the cost of living impacts your pension, or what to do about your pension while you’re taking parental leave? It’s all here, plus lots more.

Just remember that anything discussed should not be regarded as financial advice. And when investing your capital is at risk.

Remember to follow and subscribe wherever you listen to your podcasts so you never miss an upcoming episode. Happy listening!

And let’s kick off with Damien Fahy from Money to the Masses with our very first tip of the series.

DAMIEN: OK, first of all, I’d say ‘engage with Auto-Enrolment‘, because as you said, it’s free money. And, I think, ‘you need to start now’, is the other tip. So, it isn’t about how much you put in, it’s the impact of starting to put in. It’s just the start, don’t think ‘that’s too little’. I think that’s the second one. And the third one is to ‘engage with it, manage it, look where your pension is invested, and make life choices about it’. Whether it’s about the risk or that you want to make a difference with your pension. So don’t just ignore it and think that it’s something that someone else will look after for you. That’s not the case if you’ve not got a financial advisor, which most people don’t. I think if you do all three of those, you’re probably going to be in a good place.

PHILIPPA: Here’s PensionBee’s own Martin Parzonka in our second episode, on the potential of your pension.

MARTIN: So, by putting your money into a pension pot, you can choose your investments and be invested in a range of assets, which could see rates of return above inflation. Now, past performance is no guarantee of future success. But it’s important to take these things into account.

PHILIPPA: PensionBee CEO; Romi Savova recorded with us in episode three. She shared her thoughts on what to do with your pension when you’re on parental leave.

ROMI: I think for women in particular, the most important thing while you’re off, is to keep the pension contributions going. Because again, those small differences - they seem insignificant at the time, but they become big problems later on because of the way that compound interest works.

PHILIPPA: Another parental leave discussion in episode 14. This time I was talking to Ellie Austin-Williams, Founder of This Girl Talks Money.

ELLIE: I’ve seen suggestions, which I think are great, suggesting that male partners could top up the pension contributions of the female partner while they’re off work, to make sure they’re not missing out.

PHILIPPA: We’ve talked about this on the podcast before. It’s an excellent idea and pretty much no one does it, do they? The higher earner, the person who’s still working should be paying pension contributions for the other person and why not?

ELLIE: Yeah.

PHILIPPA: Here’s Rachael Oku, PensionBee’s VP Brand and Communications in episode four on the advantages that pensions have over traditional bank savings, when it comes to passing on assets to your loved ones.

RACHAEL: There are also incentives when it comes to passing on your pension. So, with a pension, if you pass away before you’re 75, your beneficiaries can, in most circumstances, take that tax-free. And then if you’re over 75, your beneficiaries will pay tax at the nominal rate.

PHILIPPA: Being a personal finance podcast, we’ve obviously talked a lot about the cost of living crisis over the last year and a half. Here’s PensionBee’s Clare Reilly in episode five on how to think about savings in tough times like these.

CLARE: I mean, look, it’s so important to invest, if you can. Investments are going to grow faster than salaries. And at this time when we’re talking about all the measures the government didn’t do, you can still get tax relief on pension contributions and that’s still free money from the government.

PHILIPPA: OK, so enough about putting money away. Here’s episode 11 and Mark Smith, Head of Media Relations at the Pensions and Lifetime Savings Association (PLSA) on when to start taking your pension money out.

MARK: So, first and foremost you have to be 55 (57 from 2028) to start withdrawing from your pension. It’s not always advisable to start withdrawing at 55 because, if you want to carry on working and contributing to your pension, then you’re limited at that point. So first thing’s first, make sure you actually need the money, or that you actually want to start accessing the money.

PHILIPPA: So, don’t take it just because you can?

MARK: Don’t take it just because you can.

PHILIPPA: And again, on how to maximise that pot - here’s Mark Smith from the PLSA on episode 11.

MARK: It might be that you’re older, you’re closer to retiring and at that point you can take 25% of your pension tax-free. It’s a really good idea to pay off things like debt at that point. Paying off your mortgage might be a good way to set yourself up for a decent retirement.

PHILIPPA: PensionBee’s Clare Reilly talked in episode 16 about the need for an easy way to move your pension pot around seamlessly.

CLARE: PensionBee has, for many years, been calling for a pension switch guarantee to give people the ability to pick up their money and move it around the system. The way that you can do with current accounts or utilities. You’ve a right to move that money to another regulated provider. So keep trying, move the money and move it again if you find that the provider that you’ve moved to isn’t offering you the choice or the type of investments that you want.

PHILIPPA: In our first podcast recorded in front of a live audience, episode 17 was an expert panel debate on the relative merits of pensions vs. ISAs. It’s getting loads of downloads. Here’s a selection of some of the most useful moments from Money to the Masses Founder; Damien Fahy, the Financial Times‘ Claer Barrett and PensionBee’s Director (VP) Public Affairs, Becky O’Connor.

DAMIEN: Whatever you’re putting away, whether it’s into a pension or other savings, it’s not an on/off thing. You can dial down and dial back up. And I’ve used that analogy before - it shouldn’t be like a light switch, not on/off, but like a dimmer switch. So you can turn it down when you need to, but then turn it back up at a later point. If you turn it off, it becomes much more difficult to turn it back on. It’s a mental thing.

CLAER: I think that everybody needs to take a longer term view of how long their money’s gonna be invested for, regardless of the tax wrapper that it’s in. Whether that’s a pension or an ISA. What’s becoming the norm nowadays is that you don’t take all of your money out of the stock market at the point at which you retire. You leave it invested and you manage those investments and hope that you can generate enough income to live off those investments for longer and not exhaust them.

BECKY: I’d just say though, that financial advice comes at a cost and it’s one that a lot of people can’t actually manage even with the pension pot size that they might have when approaching retirement. So there’s something called Pension Wise, which is a free government guidance service, which is actually really good. It’s not full-on, very detailed financial advice that you’d expect from an Independent Financial Advisor, but it does go into some detail and it’s personalised.

CLAER: You can leave anyone your pension. It doesn’t have to be somebody you’re married to. My pension will go seven ways between my three stepchildren, and my four nieces and nephews. If you want the money to go to them, there are massive tax advantages in passing it to them. In some cases, if you die before the age of 75, the money will go to them tax-free or they’ll only have to pay the marginal rate of tax that they pay when they access the pot.

I’d say with both pensions and ISAs, you’re getting the most bang for your bucks. I’ve tried to explain pensions before to a group of school children, like a supermarket meal deal. So, you’re putting in the sandwich but then you’re getting the free money, which is the contribution from your employer, and that’s the drink. And then, because you’re not paying tax on any of that money and it can grow tax-free, that’s the packet of crisps that the government’s throwing in.

PHILIPPA: That’s it for this episode. Hope you found some useful takeaways to mull over. See you next time.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

‍

The following’s a transcript of our monthly podcast, The Pension Confident Podcast. Listen to episode 21, watch on YouTube, or scroll on to read the conversation.

PHILIPPA: Hello and welcome back to The Pension Confident Podcast. Now, you’ve probably heard of the gender pay gap and you may have heard us talk on this podcast about the gender pension gap. But did you know there’s also a gender investment gap?

Now, there could be many reasons why you don’t invest. Worries about risk, maybe feeling you just don’t know enough about investments. But the data tells us that gender can be a big factor too. The fact is fewer than half of women invest in the stock market compared to 66% of men. Investment website Boring Money reckons that adds up to nearly £600 billion more in men’s investment accounts than in women’s, in the UK. You heard that right - £600 billion. So why can women feel reluctant to invest? Is it about financial confidence, historical inequality or is it something else entirely?

Well, today we’re joined by a panel of experts who have all thought very hard about that. Ayesha Ofori is the Founder and CEO of Propelle; a financial education and investment platform that specifically caters to female investors. Hi Ayesha.

AYESHA: Hi, thanks for having me.

PHILIPPA: Next. We have Anna-Sophie Hartvigsen. She’s Co-Founder of Female Invest; a financial education platform that aims to close that financial gap between men and women. Hi, Anna.

ANNA: Hi, happy to be here.

PHILIPPA: And from PensionBee, here’s Independent Non-Executive Director; Lara Oyesanya FRSA, who as well as being a Barrister of the Supreme Court of Nigeria is also a Solicitor here in England. Very useful for us as she has plenty of senior leadership experience across various FTSE 100 and financial services companies. She’s going to share some of that experience with us today. Lovely to have you with us, Lara.

LARA: Hello.

PHILIPPA: Now, as usual before we start - do remember anything discussed on the podcast should not be regarded as financial or legal advice and when investing your capital is at risk.

So, should we talk about that investment gap? That £600 billion number that I mentioned. We’re talking about ISAs, private pensions and other investment accounts here. That’s from this Boring Money report last year. Were you all surprised by that number?

AYESHA: No, unfortunately. I spend a lot of time researching this and that’s one of the reasons that I set up Propelle - to try and address this issue. So unfortunately, I’m not surprised.

PHILIPPA: I think most people don’t know that though. Most women don’t know that.

LARA: I think that’s absolutely right. Although it’s not a surprise, it’s still a huge number. When you have it that stark, you stop to think, ‘really?’.

PHILIPPA: It’s probably worth asking at this point - does it matter if women don’t invest, Anna?

ANNA: It hugely matters because money is not just for buying things and having fun. Money equals freedom, power, independence and the ability to make the big decisions in life yourself, rather than having them dictated by your bank account. So, when women are falling financially behind, it ultimately means that we have fewer options in life.

LARA: I couldn’t agree more. And can I just add to that by saying it just limits your options? You have fewer choices if you don’t have that ability to make the same sort of investment decisions that men do.

THE FINANCIAL BARRIERS WOMEN FACE

PHILIPPA: When you look at the history of women and money, it’s not hard to see why we might still be thinking that money is men’s business. Did you know it was 1922, only 1922, that women in England won the right to inherit property? Before that, they had to give up all their property rights if they got married. It’s amazing, isn’t it?

AYESHA: Absolutely, and that’s not all. The Equal Pay Act didn’t come out until 1970. That was all about making sure that women were paid the same as men for doing the same role. And one could argue that the gender pay gap still exists. So, has it really solved anything?

ANNA: And then even after that, it took another five years before women were allowed to have their own bank account and before they were allowed to have a credit card for themselves. That was in 1975 which is just hard to believe.

PHILIPPA: It is. Do you know, this is the one that really amazed me? Women were only taxed independently of their husbands in 1990.

LARA: Yes indeed and I do have some personal experience here. I think it was around 1993 to 1995, thereabouts. I was trying to get some money from my bank and they said, ‘Oh, we need your husband’s consent to proceed.’ And I was thinking, as a professional woman in my own right - I’ve been a Barrister and practising Solicitor - ‘I still need my husband’s permission to manage my own financial affairs? No, thank you.’

PHILIPPA: Thinking about financial gaps. Do women just have less money than men generally to save or invest, or are they specifically choosing not to invest the money they have? What do you think?

AYESHA: It’s a bit of a combination of both. So, I’d say historically, one could argue that it was the case that women had less because of the gender pay gap. Because women often take time out to be carers, become mothers or care for elderly relatives, for example. And so if women are working for a smaller period of time and earning less, then you could say that they have less money at their disposal to actually invest. But if you look at the data, and depending on where you go, the stats are indicating, particularly in the UK, that women’s wealth is increasing. Some say that by 2025, 60% of UK wealth is going to be controlled by women, which is absolutely fantastic. But if that money is being saved and not invested, then that’s a problem.

PHILIPPA: Are they saving it though? Because I do wonder whether women spend their disposable cash on things like family holidays. If they have kids, they’re spending it on stuff for the kids. It’s more of a domestic thing.

AYESHA: I think women do save and absolutely versus men, women save much more. I think it’s because they feel more comfortable with saving, and investing is something that they haven’t been exposed to as much. And in some cases, women actually think that when they’re saving they’re investing, and that’s not the case.

LARA: I think there’s probably another element to that which is how we’ve, kind of, been conditioned to believe we’re the person that holds the family together. You have to be the responsible one. And one of the things you’re thinking is - when times are difficult, you need to have a nest egg somewhere. But that nest egg is very much in savings rather than investments.

PHILIPPA: So you can get at it?

LARA: Yeah, so you can get at it. But that’s so 70s, that’s so 80s. Now you have a lot of young professional women that are in jobs, if you look at law, for example, you have people in their early 20s as lawyers that have qualified at age 23, 25. They’re earning six figures.

PHILIPPA: So thinking about younger women then, if we had a woman who was, say, 27 years old, she’s got some spare cash. Is she far less likely to invest it than a man in exactly the same position as her, earning exactly the same salary?

ANNA: Yes, she is. And there are two main reasons for that. The first one is just looking at the financial industry, it’s historically been built by men. Today, the vast majority of power positions are held by men and that’s reflected in the culture, in the products, in the communication, all of that, which just isn’t built for women. So that’s a problem in the financial industry. Then, just looking at the rest of the world, we live in a world where inequality starts so early. It’s very well documented that little girls get less pocket money than little boys. Parents are more likely to talk to their boys about how to build wealth and to girls about how to save. When we go through school, we read literature written by men. We get paid less. There are fewer role models. The media portrays women as spenders and not investors. Even when we go down to our bank, it’s so well documented that women get different advice. We’re more likely to be advised to save rather than invest. So that just means that at every single point in our lives, women are treated differently when it comes to money, and stereotypes around women and money are just enforced everywhere we look. So of course, women are less likely to invest. The interesting thing is that when they then do invest, they actually get better returns.

LARA: I have two daughters, they’re lawyers and they say, ‘Oh mum, but it’s too difficult, it’s too technical. How do we go about it?’ So I think there’s a lot to be said in terms of education - making is simple.

PHILIPPA: I want to get into that. But first, I want to go back to that thing that Anna said about pocket money because I think that’s really interesting. I think there’s a sense that this all starts really early for girls. Girls, on average, get 20% less pocket money than boys, don’t they? And I’m wondering, does that play into the way we feel about risk? Because if boys have more cash, they can splash it around, they can risk it. Whereas if we have less, we need to be cautious.

ANNA: But I don’t think having less money necessarily makes you less likely to take risks. I think it’s a confidence gap, because there are so many men who aren’t in a great financial situation who invest anyway. And my hypothesis would be that when you look at who invests in crypto or who tries to be day traders, there would be a lot more men who have less financial knowledge and don’t make as much money, but they still invest. I think it just comes down to role modelling, unconscious bias and stereotyping, and women falling victim to that even though they’re brilliant with money once they get the confidence.

LARA: Or could it be because men have more time on their hands? They’re not multitasking.

PHILIPPA: Because women are doing the second shift when they get home?

AYESHA: Potentially, but I think that, just going back to the topic of risk, one thing that we say is that women are risk aware versus being risk averse. What we mean by that is if you give women information about the risks, about the investments, and they can understand it and make informed decisions, they’ll still go ahead and invest if something’s higher on the risk spectrum. It’s more a case of women wanting to have more information. I’d say men sometimes would potentially have less information and still jump in.

LARA: Absolutely. And this huge responsibility of, ‘I can’t afford to be reckless if I know that I have to hold the family together’ or, ‘I have to make sure that I have a nest egg’.

HOW DO WE GET WOMEN TO INVEST?

PHILIPPA: So, exploring the idea that women are prepared to do it as long as they know what they’re getting into and attitudes to risk. Because, as the data says, women have a lower willingness to take risks than men. It’s 82% for women. It’s 69% for men. What are good ways to understand risk when we invest? I think that’s the barrier, isn’t it? What are the elements that we need to think about when we’re thinking about our risk appetite? There are things like age, aren’t there?

AYESHA: Absolutely. It’s things like age, it’s investment time horizon. The longer you can invest or the longer your money can be an investment, they say typically you can take on more risk because you have the time to withstand any downturns in the market. But one interesting thing that we’ve looked at, particularly when it comes to women, is what are the main drivers behind what they feel about risk? We digested it into several key components. But two interesting ones are what we look at as financial risks - how much you can afford to lose? And then what we call more the psychological risk - how much do you feel comfortable losing? The gap, with women, between those two things is much greater. So, even though women can afford to invest in something and actually take on the risk, they just don’t feel comfortable with it. And so they’re more likely to go with how they feel rather than what they can actually afford to do.

PHILIPPA: That’s really interesting, isn’t it? That distinction.

AYESHA: Yeah, I always say the best thing to try and deal with is to just start. If you can actually start investing - even if it’s a small amount, and get comfortable with it - as you start to get the documentation through, you can start to read them and become more familiar. Then eventually, you can start to invest more and more. It’s about dipping your toe in and experiencing it.

PHILIPPA: Just going back to that thing about women understanding they can afford to lose the money but still not wanting to. I’m intrigued by the motivations there. Is it that we look further down the road in life than men? That we’re thinking, ‘Yeah, I don’t need it now, but I might need it later’. Is it about anxiety? What’s that about? Why are we worrying about that more than men?

AYESHA: I think it’s because when you save, the idea is that whatever money you put in, you go back at a later date and you get that money back out, it’s still there.

PHILIPPA: And you don’t necessarily do that with investing?

AYESHA: Exactly. With investing, you put money into an investment and you’re expecting it to grow over time, but equally it could fall. So you’re not necessarily going to get back what you put in. I think it’s the comfort levels around that, which is what potentially skews women more towards savings than investments. It’s knowing that it’s still going to be here. Yes, it may be less than if I’d invested, but it’s still going to be here, and that’s what we need to work on.

LARA: I think that’s absolutely right, but there’s also what I’ll put in the category of value proposition. Because when you think, ‘I don’t know whether I’m going to make the money, I might lose it. Is that of value to me? Should I be risking it? Yes, I’ve got the money, but why would I want to lose that?’

PHILIPPA: So we’re more worried about losing it than we are excited about growing it?

LARA: Yeah, I think it’s still part of this responsibility idea. That you look at yourself and think, ‘is that actually a responsible decision to make when I might lose it?’ Compared to, ‘Ok, it’s not earning a lot of interest’.

PHILIPPA: So obviously, on this podcast we’re not in the business of telling women they should risk their money if they don’t want to. But, we touched on financial education. And I think that’s the issue here. I don’t want to tell women they need to educate themselves, but I think we do know that if we understand what we’re getting into, we’re more likely to at least consider it. Would that be fair enough to say? So, when we think about financial literacy and education, you’re all in that business, what sort of tools are you offering women?

AYESHA: So we’ve started by offering financial courses that are very comprehensive, that start at very fundamental levels, but that also become more complex. We want to cater to women who have never invested before, but also those women who may have started, but have gaps in their knowledge. We’ve also built a lot of financial tools and calculators to help make the education more practical. We see that as a great first step to investing. But what have you guys done?

ANNA: So we’ve done a lot of the same. We use role models, we talk in a language everyone can understand. Not on a lower level, just without the jargon. And then, we also make it about more than money, because I think for a lot of women, they aren’t necessarily comfortable saying, ‘I want more money’ or ‘I want to build wealth’. So we make it about freedom, we make it about independence and we make it fun. We use a lot of humour in our content as well. I think that’s really worked to engage women who never thought they’d be interested in investing, but then suddenly they’re drawn in, they feel comfortable. They see so many women who look like them and before they know it, they have an investment account.

PHILIPPA: Is that another gender difference then? That women don’t want to say, ‘I want to invest to make money’. They’re thinking, ‘I want to buy this, I want to do that’. It’s about what you can do with the money rather than the money itself.

AYESHA: Yeah, we’ve definitely seen that. And so, the way that we’ve actually built our investment platform is what we call ‘goals based investing’. Because when you ask women why they want to invest, nine times out of 10, they have very clear goals in mind. ‘I want to be able to buy a house in X years. I want to be able to send my children to university. I want to go part-time in X years and still have the same sort of income’. Very, very clear goals. If that can be tied into investing, it makes it much more appealing. That’s what we found.

PHILIPPA: How do we reach a wider breadth of women?

ANNA: So I think we all play a role when it comes to engaging more women in the world of investing. From the media who should be using more female experts, so that you see women talking about money. The banks and financial institutions need women in positions of power to shape products, communication and company culture. Parents and the education system - both primary schools and universities - and bank advisors, who right now give women different advice. So I think we all have a role to play.

LARA: I think that’s absolutely right. And if you look at PensionBee, for example. Look at the amazing way they’ve debunked pensions - the colours they use and the simple language that’s used.

PHILIPPA: Pensions are a great thing to talk about in this respect, because obviously, pensions are investments. But I think perhaps a lot of people, not just women, don’t think of a pension as an investment. Because you know you’re going to get something out of a pension, that’s kind of the deal. Is that where most women are actually investing but they don’t quite understand they’re already investing because they’ve got a pension?

AYESHA: Absolutely. I think a lot of people don’t see it that way. We work with a lot of corporate clients and one of the first questions I always ask is, ‘Put your hand up if you’re saving’ - lots of hands go up. ‘Put your hand up if you’re investing’ - a lot of hands come down. ‘Put your hand up if you have a pension’ - the hands go back up again. So, you can see that they don’t see it in the same way. But also, when it comes to pensions, I still think there’s more work that needs to be done, because we’ve found that when we say, ‘OK, do you know where your pension is? Is it in the default option? Is it in something else? How much money do you have in it?’ - very few people know the answers to those questions.

PHILIPPA: And the power that you have to actually do good with your money as well. Obviously, we’ve talked about impact investing on this podcast before. We’ve talked about ethical investing and green investing. There’s all these issues which are certainly discussed by women or might be an issue for women. And that’s a place, your pension, where you can actually do something actively yourself, can’t you?

ANNA: And not just, ‘Can we do something with our pensions?’, but, ‘We absolutely have to do something with our pensions’ as well. We just wrote a book actually, on the topic, and while I was writing this book, I was researching and what I found was shocking. I knew things were bad, but it was even worse. The good thing is that women are much more likely to be change makers when it comes to social impact and environment. That’s great. The not so great thing is that we aren’t represented anywhere in positions of power. The only way that we can influence these decisions is if we start using our money as power and start setting demands to the companies we invest in, and so on.

PHILIPPA: OK. Here’s another question for you - is there a sense that investing is just for the rich? Do you think people don’t understand you can start really small?

AYESHA: I often say, ‘Do you have a pound?’, ‘Well yes, obviously’, ‘Well, then you can invest’ and then they, sort of, give me blank stares. But, start small, it doesn’t matter if you don’t have a lot of money to invest. The beauty of investing is compounding. And what that means is that over a long period, you’re getting returns on your returns and it adds up quite substantially.

PHILIPPA: So, best ways for women to dip their toes in then? I mean if you were just starting. Say you had £10 a month, £20 a month tops. What would you do with it?

ANNA: Invest it. And if you don’t know what to invest in, because no one knows what will happen in the future, then just lean on history. Historically, since the first stock was traded more than 400 years ago in the Netherlands, the stock market has always increased in the long run if you have diversified, which means to invest in a lot of different things.

PHILIPPA: OK. Before we get too carried away, I’m going to talk about things that might trip you up, like fees and charges. So, what should women be looking for there?

AYESHA: So, fees are absolutely one of the key things to look out for. Now, companies should be making their fees very transparent. But if it’s something that you can’t find or you’re not able to easily calculate what you’re being charged, then you absolutely have to ask. Because the numbers might not seem like big differences, but again, over time it matters.

PHILIPPA: Well, they work on percentages, don’t they? So this stuff ramps up. These are significant sums of money.

LARA: To add to what you’ve just said, is the fact that if you’re selecting your own investments, the fees are cheaper compared to if somebody else is making the selection or managing it for you.

PHILIPPA: It feels quite daunting.

AYESHA: It can, but it really doesn’t have to be. There are, absolutely, some funds out there that are actively managed by fund managers and therefore will have higher fees because there’s a team of people somewhere actually making decisions. But there are funds out there such as exchange traded funds (ETFs) that have significantly lower fees because they’re passive funds. So, you can still get a wide range of diversification through funds like that, but the fees tend to be quite low. Again, a great place to dip your toe in.

PHILIPPA: What was the first investment all of you made? I’d be really interested to know. Anna?

ANNA: So, my first investment was in a very famous Danish company, one of the biggest ones that we have. And the reason why I invested in that is that I was 19 years old and knew no one in the world of finance or investing. So it was just one of the only companies I’d heard about when you talk about stocks. So that’s what I bought.

PHILIPPA: What prompted you, at 19, to invest? I’ve got to say I wasn’t investing at 19!

LARA: Me neither!

ANNA: So, I’ve always been interested in money. I started working when I was 13, actually, and I’ve done every blue collar job you could imagine. From sandwiches, to kindergarten - doing whatever, I’ve done it. And that meant that I’d actually saved up a decent amount by the time I was 19. Then when I was 19, I learned about something called an interest rate and something called inflation. The combination of those two meant that the money I worked so hard to earn was losing value in my bank account and I just couldn’t live with that. So I had to do something. What I did first was, I booked a meeting with my bank advisor because I wanted to buy an apartment, because you hear about people buying property. She actually agreed to do a meeting with me and it was around a full hour. She even prepared a powerpoint slide. It was just her going through all of the reasons why I could absolutely not buy an apartment because I didn’t have enough money for it. I just ended up apologising, thanking her for her time. And then I went back and I said, ‘OK, what can I do with less money?’ And that’s how stocks came into the picture.

