If you’re self-employed or have a side hustle, the Self-Assessment deadline is probably already on your radar. 31 January 2026 - for filing your return and paying what you owe.

It can feel overwhelming, especially if it’s your first time. But most of the stress comes from leaving it too late or not knowing what you need. Start early, get organised, and you might even discover you’re owed money back. Particularly if you’re paying into a pension.

Who needs to file?

You’ll need to complete a Self-Assessment tax return if any of these apply to you:

• Self-employment or side income - you earned more than £1,000 from self-employment, freelancing, or a side hustle.
• Untaxed income - you received over £2,500 in untaxed income. This includes things like tips, commission, or freelance payments.
• Rental income - you earned more than £1,000 from renting out property (or more than £7,500 if you’re renting out a room in your own home under the Rent a Room Scheme).
• Savings and investment income - you received £10,000 or more from savings interest or dividends (excluding ISAs).
• High Income Child Benefit Charge - you or your partner earn over £60,000 and you’re claiming Child Benefit.
• Capital Gains Tax - you’ve sold assets like property or shares and need to pay Capital Gains Tax.
• Pension tax relief - you’re a higher or additional rate taxpayer and want to claim extra tax relief on your pension contributions.

Unsure whether any of these apply to you? GOV.UK has a simple online tool that can help you check.

What you’ll need

Before you start your Self-Assessment, make sure you’ve got:

• your 10-digit Unique Taxpayer Reference (UTR) - you’ll find this on letters from HMRC or in your Government Gateway account;
• your National Insurance (NI) number;
• income records, invoices, bank statements, or anything showing what you earned during the tax year; and
• work expenses receipts for things like equipment, software, and travel costs.

A few key details to keep in mind:

• if your turnover is under £90,000, you can enter one total for expenses;
• if it’s over £90,000, you’ll need to list expenses by type;
• you can’t claim expenses if you’re using the £1,000 tax-free trading allowance - you have to pick one option; and
• don’t forget your pension contribution details - this is where many people miss out on valuable tax relief.

The pension boost many people forget to claim

When you contribute to a personal pension, you’ll usually receive a 25% tax top up from the government. So if you pay in £100, HMRC effectively adds £25, bringing it to £125 in your pension.

If you earned over £50,270 in the 2024/25 tax year, you’re a higher rate taxpayer. That means you can claim an extra 20% back through your Self-Assessment.

Here’s what that looks like. Say you contributed £8,000 to your pension during 2024/25. Your provider will usually claim the basic rate of 20% on your behalf and top it up to £10,000. But you can claim another £2,000 back through your tax return. So your £10,000 pension contribution actually cost you £6,000.

Most people don’t realise this. And HMRC won’t remind you.

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How to claim it

When you’re filling in your Self-Assessment, look for the pension contributions section in form SA100. It asks for “payments into a registered pension scheme, annuity contract, or employer’s scheme where deductions were made after tax.”

Enter the gross amount - that’s the total including the 20% your provider already added. In our example above, you’d enter £10,000, not the £8,000 you paid.

The system works out your additional relief automatically. You’ll either get a refund or your next tax bill will be reduced.

You don’t need to send proof when you file, but keep your pension statements for at least five years in case HMRC asks later. And if you’ve missed claiming in previous years, you can backdate for up to four years.

Understanding payments on account

If your last tax bill was over £1,000, you’ll usually need to make payments on account - unless you paid more than 80% of your tax through PAYE or at source. These are payments made twice a year:

• on 31 January; and
• on 31 July.

And each payment is half of your previous year’s bill.

So if your 2023/24 bill was £3,000, you’ll have made two payments of £1,500 during 2024/25. When you file in January 2026, those get deducted. If your new bill is £4,000, you’ll pay £1,000 as a balancing payment, plus £2,000 as your first payment on account for 2025/26.

It works very differently from PAYE, where tax comes out monthly. Most self-employed people set aside 20-30% of their income to stay on top of it.

What if you can’t pay?

If you’re struggling, contact HMRC on 0300 200 3820 as soon as possible. They might offer more time to pay, a payment plan, or the Time to Pay service for bills under £30,000.

Don’t ignore it. HMRC can take enforcement action, including taking money directly from your earnings, bank account or pension.

Final thoughts

Self-Assessment doesn’t have to be a headache. With a bit of prep and the right paperwork, you can make it straightforward - and even spot opportunities to save. Don’t forget to claim everything you’re entitled to, especially your pension tax relief.

A little effort now means more money working for your future, right where it belongs.

Please note that tax rules change regularly, and the actual tax benefits you receive will depend on your individual circumstances. If you’re not sure, please seek professional advice.

For many people, their 40s and 50s mark a period of reflection and renewed focus. Whether you hope to retire within the next decade or plan to work for longer, this stage can be a powerful time to grow your pension.

This isn’t about pressure or perfection. It’s about knowing how much you have, understanding what you might need, and spotting any gaps you can close.

Making the most of midlife pension saving

Savings that stay invested for longer have more opportunity to benefit from compounding. This happens when your investment returns generate further returns. The longer your money stays invested, the harder it works for you. And even small, regular amounts can build gradually over time.

Here are four ways to boost your pension in midlife.

1. Start by understanding where you are

It’s often helpful to pause and get a clear sense of your pension today. You’re not alone if you’re unsure how much you’ve saved or what that might mean for the future.

You might find it helpful to:

• check all your pensions, especially if you’ve changed jobs as you may have left a few pots behind that you could consider consolidating;
• look at how much you’re contributing, including both your personal payments and your employer’s; and
• estimate what you’ll need in retirement, based on the lifestyle you’d like.

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2. Building momentum step-by-step

Once you understand your position, here are some practical ways to strengthen it.

• Increase your contributions gradually - even adding 1% a year can make a noticeable difference over time. PensionBee’s Calculator can show how small steps today could shape your future income.
• Consolidate your old pensions - combining multiple pots could make managing your savings easier and may help to reduce fees. It also makes managing your progress easier so you can see if your investments still match your goals.
• Review your investment plan - make sure your plan suits your time horizon and comfort with risk. In your 40s, you may have 20-25 years to benefit from potential investment growth. In your 50s, you might want to balance growth with stability.

3. Making the most of tax relief

When you pay into a pension, the government usually adds tax relief to help boost your savings. This means some of the money that would’ve gone to tax goes into your pension instead. Here’s how it works:

• basic rate taxpayers get a 25% tax top up, so for every £100 you contribute, HMRC adds £25; and
• higher and additional rate taxpayers can usually claim extra relief through their tax return.

Regular pension contributions don’t reduce your taxable income, but thanks to tax relief, they cost you less than you’d think. Our Pension Tax Relief Calculator shows you how much gets added to your pot.

4. Finding space in your budget

Saving more can feel challenging when you’re balancing different priorities. Reviewing your spending from time-to-time may help you see where there’s room to support your pension contributions. You could consider:

• redirecting money from childcare or loan repayments once they end;
• using part of a pay rise or bonus to increase contributions before adjusting your spending;
• reviewing subscriptions and regular expenses for small monthly savings; or
• if you’re self-employed, treating your pension as a regular business cost to prioritise.

See what this could mean for you

Imagine you’re 45, earning £50,000 a year, and contributing 8% into your pension - including what your employer adds. That’s around £4,000 going in each year.

If contributions increased to 12% - about £2,000 more each year - and that continued for 10 years before returning to 8%, the overall difference by age 68 could be significant.

That extra £20,000 contributed over the 10-year period doesn’t just add £20,000 to your pot* - it may have the potential to grow further over time because of compounding. Earlier contributions have more time to benefit from long-term market growth.

Tools like PensionBee’s Pension Calculator can help show:

• how contributions affect your long-term savings;
• how increasing or pausing payments changes the picture;
• how factors such as tax relief, inflation and the State Pension influence results; and
• how pensions could perform under different market conditions.

Use PensionBee’s Pension Calculator to model different scenarios - increase contributions, adjust timeframes, and see how your pension could grow under different market conditions.

Actual results will vary, and the value of your pension can go down as well as up.

*These calculations assume 5% investment growth per year, 2.5% inflation, an annual management fee of 0.7%, retirement age of 68, and include the 25% tax relief automatically added by HMRC on personal contributions. They don’t account for taking 25% of your pot as tax-free cash.

Your advantage in midlife

It’s never too late to strengthen your pension - your 40s and 50s can be a great time to build towards a more comfortable future.

You may feel more financially settled than you did in your 20s, with a clearer sense of your priorities - and still plenty of time for compound growth to make a difference.

Taking practical steps now - reviewing contributions, consolidating old pots, checking your investment plan - can help you build a pension that gives you more freedom and flexibility when you need it.

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.

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For some savers, a £3 million pension may sound far beyond what they’ll ever need. But long-term trends suggest bigger pots could become more common in the future. The Department for Work and Pensions (DWP) recently found that around 43% of working-age people are undersaving, with younger workers most affected.

Rising prices also play a role. If inflation averages 2% a year (2025/26), money loses around half its buying power over 35 years. That means today’s ‘comfortable’ retirement income of £43,900 a year could be around £96,000 in 40 years’ time to offer a similar lifestyle.

How rising costs could affect future costs

When you adjust for these future prices, a 25-year-old saving today could need a pot of around £3 million to support a comfortable 25-30 year retirement. This long-term view matters most for people in their 20s and 30s, as small changes today can have a much bigger impact once future prices are taken into account.

At the same time, some people simply like the idea of having more choice, more financial resilience, and the flexibility to stop working earlier if life allows. Aiming for a bigger pot can support that.

A £3 million pension could offer:

• more room to adapt as living costs rise over the decades;
• the potential to retire earlier than the State Pension age (currently 66, rising to 67 from 2028); and
• financial stability if your needs change later in life.

Whether this goal feels achievable will depend on things like when you start saving, how your salary changes, and the pension contributions your employers offer throughout your career.

What could a £3 million pension pot provide?

Based on a commonly referenced withdrawal guideline - where some people draw around 4% of their pot each year - a £3 million pension could provide roughly £120,000 annually. When combined with the full new State Pension (£11,973 for 2025/26), this could total around £131,973 each year.

In today’s terms, £120,000 sounds substantial. But it’s helpful to think about what this might mean in the future. If a 25-year-old retires in around 40 years, £120,000 could have similar buying power to about £55,000 today (based on 2% inflation). So what feels like a high income now may simply support the kind of comfortable lifestyle today’s retirees achieve with much less.

A £3 million pension could support:

• regular travel;
• spending on wellbeing or healthcare services;
• helping adult children or grandchildren;
• charitable giving; and
• day-to-day spending with more financial flexibility.

However, your actual retirement income will vary depending on investment performance, how much you withdraw and when, and tax. Tax treatment depends on your individual circumstances and may be subject to change in future.

Tax considerations

You can usually take up to 25% of your pension as a tax-free lump sum (from the age of 55, rising to 57 from 2028), but this is capped by the lump sum allowance (LSA) of £268,275 (2025/26). For a £3 million pot, this means the maximum tax-free amount would be £268,275, not £750,000.

Above this, pension withdrawals are subject to Income Tax after the £12,570 Personal Allowance (2025/26).

At higher levels of wealth, understanding how tax works can make a meaningful difference, so many people choose to speak with a regulated Independent Financial Adviser (IFA) about their options.

What it could take to reach a £3 million pension

Building a pot of this size is usually linked to:

• higher and more stable earnings across your career;
• access to generous employer pension schemes;
• starting contributions earlier in life; and
• increasing contributions as your income grows.

This combination may be more achievable than it first appears for those working in well-paid sectors, particularly when employer matching and long-term investment growth are involved.

If you’re part of Gen Z - born between 1997 and 2012, currently aged between 13 and 28 - you have decades ahead to build your pension, and starting early makes a significant difference.

Strategies for reaching £3 million

Building a pension pot of this size takes time and consistent effort. Here are some approaches that could help:

• Start early - the earlier you begin contributing, the more you benefit from compound growth, which is where your returns generate further returns.
• Increase contributions with pay rises - a small increase each time your salary grows can add up over time and may feel easier than making a large change all at once.
• Use bonuses and windfalls - some people choose to pay part of a bonus or inheritance into their pension, as tax relief can make it a tax-efficient option.
• Review employer benefits - as your career progresses, it’s worth understanding any pension enhancements your employer offers.
• Think long-term - for younger savers, a £3 million target isn’t about luxury. It’s about keeping your spending power over time and planning for life in the 2060s and beyond.
• Combine old pensions - consolidating multiple pots can make it easier to track your progress and may reduce fees.

Not all of these will suit everyone, but using just a few consistently over your career could significantly boost your pension savings.

Is this goal right for you?

A £3 million pension pot won’t be necessary or achievable for everyone. What matters most is building a pot that aligns with your own retirement goals.

For someone retiring in the next 10-15 years, a £3 million pot would offer significant financial freedom. For someone in their 20s or early 30s, it may simply reflect rising costs over the decades ahead. Your age and expected retirement date shape how ambitious this target really is.

You might consider:

• the lifestyle you hope to have in retirement;
• when you’d like to stop working;
• whether you’ll have other sources of income; and
• your family circumstances.

Even if your target is £1 million or £2 million, the same principles apply: start early if you can, contribute regularly, take advantage of tax relief and employer contributions, and increase what you pay in when it feels manageable.

You can use PensionBee’s Pension Calculator to explore how your pension could grow over 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.

Workers, pension savers, landlords, employers and investors face paying higher taxes as a result of the government’s Autumn Budget 2025.

The main ways the Treasury is raising money are:

• keeping tax thresholds frozen;
• capping the National Insurance (NI) break on salary sacrifice; and
• increasing taxes on property, dividend and savings income.

We explain what the changes announced by Chancellor Rachel Reeves could mean for your savings and pensions.

Maike Currie, VP Personal Finance at PensionBee, says: “For anyone serious about protecting their wealth, saving within tax-efficient wrappers like ISAs and pensions is no longer optional - it’s essential.”

Tax thresholds frozen

A three-year extension of the freeze in personal tax thresholds is the main revenue raiser for the Treasury.

Income Tax and NI thresholds will now be frozen for a further three years until 2031 from the current 2028 date. It means any pay rise you get over the next few years will drag more of your pay into tax, and could also push you into a higher tax bracket.

The policy will affect people in England, Wales and Northern Ireland, which all have the same Income Tax rates. Scotland has its own structure but the Personal Allowance of £12,570 - the threshold at which you start paying Income Tax - is the same across all four nations.

Extending the freeze will raise an additional £8 billion in 2029/30. It also means around 780,000 more basic rate taxpayers, according to the Office for Budget Responsibility (OBR).

It’ll also create 920,000 more higher rate taxpayers and 4,000 more additional rate taxpayers than if the thresholds had risen with inflation. There are around 7 million higher rate taxpayers today paying 40% Income Tax on earnings above £50,270.

Inheritance Tax thresholds frozen

The freeze in Inheritance Tax (IHT) thresholds will be extended by a further year to 2030/31.

The main IHT allowance, the nil-rate band, is to stay at £325,000 per person - a figure that has remained unchanged since 2009. The residence nil-rate band, which applies if you leave a family home to a child or grandchild, will remain at £175,000 per person.