PHILIPPA: I love that woman. I’ve got to say you were 10 years ahead of me. I didn’t get to any of this until much, much later on.

AYESHA: Same with me. I bizarrely found investing quite late. It’s ironic because I was a wealth advisor for quite a long time, so I spent my time advising other people how to invest and I wasn’t doing any myself.

PHILIPPA: You’re kidding me? That’s really shocking!

AYESHA: Absolutely shocking. But I think it’s something that we touched upon earlier as well. It was just not having the time. My job was incredibly demanding and then I had a young family. Yes, I knew how to invest but it was always, ‘I’m going to do it, I’m going to do it’, and just never got around to it until what, I think, was far too late. But the good news is that I did.

PHILIPPA: And what did you start with?

AYESHA: I was doing quite risky things. My first investment, actually, was in a Russian bank, but I bought something called call options. But, the most mainstream investments I made were in property. I went into property in quite a big way.

PHILIPPA: Residential property or commercial property?

AYESHA: Residential property, and I built up a portfolio that was able to give me financial independence. And actually, that’s how the idea for Propelle came about - because I got to that position where I was thinking, ‘Oh my gosh, other women need this’. But I said that I completely appreciate that not all women have deposits, so can’t go out and do it in the way that I did. So, how can we make it fractionalised in such a way that women with less money can also invest in property. And eventually, we found a way to do it. The first thing we started to offer was helping women to invest in property type assets from as little as £100, and then Propelle, kind of, just grew from there into other asset classes as well.

PHILIPPA: We’re impressed. I’m hoping Lara started smaller than that!

LARA: I started late. Mine was totally safe and secure, through workplace financial advisors that chose all the stocks and everything. Which actually, frankly, this was in the early-90s, late-80s and it did really, really well. Because those sorts of stocks were going up at the time and it was a time of privatisation, everything was happening.

PHILIPPA: So it was a good time?

LARA: Yeah, it was great. And that kind of gave me the confidence to invest in property and then pensions, and all that. So, it’s about having a well diversified portfolio.

AYESHA: There’s one thing that I would like to say. When I did start investing, people would say, ‘Oh, you’ve missed the boat’ or ‘The market has just gone up’, ‘Oh, it’s not the right time’, ‘You should wait, you should wait’. My view is if you’re going to start investing, which means you should have a long-term time horizon, just start.

PHILIPPA: What do you mean by long-term time horizon?

AYESHA: For me, anything less than around three years is not an investment. And in some cases, people say it’s five. So you should have at least a three to five year time horizon in which you’re not expecting to have to use that money.

PHILIPPA: So, we’re not talking about quick wins here? That’s really clear.

AYESHA: Absolutely. This is about building long-term wealth and investing over a period of time. So, if you need that money within three to five years, then it’s probably not going into your investing pot.

LARA: You’ve got to prepare for the highs and lows because everything is subject to market movements, which you don’t have control over.

AYESHA: And you can’t predict.

PHILIPPA: We’re running out of time here. I just want to ask though - it does seem to me that as women, we need allies in this, don’t we? And I’d be interested to know just a quick line from all three of you. What should men be doing to be our allies? What do you want to see from the financial services industry and what should the government be doing? You can have one each. I’m going to start with Anna.

ANNA: So, I think the first thing that men should do is to just zip it and listen! I think when groups that we don’t belong to describe problems that they’re facing that we don’t experience ourselves, that we can’t relate to - then instead of defending or reflecting by saying that, ‘That can’t be true, that never happened to me, I wouldn’t do that’ - just listen. Take it in and then take accountability, not just for yourself, but also for the groups that you belong to. So when you see some of that behaviour that you just heard happening, then you step in and you hold other men accountable. But I think the first step, and this is so underrated, is just listening.

PHILIPPA: Got it. Lara?

LARA: To me, I think it’s the recognition of the increasing power of women in terms of purchases and being decision makers. They have a lot of money to spend. I think that recognition and then developing products and services for them. And creating the proper regulatory framework for women to dip their toes into investing.

AYESHA: And I think it’s about the government starting with investing as early as possible in schools, in primary school even.

PHILIPPA: Education?

AYESHA: Absolutely, like with my daughter - I teach her about investing. Her tooth fell out the other day and she told her friend that she’s going to use the money to put in her investment account. I was really proud.

PHILIPPA: How much are you giving her?

AYESHA: Remember, it doesn’t matter how much you have, it’s starting small and just being consistent.

PHILIPPA: OK. Well, I’m gonna wrap this up. But finally, if women aren’t convinced that this is something at least worth looking at, should we end on some numbers? Now, investments vary enormously - we can’t say this too often. But say I had started investing, say £20 every month, 20 years ago. Ayesha, if I’d invested that money, what might I have now, potentially?

AYESHA: So, it really depends on your risk tolerance and also the rate of investment. I’m gonna sort of give an answer, but there are caveats around it. But if you were, say, medium risk and you invested it for that period, it could have grown to potentially £8,000 or thereabouts.

PHILIPPA: It’s a lot of money. And if you just put it in the savings account? Had just played it safe?

AYESHA: Around £4,800.

PHILIPPA: Ok. So considerably less. And under the mattress?

AYESHA: Well, even less because even savings accounts today still give you something. I think the important thing to mention and to think about is inflation. Anna, you mentioned this before with your own story.

PHILIPPA: It would have gone backwards in terms of what you could buy with it?

AYESHA: We can see money but we can’t see inflation, so we often forget about it. But it’s really important to remember that it erodes your money. So you have to make it work for you wherever you can. You have to put your money to work.

PHILIPPA: OK. I’m just gonna say again - remember those figures we mentioned, they aren’t guaranteed returns. It’s very important to remember. Investments can go down as well as up. So, what we’re gonna do is we’re gonna put all that information in the show notes for this episode. You’ll find it on your app and we’ll put some links in there for you to check out the calculations for yourself. Thank you very much everyone. A fantastic discussion and so much to think about.

We’ll be back next month looking at why it costs so much to rent a home right now. A very hot topic!

Finally, just before we go, do remember anything discussed on this podcast should not be regarded as financial advice. When investing your capital is at risk.

Thanks for listening.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

‍

The following’s a transcript of a bonus episode of The Pension Confident Podcast - personal finance tips from the experts part two. You can listen to this bonus episode here or scroll on to read the conversation.

PHILIPPA: Hello and welcome to another bonus episode of The Pension Confident Podcast. In this second special we’ve got more personal finance tips from the wonderful experts who have appeared as guests on the series so far. Keep listening for their best tips on managing your finances - whether you’re self-employed, starting a family or looking to get on the housing ladder.

Just remember that anything discussed on this podcast should not be regarded as financial advice or legal advice. When investing your capital is at risk.

And stay up-to-date by following and subscribing to the series wherever you find your podcasts. Happy listening!

To start us off, here’s Emilie Bellet from Vestpod in episode three - talking about planning ahead for kids.

EMILIE: So, I think when you’re planning for a family, it’s really important to have this conversation around, ‘OK, who’s going to take time off and when?’ Plan a bit for your finances, what’s going to happen. Because very often women do this on their own and they’re going to look at, “OK, how much time am I going to be off work? How much will childcare cost?”, and they’ll compare this to their own salary. They’ll make a decision and say, “OK, I’m not going to go back”. So, I think it’s trying to look at joint incomes, and how much you can pay for childcare, and see childcare more as an investment rather than a cost. But I think it’s really important to have these difficult conversations beforehand.

PHILIPPA: Next we’ve got Peter Komolafe from The Conversation of Money, in episode 17; all about pensions versus ISAs. He’s talking about turning your pension saving off and on again.

PETER: I always say this; what’s gonna help you sleep better at night? If, like Damien said, you’re at this point where, actually, the roof over your head’s the priority, then you have to make a tough decision. And it may be that the right decision at the time is to turn it off and stop contributing to your workplace pension. But you have to be mindful that you’ve got to turn it back on again.

PHILIPPA: Here’s Claer Barrett; The Financial Times (FT) Consumer Editor on self-employment in the same episode, number 17.

CLAER: Say you’re paid £1,000 for a job, then you’d probably wanna put at least 20-25% of that money away for the tax bill that’s eventually gonna arise. That trips up a lot of people. But then maybe put another 10%, as Damien was saying, into an accessible place where you can reach it. Maybe an ISA, maybe premium bonds - you could win a tax-free prize while it’s sitting in there. But then, if you can live without it for a year, then it’ll give you more confidence that you could actually lock it up into a pension, or invest it for the long term using a Stocks and Shares ISA.

PHILIPPA: Peter Komolafe again talking about the tax benefits of ISAs.

PETER: ISAs are great, because we’re talking about how ISAs and pensions can converge and interact with each other. One of the great things about ISAs and why people often get attracted to them is because you get the flexibility that comes with it. You can access the money as and when you want to, right? But, when you think about using an ISA to generate an income, it’s also tax-free. So you’ve got that added benefit as well, unlike pensions where you’ve got to pay income tax on it.

PHILIPPA: One of my favourites; Ellie Austin-Williams from This Girl Talks Money, and Paul Infield; a Barrister and Spokesperson for legal assistance charity, Advocate, in episode 14 on paying attention to the small print when you buy a home with someone else.

ELLIE: Even from a very basic perspective, if you’re buying the property together and discussing whether you’re buying as tenants in common or as joint tenants - it’s a big decision. Especially if you’re putting in different amounts of money towards the property, then you might want to discuss whether you should look at being tenants in common so that you’re represented proportionally rather than down the middle.

PAUL: Can I just explain the difference between those two?

PHILIPPA: Yeah.

PAUL: Joint tenancy and tenancy in common have nothing to do with renting, by the way, even though the word tenancy appears in both. A joint tenancy means, effectively, that you both own the whole thing. Though people sometimes prefer to think of it as a 50-50 split. And you can only have two people in a joint tenancy. Tenancy in common is when you own in different proportions. So as you say, if you’ve put in different amounts of money, you can actually set out - normally in a declaration of trust, when you buy the property - who owns what. That’s one way of protecting yourself, but that’s a conversation to have when you’re buying the property.

PHILIPPA: And PensionBee’s own Head of Content; Brooke Day analysing her own financial personality in episode 13.

BROOKE: I always kept talking about wanting to buy a house in London, I really wanted to live in London. But it felt like this pie in the sky dream and I would say, ‘oh I’m single, I’m never going to do that’. I was just sort of kicking the can and the responsibility down the line. When I meet someone, that’s when I’ll take this goal seriously and I’ll start saving. And I remember just one day having a word with myself saying, ‘This is ridiculous. Why am I pinning this moment that I want on waiting for somebody else or something to happen, that may or may never happen?’ Then I went and opened a Help-to-Buy ISA and I started to take savings seriously. I had this end goal in mind, that I was gonna achieve. Knowing what I was saving for and that I was the one responsible really empowered me to make it happen.

PHILIPPA: And here’s Scott Mowbray from Snoop in episode five on why it’s so important to set yourself a monthly budget.

SCOTT: That’s why I always start this type of conversation with - you must have a budget. You must know what your finances look like - what’s coming in, what’s going out, what’s left afterwards, if anything? And for those that are on lower incomes, if there’s nothing left, you need to go and claim every single benefit you possibly can.

PHILIPPA: And finally, Claer Barrett from the FT again in episode 17 with some words of warning about taking cash out of your Lifetime ISA.

CLAER: If you want to crack open your Lifetime ISA and get the money out - you can, unlike a pension. But you’ll lose that bonus and you’ll also lose some of the money that you put in as a penalty. So, you have to be absolutely sure that you can live without it.

PHILIPPA: That’s it for this episode. I hope you found some useful financial nuggets. See you next time!

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

‍

The following’s a transcript of a bonus episode of The Pension Confident Podcast - personal finance tips from the experts part one. You can listen to this bonus episode here or scroll on to read the conversation.

PHILIPPA: Hello and welcome to a bonus episode of The Pension Confident Podcast. This time, we’re sharing personal finance wisdom from some of the brilliant guests who featured on the podcast so far. So confused about compound interest? Need help with budgeting? Keep listening for simple explanations on those two, and hear our guests discuss credit ratings, ISAs and more.

Just remember that anything discussed on the podcast should not be regarded as financial advice and when investing your capital is at risk. And remember to follow and subscribe to the series wherever you find your podcasts so you never miss an episode. Happy listening!

First up, it’s a friend of the podcast, Damien Fahy, Founder of Money to the Masses. In our launch episode, he laid out one excellent reason to save money into your pension pot.

DAMIEN: Because this is a wonderful world of pensions - that you get a Brucey bonus from the government. Yes, free money. So, if you ensure that you claim back the tax relief that you’re owed, then you will actually reduce the amount it’s costing you out of your net pay. That’s your take home pay, that’s what most people are concerned about.

PHILIPPA: Here’s one for the entrepreneurs and wannabe entrepreneurs listening in. It’s Ken Okoroafor, from episode four with a smart plan for maxing out his pension contributions.

KEN: Well exactly, this is actually a really important point, because a lot of people I know who run - lots of my friends are entrepreneurs now. You tend to hang around people who do what you’re doing or something quite similar. A lot of them don’t actually know that within a limited company, if you’re registered as a limited company, you can set up your own pension, and your business can contribute into that and it’s 100% tax deductible.

PHILIPPA: Einstein called it the 7th Wonder of the World. Yes, it’s that magical force of nature - compound interest! And here’s The Money Whisperer; Emma Maslin, explaining how it works in episode eight.

EMMA: Compound interest’s where your interest earns interest on itself. So, if we leave our money in the bank and allow it to grow with the power of interest. If you leave the money that’s there to continue to grow, it acts sort of like a snowball effect. Now, we live in a society where we’re encouraged to consume, consume, consume. So we end up not leaving our money in the bank to do this. If we could encourage and educate children to do this, and certainly if I’d have learnt that when I was younger and not spent so much on going out, and handbags, and shoes, I think I’d be in a better position now!

PHILIPPA: And in episode five, Lynn Beattie, aka Mrs MummyPenny talked about how much she regrets all the interest she missed out on because she just didn’t know how compound interest worked.

LYNN: If I think back to when I was in my 20s, I didn’t put any money into my pension in my 20s because I just felt like the future was too far away. But then when I got into my 30s and 40s, my mindset changed dramatically. But then I’ve lost out on sort of the compound of those pension contributions. So there’s nothing that can compare to a pension.

PHILIPPA: Onto episode 13 and Mr MoneyJar, Rotimi Merriman-Johnson on how the wonders of AI are helping his savings pot to grow.

ROTIMI: When it comes to saving, just set up that standing order to your separate savings account and let it run.

PHILIPPA: It’s not a decision, it just happens?

ROTIMI: It just happens using budgeting software which automatically categorises your spending. You just need to review and check it. I do that every week. I like relying on tools and things outside of me, systems that can help me make good decisions.

PHILIPPA: As the cost of living crisis hit home, we’ve talked a lot about how to spend less and save money on the podcast. And in episode 14, Ellie Austin-Williams laid out some of the ways savvy single people could dodge all those unfair added costs that singletons often have to shell out when they travel alone.

ELLIE: Buddying up with people’s a good idea. You don’t have to be in a couple romantically to benefit from sometimes splitting costs. So asking people, if you’re going to something like a weekend away, if you can split the costs, if you can share a ride. There’s sharing hotel rooms as well. Things like hen parties or weddings are expensive to attend as a guest a lot of the time, but if you’ve got another friend or an acquaintance who’s going, who’s single, why not just get a room with two single beds and share the cost?

PHILIPPA: We all lust after a perfect credit rating, but lots of us don’t have one for one reason or another. That can make it harder to access all sorts of financial products like loans and mortgages. In episode 15, Nina Mohanty, Co-Founder of Bloom Money, told us about the horrifying moment she realised that a case of mistaken identity was badly affecting her credit rating.

NINA: I came to realise that one of the credit rating agencies, I’ve no idea why, said I had a terrible credit rating and the other two said I was in good standing. I started going through and I realised that it had my address as a place that I lived three or four years ago. So whatever was going on with that particular residence was negatively affecting me. There’s usually a link on the websites of the credit rating bureaus where you can file a correction. It’ll take ages and it’s very paperwork heavy, but I highly recommend having a quick audit and looking to make sure.

PHILIPPA: We’ve already heard about Rotimi Merriman-Johnson’s reliance on AI to do his saving for him. In episode 17, the Financial Times‘ Consumer Editor, Claer Barrett, celebrated just how easy it now is to open a Stocks & Shares ISA compared with the complicated process she had to go through in her 20s.

CLAER: I was always put off opening a Stocks and Shares ISA as a young worker because I didn’t know where I could get one, and I also didn’t know how I’d make the decision of what investments to put in it. But nowadays it’s much, much easier with the different investment platforms that you can open ISAs on. There’s even apps where you can open a Stocks and Shares ISA which have made it much more user-friendly for people to find, maybe select a risk weighting that they’re comfortable with, even answer a questionnaire about the sort of investing they’d like to do, and get going.

PHILIPPA: Easy to open, but not always that easy to choose which ISAs are right for you. Peter Komolafe, in episode 17, told us how important it is to weigh up the risks of each type of ISA before you take that plunge.

PETER: One of the key things that people often make a mistake on is not understanding what type of ISA they want to go for. I think it’s really important to understand how they work. Cash ISAs, Stocks and Shares ISAs, Lifetime ISAs. Particularly when it comes to things like Stocks and Shares ISAs, you can’t get away from the immutable fact that you’re going to have some investment risk with it and you shouldn’t underestimate that. It’s a great vehicle in terms of potential growth, but the downside to that is also very, very real.

PHILIPPA: Peter, again, hammering home the point that the risk’s very real, especially if you’re hoping for, or relying on short-term growth.

PETER: I see a lot of people looking to get on a property ladder with a Stocks and Shares Lifetime ISA, that want to buy a house in three years time. And I think the risk’s too high. Do you want to potentially lose your deposit on the stock market? I think that’s really important to understand.

PHILIPPA: That’s it for this episode. We hope you found some useful financial nuggets. See you next time!

Listen or watch any of the episodes mentioned above and stay up-to-date with all of our new episodes. And if you’re enjoying the podcast? Don’t forget to rate and give us a review! As always we’d love to hear your suggestions and feedback.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

‍

The following’s a transcript of a bonus episode of The Pension Confident Podcast - The best of our guests with Philippa Lamb and Lucy Greenwell. You can listen to this bonus episode here or scroll on to read the conversation.

LUCY: Hello, I’m Lucy Greenwell. This is a voice you haven’t heard before. I’m the Series Producer on The Pension Confident Podcast. We’ve covered a lot this year from money personalities and relationships to sharing how not to run out of money in retirement and where to start financially planning for parenthood. We’ve had some brilliant guests from CEOs to campaigners, barristers to financial influencers along with some of our favourite in-house PensionBee experts. So today we’re doing something a little bit different. We’re turning the mic around to hear from our host, Philippa Lamb about some of her favourite moments from this series so far.

So Philippa, every month, we get to learn about the personal financial journeys of our guests, but we never get to hear much about the person asking the questions. So why don’t you tell us a little bit about how you ended up so interested in personal finance?

PHILIPPA: Very nice to see you on this side of the glass, Lucy! I will. But honestly, if you’d asked me when I was 21 if I could see myself as a personal finance journalist 10 years later? I would’ve laughed. I was so feckless about money. I just spent everything I earned. I ran a constant overdraft which just crept up and up. I have to say, by the time I was 31, I had grown up a bit. I’d got married, we’d bought our first place and you know, just like now interest rates were high and they were getting higher. We were really on a knife edge with the payments every month.

So it got personal for me. I was already a business journalist and really luckily for me, I got the chance to move on to a daily personal finance slot on BBC Five Live. I loved it! Talking to real people about their finances, holding organisations like banks and building societies and insurers to account when they behaved badly. I was learning all sorts of useful lessons from expert guests. It was so great. It really felt like it mattered to the people listening. I was so hooked.

LUCY: And the rest’s history?

PHILIPPA: Exactly.

LUCY: Well, let’s hear a bit more about some of the personal stories that we’ve heard from our very many guests over the past year. Which one has been your favourite? If you can pick!

PHILIPPA: Do you know? This was actually really easy for me to choose. It was the CCO at the Financial Services Compensation Scheme (FSCS), the marvellous Lila Pleban. She talked so honestly about how she got buried in credit card debt when she got divorced. You know, that really rang a bell with me because I remember so clearly all the sleepless nights I had as a newly single parent worrying about money when I divorced my first husband.

LUCY: Yeah, that was in episode nine, wasn’t it? That was all about money and mental health. Let’s hear a clip of it.

LILA: The big time in my life was when I got divorced. If I’m honest, I quite quickly found myself without a roof over my head, without any bank account because everything had been frozen. But I think it was the spiral that happened after that really got me into quite a pickle, if I’m honest. Not checking my bank account, the credit card started to be used. I started to build up a credit card bill, because I was comfort shopping, trying to keep the visage of being in control and being successful, but I wasn’t. I was completely and utterly falling apart and it really came down to a crunch, really at one point, and I had to face it. It took some time to figure it out, and it took some time to pull myself out of the hole. But I totally relate even now, I really struggle to use my credit card. I fear that I’m going to build up another big debt. I pay my bill off every week, because I’m so frightened of it getting any bigger than a little bit and when it does, I do panic even now many, many years later.

PHILIPPA: Let’s talk a bit about how to protect yourself and learn coping strategies, things we need to know about managing this burden of money worry, because it’s not like it’s going away. What is the first useful step you can take if you think stuff is getting out of control? Money’s getting out of control?

LILA: I’ll draw on my personal experience for this one, and I think it’s about facing it, and looking at it and really being honest. I hid away from my money worries, and they weren’t going anywhere, but downwards. So I think it’s about really facing into it and talking to somebody about it.

PHILIPPA: So taking stock?

LILA: Taking stock and just being really honest with yourself. I was only able to take some practical steps to help myself, once I really faced into what was going on.

PHILIPPA: Isn’t she great?

LUCY: Yeah, I love that one.

PHILIPPA: Another of my favourites was Founder of The Money Whisperer, Emma Maslin. She was on episode eight. She talked about the gender pension gap where women so often end up with far, far lower pensions than men.

LUCY: Yeah, it was all about how to teach our kids about money, wasn’t it? Well I’ve got kids, so I was listening very, very hard. Emma was really clear that she’s not prepared to have a gender pension gap for her daughters and she’s already started saving for them.

EMMA: I’m determined that my children will not retire with a gap in their pension compared to their life partner, if that’s a male. In order to do that, I’ve set them up with a pension. I’ve written about it on the PensionBee blog as well.

LAURA: So, this is a Junior SIPP, a Junior Self-Invested Personal Pension?

EMMA: Correct. Now anybody can set up a Junior SIPP for a child. They can pay in up to £3,600 a year. Now I’ve put in that small amount for my children. They’re both under the age of 10. I’m going to do nothing else with it and I’m going to let that grow over time for the next 50 years. I’ve told them this. I’ve told them that they’ve got some money sitting there, but they can’t touch it for 50 years. And it’s going to give them a nice big healthy pot, which, by my rough calculations, and assuming that money kind of doubles roughly every 10 years, they could potentially be sitting with a £100,000 pot by the time that they’re close to 60. And that’s the gap that we look at between men and women’s pensions when they hit that age. So, I’ve done my bit for my children to try and help them with the gender pension gap.

LUCY: Smart woman! I haven’t set up a pension for my kids yet.

PHILIPPA: You know she’s just an excellent mother, don’t you?

LUCY: I know. I’m feeling a bit of a mum fail! You’ve covered so much ground, when you sit back and look at it like this. There’s so much we’ve covered across the series so far. And one of the things I’ve really loved about making it, is that some of the stories that have come out in the studio have been really quite unexpected.

PHILIPPA: I know. Do you remember episode 15? We were talking about financial inclusion. We had Nina Mohanty, Founder of Bloom Money and the Head of Communications at the Financial Services Compensation Scheme (FSCS), that’s Emma Barrow. And they were sharing stories from their own lives about how you can end up with a bad credit rating even if you’ve done absolutely nothing to deserve one.

LUCY: Yeah, I do remember that. It goes to show, doesn’t it? It’s really worth understanding the dark arts of credit ratings because your credit score, you know, can trip you up big time at a certain stage.

PHILIPPA: Nina, you talked about credit ratings at the top of the podcast. As you said, it really damages people’s ability to access financial services. That might be because you’ve fallen into debt in the past, which is kind of a separate issue. But it’s that thing about a ‘small credit footprint’, I think it’s called. And that’s a lot of people isn’t it?

NINA: Absolutely. I think often about my mother-in-law, she was briefly a farm secretary and then took over running the household, and I believe she had a joint account with my father-in-law. So she never actually established a credit file for herself.

PHILIPPA: So she’s invisible?

NINA: She’s credit invisible. And it wasn’t until one day she decided, ‘I want to have a credit card, I want to have a bit of agency in this household’. The options that were available to her were predatory quite frankly. There are everyday people who are credit invisible because they perhaps have never tried to get credit.

PHILIPPA: Young people for example, when you leave home you’re credit invisible, aren’t you?

NINA: Exactly.

EMMA: And again, culturally, if you grow up in a less wealthy household, credit can be seen, and was definitely seen in my family, as a very bad thing. You didn’t borrow money. You saved and you lived within your means. So when I went to university, I remember being terrified of getting a credit card because it was drummed into me that you don’t borrow money. Because it’s scary and you mightn’t be able to pay it back and then bad things happen.