Changes to salary sacrifice

People who pay into a workplace pension through salary sacrifice will pay NI on contributions above £2,000 a year from April 2029.

NI rates are 8% on earnings up to around £50,280 and 2% on earnings above that.

Employers will also be hit by the change, having to pay 15% NI on contributions above the £2,000 cap. The move will raise £4.7 billion for the Treasury.

If you earn £50,000 a year, for example, and pay £3,000 a year into your pension through salary sacrifice, the £1,000 above the £2,000 cap would be subject to 8% NI. This would reduce your take-home pay by £80 a year.

Currently, all pension contributions through salary sacrifice save on NI. High earners in particular often take advantage of this.

Lisa Picardo, Chief Business Officer UK at PensionBee, says: “Employees that are enrolled in a scheme that facilitates salary sacrifice should look to take advantage of the opportunity to maximise pension contributions before the April 2029 deadline.”

Pensions are still a tax-efficient way of saving, despite the reform. Most UK taxpayers get tax relief on pension contributions, up to a certain limit. Usually basic rate taxpayers get a 25% tax top up and higher and additional rate taxpayers can claim more. Contributions also reduce your overall adjusted net income. This could take you out of a higher tax bracket and mean you’re still entitled to benefits such as Child Benefit.

If you’re a high earner, pension contributions could bring your adjusted net income below £100,000. This means you keep all your Personal Allowance of £12,570 and access to childcare schemes such as tax-free childcare and funded childcare hours.

Higher taxes on property, dividend and savings income

Reflecting the fact that income from property, dividend and savings incur no NI, Chancellor Rachel Reeves says the Treasury is increasing tax on these income sources to raise an additional £2.1 billion a year.

For landlords in England, Wales and Northern Ireland, there will be a 2% increase in tax rates from property income. From April 2027 rates will increase to:

• 22% for basic rate;
• 42% for higher rate; and
• 47% for additional rate.

The same 2% rise to Dividend Tax will also affect landlords who hold their property investments through a limited company.

People who receive income through dividends will also face higher tax bills from April 2026 as:

• the basic rate is rising from 8.75% currently to 10.75%; and
• the higher rate is rising from 33.75% to 35.75%.

There’s no change in the additional dividend tax rate, which will remain at 39.35%. The annual dividend allowance will remain at £500.

Meanwhile taxes will increase on savings income by 2% across all Income Tax bands from April 2027. The changes to dividend and savings income rates will apply UK-wide.

Cash and Lifetime ISA reforms

The current £20,000 ISA allowance will remain, however the amount you can pay into Cash ISAs each year will be capped at £12,000 a year. The remaining £8,000 can only be used for investments such as a Stocks and Shares ISA.

However, this cap will only apply to anyone under the age of 65. Savers aged 65 and over keep the full ISA allowance of £20,000 in a Cash ISA.

The government also plans to scrap the Lifetime ISA (LISA) and replace it with an ISA product aimed specifically at first-time buyers. The current LISA can either be used to buy a first home or for retirement income. The government will launch a consultation on how the new ISA could work in early 2026.

Maike Currie, VP Personal Finance at PensionBee, says: “The changes carry an important signal for millions of self-employed savers who’ve used the LISA as a flexible retirement vehicle: pensions remain the UK’s only durable, purpose-built long-term savings product. For anyone saving for retirement, pensions offer the stability, tax relief and regulatory protection that ISAs can’t match.”

What should you do now?

If you have the ability to save, make sure you’re using tax efficient schemes wherever possible to keep more of your money. Pensions have the benefit of tax relief, contributions can reduce your adjusted net income and growth is tax-free while it remains invested. ISAs provide tax-free growth and income, offering protection from Income Tax, Capital Gains Tax and Dividend Tax.

Elizabeth Anderson is a Personal Finance Journalist and Editor (Times Money, Metro and i paper).

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.

There’s been ongoing speculation about possible changes to pension tax rules in the upcoming Autumn Budget. The Treasury has reportedly confirmed it’ll not cut the 25% tax-free pension lump sum.

Maike Currie, VP Personal Finance at PensionBee, says: “Salary sacrifice is one of the most straightforward and efficient ways for employees to boost pension contributions. Rumours that the government might change the rules would be an unpopular move, disincentivising companies who provide workplace pensions and sending the wrong message to millions of basic rate taxpayers trying to save more for their future.”

That’s welcome news for many savers, particularly those nearing retirement. For lots of people, this allowance is a key part of their long-term financial plans - helping to pay off a mortgage, enjoy a holiday, or support family members.

But the relief may be short-lived. At least five other pension-related tax measures are still being discussed ahead of Chancellor Rachel Reeves’ announcement on 26 November.

The government is reportedly looking for up to £30 billion in extra revenue, and pensions could be one of the areas under review. The gap in the public finances comes from a mix of higher borrowing costs, rising welfare spending, and slower economic growth, which has reduced the Chancellor’s room to manoeuvre.

Salary sacrifice cap

One of the most likely measures is allegedly a new £2,000 a year cap on salary sacrifice pension contributions that avoid employer National Insurance (NI).

Here’s how salary sacrifice works:

• you agree to give up part of your salary in exchange for pension contributions;
• your employer pays that amount directly into your pension;
• you pay less Income Tax and NI on the reduced salary;
• your employer saves on NI contributions (currently 15% on the sacrificed amount); and
• there’s currently no limit on how much salary can be sacrificed.

Here’s what could change:

• contributions above £2,000 per year may no longer avoid NI;
• those earning under £50,270 would pay a rate of 8%; and
• those earning £50,270 and over would pay a rate of 2%.

The move could reportedly raise around £2 billion a year.

Income Tax rise that may affect pensioners

There’s also speculation about a rise in the basic rate of Income Tax. Some reports suggest it could increase from 20% to 22%. The proposal would pair this Income Tax rise with a matching 2p cut to NI for working people.

Here’s how it currently works:

• workers pay both Income Tax and NI on their earnings; and
• pensioners pay Income Tax but not NI.

Here’s what could change:

• workers would pay 2% more in Income Tax, but save 2% on NI; and
• pensioners would pay 2% more in Income Tax with no NI saving to offset it.

This means nearly nine million pensioners could see their tax bills rise. The Personal Allowance has been frozen at £12,570 since 2021, while the full new State Pension has risen to £11,973 per year (2025/26). Future State Pension increases could push more pensioners over the tax threshold, meaning they’ll pay Income Tax on their retirement income.

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National Insurance on rental income

Another measure reportedly under review would bring landlords into the NI system for the first time.

Here’s how it could work:

• a 20% NI rate on rental profits up to £50,270; and
• an 8% NI rate on profits £50,270 and above.

Rental income is currently exempt from NI. The change could reportedly raise around £3 billion a year, but it’d directly affect retired landlords who rely on rental income to supplement their pension income.

Watch the video below to see what other property-related changes the Chancellor may introduce in the Autumn Budget.

Flat-rate pension tax relief

The Chancellor is also said to be considering whether to replace the current tiered tax relief system on pension contributions with a single flat rate of around 30% for all savers. Tax relief is when the government adds back the tax you paid on the money you put into your pension, giving your savings a boost.

The current tax relief rates are:

• 20% for basic rate taxpayers;
• 40% for higher rate taxpayers; and
• 45% for additional rate taxpayers.

A flat rate could make the system simpler but may reduce incentives for higher earners to save.

Higher and additional rate taxpayers currently get 40% or 45% tax relief. This magnifies the impact of saving into a pension, meaning every £1 added to their pension costs them about 60p or 55p. If a flat 30% rate were introduced, that cost would rise to around 70p, which could make pension saving feel less rewarding for some.

It could also affect public sector workers in defined benefit schemes, such as teachers, NHS staff, and civil servants. Higher-rate taxpayers in these schemes may need to pay in more to get the same pension benefits, which could make saving through work seem less worthwhile.

Inheritance Tax (IHT) changes

The April 2027 change bringing pensions into IHT has already been confirmed. New speculation suggests the Chancellor might go further by:

• changing the seven-year gifting rule; and
• removing exemptions on certain gifts and transfers.

Lisa Picardo, Chief Business Officer UK at PensionBee, says: “Rather than layering more complexity into the system, the focus should be on providing clear and consistent rules that give families the confidence to plan for the future.”

Key takeaways

Try not to act on speculation - early withdrawals could reduce tax efficiency, limit potential investment growth, and affect employer contributions.

Keep an eye out for announcements on and after 26 November - no measures will be confirmed until the Chancellor’s Budget announcement, when more details will become clear.

Stay informed - once any measures are confirmed, we’ll be here to help you understand what they could mean for your pension, whatever stage you’re at in your savings journey.

However things unfold, remember that pensions are designed for the long term. Taking time to focus on your goals can help you feel more confident about the road ahead.

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.

At PensionBee, our mission is to build pension confidence and create a world where everyone can enjoy a happy retirement. A key part of that mission is making sure our plans continue to align with our customers’ expectations. That’s why each year we ask customers to share their views on a range of topics related to their investments.

Because PensionBee plans invest in thousands of companies around the world, our customers are shareholders in most major listed businesses. With that comes the power to influence how companies treat people, run their operations and care for the planet.

Companies that protect the environment or treat people fairly, for example by paying real living wages, aren’t just acting ethically. Good corporate practices help create sustainable long-term value, supporting better financial returns for your pension pot.

In 2025, we improved our default plan range based on years of customer feedback. As a result, we didn’t survey customers who had been through a plan switch in 2025, to give them sufficient time in their new plan.

This year’s surveys covered the Climate, Tracker, and 4Plus Plans. We seek to understand the priorities of the customers in each plan, and ensure our stewardship approach aligns with their expectations. You can consult the full report for all findings.

Your priorities, plan by plan

Climate Plan: clear focus on emissions, transition plans and human rights

Customers were asked to rank engagement and voting priorities across climate, nature and human rights:

These results reflect a strong desire for more ambitious climate-related stewardship.

Tracker Plan: workers’ rights and social issues take priority

Tracker Plan customers were asked to share their voting priorities at company AGMs. The following issues were selected the most:

On expanding the Tracker Plan’s exclusionary screens, customers selected:

Each year we measure our customers’ views on investing in oil, gas and related companies, given there’s a growing debate about the industry’s future:

• Preference for excluding or transitioning away from oil and gas has risen from 15% in 2022, to 21% in 2023, and 46% in 2025.
• 43% still prefer staying invested, meaning there isn’t consensus yet for change.

4Plus Plan: strong support for high-profile shareholder proposals

Support was high across all four major proposals presented:

• 86.5% supported asking Amazon to ensure all workers receive a real living wage and report on wages, human rights and inequality.
• 91.3% supported asking Meta to assess and report on the risks of AI-driven misinformation.
• 91.2% supported proposals for McDonald’s to reduce antibiotic use in its supply chain to tackle antimicrobial resistance.
• 80.9% supported asking Alphabet and Microsoft to disclose the environmental footprint of their AI operations.

Across all four votes, PensionBee voted in line with customer preferences.

Next steps

The 2025 survey results reaffirm that our existing voting approach, based on the ISS SRI policy, remains aligned with customer expectations in the Tracker and 4Plus Plans.

Have a question? Get in touch!

Do you want to know more about your pension plan with PensionBee? You can check out our Plans page to learn how your money is invested in different assets and locations, or log in to your BeeHive to see your specific plan. You can always send comments and questions to our team via engagement@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.

Over the next 30 years up to £7 trillion is expected to be passed down the generations in the great wealth transfer. All too often it’ll occur after death, with the money being heavily taxed.

One approach could be to use pensions to build intergenerational wealth. Making the most of the tax-free advantages that come with pensions can boost everyone’s future finances.

Here’s how to stop thinking about pensions as just your retirement pot, and instead as a family savings vehicle.

How pensions can help you pass on wealth

Pensions can be a great way to pass wealth on and they offer multiple tax benefits.

You can pass money on to your adult children by contributing directly into their pension as a gift. They’re treated as contributions from the child and so they’ll receive tax relief on those contributions (in the same way that they receive tax relief on personal contributions).

Usually, basic rate taxpayers get a 25% tax top up from the government. So a £100 contribution is topped up by £25 added making the total contribution £125. Higher and additional rate taxpayers can claim further tax relief through a Self-Assessment.

Plus, that money will then grow free from Income Tax and Capital Gains Tax (CGT) until they retire. When they’re able to withdraw from age 55 (rising to 57 from 2028) they’ll be able to take the first 25% tax-free - either as a lump sum or in portions.

Few other savings products reward saving like pensions do with tax relief, tax-free growth and the 25% tax-free lump sum.

You can use PensionBee’s Pension Tax Relief Calculator to see how much the government will add to your contributions.

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Boosting your children’s future income

There are a few things to consider before contributing to your adult children’s pension. First, check they aren’t maxing out their annual allowance. Most people can pay up to £60,000 into a pension each year (2025/26), including employer contributions and tax relief. Contributions over that limit won’t receive tax relief.

For example, if you gift your child £32,000, they can pay it into their pension and HMRC will add £8,000 in basic rate tax relief. That takes the total to £40,000.

Let’s assume they’re 40 years old and achieve 5% annual investment growth. That £40,000 contribution could grow to £65,000 by the time they retire at 68 years old.

Meanwhile, you’ve removed £32,000 from your estate - which is the total of your money, belongings and property. The first £3,000 uses your annual gift allowance and is immediately exempt from Inheritance Tax (IHT). The remaining £29,000 will be exempt from IHT provided you live for seven years after making the gift.

Calculations are based on PensionBee’s Pension Calculator.

Transforming your grandchildren’s retirement

Pensions aren’t just for adults, children can have them too in the form of a Junior Self-Invested Personal Pension (SIPP). Parents and guardians can save up to £2,880 into a Junior SIPP each year (2025/26). The government adds a 25% tax top, up to £720.

If you paid the maximum of £3,600 a year into a Junior SIPP from birth to age 18, that money could grow to £115,000. If you leave it invested and don’t add any further contributions, by the time they’re 57, it could be worth £1.24 million. You’d have made your grandchild a pension millionaire having only contributed £51,840 yourself.

You’ll also have the peace of mind of knowing the money can’t be frittered away. It’s locked away to support them in later life.

Based on 5% annual growth after fees. Actual returns will vary.

The Inheritance Tax benefit for you

For years pension pots have been a fantastic way to pass money on after death. Under current rules, the money in your pension isn’t counted as part of your estate when you die. This means they can be passed on to your beneficiaries free from IHT.

But the rules around pensions and IHT are changing. From April 2027, the government plans to include unused pension savings as part of your estate when calculating IHT. That means if your total estate, including your pension, exceeds £325,000, your beneficiaries could face a 40% tax charge on the money above that limit.

But that doesn’t mean you can’t still use pensions for IHT planning - you just need to shift your strategy. Putting money into your children and grandchildren’s pension pots can help get over the hurdle of worrying what they may do with the money. It’ll be locked away until their retirement age (55, rising to 57 from 2028).