NINA: Funny that you had that reaction because in my experience, and I’ve spoken about this publicly before because I’ve gotten over the shame of it. When I went to university in the USA, the banks could still set up shop on campus and say, ‘come and get a credit card’ to any random person on campus. Now they can’t anymore thanks to the Credit Act. But I was offered a credit card and I thought, ‘amazing, free money, I love it’. And of course, I didn’t read the small print, which said it’s 0% interest, but only for 18 months. And so here I was going, ‘free money, la la’, buying the most ridiculous and unnecessary things, especially since I was living in a dorm, and then realising, ‘uh oh, I have to pay this back’. And by then it had snowballed. I think at its peak, it was about $10,000 of credit card debt. And it followed me around. I’ve talked about this before but there’s so much shame that comes with it. I thought, ‘right, I’m never touching credit again’. But then when I moved here I thought, ‘well I’ve got to get a credit card, haven’t I?’ to build that credit score!

EMMA: It’s weird.

NINA: It was a bit traumatic actually, applying for that credit card and thinking, ‘oh gosh, I’ve got to lock it away or put it in a drawer so I don’t use it’.

PHILIPPA: Hey, it’s me Philippa, just interrupting briefly to remind you to click on that subscribe button so you never miss an episode of The Pension Confident Podcast. Remember to share, rate and review too. And now I’ll leave you to enjoy the rest of this month’s conversation. Happy listening!

LUCY: I was thinking that The Pension Confident Podcast’s all about making personal finance simple for our listeners. You’ve covered personal finance for ages now. But has there been any episode in particular that has taught you something that you didn’t know?

PHILIPPA: Oh, yeah. I mean, you never know everything do you? There’s always something new and I tell you, there’s one episode that really stands out for me. And that’s episode six and it was about Shariah investing. Now, I’ve got to admit it wasn’t a subject I knew much about at the start. And it was really fascinating. Here’s CEO of Islamic Finance Guru, Ibrahim Khan, explaining what Shariah investing is and just how closely it can overlap with socially responsible investing.

IBRAHIM: So Shariah investing’s really just looking at the two words. It’s, you know, Shariah-compliant, so it’s compliant with Islamic law. What that actually means is you look at the Quran and the sayings of the Prophet Muhammad, peace be upon him. And then investing, is just investing in line with those rules and regulations. So in a nutshell, that looks like not investing in things that, you know, generate interest, or gambling, or investing in alcohol or pork. These will be like the really obvious ones, and then there’s some others that are under the surface and a bit more technical.

PHILIPPA: Okay. So Shariah-compliant investments, they have different criteria, completely different criteria from, say, fossil fuel free investments, but you would still classify them as socially responsible.

IBRAHIM: I think there’s a really strong overlap between the two. But there’s still a difference.

PHILIPPA: So yeah, so the crossover is, I mean, it’s directly excluding certain sorts of companies, and also its business practices as well, isn’t it?

IBRAHIM: Yeah, absolutely. So if, you know, a company is, I don’t know, involved in, let’s say, the war in supporting Russia in some way, shape or form. That could be, you know, a clear question mark.

PHILIPPA: So there’s judgments involved?

IBRAHIM: 100%.

PHILIPPA: That was all so interesting. But what about you, Lucy? I mean, you produce the podcast, you must’ve learned something along the way?

LUCY: Honestly, producing this podcast has actually transformed my personal finance landscape.

PHILIPPA: Has it really?

LUCY: Yes.

PHILIPPA: Or are you just saying that?

LUCY: No! First of all, within a few months of making it, I upped my pension contributions by 25%.

PHILIPPA: Did you?

LUCY: Yep, which is really quite unaffordable sometimes. But I know it’s the right thing to do. So I’ve stuck with it so far. I’ve also shifted half my pension into an ethical investment off the back of PensionBee’s Chief Engagement Officer, Clare Reilly’s episode in which she told us all about ethical investments, which really kind of pricked my ears up. And also, I had Junior ISAs for my children which were cash so I thought they were safe as houses. I’ve transferred those into a Junior Stocks and Shares ISA - which I’m really glad I did.

PHILIPPA: Because it’s a long-term investment, isn’t it? They can have a higher risk profile.

LUCY: Yes. I just kick myself that I didn’t do it earlier now.

PHILIPPA: But even I would have done the same.

LUCY: Yeah, you felt it was, kind of, more stable but it was just shrinking slowly. So, yeah. I sit in the gallery, at the other end of the studio, with Dani, David and Brooke - who’re the PensionBee team - listening and it really is interesting. We kind of sit there and go ‘oh, that’s interesting, oh, wow’.

PHILIPPA: I love that. I mean, you’re all people who know about personal finance but you’re learning stuff every time. It’s so great.

LUCY: We’ve had guests in a wide array. I haven’t totted up how many guests we’ve had on the podcast so far, but a lot. And they haven’t just been from a finance background. They’re from all walks of life. So who have we had that’s been surprising and not necessarily from the background you’d imagine?

PHILIPPA: This is easy! Barrister and Spokesperson for the free legal assistance charity Advocate. This is Paul Infield in episode 14.

LUCY: He was so lovely.

PHILIPPA: Wasn’t he? Now, we were talking about how your relationship status can impact your finances and he told us how unmarried women in so-called common law marriages -

LUCY: Meaning they’re not married but they live together?

PHILIPPA: Yes. They can end up with literally not one single penny if their relationship collapses. Even if they’ve had kids with that partner. Now, I already knew they were vulnerable but I hadn’t realised it could be that catastrophic. It was shocking.

LUCY: Yeah, I tell you what, in the gallery that day you could feel the air crystallising. We couldn’t believe it. I had no idea. Let’s hear a bit of that.

PHILIPPA: Every woman needs to hear this.

PAUL: Well let’s start off by talking about simple cohabitation. Let’s face it - over half the people in Britain now, who live together, are not married or in civil partnerships. They’re cohabiting without the benefit of legal ties. I say the benefit of legal ties because I do actually think there are benefits to the legal ties. There are a lot of people out there who think that they have some legal protection if they’re cohabiting for a period of time.

PHILIPPA: The common law idea? Is it anything? Is it a reality?

PAUL: No, it never has been. Certainly not since 1753. And there’s a controversy about whether it existed before the Marriage Act of 1753. Every now and again I end up with, normally a woman, sitting across my desk talking about common law marriage. She’s been living with a man for say 20 or 30 years. She’s brought up his kid, she’s given up her own career to do that, the children have left home and he has now left, perhaps run off with somebody else, and I have to tell her that she’ll get nothing. That the law doesn’t provide for her.

PHILIPPA: Literally nothing?

PAUL: Literally nothing. If the house is in his name, as it very often is, and the children are gone, she gets nothing.

LUCY: You want to tell all your friends about that, don’t you? So horrifying.

PHILIPPA: I did tell all my friends about that. It really matters. It’s horrifying because this could be middle aged women with nothing, no home and no cash. It’s shocking.

LUCY: Unbearable. Do you remember Ellie Austin-Williams? She was talking about this really bad period in her life when her relationship ended. She was sharing a flat with her boyfriend, wasn’t she? And I think she’d let him money and the relationship ended and she had to write off the money -

PHILIPPA: - The loan.

LUCY: The loan, yes. But also she was left saddled with the rent.

PHILIPPA: Two rents. Because she had to rent a place for herself and she was still committed to the rent on the place they’d had together.

ELLIE: Yeah, so I think this is probably the biggest lesson that I’ve learned. Before I met my current partner, I lived with a previous boyfriend and I lent him a significant amount of money. You can probably guess where it’s going. The relationship broke down and I needed to cut ties. So I had to walk away and forget about the few thousand pounds that I had lent him. Luckily I was in a position where my family could help me, but it was a really messy time financially. We had a rental agreement, so I had to move out and pay rent somewhere else whilst also paying rent on the place we shared. But, I always say to people that it was the best thing for my mental health at the time and I wouldn’t change that. Sometimes you’ve gotta just cut the losses and walk away.

LUCY: An eye opener. And I have to say, we’ve played a few clips that’ve been terrible moments for people, but we have a real laugh on the podcast too. You do, and we laugh through the glass too.

PHILIPPA: We do. And I really like that about this podcast.

LUCY: We’re in the second year of the podcast now.

PHILIPPA: It’s good, isn’t it?

LUCY: Looking ahead to next year, what would you like to see covered in series three?

PHILIPPA: Ok, I’ve thought about this and I want to do an episode about renting. So I grew up in London and I worked here for years. I remember just how much of my salary went on rent before I bought my first flat. Then obviously it went on mortgage payments, but it was rent before that. Now, of course, I keep reading news stories about how much more unaffordable renting is now, even than it was back then. Most people, as I understand it, are spending up to about 30% of their monthly income on rent. In London, it can be more like 35- 40% or even more. That’s a huge problem for a lot of people, particularly in the cost of living crisis. I’d really like to do an episode about that.

LUCY: It’s a really good idea. What about dream guests? Because I’ve got one. I’ve always loved Merryn Somerset Webb. She’s a Financial Times columnist and the Editor at MoneyWeek. And she wrote this book, a long time ago that I remember buying and reading in my early 20s it was called Love Is Not Enough. It was about women and money and it taught me, to be honest, it taught me all the things that my parents hadn’t and my school hadn’t. She taught me to think about finances and not to rely on some fictional man that I might, or indeed might not, meet.

PHILIPPA: A valuable lesson that one.

LUCY: Who would yours be?

PHILIPPA: Oh, there’s so many. But this is The Pension Confident Podcast, right? Pensions are always on our agenda. So top of the list for me would be the woman with responsibility for the whole sector. Parliamentary Under Secretary of State for Pensions and Financial Inclusion, Laura Trott. Laura, we’d love to have you on the podcast!

LUCY: Let’s get booking!

PHILIPPA: Oh, yeah!

Listen or watch any of the episodes mentioned above and stay up-to-date with all of our new episodes. And if you’re enjoying the podcast? Don’t forget to rate and give us a review! As always we’d love to hear your suggestions and feedback.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

‍

The following’s a transcript of our monthly podcast, The Pension Confident Podcast. Listen to episode 18 here, watch on YouTube, or scroll on to read the conversation.

PHILIPPA: Welcome to The Pension Confident Podcast with me; Philippa Lamb. Now, back in episode 11, we talked about preparing for a happy retirement. This month, we’re going to talk about spending rather than saving. What’s the best way to manage your money once you retire? And how do you make sure you don’t run out?

Picture the scene: you’ve been saving into your pension for years. Finally, the day has dawned and you’re there, you’re retiring. But there’s a cloud or two on your horizon. You don’t know the smartest way to start withdrawing your retirement cash and you don’t know how long you need to make it last. So to run through everything you need to think about when you start withdrawing a pension, I’m joined by three expert guests. Mark Jones is Product Director at Legal & General Retail. Hi Mark.

MARK: Hi.

PHILIPPA: Next, we have a returning guest and a good friend of the podcast, Financial Journalist and Founder of Much More With Less; Faith Archer. Nice to see you again Faith.

FAITH: Hello, good to be back.

PHILIPPA: And also back for another appearance, PensionBee’s Head of Product; Martin Parzonka. Hi Martin.

MARTIN: Hi. Good to be back as well.

PHILIPPA: As usual, before we start, please do remember that anything discussed on this podcast should not be regarded as financial advice and when investing your capital is at risk.

So everyone, it’s a big day when you retire. I know we’re not there yet. But after all those years of working and saving, it feels like it’s going to be a day to celebrate. Have you ever thought about what you might do the day it happens?

FAITH: You see, I think I’m not entirely sure when I’m going to retire. Because I’m a freelancer, I think I’m envisaging a much more phased retirement, so I might switch to working part-time rather than full-time.

PHILIPPA: So there won’t be that one day?

FAITH: Maybe there will be. Maybe on the submission of that Iast article. I think for me, going out for a big lunch because I wouldn’t normally do that on a working day. That’s something I’d look forward to.

PHILIPPA: Yeah, that’s a nice idea.

MARTIN: I think that rings true. I don’t really see retirement happening because we’re all gonna have to work a bit longer, right? When I quit, or ‘mini-retired’ from my career back in Australia, the first thing I did was sleep in, that was it.

PHILIPPA: We can all identify with that.

MARK: Perhaps I’m a little closer. So I’ve thought about it a little bit. I’m a natural optimist. So, I have this wonderful idea that my retirement will coincide with Wales playing at the Rugby World Cup, and I’ll go out there and watch them lift it for the first time.

PHILIPPA: That’s obviously going to happen as well.

MARK: Absolutely, guaranteed.

PHILIPPA: I hope it does. It’s gonna be a big disappointment otherwise.

A lot of us are just thinking about retiring sooner, aren’t we? Since the pandemic, the number of people in their 50s and 60s who aren’t working has gone up by over a quarter of a million. And as I understand it, for more than half of them, that’s because they’ve decided to retire. So, we do all need to think a bit about when we might stop working. But it’s this question about predicting how long we’re going to live? If you don’t know that, how do you know how much to spend and when?

MARTIN: You can predict it. There’s a thing called death-clock.org on the internet, you can plug in some details. I’ve got about 42 years left, according to that.

PHILIPPA: Oh, that’s so grim!

FAITH: Yeah, well I must admit, I hadn’t heard of the death clock. I just went to the boring old Office for National Statistics. I’m 52, so it reckons my average life expectancy is 87. But, I’ve got a one in four chance of living to 95, or a one in 10 chance of living to 99. I don’t particularly want to get to 87 and realise, ‘oops, I’ve run out of money’. So I’m basically planning, just assuming that I’m going to live to 100. That’s the basis I’m looking at. It’s a lot of years ahead to be planning for.

MARK: It absolutely is. I’m an Actuary by trade, we create some of these numbers.

PHILIPPA: Death clock’s all about people like you then!

MARK: I mean, some people define Actuaries as those who know when you’re going to die or make sure people are dead on time and all those horrendous ideas. But it only works on maths, as you say. It’s all proportions, it’s all percentages. So no one knows how long they’re going to live for. And more importantly, though you run the risk of running out of money, there’s also a risk of not spending it and enjoying it. So it’s a really big decision, whichever way you look at it.

MARTIN: That’s a really good point. I think using 100, it’s an easy number to remember. So, planning for death at 100 makes sense for a lot of people. Like you said Mark, people may not spend and enjoy their money, but I guess that’s also part of legacy planning, right? You might think about how much you want to leave to people when you do move on. So there’s a lot of things to take into account.

PHILIPPA: Well, there are because if you’re looking at another 10 years, beyond what you might actually live. I mean, that’s a substantial reduction in what you’ll spend every year, isn’t it?

MARTIN: Yeah, it is.

MARK: And it depends how much you want to spend. Most people have big plans when they retire and they assume they’ll be spending less as they get older. Then potentially, they may want to think about long-term care of some variety at the back end. So it’s possible that your spending potentially goes back up.

MARTIN: People don’t think about how much they have to spend on care later in life. I reckon that’s gonna be a miss for a lot of people. Humans have an optimistic bias naturally, right? And they forget about the bad stuff that happens. I’m going to need someone to look after me when I get to that age, potentially. That’s why it’s important to take care of yourself now. But I think there‘s a gap for people thinking about that and financial products to suit longer-term health care.

HOW TO ACCESS YOUR PENSION MONEY

PHILIPPA: Okay, so we definitely need to think about this, as we’ve just established. But Faith, you can’t just take your pension money when you feel like it. So can you just remind us what the rules are?

FAITH: Well, to be fair, in the brave new world of pension freedoms, if you’ve got a defined contribution pension, you can take the money when you reach the age of 55 (rising to 57 from 2028). But, I wouldn’t necessarily recommend you do that. Because I think what a lot of people forget is that your pension isn’t exactly the same as a savings account. You can only take 25% of your pension savings out tax-free. The rest’s taxable. So if you’ve decided, ‘right, I’m going to take that whole lot out in one year’, it could push you up the tax brackets, so you’d pay far more in income tax than you need to. Than if, for example, you’d spread your withdrawals over several years.

PHILIPPA: Now, there are various ways you can start taking that money when you retire. Should we kick off by explaining what they are and how they work? And then I would like to take a look at the pros and cons of those. So Mark, should we start with annuities? Shall we just say what an annuity is? It’s a financial product, you buy it, when you retire?

MARK: You buy it when you retire. People get concerned about annuities. They think they’re very complicated. But in the simplest terms - you have a lump sum you pay and for that lump sum, you’re told you’ll get an amount of money until you die. Whatever happens to you, whatever happens to your health, whatever happens to the economy, whatever happens in the world, it’s an absolute guarantee of a fixed amount of money that carries on.

There are options that you have. So, you can have it increasing. You can have it so it’s guaranteed to last a number of years, even if you die early. You can have it so it goes to a spouse when you die. All these are elements that’ll impact the price. So, you’ll get a little less each month. But more important than anything else is the really simple idea of - you pay this amount of money that you know and you get this amount of money that you know until you die.

PHILIPPA: So Faith, what’s drawdown? How’s it different from an annuity?

FAITH: With an annuity, you hand over a big lump sum in exchange for guaranteed income. With drawdown, you hang on to your money. So it stays invested in the stock market and then you have the freedom to decide how much you withdraw and when. That means you benefit from growth, but potentially there’s that risk that if you spend too much, you could run out of money.

PHILIPPA: Okay. Pros and cons to choosing?

FAITH: I think for me, one of the big pros about an annuity’s peace of mind. You know what’s gonna happen, you’ve handed over your lump sum and you know your income isn’t going to run out. Unless you choose an annuity that only lasts for a certain number of years, it’s going to continue for as long as you live. I guess the good news is that annuity rates are linked to interest rates, we’ve seen interest rates increasing. So now you get more income than you used to.

PHILIPPA: Yes, because for a long time annuities haven’t looked like a very great deal haven’t they? Because interest rates had been so low. But they are really healthy now.

FAITH: They’re looking more healthy, but still, if you go for the drawdown option - where you leave your money invested and choose how much you take out and when, you’re the one that benefits from any investment growth, if you’re being optimistic. You hope the stock market will continue rising, that your fund will grow, and if you don’t gouge enormous sums out of it, that the money will last you.

So it gives you a lot more flexibility and a lot more control. With an annuity, because you know what you’re getting, there’s no flexibility if you have a phased retirement. So if you take out an annuity while you’re still working, you might end up paying more tax. With drawdown, you’d have the flexibility to say, ‘you know what, I’m just going to take small sums when I’m working part-time, and then I’ll ramp up and take a bit more later on’.

MARK: And the other option, of course, is you don’t have to do one or the other. One of the things that’s becoming perhaps more thought about these days, is that you can use an annuity to guarantee a level that makes you comfortable, gives you the peace of mind referred to and then maintain some in a drawdown state, such that you can then benefit from investment growth. And perhaps be a little bit more adventurous in your investment choices, because you do have that guaranteed underpin.

PHILIPPA: Okay, so you’re not spending your whole pension pot on an annuity, you’re chopping a chunk of it out for that and then being a bit more flexible with the rest?

MARK: Yes, depending on how much you have in your pension pot. If you’ve got a pension pot of over a million pounds, then you’ve got an awful lot more freedom and less concern about not being able to cover the basics in life.

MARTIN: There’s these new products being kicked around, I think. I only found out about this yesterday. Our Director of Public Affairs reached out to me and said, ‘hey, what do you think about these?’ It’s called decumulation pathways, and I thought she was talking about investment pathways, which is a Financial Conduct Authority (FCA) initiative. Is this potentially confusing to the consumer? Probably, I was confused. I thought we were talking about this other thing.

PHILIPPA: And you know about this stuff, so that’s not great, is it?

MARTIN: So, decumulation pathways are where you do get the annuity and flexi-drawdown blend. And so, it’s proposed to the consumer and there’s some modelling that’s done that they set aside a flexible amount. So how much do you want to have the flexibility of leaving invested. Like you said, it can grow or decrease depending on the markets. And then you do have this guaranteed element. Now, the guaranteed element is pooled with other people that buy the product. So, it’s kind of like an insurance product where other people’s funds are put together. So people that die earlier than expected forfeit their funds and those that live longer than expected, do better. Well, they have the guaranteed element paid out to them. So it measures the longevity risk, or accounts for longevity risk by pulling funds. So it’s interesting, complicated, but interesting.

MARK: I think that’s what it comes down to. It’s the level of simplicity against complication. Possibly the easiest way to think of the most of the old fashioned with profit funds, because that’s effectively what this is. And with profit funds worked very, very well for a long period of time.

PHILIPPA: Just remind us how they worked.

MARK: Again, it’s what’s called pooling of risk. So the idea is everyone pays in the same amount and depending on what happens, you get paid different amounts out. So that if someone dies early, they won’t get as good a value as someone who lives longer. So you’re basically…

PHILIPPA: Gambling on how long you’re gonna live!

MARK: Yeah, well, I suppose we all are, all the time in that respect. But I think that’s the big element. The simplicity against complexity. For some people, they’ll make absolute sense, they’ll get very comfortable with that. For others, they want absolute simplicity. The one bit I would really be keen to get out is that annuities nearly always have the option of being underwritten. So they’ll take account of your lifestyle and your state of health. It’s really, really important that you answer those questions. Because depending on your lifestyle, for example if you smoked, or if you have smoked, you can get a better value annuity.

PHILIPPA: And that’s, just to be clear, because they think you’re going to die sooner.

MARK: Absolutely. That’s the reason. It’s a pure economic piece. Obviously, if you take out an annuity when you’re older, you’ll get better value. Because you’re older, you’ve got to live a shorter lifespan. But also there’s a higher probability of you having something that you can put on this underwritten annuity and therefore get better value as well. The con side of that, of course, is at what age do you want to be making these financial decisions?

PHILIPPA: Yes, when you don’t know what sort of situation you’re going to be in and what state of health you’re going to be in if you leave it that late.

MARK: Absolutely. It’s about how much confidence you have.

MARTIN: I think what’s key there’s just starting early. No matter what product you choose, at the end of the day, whether it’s an annuity or flexible drawdown, start thinking about it as soon as you can. Start putting money into the pension, getting that beautiful tax relief from the government to top up your pension pot. And then you’ve got options. You can make the choice when you need to make the choice and you’re a bit more flexible with it.

PHILIPPA: Is it fair to say people have been frightened of annuities in the past? Because it’s this business of how do you choose which one to go for? You have to shop around for one, don’t you? And I think people don’t feel equipped to do that. How would you do that?

MARK: Part of the regulations now mean that if you go to a provider to purchase an annuity, they’ll take you through the quote or you’ll do it online and you have the opportunity to try all the different options, and see the impact. If another provider would then give you better value for that, the provider you’ve gone to will tell you that. So it’s a far more transparent piece. So you’ve got confidence about whether you’re getting the best price for the choice that you’re making.

FAITH: I mean, let’s face it, people are becoming much more accustomed to shopping around for different financial decisions. If you think about comparing car insurance, home insurance, mobile tariffs and so on.

Annuities are another financial product where you can look for help online from a financial advisor or from the person that provides you a pension if they offer annuity options. So I think people are getting a greater level of comfort and it’s absolutely worth shopping around and comparing what you can get. I think people may have had concerns about annuities because it’s a big decision. You’re handing over a big chunk of money that you’ve saved up over decades in return for an income that’s potentially going to take you through the rest of your life.

PHILIPPA: And you cannot change your mind. Once it’s done, it’s done.

FAITH: Once it’s done, it’s done. But I think the comfort for me - you were talking about potentially making the decision in later life. And I think I can imagine if I was 55, 65 - I’d be quite happy having a chunk of money in drawdown, keeping an eye on the stock market and thinking about how much I should or shouldn’t take out. But later in life, when I’m 75 or 85, I’m not sure I want to be worrying about that. So I could imagine delaying an annuity purchase until I’m older and iller. I’m gonna get more income and I don’t want the hassle of looking at investments and managing them. And so, having that combination over time.

MARK: We did some research and we found just shy of a million people; 990,000, when over the age of 55 and still at work, were now considering annuities for the first time. That’s on top of the 828,000 in that category who already were. So it’s more than doubled. I think it’s largely because of the interest rate rises which mean you get better value. But I think there’s been more discussion in the media about it. I think people are getting a little bit more comfortable with the idea that it’s not that one thing’s good and one thing’s bad. There’s a more nuanced and better coverage of this subject in the market.

PHILIPPA: Yes, as Faith says, people are getting used to shopping around, aren’t they?

HOW TO MAKE A PENSION WITHDRAWAL PLAN

PHILIPPA: So, we know what the options are and we know we need a withdrawal plan. Shall we get into how you make one? Because there’s this big mindset change, isn’t there? When you’re switching from saving to spending. And it’s quite difficult to know how to make your money last.

FAITH: I think it’s a huge mindset change. I know I’ve spent quite a lot of my life making sure I put decent amounts of money into my pension. I’m now counting down the years until I can retire. I’m quite hopeful I might be able to quit before I reach the State Pension age. Part of me is like, ‘Yes, I can get hold of that money and go travelling. The kids will’ve left home. I’m out of here!’

PHILIPPA: She sounds quite pleased about that, doesn’t she?