You have two ways you can make contributions to their pensions and move money out of your estate for IHT purposes. One option is to make regular ‘gift’ payments to put into their pensions out of your own income. Provided giving away that money doesn’t affect your own lifestyle, that money is immediately considered outside of your estate.

The other option is to gift a lump sum. You can give away up to £3,000 per tax year without it ever being added to your estate for IHT purposes. You can gift larger amounts, but if you die within seven years, anything over the £3,000 annual exemption may be subject to IHT. MoneyHelper has a detailed guide on gifting and IHT for more information.

Family pension and retirement planning

As the great wealth transfer gets underway, reframing pensions as family financial plans rather than individual savings could transform the finances of generations.

By using pension contributions to pass down wealth, you can help your loved ones secure their futures while reducing your own IHT bill, making every generation more financially resilient.

Ruth Jackson-Kirby is a Financial Journalist passionate about making money matters clear and accessible. She’s written for The Mail on Sunday, MoneyWeek, The Sun, and Good Housekeeping, helping readers navigate pensions and personal finance with confidence. She believes everyone deserves financial security and is on a mission to cut through jargon and make finance relatable.

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. Please note that tax rules change regularly, and the actual tax benefits you receive will depend on your individual circumstances. 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.

PHILIPPA: Happy New Year from all of us at The Pension Confident Podcast. We’re excited to be back. And if you’re new to the podcast, welcome. Managing your money can feel like a real challenge, especially right now. And we’re here to help.

Every month, with expert guests, we dig into those money and pension questions that can feel so complicated. We just lay out the answers in simple, jargon-free language we can all understand.

There’ll be bonus content throughout the year, too, to keep you up to speed on everything from stock market trends to Downing Street decisions. And we’ll be hearing from savers just like you.

AMANDA: I was a single parent, and every penny mattered back then in order to survive. I’ve really only started saving for retirement in my 40s, which was far too late.

TONY: I work as a handyman, mostly to keep me active and engaged in work, but to also top up the pension money being paid to me monthly.

SANNA: That was actually the deciding factor in me switching my pension to PensionBee because it’s Shariah-compliant. It complies with my faith and my values.

MYRA: I’ve had what I guess gets called a portfolio career, and I’ve generally only saved from one part-time job at a time.

PHILIPPA: Join me, Philippa Lamb, for The Pension Confident Podcast. We’ll have practical tips on how to bounce back from redundancy coming out on 25 January. Listen on any podcast app, YouTube, or the PensionBee app. Remember, subscribe so you never miss an episode.

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.

PHILIPPA: Hello. Welcome to our final episode of 2025. We’ve covered a lot this year, from changing climate to changing careers, Trump’s tariffs, ADHD. We even dug into the financial realities of living with your parents. For those of you who are parents, we looked at funding your kids through university.

It’s been another brilliant year for guests, too. We’ve had old and new friends with us, everyone from Divorce Lawyers to Behavioural Experts, Authors to Financial Influencers, and of course, some of our favourite people from PensionBee HQ.

We have a lot of fun recording the podcast, but it wouldn’t be possible without a whole team of people that you, the listeners, never usually hear from. So today, we’re in for a treat because I’ve persuaded our Producer, Lucy Greenwell, to come out of the gallery into the studio so she can reveal her favourite moments from Series 4.

Before I talk to Lucy, I’m just going to remind you, as I always do, that nothing discussed on the podcast should ever be regarded as financial advice or legal advice, and when investing, your capital is at risk.

Lucy, welcome to this side of the glass.

LUCY: Hello.

PHILIPPA: Does it feel weird?

LUCY: It does a bit. I can see behind your head, a sea of ghostly faces in the gallery, which is where I normally sit. So it’s a taste of my own medicine now.

PHILIPPA: Yeah, you can see what I see, which isn’t very much actually through the glass, which I think could do with a bit of a clean, actually.

LUCY: It’s also nice being in the room with you. Normally, we do it on Zoom. Every month, we do quite a lot of chatting, scripting, thinking about the guests and the order and the topics. Now we’re here in person.

PHILIPPA: I know. Now, look, everyone knows you’re the brains behind this operation, but I think -

LUCY: - that’s actually not true. It’s a massive team effort.

PHILIPPA: It is, but you’re involved from start to finish in every single episode. But I think we can agree, can’t we? The guests, they’re the ones who make it. Their expertise, their stories. I mean, without them, obviously, there would be no show.

LUCY: No, it’s true. We’ve had 22 this season, I counted. 22 different guests, all their deep expertise and their tools and tips and thoughts ideas and creativity around this stuff. Yeah, the guests have been epic. For that, we should praise Dani and Tilly, who’ve been casting these.

PHILIPPA: From PensionBee? Yes, absolutely. Who picked the guests and booked them. You end up with this huge pool of knowledge, don’t you? All these insights, hidden in the podcast.

1. Biggest “I never knew” moment

PHILIPPA: But I was thinking about this. I was thinking of all the things that the guests have said to us this year, and obviously it’s a lot. Was there one thing that you’d just never thought about before?

LUCY: There were loads of things that I’d never thought about before. We just recorded an episode before this in the studio, and I was sitting in the gallery. During that recording alone, I made two changes to my personal finance arrangements.

PHILIPPA: Is that actually true?

LUCY: Yes, totally true. I know I’m meant to be working, and I’m listening, but I’m also thinking, “God, that sounds like a really good idea. I’m going to do that”.

I downloaded an app that’ll help me save, Snoop, that someone mentioned. I also asked my phone not to allow apps to track me, to stop me being hustled about buying things or showing me stuff. So yeah, there’s so much stuff.

But the one I’ve chosen for this is actually from Episode 35, which was about the cost of divorce. Now, I’m married, luckily not divorcing at the moment, but I was really blown away by -

PHILIPPA: Sorry, I’m going to stop you there. You said “not divorcing at the moment”. Does your husband know this?

LUCY: Not currently divorcing.

PHILIPPA: Let’s just clarify. Not divorcing.

LUCY: Not divorcing. But this episode was really fascinating. They talked about this form, this massive form that I just didn’t understand that there was such a load of admin around divorce.

PHILIPPA: Oh, yeah.

LUCY: Yeah. The ‘Form E’. Should we listen to the clip about that? Yeah.

Clip from E35: The cost of divorce plays.

PHILIPPA: I remember this, Lynn, do you? This great long list of trying to work your way through everything.

LYNN: It’s so painful. And getting all the paperwork, it took so much time.

HARRY: When you fill in the document, which is called a ‘Form E‘, it’s 28 pages of agony for most people.

PHILIPPA: It’s tough.

LYNN: I had to print out so much stuff, all my bank accounts, 12 months, and all my accounts.

HARRY: Yes.

PHILIPPA: It’s a big job, this. You don’t do it in five minutes. It really is a big task.

HARRY: It’s a big job.

2. Most shocking number

PHILIPPA: And talking of big jobs, it’s making me think about numbers, it’s making me think about statistics. Because obviously, it’s a financial podcast. We have a lot of statistics on the podcast. They drop into every episode, even if we don’t particularly go looking for them. Tell me the one that has stood out for you the most this year.

LUCY: Well, this is one... This is really easy because these stats do get mentioned. They’ve been mentioned in more than one episode because they’re so fundamental to planning [for] our futures and our retirements. They’re these figures from Pensions UK. They set these annual figures for three different retirement lifestyles: minimum, moderate, and comfortable.

PHILIPPA: OK, so these are the benchmarks, aren’t they?

LUCY: Yes.

PHILIPPA: Say, if you’re a single person, I think it’s £13,400 a year for a minimum lifestyle, which does sound quite minimum.

LUCY: Very minimum.

PHILIPPA: No holidays abroad, no car. £31,700 for a moderate. A comfortable lifestyle, maybe with some holidays, it’s £43,000 - well, nearly £44,000. Not quite double if there’s two of you, right? But still, it’s more than people might think.

LUCY: It’s more than people might think. The real kicker about these numbers is that they’re based on you owning your home, i.e. having no monthly housing costs, not mortgage payments, not rent. Given that so many people are struggling to get onto the housing ladder at the moment -

PHILIPPA: You make a really good point because, as we say, what is it - first time buyer’s average age in the UK now, is it 35? [Correction: 34] If you get a mortgage now that takes you 20 years, 55 [years old]. That doesn’t give you a huge amount of time before you’re looking at maybe wanting to retire. As you say, if you do it later, or if you’re renting and you’re having to pay rent or mortgage payments out of your pension, those numbers don’t start to look very realistic at all, do they?

LUCY: No. It feels like there’s real trouble coming down the track for that. Yeah, that was very startling.

3. Surprising money tip

PHILIPPA: [I’ll] tell you the episodes that I really love. They’re the ones where you get into the real nitty-gritty of how people manage their money. You know, not the theory, but the personal stories. Obviously, a lot of it’s rooted in family. I mean, not always. But do you remember Damien Fahy?

LUCY: I love Damien Fahy!

PHILIPPA: I know. He’s always so great.

LUCY: He’s a returner to our podcast.

PHILIPPA: He’s a returner and a great talker, so he’ll definitely be on again.

LUCY: Yeah, so Damien from Money to the Masses. He came on, he told us this story about how he’d done this projection of having very young kids and you start saving for them £50-ish a month, and you just put it in every month, and then they take over when they’re 18 [years old]. Flat rate doesn’t go up, I think, and it just stews and does its own clever, wild, compounding thing.

PHILIPPA: Until they retire.

LUCY: Yes. Makes them a millionaire by the time they retire.

PHILIPPA: Wow, let’s have a listen.

Clip from E43: Who wants to be a pension millionaire? plays.

DAMIEN: We did a piece about how to make your child a millionaire, because we all get to a stage where in life you start to look at this million pound number. If you started early, or you started for your children, they have a much greater chance of becoming a millionaire on much lower numbers. We looked at the numbers and crunched them.

Let’s say, for example, you had somebody who was five years old. When we did this example, we were looking at putting it into a Junior ISA. If you assume growth rates that are slightly more punchy, let’s say 8%, which is the higher of the FCA guidelines and the numbers in which they’ll allow people to project with.

PHILIPPA: OK, so it’s optimistic.

DAMIEN: It’s optimistic, but if you’re investing for a very long time, we’re talking about somebody from age 5 to 65.

PHILIPPA: Yup.

DAMIEN: You can get to the point where for that person, if they have £56 a month put into a Junior ISA to start with, which when they get to 18, it will become a Stocks and Shares ISA, which they take control of themselves as adults, then that amount of money will grow to a million pounds over time.

PHILIPPA: That’s a flat contribution that doesn’t go up?

DAMIEN: That’s a flat contribution that doesn’t go up. You can see by starting early, you have something to compound because that’s the thing about compounding. If you have nothing, it doesn’t compound to anything. So you have to have some money.

LUCY: It’s the dream! But on the other hand, if I’m going to be putting £56 away for each of my children every month, there are more imminent costs that they’re going to have to face that I might prefer to help them with. Buying -

PHILIPPA: - Buying a flat deposit or something.

LUCY: Yes. Or a car or their university fees, something like that. It’s hard to know whether you want to put it away for that long.

PHILIPPA: It’s like all parental decisions, isn’t it? You never know if you’re making the right one. Personal choice, I guess.

4. Funniest episode

PHILIPPA: Now, obviously, we’re a serious money podcast. We talk about personal finance and pensions, but it always seems to me, and it’s one of the things I really like about the series, that there’s a lot of laughter in - We always are laughing about something in the studio. There are some moments, some guests who’re just priceless. I’ve got a favourite. Have you got a favourite?

LUCY: Well, I had a runner up who’s Sam Bartley from an episode this season about intergenerational living. He was very funny about living with his in-laws during COVID.

PHILIPPA: I remember that.

LUCY: But my winner... Well, tell me who yours is.

PHILIPPA: So my winner was a guest called Suzanne.

LUCY: Yeah, she was my winner.

PHILIPPA: She was too! She was great.

LUCY: She was absolutely brilliant. She was talking about her fantasy dream job in episode 38 about how to shift careers. Suzanne is the Co-Founder of Startup School for Seniors, but she’s also a podcast Presenter of Sex Advice for Seniors. So, yeah, it’s a personal finance podcast, but don’t make the mistake of thinking that we have dull or hum drum guests. We don’t!

PHILIPPA: Absolutely not. Suzanne was a spectacular woman. Let’s hear from her.

Clip from E38: How to shift careers plays.

SUZANNE: Years ago I said, “I want to run a small boutique hotel in Mexico -

PHILIPPA: Really?

SUZANNE: - where I swan around in a kaftan and just ask people what they want to eat every day. While I instruct the Michelin starred chef what to -

PHILIPPA: To make?

SUZANNE: - to do”. Then I started doing Airbnb.

PHILIPPA: Ah ha! And how was that?

SUZANNE: Then I realised that I’ll never run a boutique hotel in Mexico.

PHILIPPA: Or anywhere else?

SUZANNE: Or anywhere else for this.

HANNAH: That maybe saved you an expensive lesson.

SUZANNE: A very expensive lesson.

BAT: I’m impressed at the level of detail in the original fantasy.

HANNAH: Clearly well thought out.

BAT: You’ve been thinking about this, haven’t you?

SUZANNE: I’ve been thinking about it for a really long time.

PHILIPPA: Wasn’t she fantastic? We need to get her back on.

LUCY: We do.

5. Best episode for beginners

PHILIPPA: OK, I’ve got another question for you. If someone is listening and they love the podcast, and we hope they do, and they want to introduce it to a friend, which episode would you recommend that they share?

LUCY: Oh, that’s tricky. Thinking about it, I’d have to pick episode 37, which was about the - It was the easiest way to retire with more money. It was off the back of this stat that we read, which was that it could cost you half a million pounds across your lifetime being unengaged with your pension, your personal finances.

PHILIPPA: Yes.

LUCY: Which blew our minds. We had this Behavioural Expert on. I always love having Behavioural Experts on.

PHILIPPA: Yes.

LUCY: Neil Bage. He just gave us this unbelievably good light bulb moment about why it’s exactly that we switch off from our retirement planning - and how to switch it back on.

Clip from E37: The easiest way to retire with more money plays.

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.

PHILIPPA: See, that’s why I love this podcast, because it’s stuff like that, that End of History Illusion, where you never think you’re going to change, but when you look back, you know you already have.

LUCY: Yes, exactly.

PHILIPPA: It’s a complete disconnect.

LUCY: It’s a complete disconnect. There’s something philosophical and profound about it. It’s scientific. It’s absolutely riveting. I feel like this - Considering our future self is so hard, isn’t it? I feel like it comes down to mortality. I think it’s really hard to make your brain think about the realities of the future.

PHILIPPA: Then translate that into money.

LUCY: Into today’s actions. Yeah, it’s hard, but it’s worth doing.

PHILIPPA: It is. It’s so fascinating.

See you next year, for Series 5

PHILIPPA: I’ve really, really enjoyed listening back to all these.

LUCY: Me too.

PHILIPPA: If you missed one of these earlier in the year, don’t worry about it. You can catch up on every episode so far, not just on this series, but all the previous series, wherever you get your podcasts. We’re on YouTube, and of course, the PensionBee app, too. Whatever works best for you.