FAITH: Oh yes, I’ve got lots of plans. But on the other hand, there’s that kind of doubt, if I blow it all by going around the world and having that new kitchen. There’s not really gonna be much left with my 100 year forecast. I think if you have spent so much time saving, then the actual reality of spending it can be a big decision. I think I have a concern that people will have so much fear about running out of money, that they won’t take enough money to enjoy their retirement properly.

PHILIPPA: Yeah, it’s an understandable anxiety, isn’t it? A horrifying thought to think you might not have enough when you’re really old.

FAITH: But horrifying if you end up on your deathbed thinking, ‘Oh my God, I’ve got all that money left. It’s just going to my children! But I could’ve been living it up’.

PHILIPPA: This stuff’s not easy is it? So, shall we think about spending sensibly? How you reach those sorts of decisions. Because obviously, as you say, you don’t want to blow the cash, but then you don’t want to end up sitting on a huge cash pile when you finally die. So Faith, the costs you need to cover when you retire. Most things that stay the same, don’t they?

FAITH: There’ll be some things that stay the same. You can certainly do some kind of budget, looking at what your costs are now. Your basic bills: council tax, water and electricity, that kind of thing. You can also have a serious think about what costs might change. If by the time you retire, you’ve finished paying off your mortgage. If you, for example, wouldn’t have the same commuting costs or the cost of smart clothes for work. Thinking of it over time, the ‘U-shaped’ spending pattern. I’ve seen it described as the ‘go-go years’, ‘slow-go’ and ‘no-go’. With go-go, you’re doing all the travelling and the eating out, and all the stuff you love. Then with slow-go, perhaps your health isn’t so good, you can’t do so much. And then no-go, when suddenly your money’s going on care costs.

PHILIPPA: The other thing that occurs to me’s that we’ve seen some very turbulent economic years recently. We’re talking about pre planning here, but global events like the invasion of Ukraine and the cost of living crisis - these are things you can imagine happening, but they are hard to plan for. But you do need to factor in some element of unexpected downside when you think about all of this.

MARK: Practically impossible to plan for, isn’t it? That’s, I think, where the personality comes in as much as anything else. The people who’re willing to accept this will happen. There’ll be good times, there’ll be bad times. Some of the bad times might be very bad. Some of the good times might be very good. As opposed to those people who really don’t want to worry about any of this. That don’t want any risk at all. And those people who say, ‘well, I’m willing to take some risk, but I want that underpin’.

MARTIN: Yeah and just assume inflation’s going to happen, right? We’re seeing a massively high rate of inflation at the moment. But over the long term, it’s been about 2% or 3%. And the central bank’s target is 2%. So, most online calculators will factor that in. When you make your plans, think about what you need to set aside to cover it. There’s also the sustainable rate of drawdown that’s purported of 4%. Do you guys buy into that? So, if you assume you’re going to get 4% on average return on your investment. So, drawdown 4%. year on year, when you’re on the other side of that, when you’re withdrawing. Does that ring true?

FAITH: I’d seen 4% quoted as a figure by the ‘FIRE movement’, Financial Independence, Retire Early, on the basis that if at year one, you took out 4%, you could then take that amount increased by inflation and that would not completely erode your lump sum. I thought it was more if you took out larger sums above the 4%, that you might be in serious trouble.

MARTIN: Yeah, those guys popularised it, the FIRE movement.

FAITH: I mean, I think it’s a rule of thumb. It’s quite a good way to think about it. But I think in practical terms, if you haven’t gone down the annuity route with a guaranteed income, if you’re not lucky enough to have a final salary, defined benefit pension, where you know exactly what you’re getting and if you’re looking at drawdown, there’s the risk of what the hell’s happening with stock markets. And depending on how stock markets do during your retirement, whether they soar or plummet at the beginning of retirement, that can make a big difference to how much money you’re left with.

But one of the really practical things you can do’s make sure you’ve got a decent stash of money in cash, at least a year’s living expenses. Because that does mean if you’re doing drawdown and you’re potentially at the mercy of the markets, if everything goes to hell in a handbasket - you don’t have to sell your investments when prices are low. You can get by using the cash.

And I think also in early retirement, if you’ve identified in your budget, what your essentials are and what’s nice to have, then you might make decisions depending on how your investments are doing to rein things in a bit. That’s what I mean about how you may have to monitor things. So that’s your personality, age and health. How much do you want to be thinking about managing your money?

PHILIPPA: Mark mentioned earlier this question of how much your pension pot has in it as a determinant of how you choose. What do we think about there? Are the rules of thumb that are useful?

FAITH: I think another thing that’s a mindset change at the point that you start retirement’s that you may be going from a single income stream to funding a retirement from multiple different places. The State Pension will kick in at 67, well, 66 currently, but the age’s rising. Lots of people actually have multiple workplace pensions now. So you’ve got different pots in different places. You might be lucky enough that some of them are final salary, others are defined contribution. But also, you might have savings and investments, outside pensions.

PHILIPPA: ISAs, that sort of thing?

FAITH: Buy-to-let mortgages, you might get an inheritance at some point. So, there may be this patchwork of amounts of money and you’re trying to work out what to spend, when.

PHILIPPA: Yeah, so you really do need a plan. This is the message of the podcast. You do need to think about this stuff. And before the moment arrives that you need to make the decision.

FAITH: Yeah, because the decisions you make could last for the rest of your life. If you buy an annuity, if you hand your money over to scammers, if you take a massive withdrawal from your pension and then carry on working - that’ll restrict how much money you can pay into a pension in the future. It can really cut down on the amount of pension tax relief you can get. So there are big decisions that have lasting effects.

PHILIPPA: Yeah, so this can all sound a bit anxiety inducing. But I think the thing to reiterate is, the more you think about it, the more you plan - the lower your risk of a bad outcome, right?

FAITH: Yes.

MARK: There’s an awful lot of tools available to help people with this. I think most financial institutions will have tools on their websites. The government has the Pension Wise opportunity where you have a free service to get some advice.

PHILIPPA: Yeah, we’ve talked about that on the podcast.

MARK: At Legal & General, we have a retirement planning course that we’ve done with the Open University. It’s independent, it’s unbiased and it’ll just help you think about a lot of these things as you go through it.

PHILIPPA: That brings me to kind of pretty much my final question which was: when should you start working on this withdrawal plan we’ve been talking about? But as you say, those tools are there. And there’s no reason why you can’t have a little play with those at any stage. You don’t have to be imminently thinking about retirement, do you? It’s just that idea of thinking ahead. What might you do? How might it work? What resources have you got?

FAITH: Yeah, and the free Pension Wise appointments are government organised service and those appointments are available from the age of 50. It’s completely free. It’s guidance explaining what your options are. So what you could do, not necessarily what you should do.

PHILIPPA: Before we wrap up, I do think it’s worth remembering that getting older isn’t all totally bad news. Because actually, there are quite a few benefits out there. Price reductions that you can take advantage of that young people don’t get. I’m thinking about reduced prices at galleries, cinemas, that sort of thing. Benefits too. This is all cash.

FAITH: I’ve written articles listing reams of them. Things like getting a senior railcard, getting a free bus pass, getting reduced membership at things like the National Trust and English Heritage. If you look out for pensioner specials in cafes, restaurants and pubs. The fact that once you’re retired, you’re no longer tied to travelling during school holidays and at peak times. You can go midweek, you can go in the off-season and take advantage of significantly reduced prices. There are many things to look forward to.

PHILIPPA: You see, it’s like I said. It’s not all bad news.

MARK: Well, it’s beautiful weather at the moment. My 81 year-old father-in-law went off cycling around the Purbecks yesterday. It’s not a financial thing, but it’s a gorgeous benefit.

PHILIPPA: Yeah, you cannot buy time. It sounds good to me. Thank you very much indeed.

Once more before we go, please remember that anything discussed on the podcast should not be regarded as financial advice. And when investing, your capital is at risk.

Next month: at some point in your life, you might think about having or adopting children. Or you might get together with a new partner who already has some. If that happens, you’ll be spending for two or more, and kids aren’t cheap. So how can you plan ahead financially for having a family?

Join us in July for that one. To catch this and all future episodes, subscribe on your podcast app. They’ll arrive the moment they’re released. And why not give us a rating and review while you’re at it? It doesn’t take a moment. Thanks for being with us. See you next time.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

‍

This article was last updated on 13/12/2024

PensionBee no longer offers the Impact Plan. To find out about our sustainable pension plans such as our Climate Plan and Shariah Plan, visit our plans page.

The following’s a transcript of our monthly podcast, The Pension Confident Podcast. Listen to episode 16 here, watch on YouTube, or scroll on to read the conversation.

PHILIPPA: Hello and thanks for joining us here on The Pension Confident Podcast. This month, we’re investigating how you can use your pension and other investments to make good things happen.

We all like to do our bit to make a difference in the world. You might already be vegetarian or buying fair trade products. Maybe you’re volunteering or cutting down on flying. But, what if you could make your biggest impact just by looking into where your money’s invested? It’s called impact investing and that’s what we’re discussing today.

Here to help us understand what it is and how it can drive change, we’ve three expert guests. Campaign Director for Make My Money Matter; David Hayman. Hi David.

DAVID: Hiya.

PHILIPPA: Next, Anneka Deva, who’s Partnerships Director at Huddlecraft and heads up Money Movers, a non-profit initiative who empower women to take climate action through moving their personal finances. Hi Anneka.

ANNEKA: Hi Philippa.

PHILIPPA: Back for another appearance on the podcast is PensionBee’s Chief Engagement Officer; Clare Reilly. Good to see you again.

CLARE: Hi Philippa.

Now as usual, please remember that anything discussed on this podcast should not be regarded as financial advice and when investing your capital is at risk.

WHAT’S IMPACT INVESTING AND WHAT GOOD CAN IT DO?

PHILIPPA: Clare, shall we kick off with a definition of impact investing? What exactly is it? What’s the goal?

CLARE: What’s the goal? So impact investing’s investing with the aim of generating positive and measurable environmental, and social outcomes while at the same time generating financial returns. So really it’s about positive outcomes based investing. It’s looking at companies, looking at the impact that they have on the world around them, on people and on the planet, and making a decision about whether or not you want to invest in those companies based on that information. It’s a little bit different to the type of investing that you’ll probably be doing through the workplace, for example. So, if you’re in a workplace pension, chances are you’re in the default fund. That plan caters for the widest mix of people possible. It’ll have a range of different things in there, maybe adjusted for your age, and it’ll invest in global equities. It’ll invest in all of the world’s biggest publicly listed companies. But what that doesn’t tell you is the negative impact that an oil producer or company’s had on the world around them. It’s just looking at their short-term profit. So, it’s a very different type of investing.

PHILIPPA: Okay. Environmental, Social and Governance (ESG) investing, can we talk specifically about how this is different?

CLARE: Every company can have something called an ESG rating. So, ESG stands for Environmental, Social and Governance. This is a measure of how well a company’s operating. For an ‘E’ or environmental measure, you’d look at factors such as; does a company have a public commitment to net zero? Does the company have carbon emissions targets? Does the company have a waste reduction policy? That would be an ‘E’ score. An ‘S’ score can be to do with the workforce; do you have a gender pay gap or an ethnicity pay gap? Do you pay a living wage? Are your employees happy? Do you have a safe workplace? They’d be your ‘S’ scores. And then your ‘G’ scores are your governance scores. So, that’s the diversity of the company board, do you have protected voting and shareholder rights? Do you have the same Chairperson and CEO? These factors are making sure that your company’s properly run.

PHILIPPA: Okay, so this is about how organisations operate. Whereas impact investing’s about their intentions, the difference they’re making in the world. Is that right?

CLARE: Yes, that’s exactly right. And the important thing to note’s that you can have a very high ESG score, but also have a very negative impact on society. So, a tobacco company can have a very high ESG score, or a mining company can have a high SG score because they score well on the factors we mentioned. But ultimately, again, can have a negative impact on society, on the planet and people.

PHILIPPA: So David, the Make My Money Matter mission, it’s exactly what Clare’s been talking about, isn’t it? It’s helping people to understand the link between where they put their money and the difference they can make in the world.

DAVID: Yeah, absolutely. I think what we’ve seen over recent years is a real increase in individuals thinking about the impact they’re having on the world around them. From the food they eat, to the clothes they wear, to how we travel, to the brands we associate with, to the organisations we work for. There’s been a real uptick in engagement on our individual impact on the world. But what we’ve also seen is a significant disconnect between how we think about our money as a vehicle for impact. Most people think about the money in their pensions as being sat in a bank vault somewhere in Switzerland, slowly accruing interest. Hopefully in 30 years time when they retire, they’ll have some money to live a nice life on.

But the reality is - that money’s invested all around us for better and for worse in the companies which are shaping the world. So you have vegans invested in factory farming, you have doctors who are invested in tobacco and you have climate campaigners who, through no fault of their own, find themselves invested in the very companies they’re campaigning against. So our campaign’s all about raising awareness, helping people understand the links between their money and the world around them, and empowering them with more voice and with more choice to say where they want that money to go.

PHILIPPA: We all understand about consumer power, but this is a huge extension of it.

DAVID: Exactly. We see this as the next frontier of consumer power. There’s three trillion pounds invested in UK pensions. That isn’t money which belongs to financial institutions. It’s not private capital. That’s money which belongs to each and every one of us. Our pension pots are, for most people, the largest pots of savings that we have. These are huge amounts of money and we can put that to work in businesses which are gonna build a better future for us. We can’t only make our money work better for us today, but over the next decades it can be building that better world for us to actually retire into.

PHILIPPA: The good news is, of course, impact investing’s taking off, isn’t it? It’s grown 40% over the past two years. I believe there’s now $1.2 trillion assets under management in impact investing generally. It sounds great, but realistically, can it make a sizable dent in environmental problems?

DAVID: Absolutely. But, I think I’d take a step back. It’s something that Clare was touching on. For us, we’d consider all investments to be impact investments. All investments have an impact, for good or for bad. And there are very deliberate, tip of the spear investments in organisations which try and create a positive natural impact on the world. And that’s great. That’s the $1.2 trillion you’re referring to. There’s also an opportunity to look at the wider investments under management. Globally, there’s $56 trillion managed by pension funds. That money has an impact, for good and for bad. So, we want people to think about all their investments as impact investments - minimising harm and increasing good. If you can do that, if you can get people fundamentally thinking differently about their money. Not as something static and scary, but their biggest superpower to change the world. Then you can really, really alter significant flows of capital and change the world.

PHILIPPA: What sort of projects and investments specifically are we talking about? Give us a sense of the breadth of things we could be investing in, in this way.

DAVID: I think the obvious answer, which most people would jump to, would be renewable energy, which helps to tackle the climate crisis in very obvious, overt ways. We’ve touched on it not just being about environmental issues. If you want to be investing your money to make a positive impact; it can go towards medical research and healthcare developments, it can go towards affordable housing, it can go towards local infrastructure in your community - which helps to build more sustainable cities. So, there’s a whole range of investments which can have a positive impact.

PHILIPPA: Even things like financial and digital inclusion?

CLARE: Yeah. With financial and digital inclusion, I’ll give you an example of one of the companies that’s one of the top holdings in the PensionBee Impact Plan. It’s called Bank Rakyat. They’re a banking provider and micro-lender across Indonesia. So, Indonesia’s an archipelago of about 10,000 different islands and much of the population are rural communities who have spread out on these geographically dispersed islands. Over half the adult population of Indonesia remains unbanked.

So, Bank Rakyat, through their innovative way of offering banking services across this geography, seeks to bring in millions of Indonesians into the banking system. To, first of all, bring them banking services, but also as a micro-lender. And it does that with the purpose of building financial resilience, empowerment, and of course, increased prosperity for that country. So, that’s a great example of a company that has a very successful business model, but is also bringing millions of people into the banking system for the first time.

PHILIPPA: And that’s obviously a particular issue for women. And Anneka, that’s what you do at Money Movers, isn’t it? Your aim’s to encourage women in particular, to take action through moving their personal finances.

ANNEKA: Yeah, that’s right. Our movement’s a movement of women who get together with their friends, their colleagues and their neighbours to talk about money, and to talk about climate change, and take action. It’s a really simple model. Women are trained up as volunteer hosts, and then they bring together some friends around a dinner table or a Zoom room. Then we give them a toolkit and a coach. Over the course of three weeks they get together, talk about these issues, start to map out where they could take action and then support each other to actually take the action.

PHILIPPA: What sort of actions are you talking about?

ANNEKA: Things like switching your bank account, switching your pension to a different provider, making a sustainable or ethical investment - sometimes for the first time. But sometimes smaller actions such as talking to your partner or your dad about where their money’s being invested.

PHILIPPA: But these are big decisions, aren’t they? For people to move their pensions, even move their bank account. It’s a big thing. Sometimes it can feel very complicated. Are people nervous?

ANNEKA: Absolutely. I mean, when it comes to talking about money, it’s one of the most taboo subjects out there. Women are more likely to talk to their friends about sex than they’re likely to talk about money.

PHILIPPA: That’s not a big surprise, is it?!

ANNEKA: Yeah. So, there’s often a feeling, with both of these topics; money and the climate crisis. There’s a feeling of overwhelm, despair, inertia. But the feeling that you get when you actually start to get your head around this stuff, that you previously just thought, ‘oh I’m putting that on the too complicated pile’ is just incredible. You feel like an absolute badass.

PHILIPPA: Yeah. Because it’s, as you say, about making these decisions. You might want to move your bank account, but the choice’s tough, isn’t it? And you don’t wanna make the wrong decision. So you actually equip them with the information they need to make choices?

ANNEKA: No. So Money Movers doesn’t give advice. It doesn’t give information because we actually know that women out there, many people out there, what they don’t need is people telling them what to do. What they need is the confidence, the motivation, and the time to go and actually find out the information themselves. And they need someone to talk it through with. Someone who they trust, someone who’s not gonna patronise them.

17% of financial advisors out there are women. There are very few financial advisors out there who look like me, a woman of colour in my mid-30s . And so, when it comes to who I can trust to talk to about this stuff, it can feel like there aren’t many options. When in fact, when you start sharing information you realise, ‘oh there are loads of places I can go, there are loads of podcasts I can listen to, and actually I just want someone to talk it through with who’s not gonna tell me what to do’.

PHILIPPA: So you open the door, you’ve put the idea out there, they chat about it. Then David, you’re at the other end of it really, aren’t you? When people have made those decisions, you’re in the business of promoting the idea of opportunity for them to actually take action.

DAVID: It’s very similar to Anneka actually. Our job isn’t to tell anyone to move to ‘X’ back account or to ‘Y’ pension fund. Our job’s to really open up the conversation about why you might want to, why it’s important. Why, if you’re thinking about your lifestyle decisions, from food, to clothes, to travel, that you’re not thinking about money. Helping people understand that money’s actually our hidden superpower to build a better world. So, very similar to Money Movers - we’re about raising awareness and empowering people to make more positive, proactive decisions. An example we use, we do this with individuals and with businesses. It’s not about me going into a business and saying, ‘you should invest your money here’. But it’s about me going into a business and saying, ‘you’re doing this on your travel policy, you’ve ruled out air travel - brilliant. You’re serving only vegetarian food in your canteen - fantastic. You’ve installed solar panels across your buildings - brilliant’. Why would you have your multi-million pound company pension investing in ways which are directly contradicting those decisions?

PHILIPPA: Have they thought about that? Is that a new thought for them?

DAVID: We’re seeing increasing numbers of individuals and organisations starting to take action. But the gap’s significant. We did a piece of research earlier this year which showed that 95% of the FTSE 100 companies have sustainability plans, but only 5% of those mention their bank accounts or their pensions within them. That’s despite the fact they’re investing millions, if not billions, through their company pension schemes and have millions invested, or held in corporate accounts. So, there’s still a big gap between money and sustainability, which we’re trying to bridge.

PHILIPPA: And also they’re thinking about returns, aren’t they? Are we inevitably looking at lower returns?

DAVID: I don’t think so. You know, we can’t offer financial advice and no one here would. But I think, what we can do is point to numerous examples of the last one year, three years, five years, 10 years of more sustainable or impact-oriented funds matching, or outperforming their non-impact cousins. There’s no guarantees in life around how much money you’ll get back in any pension fund you invest in. But I think there’s an increasingly growing wealth of evidence that if you want to be making money long-term - investing in the businesses which are gonna be around long-term, which are gonna be successful long-term, which are gonna treat the environment and their people well - are good places to be investing your money.

HOW IT WORKS AND WHERE YOU’RE MONEY’S INVESTED

PHILIPPA: Now Clare, I wanna talk to you about PensionBee’s own new Impact Plan. Before I do that though, I wanna ask you about regulation because that’s gonna be in people’s minds. How safe is it to get involved in the impact investing market? Where, where are we on the regulatory front there?

CLARE: The industry’s regulated. The Financial Conduct Authority (FCA) have, in recent years, taken a very keen interest in introducing additional consumer protections around sustainable investing and sustainable products because of greenwashing.

PHILIPPA: Claims of sustainable investing?

CLARE: The general public are rightly concerned about greenwashing. They want to make sure that the label matches what’s in the tin. And so the FCA are bringing in, next year, a new set of rules called sustainability labels. The one that’s relevant to this conversation’s sustainable impact. So, the FCA will have a set of criteria and unless your product meets those criteria, you’re not allowed to use the word ‘sustainable’ or ‘impact’. But of course, everyone’s approaching impact slightly differently. I think, when we began looking, last year, at all of the impact options available in the market in the UK - there were lots of different flavours of impact. There are impact funds out there that have a lot of financial services, or big tech, or car producers in them. So, it mightn’t be that you view impact in that way. And so, it’s always important with everything that all of us agree that you need to look under the bonnet and check what’s actually in there.

PHILIPPA: Is it young people mostly who’re leading the way?

DAVID: I think it’s a real combination. I think the obvious answer’s yes, this is something which is more appealing to younger audiences who’re already pre-engaged on social issues, environmental issues, gender and diversity. So, yes we’ve seen that this definitely does resonate a lot with younger audiences. But, I think it actually is something which cuts across all demographics and all ages because it’s really about taking control over your money.

ANNEKA: Can I just come in on that? Just to say that when I started working on this at Money Movers, I started talking to my dad and he’s now finally retired. And my dad’s interested in what he can leave to his children and his grandchildren. The questions and the conversations we’re having at home about what he’s seeing on the news about climate change, about the volatility globally. Those are the things that he’s also thinking about. Thinking about what he does with his money. And my mum’s thinking about retiring and she’s wanting to ask questions about pensions, but historically that’s not been something that women have been as in control of.

You know, women weren’t allowed to get a credit card or a mortgage without the signature of a man until as recently as the 70s and the 80s. Women historically have not been involved in these conversations. So, when they get to retirement age, women are losing out. A woman in her mid-thirties is likely to have around a hundred thousand pounds less at retirement age than a man of the same age. That has to change. That has to change for all of us because what we know is that when women make financial decisions and invest, whether that’s through a pension pot or another investment vehicle, they think about their family, they think about the wider community, they think about the world. So do men, I’m absolutely saying that men are allies in this, but with the women we talk to, those are the primary things they’re thinking about when they’re making these decisions. Not, ‘how can I make a return in one year, in two years and three years?’

PHILIPPA: So Clare, David was talking about transparency and people knowing where their money is. So as I said, PensionBee has recently launched this Impact Plan. We’ve talked before on the podcast about your Shariah Plan, you’ve got a Fossil Fuel Free one, so why the new one?

CLARE: Our customers have led to the creation of all those plans. With the Fossil Fuel Free Plan, customers were telling us they wanted a way to be able to invest their money and take oil out, and take everyone associated with the fossil fuel industry out. So, we launched that in 2020. It’s kind of a first in the industry and we’re very proud of that. Then, as time went on, a group of customers, through surveying that we do regularly, came forward and said, ‘we want to go further, this isn’t going far enough’. We don’t wanna just still be invested in the same type of stocks and remove oil. We actually wanna see our money having a positive impact in the world around us’. And what our customers were telling us they wanted, didn’t exist.

So we worked all of last year to build this Impact Plan. And this plan’s a completely different way of investing to all of the other plans we offer because it has a very strict five-step vetting process in order for a company to be included in the plan. So first of all, any company needs to meet an impact theme - affordable housing, public health, green energy, financial inclusion. It also needs to advance one of the United Nations Sustainable Development Goals (UN SDGs). Then there’s a materiality check. So basically, more than 50% of the revenue of that company from their core goods or services needs to be advancing either the impact theme or the UN SDSGs. And then you have additionality - is this company an agent of change? Is this company meeting an unmet need around the world? And then finally, the really important one that I’ve mentioned, which is the measurable. How do we measure the positive impact that this company’s having over time to demonstrate that it really is having a positive effect? So, what you see when you look at the companies, these are not companies that you’ll see in other pensions because these are, potentially, the companies of tomorrow.

PHILIPPA: Yeah, I want to ask you about returns and I want to ask you about charges. Are they higher?

CLARE: Charges in impact investing? Because of all of the assessments that impact investing comes with - you can’t just buy the data like you can with ESG data. So, traditionally it’s been more expensive. The PensionBee plan’s 0.95%, which is the same as our other specialist plans. But historically impact investing has been a bit more expensive.