PHILIPPA: We’ll be back in January with a brand new Series 5. And of course, new bonus content to keep you feeling pension confident. A final reminder, anything discussed on the podcast shouldn’t be regarded as financial advice or as legal advice. And when investing, your capital is at risk. We will see you next year.

LUCY: I’m going to get back into the gallery where I belong.

PHILIPPA: Until the next time.

LUCY: Until the 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.

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Raising a family can be a financial strain at the best of times, but doing it on your own brings unique challenges. With so much focus on day-to-day costs, it’s easy for long-term saving to take a back seat.

That’s why it’s perhaps unsurprising that the average single-parent household has around £24,000 saved for retirement. For couples with children, that figure rises to £97,000 - more than four times higher.

Single mothers make up 89% of all single-parent families. That’s why much of the research focuses on them - though these challenges affect many people raising children alone.

One-in-three working single mothers can’t access a workplace pension at all, despite being employed. Research suggests that as many as 75% risk living in poverty in retirement.

These figures highlight how important it is for pension saving to work for everyone. With better access and clearer information, more single parents could take control of their long-term financial wellbeing.

The £10,000 barrier

To be automatically enrolled into a workplace pension, you need to earn at least £10,000 a year (2025/26). For many single parents, reaching that threshold can be difficult.

Around 54% of single mothers work part-time while balancing childcare, school runs, and often more than one job. Part-time roles often pay below £10,000, which means:

• no automatic workplace pension;
• no employer contributions; and
• you have to ask your employer to add you to their pension scheme.

There are currently 1.59 million single mothers in the UK workforce, but only a fraction are enrolled in workplace pensions. Those who do qualify contribute an average of £885 a year - almost half the UK average of £1,573.

Part-time workers often fall outside Auto-Enrolment, so they can miss out on employer contributions and the tax top ups that help a pension grow. Many also don’t realise they have the right to opt in.

This hits single mothers hardest. A large share work part-time and earn below the threshold, which means they’re building up less pension than they should - even though an employer contribution could make a real difference over the long term.

There’s another catch. When your employer calculates pension payments, they don’t count your full salary. Only the amount you earn between £6,240 and £50,270 is included. So if you earn £10,000, only £3,760 counts towards your pension.

For single parents already managing tight budgets, this can make saving even harder.

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The impact of childcare costs

Childcare in the UK is among the most expensive in the world. Full-time nursery care for a child under two costs around £12,425 a year in England and £15,083 in Wales. In London, costs can reach around £21,600 a year - around 33% higher than the rest of the country.

For single parents, this can amount to more than half their take-home pay. In London, childcare can reach 74% of a single parent’s income, compared with a UK average of 51%.

That leaves little room for essentials, let alone pension contributions.

The government offers support through Universal Credit, which covers up to 85% of eligible childcare costs.

But that still leaves 15% to pay, plus limits on what qualifies. Free childcare hours - between 15 and 30 depending on the child’s age - only apply if parents earn between £9,518 and £100,000, and nursery places can be hard to find.

The motherhood penalty in retirement

On top of eye-watering child care costs, career breaks can have a long-term impact on pension savings.

Because single parents don’t have a partner to share childcare duties or top up savings during those years, the gap often widens even further.

This creates a cycle that’s difficult to break as:

• lower earnings mean lower contributions;
• career breaks mean missed years of growth; and
• by retirement, pension pots may fall far short of what’s needed.

Career breaks and part-time work can have a lasting effect on pension savings, often leading to smaller pots over time.

According to Pensions UK, a minimum retirement lifestyle for one person costs around £13,400 a year (2025/26) - or £294,800 over 22 years. For many single mothers, reaching this level can be challenging.

The gender pension gap means single mothers often retire with smaller pots than men, reflecting the combined effects of lower earnings, part-time work, and time spent caring for children.

What’s being discussed

The government is taking a closer look at why many people may retire with less than previous generations. In July 2025, it launched the Pensions Commission - a major review into the future of retirement saving.

The Commission will report in 2027 and is focusing on:

• low earners being locked out of pension saving;
• the 48% gender pensions gap between women and men; and
• whether Auto-Enrolment should be extended to more workers.

New government data shows:

• only one-in-four low earners in the private sector are saving into a pension;
• 45% of working-age adults are saving nothing at all; and
• women approaching retirement may have a private pension income around £5,000 a year lower than men.

If changes go ahead, they could make a real difference. Research suggests that removing the lower earnings limit could:

• bring around 400,000 more single mothers into the pension system;
• increase annual pension contributions by more than 50%; and
• grow average pension pots from £48,000 to £75,000 over time.

The tools to do this already exist. The Pensions (Extension of Automatic Enrolment) Act 2023 gives the government power to lower the age threshold and remove the lower earnings limit - but it hasn’t yet been put into action.

The main challenge is timing. With the review’s report not due until 2027, any changes would come after that. Each year of delay may mean millions in missed savings for single parents and other low earners.

What you can do now

Being a single parent often means carrying the load alone emotionally and financially. And pensions can feel like one more thing on an already long list. But there are small, manageable steps that can help you feel more in control of your future, even while policy catches up.

Check your State Pension forecast

Visit GOV.UK to see what you’re on track to receive. If you’ve ever claimed Child Benefit, you may have built up National Insurance (NI) credits for those years - these credits can help fill gaps and protect your State Pension.

Opt into your workplace pension

To be enrolled automatically into a workplace pension, you need to:

• work in the UK;
• be aged between 22 and the State Pension age (currently 66, rising to 67 in 2028);
• earn more than £10,000 a year; and
• not already be part of a qualifying workplace pension scheme.

If you don’t meet these criteria but you earn between £6,240 and £10,000, you can still ask to join your employer’s scheme. If you do, they have to pay in at least 3% of your qualifying earnings.

Once you’re enrolled, the minimum you pay is currently 5% of your qualifying earnings (between £6,240 and £50,270 for the 2025/26 tax year). Your employer must add at least 3%.

Some employers offer more than the legal minimum. They may match what you pay in, up to a limit. It’s worth checking with your HR team to see if this applies to you, as these extra contributions can give your retirement savings a real boost.

Combine your old pensions

Many single parents have worked different jobs over the years. Small pots can be easy to lose track of, but they still belong to you. Bringing them together can reduce fees and make things easier to manage.

Top up when you can

Even small amounts count. If you contribute personally, the government usually adds a 25% tax top up - for every £100 you pay into your pension, it becomes £125. There’s no pressure to contribute every month; even occasional payments can make a difference over time.

Make sure you’re claiming everything you’re entitled to

Benefits, childcare help, cost-of-living support - all of these can free up room in your budget. Organisations like Gingerbread and Citizens Advice can help you check what you’re eligible for.

Name your beneficiaries

It’s a simple step, but an important one. Adding beneficiaries means your pension can go to the people you choose if something happens to you.

Looking ahead

Single parents are doing the work of two people on one income. It’s a big responsibility, and it often leaves very little space - or energy - to think about the long term.

While wider changes take time, there are manageable steps that can help you protect your future.

Remember, there’s no pressure to get it all right - just do what you can, when you can. Every contribution, however small or irregular, plays a part in your future.

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.

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This is part of our monthly series. Catch up on last month’s summary here: What happened to global investment markets in October 2025?

In November, the UK saw Chancellor Rachel Reeves deliver the Autumn Budget - an annual statement setting out government spending for the year ahead. This year’s included an unusually long delay, a last-minute leak and plenty of mixed reactions.

Following the announcement, UK headlines focused on domestic policy, global markets continued to set the pace. While the US recorded another month of growth and Asian markets added to a strong year. For pension savers with globally invested portfolios, the Budget became a minor moment in a much wider global picture.