PHILIPPA: So thinking about returns, because obviously, this is why people invest. With the best will in the world, this is hard earned cash and they want to know what they’re gonna get out of it in the end. Is there an expectation that, realistically, they’re gonna see less than if they invest in a mainstream pension fund?

CLARE: No, I think that there’s a myth around lower returns and impact investing. I think the first thing to say is, the PensionBee Impact Plan seeks to replicate global markets. So, it’s in line with global markets. You’ve got to think about it in the other way as well - you can invest in the companies of today, the biggest companies in the world that are worth $1 trillion dollars at the moment. Or you can be investing in the companies of tomorrow, that are currently worth $1 billion and in 30 years will be worth $1 trillion, right? There’s actually a different type of return that you’re gonna get in 30 years by investing in companies that are taking care of the planet and society, than you are investing in companies that give you that quick, short-term return whilst destroying the planet.

PHILIPPA: Yeah and as we said, it’s not just pensions, is it? What about other investment products - stocks and shares, impact ISAs etc.?

CLARE: Yes, they all exist. It’s a growing industry. The conversation we’re having today is that we want people to be more aware of it and get more interested in moving their money into these types of investments.

CHANGING THE WAY WE THINK ABOUT INVESTING AND WHAT THE FUTURE HOLDS

PHILIPPA: If people are listening to this and they’re thinking, ‘yeah, I’m interested’, what are their next steps here? Because investments aren’t always as transparent as they should be. We’ve talked about this, people sometimes don’t know where their money’s invested. How can they find out, Clare?

CLARE: Well, the first thing to do is maybe have a look on the fund fact sheet. Log into your portal or Google the name of the pension fund you’re invested in. Try and find the fact sheet, see if you can look at the top 10 companies that the pension’s invested in. If it’s not on the fact sheet, you’ll probably be able to find it on Google. Look at those and ask yourself, ‘is that what I expected? Are those the companies that I want to be giving my money to?’

PHILIPPA: Not all providers make it that easy to switch, do they?

CLARE: No they don’t. PensionBee has been calling for many years for a pension switch guarantee to give people the ability to pick up their money and move it around the system. The way that you can do with current accounts or utilities. You’ve a right to move that money to another regulated provider. So keep trying, move the money and move it again if you find that the provider that you’ve moved to is not offering you the choice or the type of investments that you want.

PHILIPPA: I guess that’s something that chimes with you David?

DAVID: Yeah absolutely. And I think there’s two things here. One’s, an individual finding or switching a pension which they feel works better for them. And that’s absolutely an option people should take if they wish to. They should be able to see where their money is, see the alternatives and make a positive, proactive decision about that. That should be easy and straightforward. There’s also another option for people and that’s something that our campaign encourages. It’s for those who don’t feel confident in switching or who aren’t able to switch, to lobby for change to the pension funds they currently have. And that can have a really significant impact in of itself.

So, we’re not a switching campaign actually, we’re not trying to move everyone’s money one by one, as valuable as that is. We’re actually trying to impact the macro-default investment decisions of those big pension funds where the trillions are invested. And get them to invest the default fund more sustainably, more for impact. By doing that, we think you can achieve real scale change. So, what we encourage people to do, who don’t wanna switch, is to contact their pension fund and ask them what actions they’re taking on net zero, on deforestation, on investing for impact, on stewardship and on speaking out.

ANNEKA: It doesn’t take many people asking questions within a company, to a pension provider for example, for them to start listening. So, it just takes some employees to start asking questions about what the default pension is for that company to start realising, ‘hey, this is something our staff really care about, maybe we should start thinking about this’. And so, that’s where we, at Money Movers, think the power of the movement, the power of coming together with other people to start asking questions, even if you don’t know all the answers, is incredibly powerful. And we’ve seen companies changing their policies, we’ve seen companies changing their practices. We’ve seen big banks making big announcements that they’re divesting from directly investing in fossil fuels. So, change is possible.

PHILIPPA: When they understand that it matters and when they understand people are going to know what they’re doing?

ANNEKA: Exactly, when they understand that both their customers and their employees really care about this, and together are going to be asking questions and taking action if the companies don’t listen.

PHILIPPA: Should we wrap this up with a bit of future gazing? What do we think the next impact product might look like? What would you like to see?

CLARE: Something that I’ve noticed and I think could potentially be very interesting in the impact investing space is place-based investing. So, it’s where you’re investing in your local area.

PHILIPPA: Lovely idea. Anneka?

ANNEKA: I’d love to see young people being taught about this in schools. About financial awareness, as part of their curriculum.

PHILIPPA: We’ve talked about this so much on the podcast, absolutely.

ANNEKA: For a lot of young people, they’re not interested in finances because they don’t think it matters to them. But there’s a real increase amongst young people’s interest in climate action. If they realise that they can have a secure future for themselves and for the planet at the same time, it’s a win-win.

PHILIPPA: David?

DAVID: A slightly different approach, maybe a bit controversial - I’d like us to not be talking about impact investing in five or 10 years. I’d like it to be fully integrated into how people think about investing.

PHILIPPA: So it’s the norm?

DAVID: So it’s the norm, exactly. I don’t want it to be a nice thing that 5% of people do or 5% of our money goes towards, that it’s a side thing, it’s separate and it’s distinct. It should be fully integrated into how the £3 trillion pounds of UK pension money’s invested.

PHILIPPA: Do you think we’re getting there?

DAVID: I think we’re getting there. I think there’s a fundamental shift taking place in how individuals think about money in businesses and how they think about money culturally. How we associate the role of money with climate change and impact. I think it’s taking time, but I think we’re getting there.

PHILIPPA: Lots of food for thought about the power we all have when it comes to where we invest. Thank you everyone for talking us through it.

ANNEKA: Thank you Phillipa.

DAVID: Thanks for having me.

CLARE: Thanks Phillipa.

PHILIPPA: Check out the show notes for lots more about impact investing and some handy links to other resources.

Once more before we go, please do remember that anything discussed on this podcast should not be regarded as financial advice and when investing your capital is at risk.

Next month’s a big one for the podcast. We’ll be recording The Pension Confident Podcast in front of a studio audience for the very first time and we’ll be tackling the question of pensions versus ISAs. Which one’s the best home for your money?

To help us work that out, we’ll be joined by four expert guests:

Financial Times Consumer Editor; Claer Barrett,

Founder of Money to the Masses; Damien Fahy,

Financial Expert, Author and Podcaster; Peter Komolafe,

And back with us from PensionBee - Director (VP) Public Affairs; Becky O’Connor.

We’ll be recording on Thursday 4 May at White City Place in London. Doors open from 6:30PM and you can grab yourself a free ticket by visiting our Eventbrite page. You’ll find a link in the show notes attached to this episode. Come and join us. We’d love to see you there! Thanks for listening. See you, in London, next time.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

‍

It’s been a busy 2022 in the pensions industry and beyond, with the cost of living crisis bringing financial challenges to us all. We’ve also been very busy on The Pension Confident Podcast tackling a range of important subjects across our monthly episodes.

A year on from our launch, we’ve covered a lot of ground. Whether you’re self-employed and trying to keep your pension on track, you’re looking for a more responsible way to invest, or are trying to keep money worries at bay, there’s been plenty to sink your teeth into across the series.

We’re still working hard behind the scenes to continue our mission of making pensions simple, whether you’re just starting your savings journey, nearing retirement or are somewhere in between. That’s why we’re delighted to announce that The Pension Confident Podcast’s returning for Series Two in January 2023!

Until then, there’s plenty of time to catch up on all of the episodes from Series One. To help you find a place to begin, we’ve compiled a list of highlights to kick-start your listening journey to pension confidence.

LISTEN NOW

1. Is sustainable investing the future of pensions?

PensionBee Chief Engagement Officer; Clare Reilly says: “You can pretty much work out which companies are not going to survive in the future based on their inability to adjust. So, I think the short answer is yes, sustainable investing is definitely here to stay. I think the bigger question really is around the pace of change.”

Where better to start than the beginning? In our very first episode, we answer customer questions on sustainable investing and whether it can really help to make the world a better place.

Our guests are Founder of Money to the Masses; Damien Fahy, and Chief Engagement Officer at PensionBee; Clare Reilly.

Listen here

Read the transcript

2. Why’s property ownership so important to people in the UK?

Founder of the Financial Joy Academy and The Humble Penny; Ken Okoroafor says: “Property gives you this gratification. You can see it, you can touch it, you can even paint it. We need to get better at helping people visualise the benefits of their pensions.”

Property ownership is a big deal in the UK and the market has seen huge growth over the past few decades. We discuss whether investing in property at the expense of your pension makes financial sense.

We speak to CMO of Habito; Abba Newbery, Founder of the Financial Joy Academy and The Humble Penny; Ken Okoroafor, and VP Brand and Communications at PensionBee; Rachael Oku.

Listen here

Read the transcript

3. Where the responsibility lies when teaching kids about money

Certified Money Coach and Founder of The Money Whisperer; Emma Maslin says: “Parents out there, we do need you to equip yourselves to be in a position to start having those meaningful money conversations. And if you don’t feel confident in doing that, really advocating to get more and better education in our school settings.”

In this episode we talk all about the best ways to teach kids about money, who’s best equipped to do so, what tools are available and what the government needs to do to improve financial literacy in schools.

Business and Finance Journalist Laura Miller is joined by Co-Founder and CEO of NatWest Rooster Money; Will Carmichael, and Certified Money Coach, Founder of The Money Whisperer and PensionBee customer; Emma Maslin.

Listen here

Read the transcript

Watch here

‍

4. Anyone can be affected by debt

Personal Finance Expert and Managing Director of Mrs Mummypenny, and PensionBee Customer; Lynn Beattie says: “I ended up funding an unsustainable lifestyle via my credit cards. I knew things were getting worse after 12 months, but I literally buried my head in the sand. I know I did, because I felt the shame of being in debt because I’m a Personal Finance Expert.”

We hear personal debt stories from PensionBee customers and discuss how financial difficulties can affect our wellbeing, along with providing some tips on how you can start to improve your own financial circumstances.

This episode features Personal Finance Expert and Managing Director of Mrs Mummypenny, and PensionBee Customer; Lynn Beattie, Research Officer at the Money and Mental Health Policy Institute; Chris Lees, and COO of PensionBee and Mental Health First Aider; Tess Nicholson

Listen here

Read the transcript

Watch here

5. What to think about when approaching retirement

Head of Media Relations at the PLSA; Mark Smith says: “First and foremost you have to be 55 (57 from 2028) to start withdrawing from your pension… if you want to carry on working and contributing to your pension, then you are limited at that point. So first thing’s first, make sure you actually need the money, or that you actually want to start accessing the money.”

This episode gives lots of useful information on when and how you can take your pension savings, as well as the different ways in which people are looking to spend their retirement years in the 21st century.

The studio guests include Financial Journalist and Founder of Much More With Less; Faith Archer, Head of Media Relations at the Pensions and Lifetime Savings Association (PLSA); Mark Smith and PensionBee’s Senior Engagement Manager, Priyal Kanabar.

Listen here

Read the transcript

Watch here

You can catch up on all of Series One wherever you listen to your podcasts, watch on YouTube, read the transcripts on The Buzz and keep up with the latest news on our dedicated Pension Confident Podcast page. Don’t forget to subscribe on your podcast app so you’re ready for the start of Series Two in 2023!

Listen on Amazon Music

Listen on Apple Podcasts

Listen on Google Podcasts *requires age verification

Listen on Spotify

If you’re enjoying the podcast, then why not leave us a review on your podcast app? Or if there’s a topic you’d like to see covered, drop us an email at podcast@pensionbee.com.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. Anything discussed on the podcast should not be regarded as financial advice.

‍

The following’s a transcript of the trailer for The Pension Confident Podcast Series Two. Scroll down to read, catch up on the first series here or watch on YouTube.

PHILIPPA: The Pension Confident Podcast’s celebrating its first birthday and we’re excited to announce that we’ll be back in the New Year with a brand new series to help you make the most of your finances.

We’ll be discussing a whole new batch of personal finance questions like:

• how does your financial personality play into achieving your money goals? and
• what impact can your relationship status have on your finances?

Join me, Philippa Lamb for Series Two of The Pension Confident Podcast. Find it wherever you get your podcasts.

• Listen on Amazon Music
• Listen on Apple Podcasts
• Listen on Google Podcasts *requires age verification
• Listen on Spotify

If you’re enjoying the podcast, then why not leave us a review on your podcast app? Or if there’s a topic you’d like to see covered, drop us an email at podcast@pensionbee.com.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

‍

The following’s a transcript of our monthly podcast, The Pension Confident Podcast. Listen to episode 12 here, watch on YouTube, or scroll on to read the conversation.

PHILIPPA: Welcome to the last episode of Series One of the Pension Confident Podcast. But no need to worry, because I’m happy to tell you we’ll be back with a whole new series in January 2023. I’m Philippa Lamb, and to wrap up this year, we’re going to demystify a subject that’s confused all of us at one time or another - financial jargon. Whether it’s stagflation, inflation, Auto-Enrolment, or all those acronyms - what do they mean?

From interest rates and income tax to dividends and bonds, sometimes it feels like the language of personal finance is specifically designed to confuse us. So, today we’re going to push back with jargon busting help from two expert guests.

PHILIPPA: Welcome to the last episode of Series One of the Pension Confident Podcast. But no need to worry, because I’m happy to tell you we’ll be back with a whole new series in January 2023. I’m Philippa Lamb, and to wrap up this year, we’re going to demystify a subject that’s confused all of us at one time or another - financial jargon. Whether it’s stagflation, inflation, Auto-Enrolment, or all those acronyms - what do they mean?

Vix Leyton‘s right here with me. By day, she’s a Personal Finance Expert and off-duty, she’s a Stand-Up Comedian and Host of the False Economy Podcast. Welcome Vix.

VIX: Thank you so much for having me.

PHILIPPA: Also with us is PensionBee’s very own CMO, Jasper Martens. Great to have you with us.

JASPER: Thank you. And no, I don’t have a podcast like Vix.

VIX: Not yet, but eventually we all will!

Why it’s important to understand financial jargon

PHILIPPA: Before we start, as always, I’m going to remind you that anything discussed on this podcast should not be regarded as financial advice and when investing your capital is at risk.

Now, Vix, financial jargon, I know you’re an expert and I’ve worked in that field myself, but it’s confusing for everyone. You were telling me before we came in, there’s still stuff that trips you up. Is there a particular word?

VIX: It’s a funny one because I’m technically a finance expert, but my job is to be the person that asks the questions so people don’t have to. Because I think everybody’s so embarrassed that they don’t seek advice on these things. So you just kind of style it out and I’m good at that.

But I like the more exciting terms like bull and bear. They sound like sexy fashion brands to me, but I think they’re a lot drier than that.

PHILIPPA: Jasper, have you got a least favourite bit of jargon?

JASPER: In the pensions industry, we’ve got lots of jargon and the one that I’ve brought to the show today is an UFPLS.

PHILIPPA: What’s that?

JASPER: That’s an Uncrystallised Funds Pension Lump Sum, which only applies to a defined contribution scheme. And even after all of these years at PensionBee, I’ve failed to explain that in simple terms to anyone.

PHILIPPA: I’m not sure I want you to do that even now!

VIX: It’s like when someone explains the rules of a card game, I really want to understand and I’m listening, I’m giving you my eye contact, but I can hear the music from Smart in the back of my head.

PHILIPPA: Which brings us to the big problem here! Jargon’s off-putting, and every line of work has its own. The difference with financial jargon is, it’s really in our own interest to understand it.

JASPER: Yes, if you don’t understand your finances then you’ll fail to plan a happy retirement but also to have a good financial outlook. And sometimes you do need to go into the books and learn. Fortunately we’ve got the internet now to help.

Financial jargon in the news lately

PHILIPPA: But personal finance is particularly jargon filled, isn’t it?

JASPER: It is and I think the industry’s made it deliberately complicated. Sometimes I hear things like, ‘Well we’ve got these difficult words and acronyms because otherwise we have to write them out and it takes a long time.’ And I feel that if we keep the population clueless, then people won’t take action. And then those companies can earn money off of you. So, you better start finding out what those words actually mean.

PHILIPPA: I’m a cynic about that too. I think there’s a bit of a barrier being put up there. But listening to the news lately, it’s been filled with financial jargon and economic stories. I was thinking we might kick off with some of the terms we’ve been hearing regularly in the news. Some of the real basics, and the first one I have for you is income tax.

JASPER: We all love to pay some tax, don’t we Philippa?! So I think, with income tax, people generally understand what that means. You’re paying tax on the income you earn. And we have tax bands in the UK, so on the first £12,570 that you earn, you don’t pay any income tax at all.

And anything you earn over £12,571 and up to £50,270, you pay 20% basic rate income tax. Then, if you earn between £50,271 to £150,000, you pay 40% higher rate income tax. If you earn over £151,000, you pay 45% additional rate income tax.

However, it was announced in the Autumn Statement on 17 November, that the higher and additional tax thresholds are changing in 2023/24. So, from April 2023, if you earn between £50,271 and £125,140, you’ll pay 40% higher rate income tax in 2023/24. And if you earn over £125,140, you’ll pay 45% additional rate income tax in 2023/24.

So those are the UK tax bands and usually, you won’t really see the tax being taken off. Because what’s given to you in your take-home pay, is different to your income as the tax will, in most cases, already have been taken off. So I think that’s where sometimes the confusion kicks in. But most people will be paying tax within those tax bands.

PHILIPPA: And inflation?

JASPER: Inflation’s basically the price of things you buy in shops increasing in value.

VIX: I knew that one!

JASPER: Oh, you knew that one? Great! Do you know the difference between RPI and CPI?

VIX: Oh, no. I didn’t realise that I had to revise for this podcast. Is that the Retail Price Index?

JASPER: Yeah, so I’m going to pretend I already knew everything about it and I didn’t look it up whatsoever.

PHILIPPA: Yeah, he did. I saw him doing it. RPI?

JASPER: Retail Price Index and Consumer Price Index.

PHILIPPA: What’s the difference?

JASPER: The simplest way to explain it, it’s the way you measure inflation. And with the Retail Price Index, we include things like the cost of living and housing, so your mortgages are included. And usually that one is higher than the Consumer Price Index. And to make things more complicated, for example, the government or a company might use the RPI and another will use the CPI.

PHILIPPA: So you need to know which is which?

JASPER: You need to know. But normally, I’d say, roughly they’re quite similar. One tends to be a bit higher than the other.

VIX: So, I’m speculating here but does which one is used depend on which one is higher? Because I’ve only ever seen RPI on bills, when they’re explaining why my bills are going up.

PHILIPPA: Interesting.

VIX: And again, like you say, it’s this willful ignorance. It looks legit, so I just huff and puff about it and just shrug and move on.

PHILIPPA: Yeah, well what else are you going to do about it?

VIX: Then I shred it and feel sad.

PHILIPPA: Okay, interest rates. I know it sounds basic, but let’s talk about interest rates.

JASPER: Well where do you start? Because it’s such a broad topic. But interest rates, I think for most people, it’s either the money you earn on your savings. So, the bank pays you an interest rate because you’ve given them some money in their bank and therefore they give you a percentage in return.

But interest rates can also cost you. So if you’ve got a mortgage, an interest rate’s the money you pay to borrow money from a bank or another organisation. And interest rates are usually set by a central bank.

PHILIPPA: Central bank being, in this case, Bank of England?

JASPER: Exactly. So for example, recently the interest rate has gone up from 2.25% to 3%. And that’s the rate that the banks pay to borrow money off the Bank of England.

PHILIPPA: And that’s what’s called the base rate?

JASPER: The base rate, exactly. And the banks who borrow that money can then lend that money to you, as a consumer. And they’ll probably put a margin on top of that. So what you pay is definitely not the base rate. You’ll usually pay a bit more.

PHILIPPA: So everything hangs off the base rate. So when we hear on the news about the Monetary Policy Committee at the Bank of England changing the base rate, it does matter because it impacts the amount of interest we might get in our savings account or the amount of money we might have to pay for a mortgage.

JASPER: Yes. So the amount of interest you pay when you borrow money to buy a house gets more expensive if the base rate goes up, but you might also get more interest on your savings. Usually, the Bank of England and other central banks will change that base rate to curb inflation. Because if it gets more expensive to borrow money, consumers hold back and don’t spend as much.

PHILIPPA: We spend less?

JASPER: Exactly. And that’s why the bank has that tool. And sometimes it’s nice for us, as we get more savings in our bank account, but in many cases it’s not so nice. And the cost of living really is now the issue here, where that rate has gone up and therefore our mortgage payments are going up.

PHILIPPA: As I said Vix, you work in this industry so I have to say, you’re a part of the problem! But you’ve talked about bull markets, there’s gilts, there’s stagflation, there’s asset management. I mean it’s just bamboozling. Does the industry really design itself in such a way that it’s building that wall between it and us?

VIX: It’s impossible to know, isn’t it? But I think the big issue for me is that this isn’t taught in schools.

PHILIPPA: Oh yes. We’ve talked about that on the podcast before - you’re not taught any of this stuff at school, are you?

VIX: Yeah, I can tell you that I’ve lost my watermelon or my umbrella in French - I’ve never used that. But I wouldn’t be able to give you a concise understanding of how interest and inflation would affect literally every element of my life, in terms of borrowing and saving.

There are so many terms that are confusing. Who’s coming up with these? What’s stagflation? It sounds like when I said yes to going to Becky’s hen in a local pub, and then six weeks later, somehow I’m in a WhatsApp group with somebody called Laura who’s asking for £1,000 for an Airbnb that I don’t remember saying yes to. Oh and also I’ve got to dress up as a unicorn. That’s not what it is, but there are no clues as to what it is?

PHILIPPA: Yeah. And that’s an old one. I’ve no idea where the word stagflation came from. It’s crazy, isn’t it?

Now look, acronyms are my personal least favourite. Jasper, again, I want to start with a common one, and I want to start with FTSE. You hear about the FTSE all the time. We might know it’s something to do with the stock market, but what exactly is the FTSE?

JASPER: Well, the FTSE is the Financial Times Stock Exchange, which is basically an index of companies that are listed on the stock exchange. And so, if we talk about the FTSE 100, we’re talking about the 100 biggest companies on the FTSE, the Financial Times Stock Exchange. That’s basically what it means. It’s just an index of companies that are listed there.

PHILIPPA: Another stock market acronym - IPO.

JASPER: Well I know that one because PensionBee did one in April 2021. It’s an Initial Public Offering. And that’s when your company is going to the market, and before you do so -

PHILIPPA: I’m going to stop you there. Going to the market? Let’s go further back to the basics.

VIX: This little piggy?

PHILIPPA: So you’re a company -

JASPER: Ok, I’m rolling up my sleeves!

PHILIPPA: So, you’re a company and you’ve grown to a certain size and now you’d like some investors to lend you some cash?

JASPER: What you’re trying to do is get people buying your shares, so that you can raise money. When a company goes on the stock market, they’re trying to sell shares. And if your company is good, and it has good unit economics and has a good future, investors will say ‘I want some of those!’ and they’ll buy those shares off you.

PHILIPPA: So the public offering is, you offering your shares for sale?

JASPER: Yeah. To anybody who wants to buy them.

PHILIPPA: Got it. Savings is a big area for acronyms isn’t it? Again, we hear a lot of them but knowing precisely what they are is something else. Here’s a nice one for you. What’s the difference between an ISA and a LISA?

JASPER: Well first of all, can I just say that I feel like I’m doing a test here?

PHILIPPA: That’s exactly what’s happening.

JASPER: I should’ve known!

VIX: We both know the answers. We’re just checking that you do.

PHILIPPA: I’ve got them on a piece of paper here.

JASPER: Well, an ISA is an Individual Savings Account and a LISA is a Lifetime Individual Savings Account.

PHILIPPA: And what are they?

JASPER: So basically, they’re both tax efficient ways to save for later. In the case of a LISA, you can save that towards your first house purchase.

The Lifetime ISA, like all ISAs, is a tax-free savings account. You won’t be taxed on what you put in, and you receive a 25% bonus on your savings. You’ll get a £1 bonus for every £4 you put in. You can put up to £4,000 into a LISA every year, so the maximum bonus you can receive each year is £1,000. In addition to this limit, you can’t pay more than £20,000 per year across all your ISAs.

LISAs are tax-free and the government provides a bonus of 25% on the money you put in. So, for every £4,000 you put into your LISA, you receive a £1,000 bonus.

JASPER: And ISAs are just savings, but they’re tax efficient. So, every year you can save around £20,000 into that Individual Savings Account and you wouldn’t pay any tax on that amount.

ISAs are popular ways for people in the UK to save or invest their money tax-free. There are four types of ISA:

• Cash ISAs
• Stocks and Shares ISAs
• Innovative Finance ISAs
• Lifetime ISAs (LISAs).

The government puts a limit on how much individuals can save or invest in them in a single tax year. This limit is known as the ‘ISA allowance‘.

This ISA limit is the maximum an individual can save across the range of ISAs. So for example, if you saved £5,000 in one ISA and £3,000 in another in one tax year, you’d have used up £8,000 of your total allowance.

In the 2021/22 tax year, the total allowance stands at £20,000. This limit resets at the start of each tax year on 6 April 2023. If you don’t make use of your entire allowance before then, you’ll lose any remaining amount.

JASPER: Does that answer the question?

PHILIPPA: Are we happy with that?

VIX: I think so.

Pensions industry jargon

PHILIPPA: So Jasper, the moment you’ve been waiting for, let’s talk about pensions! Because, as we know, the pensions industry is big on confusing acronyms. There are a lot of very confusing terms. Which ones do you think listeners really need to have their heads around?

JASPER: I think, especially at the moment because it’s been in the news a lot, it’s the triple lock on the State Pension.

PHILIPPA: And what’s that?

JASPER: It’s basically indexing your pension. That means that the UK Government is legally binded to make sure that your State Pension rises in line with one of three locks. Lock one is the rate of inflation, which was at 10.1% in September 2022. This is the rate in which the Chancellor confirmed that the State Pension will rise in April 2023. Lock two is the increase in average earnings. And lock three is a fixed amount of 2.5%. The highest of those three is the one in which the State Pension will grow.

PHILIPPA: Okay. Vix is looking confused!

VIX: Does that mean that the State Pension only ever increases and never decreases?

PHILIPPA: That’s a very good point. Can the State Pension go down?

JASPER: No, the minimum it will go up is 2.5%. But if inflation, or average earnings are higher than 2.5%, then the State Pension will increase in line with those instead. The highest one will win.

PHILIPPA: And it really matters right now because we’ve got very high inflation all of a sudden. If you’re dependent on the State Pension, then it’s really significant isn’t it? Because everything you’re spending, you’re getting 10% less for.

VIX: And everything’s costing 10% more.

JASPER: It sounds really great, right? And it’s really beneficial for people who’re taking their State Pension because they’ll get that increase. But what about everybody else in this country that aren’t getting the State Pension because they’re still working and earning? What about them? And that’s what’s often criticised in the media - that pensioners are getting the best deal. So, I would say, the jury’s still out.

PHILIPPA: Jasper, what’s risk?

JASPER: This isn’t being a risk devil or a risk taker.

VIX: Or a skydiver! I’m not going to go on this rollercoaster because the harness looks a bit loose? No! That’s not what risk is.

My mum got divorced about 10 years ago and she didn’t take care of any of the household finances, she ran our home and brought me up and did a brilliant job of it. But I think my mum’s perception of pensions was, it was kind of a benefit that work gave to you and it was a flat rate like a savings pot.

I remember, we went to the bank and sat down with a bank manager because I didn’t understand enough to help her. Even though she was like ‘You work in finance, you can help me make these decisions’, I was like ‘Oh, no thank you!’

They sat her down and they said, ‘Right, we want to understand what your interest in risk is.’ Like, how much of a risk taker are you? My mum was scrambling around, and she sort of fancied the bank manager as well, which didn’t help. So she wanted to seem a bit sexier and a bit riskier, and I could see the cogs turning in my mum’s head. And she was like, ‘Hmm, you know, occasionally I like a scratch card.’

JASPER: Risk is about how you want to invest your money. Other than the State Pension and defined benefit pensions, every other pension in the UK’s actually an investment, whether you like it or not.

It can be cash, it can be bonds, it can be stocks, it can be anything really. But the typical cocktail is a mix between shares and bonds, and then maybe a little bit of cash and property, and all of those come with a risk. Now, if you’re young and you’re growing your pension savings, you might actually want to take a little bit of risk as share prices can go up and down, as we are seeing right now.

PHILIPPA: But you might get potentially better returns?

JASPER: Yes, especially in the long run. And when you get a little bit closer to retirement, you might want to take less risk and therefore, you might be looking at investing in property, bonds or cash.

Now most pension plans that are out there will be a mixed cocktail. So, you might have a very strong cocktail when you’re young and maybe an alcohol-free cocktail as you get nearer to retirement. But most pension providers will start you off with a very ambitious cocktail when you’re younger and all you need to do is contribute. And then what they’ll do over time, is they’ll change the cocktail. So they’ll add more water to it.

PHILIPPA: So you’ll end up with mineral water at the end of it?

JASPER: Exactly. You want less risk when you’re two years away from taking your pension. And that’s what risk is all about.

PHILIPPA: Okay, I’m happy with that. I’ve got more pension related terms for you - what’s an annuity?

JASPER: So, let’s say you’re getting to an age where you want to retire and you’ve saved a pot of money. You can give that to a pension company or a life insurance company and in return they’ll say, ‘Oh thank you Jasper, thank you for your pension. And for that, I’ll give you a fixed amount until you die.’

And an annuity rate, let’s take 5% for example, basically means that you get 5% of your pot every year until you die. Now that’s usually linked to interest rates. So this is where the base rate comes in.

So if interest rates are really low, annuity rates will be low too. And annuity rates have been historically very low. Now, with the interest rates rising from 2.25% to 3%, even though it might not sound like a lot, it’s a huge change.

PHILIPPA: What about drawdown? We hear about this all the time - but what’s drawing down your pension?

JASPER: So, with an annuity, you give away your pension pot and in return, you get an income every month. In the case of a drawdown pension keeps your money invested for longer. At the same time, you can take your pension flexibly, withdrawing money whenever you need it. Up to 25% of your savings can be taken tax-free, with the remaining 75% subject to income tax. The amount you pay depends on your total income for the year and your tax rate.

VIX: Is that subject to the same income tax rules as your salary?

JASPER: Yes.

PHILIPPA: Like we were talking about earlier.

JASPER: So for example, people who are emptying their pension pots when they’re 55, that’s drawdown. Basically, you draw down your whole pot until it reaches zero. So, let’s say you have £100,000 in your pension and you take that in one go: suddenly, your income in that year is £100,000 and you’re going to have to pay a lot of income tax.

VIX: That’s an expensive boat!

JASPER: But if you take small chunks every year as income and leave the rest invested, it has a chance to grow over time.

You can take up to 25% as a tax-free lump sum or take 25% of each withdrawal tax-free. Your tax-free amount doesn’t use up any of your personal allowance, but once your withdrawals exceed this threshold you’ll be required to pay income tax. It’s important to consider how much you withdraw from your drawdown pension, and when you do so, to ensure you don’t move into a higher tax bracket.

If you’ve a small pension with a value of £60,000 you can take 25% as a tax-free lump sum, leaving £45,000 in drawdown. Once you exceed your personal allowance, each withdrawal will be subject to income tax. However, if this is your sole income you’ll only be charged the basic rate of income tax, as your total pot falls within the lowest tax band.

If you’ve a larger pension with a value of £400,000 you can take £100,000 as a tax-free lump sum. You’ll then have £300,000 to invest via drawdown. The amount you choose to withdraw in any given tax year will determine how much tax you pay and you could easily be required to pay higher rate or additional rate tax if you withdraw too much too soon or have other earnings. If, for example, you choose to withdraw a further £100,000 in a single year you’ll have to pay higher rate tax at 40%.

So it might be better if you take small chunks every year as income, and you leave the rest invested so it has the chance to keep growing over time.

PHILIPPA: Pension policy documents, they’re full of jargon, aren’t they? What are the common benefits and acronyms that we might find in pension policies?

JASPER: So you might find things like a Guaranteed Annuity Rate, a Guaranteed Minimum Pension, Protected Tax-Free Cash, Protected Pension Age. Basically these are guarantees that were given to customers in the past.

So just to give you an example: a Guaranteed Annuity Rate. If you were with pension company A and you wanted to buy an annuity, you’d get a really good rate from pension company A, because they didn’t want you to go to pension company B, C, or D. Nowadays, websites like Money Helper actually help you to shop around because there might be better deals out there.

PHILIPPA: Like we do with utilities?

JASPER: Exactly.

How and where can we learn about finance?

PHILIPPA: It’s all about better education around money and finance, isn’t it? And it always seems to me that basic finance skills, and I know you feel the same way about this Vix, is something that we should be teaching kids in school?

VIX: It absolutely is, because just in this session I’ve understood more than I’ve ever known. It can be scary, you’ll read the first couple of paragraphs of something and if you don’t engage with it straight away, I’ll just move on.

PHILIPPA: It’s bewildering isn’t it?

VIX: I sit down and I try but it’s confusing and I think people are embarrassed to ask questions. I was with my mum in that session, and she’s not a stupid woman, she’s a very intelligent woman, but she’s just had no exposure to this whatsoever so she didn’t know what to ask. And her view was that she just wanted somebody to tell her what to do and they weren’t able to do that.

That’s the one thing that a pensions advisor cannot do, you have to opt in. But she didn’t have the financial skills to opt in. And that dragged on for much longer than that session, because we came away from it and it manifested on the route home. She hadn’t really taken in what was said enough. So it took us a long time to get there.

PHILIPPA: I’m hoping there might be people who’re listening to this, who might not know anything about pensions actually, because we do talk about the basics. And we’re not frightened to talk about the basics because, as you say, no one really wants to admit they don’t know what drawdown is. And with the situation that we’re all in, economically, this stuff matters more than ever.

JASPER: Yes and I think as an industry, we’ve got to do much better than what we’re doing right now. At PensionBee, we want to make pensions simple so you can look forward to a happy retirement. That’s our mission statement. But every week there will be moments where it’s almost like someone presses a button and we’ll realise something is too jargony. So every piece of content we produce has a proper tone of voice check because we have to avoid these things creeping in.

PHILIPPA: Are you surprised just how low the level of understanding is in the finance industry? Because I always feel that, even in myself, as well as in others, who’ve worked in this field. There’s always stuff that, if you’re really honest, you just don’t properly understand?

JASPER: Yeah. Half of the time people don’t know that a pension’s actually invested, or that it costs you money.

PHILIPPA: And there’s no shame in not knowing that, is there?

JASPER: There’s no shame. I didn’t know that a pension costs you money when I joined PensionBee in 2015. I thought my company was paying for it but no, I was paying for it.

VIX: I found out today!

PHILIPPA: Have you got a favourite way of educating yourself more about this? We’ve got this podcast, there are other podcasts. But have you got any favourites, Vix?

VIX: I’m approaching 40 years old and I’m a Peter Pan. In my mind, this is something to worry about later. I’m astonished that there are 21 year olds walking around now that didn’t exist when I was a teenager. But I think we all want to believe that we’re still young enough that we could change the game. So I think it’s brilliant that all these resources exist, but particularly now, with the cost of living crisis, where people are trying to work out how they can budget until the end of the month, budgeting for even 10 or 15 years feels like a problem for another day.

So I think the press and financial experts need to do more to highlight the difference between tackling it now versus leaving it a few years - five years, 10 years, 15 years - because there’s a penalty for that. I’m already paying a penalty for that now I’m approaching middle-age. That hurts to say out loud!

PHILIPPA: If we’re talking to young Vix, Jasper, where would you send her? Is there a book, are there some websites you can go to, to look up financial terms?

JASPER: There are a couple of handy websites I would check out. Money To The Masses explains finance in a really easy way. And secondly, Boring Money is a really good website too.

VIX: I mean they’re really under-selling this!

JASPER: They’re looking at how to turn something boring into something actually really exciting and hopeful. So that’s what they do. They’ve also launched a really good community hub especially aimed at women and their savings, because they tend to be behind in terms of their pension savings, for example. So I think that’s really good. And of course, Money Helper‘s also definitely a really good one to go to.

PHILIPPA: That’s all really helpful. I’m gonna wrap it up there. Thank you both very much.

VIX: Yeah, it’s been a brilliant educational day for me, so thank you.

JASPER: Yeah, thank you both!

PHILIPPA: That’s it for this episode and Series One. A final reminder that everything you’ve heard on this podcast should not be regarded as financial advice and wherever you invest your capital is at risk. We’ll be back with you in January 2023 with Series Two and we’ll be kicking off with financial personalities - what’s yours and can you harness it to help you reach your savings goals?

If you’ve got a moment, we’d love it if you could rate and review us on your podcast app, or you can share your feedback and suggestions for future episodes by emailing podcast@pension.com. Thanks for being with us this year. Have a great Christmas break and join us again in January.

Catch up on episode 11 and listen, watch on YouTube or read the transcript.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

‍

The following is a transcript of a bonus episode of The Pension Confident Podcast - Tips for the end of the tax year. You can listen to this bonus episode or scroll on to read the conversation.

PHILIPPA: Hi, welcome to another bonus episode and as the end of the tax year is coming up fast we’re going to be talking pensions, ISAs and tax!

From tax relief to ISA limits, we’ve gathered some top tips and insights from our guests to help you get your finances in order. And before we get going, remember, anything discussed on the podcast shouldn’t be regarded as financial or legal advice, and when investing, your capital is at risk.

OK, first up, you’ve probably heard people talk about tax relief but what is it and how does it work? Here’s Financial Journalist and Founder of Much More With Less, Faith Archer from episode 32 with a great little explainer.

FAITH: One of the good things about pensions is the government wants to bribe us into saving for retirement. You get free money on top of your pension contributions. You automatically get basic rate tax relief. Every pound you pay into a pension, the tax relief added is 25p as a basic rate taxpayer, and you can claim back further tax relief if you’re a higher or additional rate taxpayer. And also, if you’re paying into a workplace pension, then by law, your employer has to contribute to that pension fund as well. There’s certain minimum amounts they’re set to do, but different employers can be more generous. It might be that they’re willing, if you pay in more, they’re willing to match those contributions and put even more money towards your retirement.

PHILIPPA: So much for pensions, what about other savings? Here’s Founder of Boring Money Holly Mackay from episode 29 talking about Individual Savings Accounts - or ISAs, and another way to save your money tax-free that you may not know about.

HOLLY: I love ISAs. They’re like Tupperware pots. You stick your money in, and the taxman can’t get his hands on what’s inside that pot. This is really important because the tax take for all of us is going up and up and up - and is just going to keep going up. So, ISAs are awesome. But, spoiler alert, we also get a certain amount of money every year we can earn in interest and not pay tax on, whether it’s in an ISA or not.

PHILIPPA: And that’s currently?

HOLLY: That’s the Personal Savings Allowance. It depends on how much tax you pay. If you’re a higher rate taxpayer, you can earn £500 a year in interest before you pay any tax on it. If you’re a basic rate taxpayer -

PHILIPPA: Which is most of us.

HOLLY: Yeah, you can earn £1,000 a year in interest. For me, the smart move, I think, is to look at your first lump sum of money, any cash savings, and go for the good rates. And quite often, those aren’t in Cash ISAs. But just make sure that the interest you earn on that every year isn’t going to go above that Personal Savings Allowance. So, £500 if you’re a higher rate taxpayer or £1,000 if you’re a basic rate taxpayer.

PHILIPPA: That’s a lot of interest, isn’t it? Most people aren’t going to be getting that much interest on their savings. So, they’re not going to be paying any tax regardless.

HOLLY: And with current interest rates as they are, to give you an idea, if you’re a basic rate taxpayer, that’d be about £20,000 in a savings account. That’d generate about £1,000 a year. So, it’s quite generous.

PHILIPPA: There’s another type of ISA well worth knowing about and that’s called the LISA. Here’s Holly again.

HOLLY: But I think for people, particularly people in their 20s, 30s who’re thinking about buying a property, you’re cautious about locking your money away into a pension. And this is where I think for people under 40, an alternative is the Lifetime ISA. This is a vehicle where you can pay in up to £4,000 a year if you’re under 40, and the government will match that with up to £1,000 every year. So that’s a total of £5,000 you could save there. There are catches with that. You have to spend that money either on buying a first property, or if you change your mind and decide not to, you can then use that for retirement. If you change your mind and take the money out sooner, you get clobbered with punitive rates. So, you have to be pretty damn sure that you’re either going to buy a property or use it for retirement. But that’s a vehicle that does give people who’re saving for a property a bit of flex. It’s an alternative to a pension. There are pros and cons to both. But particularly, I think for self-employed people who don’t have those workplace contributions it’s an interesting tax wrapper to have a look at.

PHILIPPA: And talking about those pros and cons, let’s hear from PensionBee’s VP Public Affairs Becky O’Connor in episode 17 when she talked about how you can use ISAs and pensions together.

BECKY: My investments are like a wild flower garden. I’ve got bits of money saved everywhere. There’s a bit in a Lifetime ISA, a bit in a Stocks and Shares ISA, some in Junior ISAs for my kids. They’re not all doing well and I’m not contributing to all of them, all the time either, they’re all there - but they’re not pension substitutes. Although with the Lifetime ISA, I do quite like the idea of getting this bit of cash at 60. With a pension you can access it at 55, although that’s going up to 57 from 2028. I just quite like the idea of having this little extra bit [saved], because my boys will then be a certain age, where they might be getting married or buying a house, or something. So that’ll be quite nice.

PHILIPPA: Becky, when we were talking about this podcast a couple of days ago, you raised this point didn’t you - about the Lifetime ISA being closest to a pension. If you’ve already got a home and you have a pension, is there any point in having a Lifetime ISA?

BECKY: Yeah, I think it’s something people come up against as a bit of a dilemma. For the reason I previously gave, it might be quite nice to have a pot that’s coming your way at 60. Obviously with the Lifetime ISA, you have the bonus and with pensions, you have the tax relief. However much you get in tax relief depends on whether you’re a basic, high rate or additional rate taxpayer. So, it depends on your taxpayer status, for one thing, as to which works out better.

There’s an annual allowance on pension contributions. And there’s another kind of loophole, which means you can use a previous year’s allowances on your pension as well, which is worth knowing about, if for some reason you’ve quite a bit of cash coming your way.

CLAER: If you come into an inheritance?

BECKY: Exactly. And that can be quite handy at that point.

PHILIPPA: Let’s wrap this episode up with Financial Expert and Author Peter Komolafe. In episode 17 he shares something to keep in mind if you’re thinking about opening more than one ISA.

PETER: Right, the ISA rules can be very, very confusing sometimes. So if you have a Stocks and Shares ISA, you can have that and you can also have a Lifetime ISA invested in Stocks and Shares as well. That’s completely fine. What you can’t do, is have a Lifetime Stocks and Shares ISA open with X provider and then go open another one with Y provider in the same tax year. So you’ve gotta be sure in terms of who you’re choosing to allocate. You can have a Stocks and Shares ISA, just a normal one, and a Lifetime ISA that’s invested in Stocks and Shares as well. That’s completely fine and within the rules.

PHILIPPA: And that’s a wrap. For more information around pensions and tax, head to the PensionBee website and search for “Pensions Explained“.

Just a last reminder before we go that anything discussed on the podcast shouldn’t be regarded as financial or legal advice. When investing, your capital is at risk.

You can listen back to all those episodes in full wherever you get your podcasts. We’re also on YouTube and in the PensionBee app too! If you subscribe right now you’ll never miss an episode and while you’re doing that, please do leave us a rating and a review. It’ll only take a moment and you know we love to know what you think!

Thanks for listening.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

‍

The following is a transcript of our monthly podcast, The Pension Confident Podcast. Listen to episode 37, watch on YouTube or scroll on to read the conversation.

Takeaways from this episode

• Financial engagement is essential - staying engaged with your finances can significantly impact your retirement savings, potentially saving you up to £500,000 over your lifetime.
• Visualising the ‘future self’ - imagining yourself as retired can be tricky, but using tools that help visualise your future can help you make better financial decisions today.
• Simple actions matter - small, consistent actions, such as reviewing pension contributions and fees, can lead to significant improvements in retirement savings.
• Automation helps - automating savings can simplify the process and encourage consistent saving without the need for constant decision-making.
• Setting realistic goals - establishing achievable financial goals rather than overly ambitious ones can help maintain motivation with retirement planning.
• Education and resources - using available resources, such as PensionBee’s Pension Calculator, can empower individuals to make informed decisions about their pensions.

PHILIPPA: Hi, welcome back. Today, we’re exploring a simple question: the most effective way to max out your chances of retiring comfortably. It might not be what you’re thinking because it’s not about trying to chase down a six-figure salary or taking huge investment risks - it’s actually just about always paying attention to your finances.

Ignoring what’s going on with your money, it can cost you. New research from PensionBee shows that ‘financial disengagement‘, as it’s known, that can cost savers as much as £500,000 over their lifetime. So, serious money.

But when did you last check on your savings? Do you actually know how much you got set aside for retirement? Small decisions made today could transform your future because they give your money time to grow. And here’s the good news: staying engaged isn’t that hard.

In this episode, we’re going to show you how to do it. I’m Philippa Lamb. Just before we begin, if you haven’t subscribed to The Pension Confident Podcast yet, why not click right now so you never miss an episode.

We’re talking about how to be ‘financially engaged’. Here with me, I have Bola Sol, she’s a Financial Adviser, Money Columnist and Author. Neil Bage is a Behavioural Expert and Co-Founder of Shaping Wealth. And from PensionBee, Head of Consumer PR, Laura Dunn-Sims. Hi, everyone.

ALL: Hi.

PHILIPPA: Here’s the usual disclaimer before we start. Please do remember, anything discussed on the podcast shouldn’t be regarded as financial advice or legal advice. When investing, your capital is at risk.

Common financial pitfalls

Now look, everyone, before we start telling people they need to pay more attention to their finances, I’m going to freely admit I haven’t always done this. I’ve definitely buried my head in the sand about money - more than once! How about you? Have you always been good?

NEIL: No.

PHILIPPA: I’m glad. I’m feeling better already.

NEIL: It’s difficult. We have a gazillion competing priorities in life - money is one of them. Unfortunately, it’s the one that often falls by the wayside because, let’s face it, it’s a bit difficult, it’s a bit complex.

PHILIPPA: It feels that way, doesn’t it?

NEIL: Yeah, that’s right.

PHILIPPA: Laura, you do this stuff for a living. Have you always been a good girl about it?

LAURA: No, I’ve not. When I first left university, my first job, I actually opted out of my workplace pension because -

PHILIPPA: - I did this, too.

LAURA: Yeah, I wanted the extra money and I had no idea of the benefits of saving into a pension. I wouldn’t do it now, but yeah, lesson learned.

PHILIPPA: Yeah, I didn’t even bother to respond. I got an email, and “would like to be?”, and I didn’t. And so, of course, it never happened. Bola?

BOLA: No. [In my] mid-20s, I took a contracting job, which means I didn’t get permanent benefits as a permanent employee. I just didn’t think about my pension. I was all thinking “oh yeah” getting all the cash for a few years. Not once did I think about my pension - but I do think about it more now.

PHILIPPA: Well, yeah, as time goes on, I think we all think about a bit more. But I mean, this is the trick, isn’t it? Starting early. It’s like you say, we’ve all got our reasons for not keeping a closer eye on our money: life is busy, pensions can feel confusing, I mean can you even remember your login details?

Laura, we do need to do this, though, don’t we? Because you’ve got this new research from PensionBee talking about this £500,000 potential loss of being disengaged from your pension. Where does that number come from? How does that work?

LAURA: So, our research found that savers who consistently engage with their pension throughout their working life typically have better retirement outcomes. That’s because small early actions, such as assessing how much you’re contributing or how much you’re paying in fees, that can really make a difference in later life. Basically, the more you know about the pension, the more tangible it becomes, and then you can make more informed decisions from there.

PHILIPPA: And the trick here, I’m going to keep saying this in this podcast, is starting early. Because as we mostly admitted around the table at the beginning, when you start out in work, you’re just not thinking about this, are you? So, just getting your head around the fact that it’s a thing that matters to you, might not matter now, but it’s going to matter later.

Visualising our ‘future selves’

PHILIPPA: Neil, we’re not great at doing that, are we? It feels so far away that you don’t feel you need to keep on it?

NEIL: Yeah. As humans, we have a really interesting challenge with our ‘present self’ and our ‘future self’. And the future self (so, the Neil Bage in the future, right?) it’s a stranger to me. And in order for me to engage with my future self, I need to use my imagination and think “OK, who do I want that Neil to be when I reach 60 or 65”. Or whatever the date is, whatever the age is.

But the challenge in that isn’t only am I relying on my imagination, I’m also trying to weigh up the day-to-day challenges of living life. The bills and the holidays and all of the other things that are competing for my cognitive attention. And so, we’ve always as a species had a really difficult time to put ourselves into a future state and make decisions today that will ultimately benefit me in the future. It’s a notoriously difficult thing for us to do.

PHILIPPA: Yeah, that visualisation. Particularly when you’re in your 20s, visualising yourself in your 60s or your 70s - I mean, it feels almost impossible, doesn’t it?

NEIL: It’s incredibly difficult, and I’d say impossible. There’s a great piece of research by Hal Hirschfield, a Professor in the US, who is one of the world’s leading authorities on ‘future self‘. He created this app where it would age you and then say, “I now need you to make some decisions”. And what they found is people who looked at an aged version of themselves typically invested more money into their pension than someone who didn’t. And it’s not just picturing it, it’s planning for who you want to be.

The other challenge is there’s an amazing psychological phenomenon called the ‘End of History Illusion‘, whereby if you ask people, “are you different to how you were 10 years ago?”, people go, “yeah, I am”. “What about 20 years ago?”, “very different”. “30?” “Oh, I don’t recognise that person.” “Great. How much do you reckon you’re going to change going forward in the next 10 years?”, people will typically say, “not a lot”.

PHILIPPA: Really?

NEIL: It’s called the End of History Illusion because we believe that we’re the finished article today. That’s playing out at the same time. Then when somebody says, “can I talk to you about a pension?”, which is about saving for your future. You’ve got these unconscious conflicts going on all the time.

Overcoming complacency with pensions

PHILIPPA: It’s interesting, isn’t it? The other thing I’m thinking [about], Bola, is if you’ve got a pension, if you’ve been auto-enrolled into a workplace pension, whatever it is, there’s that temptation [to think], “well, job done”, right? And complacency sets in, and you never think about it again.

BOLA: Oh, absolutely, because you tell yourself “it’s being taken care of, so I can’t be asked to look at it”. I have conversations with people and ask [them], “do you know what it’s invested in?”, and they say “I have no idea”, because it takes away, as you said, the stress of competing with everyday life priorities and stuff. So, you think, “look, I’ve got some money in there, not sure how much it is, but it’s doing something”.

The £500,000 ‘cost of disengagement’

PHILIPPA: Laura, this is the thing, isn’t it? This is where the £500,000 comes in, that if you do think about it early, you can make a real difference to it. Can you talk us through the missed opportunities that people have to engage with this?

LAURA: Yeah, definitely. I think engaging with a pension doesn’t have to be as overwhelming as sometimes we think it can be. It’s really simple steps like understanding what your pension is invested in.

Simple things like moving from a poor performing fund, which might typically be giving you about a 3% annual return a year, to finding a better performing fund, for example, maybe giving you a 7% annual return. Over your lifetime of saving, that can add almost £500,000 to your pension.

It’s those simple things like perhaps you’ve changed jobs. You have an old pot that you haven’t thought about for a few years, you find it, you consolidate it into one pot if that makes sense to do so. And then you’re only paying one set of fees instead of two. Then from there, you can start planning and making those decisions in the future that helps retirement feel so much more tangible.

How can we make the numbers feel real?

PHILIPPA: In terms of ‘the how’ you do all this, thinking that most people are definitely not experts on pensions. You’re thinking, “OK, I should be - I don’t even know how good my fund is. Is this a good thing? What I’ve got now? Should I be somewhere else?”. How do you make those decisions? Where do you start with that?

LAURA: So, your pension provider should be able to help provide a ‘fund sheet‘, which would give you an overview of performance. There’s also the government’s MoneyHelper website, they give free, impartial advice. So, they can help you navigate that a bit more.

There’s lots of great educational tools like pension calculators, where you can play around with your contribution amounts, change the age you want to retire at, and then that can really help you give a personalised view of what saving for retirement could look like for you.

PHILIPPA: They’re quite fun, aren’t they? In that whole thing of being, “if I could save a bit more now, I could have a yacht when I’m 70!”. But I think as part of the visualisation process that you were talking about, I think they’re pretty good for that, don’t you?

NEIL: Anything that I can look at, anything I can engage with, that allows me to put a piece in the jigsaw puzzle (if you like) is helpful. And the more it feels real, the more it feels achievable, the more likely I am to then engage with it. The more I see something and I go, “I’ll never, ever do that, I’ll never reach that figure” - it becomes a barrier to entry for any of us. That’s no different to other walks of life.

You don’t really need to go to the gym and pay £50 a month for gym membership if you’ve never been to the gym. Because the likelihood is you’re not going to stick it out. Because you’ll go to the gym, you’ll forget how difficult it is. You’ll see all these other people around you pumping weights and doing all the things, and you go, “oh, I’m not like them”. And so, you retreat from that.

That’s the same as our money life. It’s no different. If you see something that you go, “but that’s not me”, it makes it notoriously difficult to engage with it. It needs to feel real.

PHILIPPA: So, this is setting realistic goals then, not setting some crazy aspirational thing and then thinking, “I’m going to fail before I’ve even started”. I mean the gym is a great analogy, I think. That whole thing, you walk in, and think “this is just never going to be me. These people are so fit and gorgeous”.

NEIL: That’s why I’ve never joined a gym. It’s never me.

PHILIPPA: You see, I go all the time.

BOLA: I go. I just stare at people in the corner like, “wow! Maybe one day I’ll be there, but I’m just going to stay over here for now”.

PHILIPPA: Yeah, at least you’re going, Bola, right? I mean, you can be one of those people, I think.

Transitioning from an ‘immediate return’ to ‘delayed return’ environment

PHILIPPA: I wonder as well, with pensions, I mean, old age, no one’s looking forward to it, right? We push it away. Why would you want to think about it? Isn’t that another barrier? You’re talking about financing a time of your life that you don’t really ever want to get to.

NEIL: Look, inertia is a really powerful issue - or challenge - for all of us. But deep rooted behind this is a bigger challenge that we never address. It’s the elephant in the room, right? So, let’s talk about it.

Human beings have been around for five and a half million years. We’ve been evolving for five and a half million years, and we have a fine-tuned sense of how to engage with the world around us. We’ve developed the most amazing skills to communicate with each other, to spot danger, to spot threats, to lean in when people need help, to lean back when you feel that you’re in danger - all that type of thing.

But during this period that we’ve evolved, things have been invented that we as a species have had to try and adapt to. And one of them is money - money is an invention. And the thing is, we’ve been around for five and a half million years. Money has been around for 2,000 years. So, it’s a relatively new thing for the human brain to navigate. So, pensions [are] a nuanced element of our money story.

Borrowing, investing, saving, giving, earning - all of these dimensions of our money life bring with it challenges. And when you say “save”, that in and of itself is a difficult thing. When you then go, “oh, by the way, I’m talking about a pension”, it becomes nuanced in a way where people go, “I can’t even save £5 a month to do this, and what you’re asking me to do something, and by the way, I’m not going to see it again for 35 years”.

So, the elephant in the room is we need to get better at addressing people’s money life first before we go down to a deeper level, which is talking about a specific solution, almost in a specific vertical. And if we can lift ourselves up and engage people at that level, I see this time and time again with our clients around the world. It completely transforms the conversation.

PHILIPPA: That’s really interesting. I mean, in the same way, even the concept of saving for the future in terms of human existence is quite a new idea, isn’t it?

NEIL: Of course.

PHILIPPA: Because we were lucky just to get through the day for human existence. So, the idea of “I’m saving for years ahead”, it’s quite a fresh thought, isn’t it? I mean, if we think of ourselves as animals, as you say.

NEIL: It really is. But it is right. If you go back to the five and a half million year timeline, we’ve probably spent 99% of that time in what’s known as an ‘immediate return’ environment. If I was hungry, I ate. If I needed food, I’d hunt. We now live in a ‘delayed return’ environment, where the benefits of what I do aren’t beneficial to me up until some future state. That messes with a brain that has just spent five million years in a world that screams “now”.

PHILIPPA: Get through the day.

NEIL: Now we’re saying, “later”.

PHILIPPA: Yeah!

How to retire with more money

PHILIPPA: Yes. See, I think we’re getting at something here. Now, Bola, tell me, if we’re thinking we’ve understood our difficulties here, the barriers, getting started on this, your tips for this. I mean, how do people - If people are thinking, “yeah, this kind of is me and I know I need to do something” - where do they start?

BOLA: First of all, looking at where you’ve worked before and asking, “did I have a pension there? And do I know where it is now?”. Because I think so many people - we know that there are billions in lost pensions. And instead of feeling like, “oh, I don’t have much to start with”, have you looked into where you’ve worked before and what pensions you have there? I think that’s incredibly important.

It can give people a bit of hope because that’s what I did. It gave me hope to just feel like, “OK, well, there’s a pot of money, and then there’s another lot of money there”. As opposed to before, there [were] maybe five different pots, and I was just like, “this feels quite overwhelming”. That’s what the government website is there for. You can check there.

PHILIPPA: Yes, they can find your lost pensions.

BOLA: Yeah, they can find your lost pensions. Second of all, look into what you’re investing in. Choose a type according to the attitude to risk that you have. I think that’s incredibly important because you may have a higher level of risk at particular stages of your life. I wouldn’t say age, but stages of your life, because you get to a point where you’re like, “OK, I can afford the risk right now”. Then you get to other points where you’re like, “absolutely not. Now is not really the time to be making those big decisions with my pension”. Maybe I’m getting closer to my pension age, I don’t really want to play with that money.

PHILIPPA: Yeah, I want to talk about risk, an appetite for risk a bit later on. The other thing that’s in my mind is contributions - because contributions are contributions, right? They just tick over, we don’t think about it. But there’s that thought as well, isn’t there? That if we’re talking about long-term savings growing with the power of compound interest, that marvellous thing, compound interest over time, even a small rise in how much more you put in your pot can make a huge difference. So, it’s about finding a little bit each month if you can. Those savings, I think, can be helpful, can’t they?

BOLA: Exactly. I speak to people about that a lot. I say, “can you put a bit more in?”. And sometimes I get, “oh, I don’t want to”. I’m like, “you’ll be happier in the future”. It’s so funny because you’re trying to make them see their future self. And funnily enough, what you said earlier, I can’t wait to be older.

PHILIPPA: Really?

BOLA: I know that you can become more unfiltered with age. And I’m just like, “oh my gosh, 70 plus, I’m going to run amok! Just be saying anything I want to”.

PHILIPPA: OK, we’re all back around the table when Bola’s that age and we’ll see what she says. I think, Laura, it’s important to understand, is it? We’re talking about upping our contributions. People think, “well, I just can’t. I just can’t”. We’re all strapped for cash. But it doesn’t need to be a lot, does it? I mean, say you could manage £50 a month more. What’s that going to look like, say, 30 years?

LAURA: Yeah. If you made a £50 contribution every month for 30 years, that could give you about £27,000 extra in your pot in retirement. It’s a very small action, but it’s the - Because it’s been done over a long period, it’s as we mentioned, compound interest. It allows your money more time to grow and you start almost earning interest on the interest you’re earning.

Yeah, I think it can be really powerful. One thing we sometimes say is sometimes it’s easier to think about it as a percentage rather than, I’m going to add £50 more. If you think I’m going to increase my contribution by 1%, 2%, then you can do that in line with if you have a salary increase or perhaps you have a bonus, and it helps you think about your overall financial position instead of maybe just plucking a number out of thin air because you think £50 sounds good, sort of thing.

NEIL: Laura, you raise a really valid point here. If I use this phrase, “human beings are born as storytellers, we’re not born as calculators“. That phrase is important. In some regards, as you say, OK, then I’m not going to baffle them with numbers. Great. But we can use it to our advantage, because if we say, just increase it by 1%, People go, “oh, that’s a small number. Oh, I could do that”.

So, we’re using it to our advantage to get them to take action. It’s not nefarious in any way. It’s playing on the fact that if you said, “oh, increase it by £50”, they can model £50 in their head. They know what £50 buys. They don’t know what 1% buys because they can’t do the maths. Sometimes we need to be clever in how we communicate with people.

Automate your way to compound interest

PHILIPPA: You can use technology as well, can’t you? To do this stuff for you because I love tech. This whole idea that you can set up all sorts of triggers with your banking. But when your savings get to a certain level, automatically ‘X’ amount goes into your pension or ‘X’ amount goes into some other form of savings. So, that you don’t even have to have that conversation with yourself, and it just does it for you. Do you use those? I think they’re really helpful.

BOLA: Yeah, I do. I know that there’s some apps where there’s things like, “oh, when it rains, put money away”.

PHILIPPA: Oh, that sounds great to me.

BOLA: I didn’t do that. Living in the UK, my friend does that. Living in the UK, I’m like, that is a very risky game because it rains a lot.

PHILIPPA: You say that, but it’s really beneficial, isn’t it?

BOLA: Yeah, exactly. Literally saving for a rainy day. But yeah, I do use some of those.

PHILIPPA: Yeah, I think that’s the thing, isn’t it? Then you don’t run that risk of a year later thinking, “oh, I got that rise, but actually, I’m so used to it now that it doesn’t feel like a rise. I haven’t done anything with that money, and I could have had a year of compound interest on that if I’d done it”. Technology can really help take some of the muscle out of it for you, can’t it?

NEIL: I use an app and I invested a small amount of money in it. I’ve kept it and I use it, and I’ve used it for now for three years. Basically, all it does is it goes into my bank account every week and it does an analysis of what my income is and my expenditure, and it just takes a tiny amount and takes it away from me and puts it into a savings account. And I never see it. I don’t miss it.

I get an email off them saying, “oh, we’ve just taken £43.62”. And you go, “amazing, OK, thanks”. And then I move on with my life. But when you go into the app and you look at how much money you’ve saved, it really is a “oh my word. That’s unbelievable”. And that’s both of them: it’s automating, but it’s also the power compounding - because it’s sitting there now and it’s doing something.

PHILIPPA: I think sometimes we talk about this like, “you should be doing this, you must do this, it’s important to do it”. But I’m not sure we talk enough about how nice it feels when you do. Because it gives you a real - Well, maybe it’s just me.

BOLA: Oh, I get it too.

PHILIPPA: But you stash a little bit of money or you look at your balance. And with apps, obviously, you can check your pension balance whenever you want to. And you do get that little, “oh, that’s nice”.

BOLA: I literally, what you said, I had an app doing that for two years, but I completely forgot about it. One time I was strapped for money and I was like [sliding out] the front door. I felt like I’d won the lottery. Although it was my money.

PHILIPPA: You did it, but it feels like a gift, doesn’t it?

BOLA: It felt great. Yeah, it does.

Understanding ‘risk’ in an investment context

PHILIPPA: The other barrier to all this is investing. We talk about this a lot on the podcast: saving versus investing. Because [with] saving, you feel good about saving, but you can always get your hands on your money. Investing, tying it up, it’s daunting. I mean, it’s an uncertain world. Stuff happens. We know this, job loss, whatever it might be, things that we’re not expecting. Good things, like unexpectedly having all sorts of nice things come to your life. It can be expensive.

That whole idea of, “do I really want my money where I can never get at it?”. I wonder whether we can talk a bit about how to get past that feeling of that being an overwhelmingly permanent final thing to do, particularly women. I think at PensionBee, you’ve got data on this, haven’t they? We’ve talked about it before that women, we like to save, but we like to be able to get our hands on it. How do we do this, Neil? You’re the one who’s going to tell us the psychology behind this. How does that not feel overwhelmingly risky to us?

NEIL: It doesn’t, and we have to accept that it’s overwhelming and risky. Two words. It’s overwhelming because every fibre of your brain is saying, “live today”. I can put my money into a savings account and the bank will say to me, “oh, you’re going to get 1% interest” and I can go, “OK, fine. Will I lose my capital?” “absolutely not”. That gives me a safety barrier. I know that if I put £10,000 in, I’m going to get at least £10,000 back. Whereas if I put £10,000 into a stock market or investment, there’s a risk that I might get none back.

Now, there’s an interesting thing that we can help people with here, and that’s understanding the difference between ‘possibility’ and ‘probability’. We often confuse those two things [interchangeably]. “Is there a possibility that I could lose money in a stock market investment?” “of course”. But it’s highly improbable. In other words, the chance of that happening, statistically, is incredibly slim, almost virtually zero, if you choose the right investment, right?

PHILIPPA: And it’s a long-term investment.

NEIL: And it’s a long-term investment. The only way you’re going to realise its value is if you stick the course. If you allow it to do what it needs to do. And that’s difficult because the roof breaks, the car’s broken down, and whatever, whatever - life happens. But the evidence is crystal clear, the sooner you can start investing in a pension, the sooner you can put your money to work, the more you will get back at the point in life when you need it. Your future self will turn around and say, “thank you so much for doing this for me”.

PHILIPPA: I mean, Laura, that’s the point that we should mention because we’ve talked about keeping an eye across your finances. That’s what the whole episode is about. But if you check your pension balance all the time, for years and years, you’re going to be looking at it at some point, it’s going to go down in value because it’s dependent on global financial situations you have no control over, your pension provider has no control over. So, one day, and it’s probably going to happen more than once, you’re going to look at the number and think, “oh, wow, that’s less than I thought”. Tell us, just reinforce the message, why we shouldn’t worry about that?

LAURA: Yeah, absolutely. I think it’s important to remember that pensions are long-term investments. And particularly if you’ve got a long investment horizon, so you’re not expecting to retire anytime soon, then you have a long time for the market [to] recover and you can weather that market volatility quite well. Typically, as you get older, you can move to a pension that ‘de-risks’. If you’re retiring very imminently, you wouldn’t have big nasty shocks, sort of thing.

PHILIPPA: Yes.

Balancing greed and fear

PHILIPPA: We’re balancing greed and fear, aren’t we? We want great returns on the money, we’re frightened of losing it - and they’re perfectly natural emotions. Thinking about how we make objective decisions, Neil, and we’re back to the whole ‘tell us how to do it’ thing. We’re aware you can feel the fear. When you - Money worries really get you like nothing else. You can really feel the anxiety in your heart, can’t you? When you think, “oh, that’s not as much as I thought it would be”. That’s bad news. And then the temptation to [make] a knee-jerk decision is really there, like a rush to action. How do we train ourselves to be less emotional about this and more rational?

NEIL: Man, that’s the million dollar question, right?

PHILIPPA: It is!

NEIL: It really is, because money is an emotional lightning rod. The second you say “money”, the brain goes into a place of, “oh, we’re going to have a difficult conversation. Do I want to really do this?”.

PHILIPPA: “It’s going to be complex”.

NEIL: “It’s going to be complicated. I’m going to hear jargon. I’m not going to understand. I’m going to look stupid”. All of those things. And risk is an important part of the story here. We need to learn more about money from a personal perspective. What I mean by that is we all have ‘money stories’. We all grow up and hear things about money. “We live our lives hand to mouth” or “oh no, we save because we’re a family of savers”. All of these stories we hear as kids -

PHILIPPA: You get an identity, don’t you?

NEIL: We get an identity, and it’s a ‘money identity‘, and it becomes part of who I am. And the more we can be objective about the decisions we make, the more we can make them based on fact and evidence, the better the decision will ultimately be. We shouldn’t really be making decisions about our long-term financial futures based on our gut or “it feels right”.

PHILIPPA: “I’ve got a friend who’s doing it”.

NEIL: Yeah, exactly. That’s completely subjective. Congratulations. Buy your friend a bottle of champagne and say, “well done”. But the reality is their life is their life and your life is your life.

PHILIPPA: So, countering that fear, that anxiety, I mean, there are rational things you can do. We haven’t talked about ‘diversification’. If you’re worried about risk, if you’re worried about a ‘bad number’ that you’re suddenly seeing on a screen - how do people do that? So they can balance out those risks.

BOLA: Yeah, I think it’s key to invest in different types of assets and ask yourself, “what are you comfortable investing in?”. Maybe also, ask yourself, “what don’t you know?”. Being British, we know about property quite well. But then you want to look at, OK, stocks and shares or bonds, for example, in different ways that you can invest.

And also, different markets. If you invest in funds, maybe you don’t know much about markets in Asia, for example, or America. But this is where you come in, you learn, you ask questions. Then just remember, you can take different percentages. If there’s something that you deem to be safer and you have a better understanding of, you maybe say, “I’m comfortable to put 40% of asset allocation into this one thing and then maybe 20% in another”, and just realise that how that number and what you put in can change over time.

How to make (and keep) good habits

PHILIPPA: Well, we need to wrap this up really now. But before we do that, I’d like to get back to that whole idea of how do we embed these good habits that we’re trying to form because Neil, you talked about the gym. We can think about diets all of us have been on. That whole sense of how do you make saving and investing feel fresh and worth doing for life. Bola, what have you got?

BOLA: Well, automation is important. So, wherever you can automate money and contributions to your pension. Yeah, I’d say that’s key. And potentially, if you can add more in manually yourself, maybe set quarterly reminders on top of the automation, that way you have two different sets of reminders. One that’s happening automatically and one where you can say, “oh, I wonder, do I have a bit more money at the moment to put in?”.

PHILIPPA: I do that. Calendar reminders, that simple. It’s a nice idea, isn’t it? Set them for weekends, though, because if you set them in the week, you don’t do it. I speak from experience here because life gets busy. Then before you know it, you’ve forgotten about that calendar reminder. Laura?

LAURA: When it comes to my pension, I’m going to have a ‘home pot‘ sort of approach. I’m going to have one pot that I keep throughout my career. Then as I go through all my old pots, I’m just going to move into the home pot. The idea is I should hopefully always have only one to two pensions.

PHILIPPA: Yeah, simplification. I guess there’s a lot to be said for that, isn’t there? How many more passwords do we need to remember?

BOLA: Honestly.

PHILIPPA: Yeah, I know. Thank you all very much indeed.

ALL: Thank you.

PHILIPPA: And thanks everyone for listening. It seems to me this is all about looking after the pennies and watching them turn into pounds - eventually.

If you’re enjoying the series, do give us a rate and a review. It really helps us reach more listeners like you. And if you’ve missed an episode, don’t worry. You can catch up anytime on your favourite podcast app, YouTube, or if you’re a PensionBee customer - in the PensionBee app.

Next month, we’re going to be looking at how to stay on top of your finances if you’re shifting careers. You might be reskilling into a whole new line of work, becoming self-employed, maybe in later life, or even starting a business. We’re all having to be more agile in our working lives, and we’ll have plenty of tips and inspiration to help guide you through your next step.

Just a final reminder, anything discussed on the podcast shouldn’t be regarded as financial advice or legal advice, and when investing in capital is at risk. Thank you for joining. We’ll see you next time.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

‍

The following is a transcript of a bonus podcast episode of The Pension Confident Podcast. Listen to the episode or scroll on to read the conversation.

Takeaways from this episode

• Understanding the new tax year - the new tax year started on 6 April 2025, which resets your annual tax allowances. This is an opportunity to set financial goals, such as utilising savings accounts like ISAs.
• Incomes and income tax - the National Living Wage for those aged 21 and over will rise from £11.44 to £12.21 per hour.
• Frozen tax thresholds - the freezing of income tax and personal tax-free allowances means that more people may be pushed into higher tax brackets as their salaries increase.
• State Pension adjustments - the State Pension will rise by 4.1%, benefiting from the triple lock. But some pensioners may feel worse off due to the withdrawal of the Winter Fuel Payment.
• Changes to statutory sick pay - Statutory Sick Pay will increase from £116.75 to £118.75 per week, though this remains a minimal change.
• Increased parental pay and childcare benefits - Statutory Parental Pay will see a nominal increase, while free childcare hours will expand significantly from September 2025, although potential costs remain a concern for parents.

PHILIPPA: Hi there. Welcome to a bonus episode all about the new tax year and what it could mean for your finances. Now, last November, we had Chancellor Rachel Reeve’s first budget. We’ve just had her first Spring Statement. So what’s changing? Well, plenty! From the minimum wage to tax bands, sick pay, and the State Pension - a bunch of announcements came into effect on 6 April. So now’s the perfect moment to get your head around them.

I’m Philippa Lamb, and if you’re not already subscribed to the podcast, why not click to sign up right now? Faith Archer has just walked into the studio. If you’re a regular listener, you already know she’s an old friend of the podcast. She’s a Financial Journalist and Founder of the personal finance platform, Much More With Less - which helps people make the most of their money. Welcome back to the podcast, Faith.

FAITH: Great to be here.

PHILIPPA: It’s nice to see you again. Here’s the usual quick disclaimer before we start, please remember, anything discussed on the podcast shouldn’t be regarded as financial advice or legal advice. And importantly, when investing, your capital is at risk.

The start of a new tax year

PHILIPPA: So, Faith, should we start with the basics? As I said, the new tax year, it started on Sunday 6 April. What exactly is the tax year?

FAITH: Well, it’s the year from 6 April one year to the 5 April the next, and it’s the period over which income tax and other taxes are calculated. So rather than running for the calendar year, from the beginning of January to the end of December.

PHILIPPA: It’s quite a useful reset point in the year, isn’t it, for everyone?

FAITH: Yeah, I think so. You can almost have your ‘tax year resolutions’ and think about the different things you’re going to do now that all your tax allowances have restarted.

PHILIPPA: I’m guessing you do this every year. What sort of things are on your list?

FAITH: Well, from an income perspective, you’re allowed to earn a certain amount of money every year before you start paying income tax. For most people, that’s £12,570 a year. But there’s also some little extra allowances. The £1,000 a year property allowance, the £1,000 a year trading allowance. If you make a bit of money, say selling stuff on Vinted or Depop -

PHILIPPA: OK.

FAITH: - those allowances restart. You can earn extra cash without having to pay income tax. Also, if you’ve got any spare cash that you can sort away, you have allowances, £20,000 is the overall Individual Savings Account allowance -

PHILIPPA: ISA?

FAITH: - the ISA, yes. Then once you put money inside an ISA, it’s protected from the taxman. The taxman can’t touch it for tax, and they’re also not interested if you take any money out of it. There are many flavours of ISAs nowadays. There’s also the Lifetime ISA. That’s a £4,000 allowance with the bonus that the government will add an extra £1,000. It’s meant to be an incentive for younger people to save for [their] first property or for retirement. There’s Junior ISAs for the under 18s, so you can put £9,000 each tax year in those for your kids. And pensions, your pension allowance resets, so you can put a larger sum into your pension.

PHILIPPA: Yeah, and as you say, I’ve been talking about the ISA allowances. They always sound like such a lot of money, £20,000 here, £9,000 there. But you can put in whatever you can afford, but it’s well worth putting in what you can, right?

FAITH: Absolutely. I think the tax year can be a really good trigger just to rethink, are there ways that you can top-up the allowances that are slightly less painful.

PHILIPPA: Yeah.

FAITH: Setting up that Direct Debit for an affordable amount, so it just goes out without you having to lift a finger. If you’re one of the lucky people that’s had a pay rise, for example, then now might be a good time to think, “have you got some spare cash that perhaps you could divert into savings or pension? Can you up a Direct Debit? Could you up, if you’re lucky enough to have an employer who might even match pension contributions, could you up those contributions?” It’s going out straight after payday before you’ve noticed it, before you’ve got used to living on a higher income.

PHILIPPA: What you’re essentially saying is, it’s a spring clean for your finances, isn’t it?

FAITH: Yeah.

PHILIPPA: The beginning of the tax year. Every year, just take a look at what’s going on, make some changes, see where you’re at?

FAITH: Yeah.

Increased pay for employees and costs for employers

PHILIPPA: Should we take a look at what’s actually changed from the Chancellor’s point of view? Because as I said, we had the Budget last Autumn. Some of the things she announced then are only coming into effect now. Then we’ve had the Spring Statement as well. I mentioned the National Living Wage. What’s changing there?

FAITH: Well, I think this is positive. It’s going up. For those aged 21 and over, it’s going to go up from £11.44 an hour to £12.21 an hour. That’s if you’re working 35 hours a week, that’s a reasonably decent increase. Where it’s really going to hit, perhaps, is more on the employer side of it -

PHILIPPA: Yeah.

FAITH: - than the employee. Because for employers, they’re not just having to find the money for increases in the National Living Wage, if that affects some of their staff. But also we’re finally seeing the changes to employee National Insurance contributions (NICs) kicking in. The ones that were announced in the Autumn Statement. That’s quite a tough pill because employers are seeing both the rate at which National Insurance contributions by employers are paid, that’s going up - 13.8% to 15%. And also the point at which they have to start paying it is going down. All of a sudden, they have to start paying employer NICs at £5,000 rather than £9,100. I think that triple whammy: more employer NICs, starting at a lower point and higher salaries if you’re sticking with the National Living Wage. That’s quite an expensive bill on the payroll.

PHILIPPA: Employers will see their payroll cost go up. It depends what business they’re in, [by] how much. There’s going to be a knock-on for jobs, I’m guessing, and maybe a knock-on for how likely you are to get a pay rise this year.

FAITH: Yeah. Fundamentally, if costs have gone up, that money is going to come from somewhere. So either it’s being passed on in higher costs for goods and services, or fewer pay rises, or are they going to be more reluctant to take on additional staff if the cost is going to be higher? If the business is struggling, are they actually going to have to let staff go? We have yet to see how that’s going to roll out, what impact that is going to have on people’s wages and employment prospects.

PHILIPPA: There’s been a lot of speculation in the press, isn’t there?

FAITH: Yeah.

Frozen income tax and personal tax-free allowance thresholds

Now, tax again. Explain this to me because I think it’s often very confusing. Income tax and personal tax-free allowances, they’re frozen again this year. What does that mean?

FAITH: I mentioned that you could earn a certain amount of money before you start paying income tax. At the moment, that’s £12,570. Now, what used to happen was each year that allowance went up with inflation. By freezing them, what it means is if the allowance is the same but your salary increases, you’ve got more income being taxed.

PHILIPPA: At the higher level?

FAITH: Well, just being taxed at all! It means more people start paying tax and more people get pushed up into higher tax brackets. It just means a higher tax take. The fact that it has been frozen, I think it was maybe even April 2022, it’s forecast to be frozen until at least April 2028. This is one way of bringing in a significantly higher tax take for the government rather than just, say, slapping up the rate of income tax.

PHILIPPA: It’s worth being aware of, because it sounds like one of those things you think, “well, if it’s frozen, so what? I don’t need to think about it”. But actually, it’s significant, isn’t it? There’s a term for it, isn’t there? ‘Fiscal drag’.

FAITH: Yeah. It’s a really big intake. I’ve seen figures from the Office for Budget Responsibility (OBR) suggesting that the freeze since 2022 means there’ll be 9% more taxpayers in all, but 47% more higher rate taxpayers, and again, 47% more additional rate taxpayers. Because of people getting pushed up into these higher rates of income tax.

PHILIPPA: It’s really, really significant.

FAITH: Yeah.

The State Pension and Winter Fuel Payment

PHILIPPA: [The] State Pension, that’s going up.

FAITH: It is! Income tax thresholds may be frozen, but the State Pension, it benefits from the ‘triple lock‘, the full new State Pension. The triple lock, it means that the State Pension increases each year by the highest of either: inflation, earnings growth, or 2.5%.

PHILIPPA: This year?

FAITH: It’s going up 4.1% in line with the Consumer Price Index (CPI) - inflation.

PHILIPPA: OK, which sounds like good news.

FAITH: Well, it is good news, and I think there are a lot of pensioners that’ll be glad of the increase in their State Pension. Especially because they saw the Winter Fuel Payment withdrawn by the government. That’s something that used to be a universal benefit that pensioners got either £200 or £300 to help pay their heating bills. The change that Labour brought in was that you’d only get the Winter Fuel Payment if you were on certain means-tested benefits, such as Pension Credit.

PHILIPPA: Yeah, this was a change that happened very rapidly, didn’t it? As soon as the new government came into power -

FAITH: Very quickly.

PHILIPPA: - pretty much this happened. I guess for those people, even though the State Pension is going up, it’s going to be offset by the fact that they won’t be able to claim, they won’t get the Winter Fuel Allowance.

FAITH: I think the real kicker, I’ve heard this month referred to as ‘awful April’ because for all of us, not just if you’re a pensioner, but virtually every utility bill you can think of is going up. Now, I’ve seen forecasts that on average, people expect their bills to go up by [around] £400 a year.

PHILIPPA: That’s a lot.

FAITH: And the State Pension is going up by £471 (a year).

PHILIPPA: So when it comes down to it, most people aren’t going to be that much better off?

FAITH: No. If you used to get the Winter Fuel Payment and you no longer do -

PHILIPPA: You’re worse off.

FAITH: You’re worse off. If you look at food prices, there’s been a lot of food inflation. Things aren’t looking rosy.

PHILIPPA: No. I mean, being a bit less doomy, at least, inflation does now seem to be coming more under control, certainly more than it was last year.

FAITH: Yes, not as sky high, no.

PHILIPPA: Before we leave pensions, there’s this issue now, isn’t there? With the State Pension getting close to the level of the personal allowance you were talking about a minute ago. This is the point at which we have to start paying tax. What could that mean for pensioners then? If their pension takes them to the point where they need to start paying tax?

FAITH: Well, it’s the government effectively giving with one hand and taking away with the other. I think it just means that more pensioners will have to pay income tax if they have the smallest amount of other income. Perhaps from a private pension, savings, investments, whatever it is, workplace pensions.

PHILIPPA: They might have been just below the limit where they had to start paying tax, but now they might tip over.

FAITH: Yeah, it’s so clear. I think the full new State Pension from 6 April, I think is like £11,973 a year versus the £12,570 personal allowance. What’s that? Like a £600 difference.

PHILIPPA: Really, really close.

FAITH: Yeah, you don’t need to be bringing in much extra income, and suddenly you’re a taxpayer.

Changes to Statutory Sick Pay, alongside overhaul of benefits systems

PHILIPPA: Sick pay. Statutory Sick Pay (or SSP), that’s changing too, isn’t it?

FAITH: It is. It’s increasing up from £116.75 to £118.75 per week.

PHILIPPA: Not a huge change.

FAITH: Yeah, it’s not a massive change. It’s a little bit up. I mean, that’s the minimum. You’ll find some employers are more generous, but I don’t think many of us would actually like to be trying to fund all of our living costs on that amount per week.

PHILIPPA: No, absolutely. Now, the other issue that cropped up in the run up to the Spring Statement was [the] changes to the benefits system. We now know what they’re going to be. It’s complicated. It affects quite a range of benefits. Do you want to just remind us which ones it is - so that people can check for their own situation?

FAITH: I think the government is very keen to get more people into work and bring down the size of the benefits bill. The main levers it’s using to pull are on Universal Credit, and the Personal Independence Payments (PIP), that are made to people who have disabilities, illnesses that make it more difficult for them to work. They’re effectively making it, I think, more difficult to get Personal Independence Payments to try and make people incentivised to go out, find jobs in some way, and increase their income that way.

Increased Statutory Parental Pay and free nursery hours

PHILIPPA: Family-friendly changes. Now, we’ve seen rises, haven’t we? To statutory maternity, paternity, adoption, and Shared Parental Pay. They’re all going up?

FAITH: They are. They’ll go up nominally from £184.03 to £187.18. But in practice, the amount is either 90% of average weekly earnings or the statutory rate (whichever is lower). The earnings threshold is also going up a tad, just ticking up £123 to £125 a week. Maternity Allowance, though, [the] threshold stays at £30 a week.

PHILIPPA: OK. I mean, something to think about if you’re planning for a new baby, I guess, just to factor those numbers in?

FAITH: Make the budget beforehand so that if you do need to make cuts, you do them as soon as possible, rather than after -

PHILIPPA: Yeah.

FIATH: - you spend the money and suddenly thinking, “oh my goodness, I can’t afford that!”.

PHILIPPA: First step, understand what your employers’ policies are.

FAITH: Yeah, because some employers are way more generous than the statutory minimums.

PHILIPPA: Yes, because if you only get the statutory minimum, that might be way, way less than you would tend to earn normally (or not). But so get on the company website, ask your line manager, whatever it is - find out. Because there’s no standard policy here. It goes company by company, employer by employer.

FAITH: Company by company. It’ll be limited to how much time you take for your maternity leave. There may be reasons why you need to return to work at certain points rather than go on to lower levels of maternity/paternity pay.

PHILIPPA: Thinking about older kids, then childcare, this is a huge cost for millions of parents. I mean, it’s something that’s talked about by everyone with children. What’s happening with free childcare hours? Because they’re going up, aren’t they?

FAITH: They are. It’s not something that’s changing straight away. It’s more from September 2025. The situation at the moment is that eligible working parents can get 15 hours free childcare for children aged nine months to three years [old]. But that then doubles to 30 hours for three and four year olds. The big change from September 2025 is that 30 hours a week should be available for all the kids from nine months up to school age. There’s widening the access to 30 hours a week [of] free childcare.

PHILIPPA: I’m slightly wondering how helpful this will be for everyone. Because there’s already talk of nursery fees going up and swallowing that benefit from the point of view of parents and also the lack of provision nationally. It’s patchy, isn’t it?

FAITH: It’s patchy. It depends what childcare provision is available in your area. Part of the reason it’s patchy is because historically, the amount the government reimburses nurseries for these free hours isn’t actually enough. It doesn’t cover the genuine cost of caring for the children. We’ve seen, I mean, some nurseries have closed. Other nurseries, they get around it by charging top-up fees.

PHILIPPA: Yeah.

FAITH: So your free hours do come with a bill attached, where that’s justified as being for, say, nappies or meals, sunscreen, trips. So there could be some cost. I think one of the other restrictions is that it’s not necessarily 30 hours week in, week out. It’s during term-time rather than all year round.

PHILIPPA: Yeah, that’s a really key thing to understand if you’re working full-time. Time, isn’t it? This doesn’t cover you all year.

FAITH: Yeah. While the free hours of childcare, if it brings down your childcare bill, that’s amazing.

PHILIPPA: Great.

FAITH: Just remember, it’s more like a reduction than potentially completely free.

PHILIPPA: It’ll depend on what nursery you’re using.

FAITH: Yes.

PHILIPPA: Faith, thank you so much. That was a really useful rundown. Sorry to have so many questions. There was a lot to talk about, wasn’t there?

FAITH: There was.

PHILIPPA: If you’re enjoying this series, please do give us a rating and a review. It really helps us reach more listeners like you. Now, if you’ve missed an episode, don’t worry. You can catch up anytime on your favourite podcast app, YouTube, or if you’re a PensionBee customer in the PensionBee app, of course.

Now, next month, we’ll be exploring how to stay on top of your finances if you’re thinking about making a career change. Maybe you’re thinking about reskilling into a whole new line of work. Maybe it’s self-employment or starting your own business that you’re thinking about. Whatever age and stage you’re at, we’ll have plenty of practical tips and inspiration to help you take that next step.

Just a final reminder, anything discussed on the podcast shouldn’t be regarded as financial advice or legal advice. When investing, your capital is at risk. Thanks for being with us.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

‍

2019 looks set to be a big year for PensionBee, and we’ve kicked off the new year with some exciting new updates. We’re always working to bring you an innovative, modern pension experience, so read on to find out what we’ve been up to this month.

We’ve launched a Shariah compliant plan...

This month sees the addition of three new PensionBee plans, including our Shariah Plan. This plan invests your money only into Shariah-compliant companies, which could make it a good choice for anyone who’d like to invest responsibly. All investments are approved by an independent Shariah committee, and the fund is managed by HSBC and State Street Global Advisors, so you know your money is in safe hands. Find out more on our plans page.

The low-risk Preserve Plan...

We’re also excited to announce the launch of our Preserve Plan, a lower-risk plan that is designed to shelter your pension from stock market volatility. Instead of investing in the markets, it makes short-term investments into creditworthy companies – reducing your risk with the intention of preserving your money. Take a closer look over on our plans page.

...and our actively-managed 4Plus Plan

The 4Plus Plan could be ideal for people looking to de-risk before retirement. The long-term growth target of 4% can indicate what you’ll expect to receive, so you can start planning your retirement to a degree of certainty.

Our 4Plus Plan aims to achieve long-term growth of 4% per year, by managing your money actively across a range of global investments. The fund manager, State Street Global Advisors, responds to market developments where necessary, always seeking a balance between growth and stability. Find out more about how it works on our plans page.

Check out our redesigned homepage

We’ve given our homepage a makeover to showcase our entire offering – helping customers combine their pensions, increase contributions and make withdrawals, in just a few clicks. It’s these key features of our product that make us a leading online pension provider. Visit our shiny new homepage here.

Keep an eye out for our next update on our blog. We’re always working on new features to make our customers happy, so if you have any ideas or suggestions, please let us know in the comments section or over on social media, and we’ll feed it back to the team.

‍

It may have been the shortest month of the year but our team were busy bees throughout February. We introduced some important new product updates last month, so read on to find out what we got up to.

We’ve made it even easier to make contributions via bank transfer

We’ve improved our process for customers making contributions via bank transfer to make it simpler to save for retirement. Now, you only need to set up a bank transfer once and we’ll be able to invest any amount you contribute, regardless of the amount you set up the bank transfer with. This means you won’t need to set up a new transfer for different contribution amounts, which may suit customers with a fluctuating income, and it’s even easier to make weekly contributions.

Our improved process applies across recurring and one-off contributions made by bank transfer. We’ve updated our terms and conditions to reflect this change, which applies to existing customers as well. If you’re contributing via bank transfer, make sure to keep track of your payments so you don’t exceed your annual allowance.

Remember, contributions can also be made using Direct Debit. You can learn more about making contributions to your PensionBee pension in our FAQs.

We’ve launched dynamic performance charts in your BeeHive

Customers can now compare their plan performance to the FTSE 100, straight from their BeeHive. This new feature will allow you to track market volatility over time, and gain greater insight into the past performance of our longest running plans. It may also provide context when considering the impact recent stock market fluctuations could have on longer-term investments.

For now, this is only available to members of the Tracker, Tailored, Future World and Match plans, when you log into your online dashboard. Simply navigate to your Account using the tabs, and select ‘My plan’ from the dropdown menu.

If you’ve chosen one of our newer Shariah, Preserve, or 4Plus plans, rest assured we’ll be launching dynamic performance graphs for these too. And soon this exciting new feature will also be available to view in our mobile app.

Our CEO Romi Savova became a PensionBee BeeKeeper for a week!

PensionBee CEO Romi Savova spent a week this month on the front line as a BeeKeeper, solving problems and helping our customers. At PensionBee, our customers are our priority and getting back to basics is a great way to feel good about the work we’re doing to create a modern pension experience, and to identify ways to improve and simplify our services. Romi loved speaking to and learning from our customers. Read about her experience on our blog.

Keep an eye out for our next update on our blog. We’re always working on new features to make our customers happy, so if you have any ideas or suggestions, please let us know in the comments section or over on social media, and we’ll feed it back to the team.

‍

It’s been another busy month in the PensionBee office as we continue working on updates and improvements, in line with our mission to create an innovative pension product for our customers. Here are some of our highlights from March.

We’re rolling out My Plan updates for our mobile app

We’re always looking to provide our customers with greater insight into their savings, from our easy pensions explainers to helping customers understand their pension performance. We’ve recently made some shiny improvements to your plan page, which you can find under the ‘Account’ tab when you log into your online dashboard. You’ll find information about your plan and its performance, as well as additional resources to help you get into the nitty gritty of your pension plan.

We’re now rolling out these updates to our mobile app, to make it even easier to learn about your plan and how it’s performing. Currently, Android users will find a new ‘Plan information’ link on their ‘Account’ tab, under the ‘My Plan’ heading. Here, you’ll be able to find details about your plan, performance charts, and other useful information. We’ll be rolling out the new update to iOS users in the next couple of weeks, alongside additional resource documents for both platforms.

Guest blogger Faith Archer wrote about the gender pension gap

For International Women’s Day this year, finance journalist and money blogger Faith Archer wrote an insightful guest post for PensionBee, highlighting the gender pension gap and steps we can all take to close it. Faith builds on our research which shows that, on average, men in the UK have 31% more in their pots than women, with the gap increasing to 42% for men and women in their 50s. Yikes!

Faith addresses the cause of this gap, including its links to the gender pay gap, and offers some helpful suggestions for women to close the gap and make the most of their pension savings. You can read Faith’s full post on our blog.

PensionBee is shortlisted for three UK Pensions Awards

We’re thrilled to announce that we’ve been shortlisted for a whopping THREE UK Pensions Awards! PensionBee has been shortlisted in three categories: DC Pension Provider of the Year, DC Innovation of the Year, and Retirement Innovation of the Year. Congratulations to all of this year’s finalists!

Keep an eye out for our next update on our blog. We’re always working on new features to make our customers happy, so if you have any ideas or suggestions, please let us know in the comments section or over on social media, and we’ll feed it back to the team.

‍

As Fiona approached 40, she wanted to start building a nest egg for the future. She had several pensions from previous jobs and her main concern was to bring them together, so she could start building a clearer picture and put a saving plan in place.

Fiona fixes her pension mess

After finding out about PensionBee online, Fiona decided to consolidate three of her past pensions with us. There was no need for her to send us reams of paperwork, or spend hours on the phone to old providers. All we needed to combine her pensions were some basic details, like her provider name and her policy number.

PensionBee deal with it all. I just put my name in and my policy number, and then they’ve done everything else. I didn’t have to do anything, it was just... done!

Fiona found the process quick and simple from start to finish, and she now uses our app to keep track of her pension from her smartphone.
‍

{{main-cta}}
‍

Pension peace of mind

With her pensions all in one place, Fiona’s now a lot more relaxed about retirement. She loves the transparency her BeeHive provides and doesn’t worry about her finances like she used to.

Being with PensionBee makes me really relaxed about my finances. It’s all in one place, I can see everything on my app, and I just don’t have to worry about it any more.

In fact she’s inspired her partner Dave to sort his own pension, after he heard about Fiona’s experience with PensionBee!

Fiona’s talked to me about PensionBee from the second she signed up. It’s prompted me to sort myself out and maybe it’s something I’ll be looking at!

Find out what other PensionBee customers have to say over on our YouTube channel, or take a look at customer reviews on Trustpilot.

‍

After a year of waiting on financial advisers to consolidate her pensions, Lucille was getting weary.

She had a number of dormant pensions from previous companies and was concerned about losing track of them, as well as losing their value to costly fees.

Lucille decided it was time to make matters into her own hands, and after a recommendation from a friend she decided to sign up to PensionBee.

Pensions made simple

Lucille found it easy to bring her old pots into one PensionBee plan. She just gave us some basic information and we took care of rest, with her personal BeeKeeper updating her throughout the process.

You’ve got a point of contact. It’s nice to know that if I do want to contact PensionBee I can email my BeeKeeper and get a response from a person!

Lucille uses PensionBee’s pension calculator to work out how much she needs to be contributing to meet her goals and retire earlier. Now, she’s excited to save into her pot and fund her big retirement travel plans.

A transparent pension for the 21st century

Lucille loves the extra transparency she gets with PensionBee. Her online balance helps her follow all her fund’s activity, while her Analytics charts help her track the performance of her money.

PensionBee allows me to see how my pension’s performing. I’ll be able to work out whether I need to ramp up my contributions, which will help me get to retirement. And then I won’t have to work any more!

Find out what other PensionBee customers have to say over on our YouTube channel, or take a look at customer reviews on Trustpilot.

‍

Ever since becoming self-employed Rebecca’s pension had been on her mind. But between running her own business and being a mum for her two young children, she didn’t have a lot of time.

She had five old pensions from previous jobs but thought consolidating them would be too much hassle. Until she stumbled across PensionBee...

A quick way to consolidate

Rebecca was able to quickly and easily consolidate her previous pensions, with the sign up process - including the time spent tracking down her dusty old paperwork - taking no more than an hour and a half. The simplicity involved definetely appealed with her time being so precious, a policy number and a provider name all that was required.

PensionBee helps me from the point of view of being self employed specifically because it’s very simple, very quick, very easy.

Rebecca likes the flexibility that PensionBee offers her as a self-employed saver. There are no minimum contribution amounts and she can make one-off contributions instead of a set amount each month.

Re-engaged to save

Now, Rebecca feels more engaged with her pension and uses the app regularly to pay in and watch her pot grow.

I think I look at the app every two or three days! I’m quite enjoying seeing it grow on my phone.

She didn’t realise how much there was until she brought her old pots together, and the increased transparency that comes with PensionBee has inspired her to save even further.

Find out what other PensionBee customers have to say over on our YouTube channel, take a look at customer reviews on Trustpilot or look at our self employed pension.

‍

We’ve got some exciting updates to share with you, including a fresh look on our website and our rollout of new Simpler Annual Statements, which makes us the first pension provider to offer customers an easy to understand snapshot of their pension. Read on to learn what’s new at PensionBee and how we’re improving your pension experience.

We’ve adopted Simpler Annual Statements to make it even easier to manage your pension

We want to give our customers complete transparency and control over their savings. Whether that’s by giving you full visibility of how your pension’s performing, or making our annual statements easier to understand – we’re on a mission to make pensions simple!

Our Simpler Annual Statements are designed to provide a short and clear overview of your pension. They’ll show you the total balance, how much you’ve contributed to your pension, the tax top ups you’ve received from HMRC and how much your employer has paid in, if applicable.

We’re pleased to be the first pension provider to adopt the new format, since it was announced by the government back in October. Minister for Pensions and Financial Inclusion, Guy Opperman said: “I am 110% committed to simpler statements and am pleased to see PensionBee adopting the Simpler Annual Statement. I look forward to the rest of the industry doing the same thing in 2019.”

If you have a live balance and transferred your old pensions to PensionBee before the end of the 2018/19 tax year, (and haven’t transferred out or started withdrawing from your pension), you’ll be able to view your Simpler Annual Statement in your BeeHive.

We’ve refreshed our website to show you how PensionBee works, from consolidating to withdrawing your pension

We’re always working to bust jargon and demystify pensions, whether that’s through the articles in our Pensions Explained centre, our Pensions 101 videos over on YouTube, or explaining how pensions work right here on our website. We’ve recently updated our How It Works page to give you a simple and concise walkthrough of our service - our website is as easy and straightforward as it is to manage your pension with PensionBee!

Plus we’ve added new sections on combining your old pensions with PensionBee and making contributions to your new PensionBee plan, which sit alongside our page on how to withdraw your pension when it’s time to retire. Our site covers everything you need to know, from transferring your existing pensions over to us, to receiving tax top ups from HMRC, and even planning your retirement with our drawdown calculator.

We’ve been nominated… again!

We’re thrilled to announce that we’ve been nominated for Diversity and Inclusion Champion in the Computing Tech Marketing and Innovation Awards 2019! We’re incredibly proud of our diverse team, whose dedication, commitment, and insight make PensionBee such a wonderful and inclusive place to work.

We’ve also been nominated for Tech Company of the Year in the Evening Standard Business Awards 2019 - alongside Twitter, no less!

🏅We’re pleased to announce that PensionBee has been shortlisted for ‘Diversity and Inclusion Champion’ in the Computing Tech Marketing and Innovation Awards 2019 🏅 #pensions #fintech #awards #diversityandinclusion https://t.co/T7vKbLtNoB pic.twitter.com/lPCt83TdI5
_{— PensionBee (@pensionbee)}

And that’s not all - PensionBee has also been nominated in the Investment Marketing and Innovation Awards 2019. We’re shortlisted for three awards: the Corporate Social Responsibility Award, Most Innovative Direct Consumer Proposition, and the Open Innovation Award. We’re proud to be bringing our company values of innovation and love to the pensions industry.

Plus, our CEO, Romi, has been nominated for no less than six accolades at the Women in Pensions Awards 2019, including Pensions Woman of the Year and Role Model of the Year. Congratulations to everyone who was nominated.

Keep an eye out for our next update on our blog. We’re always working on new features to make our customers happy, so if you have any ideas or suggestions, please let us know in the comments section or over on social media, and we’ll feed it back to the team.

‍