Keep reading to see how markets performed in November and why the long-awaited Autumn Budget had limited impact on globally invested pensions.

What happened to stock markets?

In the UK, the FTSE 250 Index fell by 0.4% in November. This brings the 2025 performance to +6%.

In Europe (excluding the UK), the EuroStoxx 50 Index fell by 0.2% in November. This brings the 2025 performance close to +15%.

In North America, the S&P 500 Index fell by 0.7% in November. This brings the 2025 performance to +16%.

In Japan, the Nikkei 225 Index fell by 4% in November. This brings the 2025 performance to +25%.

In the Asia Pacific (excluding Japan), the Hang Seng Index fell by almost 0.5% in November. This brings the 2025 performance to +32%.

The Autumn Budget 2025 and the impact on markets

This year’s Autumn Budget was one of the most talked-about in years, with the delay leading to weeks of speculation. But when it finally arrived on 27 November, markets reacted calmly - a clear contrast to the build-up beforehand.

Here are some key takeaways:

• from April 2029, salary sacrifice pension contributions above £2,000 per year will be subject to National Insurance (NI) - a significant change to workplace pension arrangements;
• pension tax relief remained unchanged despite months of speculation about cuts; and
• for globally invested pensions, the Budget’s market impact was limited.

Read our full summary on what the Autumn Budget means for your pension.

An unusually long wait

UK budgets are normally delivered at the end of October. This year, the Chancellor moved it to 27 November. It may have looked like a small change, but the extra month added to the sense of uncertainty. Questions persisted about possible pension tax changes, Inheritance Tax (IHT) reforms and the scale of future tax rises. The steady flow of rumours began to affect confidence.

Consumer spending softened, some businesses paused investment plans, and a small number of savers made pension withdrawals based on concerns that hadn’t yet been confirmed.

The market reaction

Despite the lengthy run-up, the market response was calm. UK share indices rose on the day, government bonds strengthened and the pound gained against other major currencies.

After months of questions, a cautious approach offered reassurance. Once the details were known, markets moved on quickly.

What this means for your pension

Most pensions are invested across global markets, so UK decisions affect only a small part of a typical pot. In November, global momentum mattered much more than domestic headlines.

Here’s what pension savers may want to know:

• pension withdrawals can have lasting consequences, as they affect future contribution limits;
• while UK headlines focused on the Budget, US markets extended their winning streak and Asian markets saw another strong month; and
• the FTSE 250’s 3.8% Budget-week rise mattered far less than global market performance for most portfolios.

This is an example of global diversification working as expected.

The long-term perspective

This Budget cycle showed how easily speculation can build, especially when timelines shift.

For savers taking a long-term view, a few things stood out:

• many of the feared changes didn’t appear;
• markets absorbed the news quickly;
• global portfolios continued to benefit from worldwide growth; and
• staying patient helped avoid hasty decisions.

In the years ahead, the details of this Budget will matter far less than the long-term benefits of remaining invested and maintaining a diversified portfolio.

Global economic trends and future interest rate decisions are likely to have a bigger influence on pension performance than any single UK policy announcement.

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.

In the Autumn Budget 2025, the Chancellor announced a future change to salary sacrifice pension contributions. From April 2029, there’ll be a £2,000 cap on the amount you can contribute without paying National Insurance (NI).

Here’s how it works and what it could mean for you.

What is salary sacrifice?

Salary sacrifice is an agreement between you and your employer where you reduce or exchange part of your salary, and your employer pays the same amount into your pension. Because the contribution’s taken before Income Tax and NI, your official salary is lower and this may reduce the NI you and your employer pay.

The same idea can apply to bonuses, but that’s usually referred to separately as bonus exchange. Not all employers offer salary sacrifice, so it’s worth checking with your HR or payroll team to see if it’s available to you.

For many people, this arrangement can be a tax-efficient way to save more for retirement.

Who uses salary sacrifice?

Salary sacrifice is widely used across the UK, with around 8 million employees making salary sacrifice pension contributions in 2024, according to analysis by HM Revenue & Customs (HMRC).

Nearly half of UK private sector companies offer salary sacrifice, and the figure climbs to about 85% among larger employers. Uptake is much lower in the public sector, where only around one-in-10 workers use these schemes.

What’s changing from April 2029?

From April 2029, the government plans to cap the amount of salary sacrifice that’s exempt from NI at £2,000 per year. Here’s what that means:

• the first £2,000 of salary sacrifice each year will stay NI-free;
• any amount you sacrifice above £2,000 will be subject to employee NI (8% or 2% depending on your salary) and employer NI (15%);
• Income Tax relief continues to apply to all pension contributions; and
• employers can still contribute as much as they want directly to pensions without paying NI.

According to HM Treasury, the change is expected to raise £4.7 billion in 2029/30. In her Budget speech, the Chancellor highlighted that some employees currently sacrifice part of their bonus into their pension to reduce the NI they pay. The new measure is designed to limit the NI savings available on very large salary sacrifice contributions.

Who will the cut to salary sacrifice impact?

The change only applies if your annual salary sacrifice contributions exceed £2,000. If you sacrifice £2,000 or less each year, you won’t see any difference to your NI.

Here are a few examples:

• if you contribute 5% on a £30,000 salary, that’s £1,500 a year - below the cap, so no impact;
• the same applies if you contribute 5% on £40,000, which equals £2,000 exactly;
• a 6% contribution on £35,000 comes to £2,100, so you’d be £100 over the cap;
• an 8% contribution on £50,000 is £4,000 - that’s £2,000 above the threshold; and
• if you contribute 10% on £60,000, you’d sacrifice £6,000 a year, putting you £4,000 over the cap.

Those who sacrifice more than £2,000 a year will pay extra NI on the amount above the cap.

How much could it cost you?

Employee NI is charged at 8% on earnings up to £50,270, then 2% above that.

Below are examples of how the change could affect you.

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NI only applies to the amount over £2,000. If you earn under £50,270, you pay 8% NI. If you earn more, you pay just 2% NI.

What isn’t changing?

It’s helpful to remember what stays the same:

• you’ll still likely receive tax relief on your pension contributions;
• your employer can still make unlimited direct contributions without paying NI;
• you can still use salary sacrifice for contributions above £2,000 - you’ll just pay NI on the amount above the cap; and
• other salary sacrifice schemes, such as childcare or cycle-to-work, aren’t affected.

Why is the government making this change?

The Treasury says salary sacrifice has grown quickly in recent years and that most of the NI savings come from higher earners. The cap’s designed to limit those savings above £2,000, bringing them in line with other pension arrangements.

Do you need to do anything now?

There’s nothing you need to change today. The update won’t take effect until April 2029 and your employer will handle the payroll changes.

If you currently sacrifice more than £2,000 each year, you may want to:

• work out your annual salary sacrifice by multiplying your monthly amount by 12;
• check whether you’re above the cap and look at the potential NI costs;
• speak with your employer if you’re considering changes to how you contribute; or
• consult an Independent Financial Advisor (IFA) if you have complex circumstances.

This only applies to contributions made through salary sacrifice. Direct employee and employer contributions aren’t affected.

The bigger picture

Even with the new cap, pensions remain one of the most tax-efficient ways to save for retirement. You’ll still benefit from tax relief on all contributions, employer contributions, NI savings on the first £2,000 of salary sacrifice, and potential long-term growth through investing.

For most savers, the long-term benefits outweigh the additional NI costs some people may face.

Remember, you can still contribute to your pension privately, outside of salary sacrifice. If you’re a higher or additional rate taxpayer, you’ll need to reclaim additional tax relief through Self-Assessment. And many people simply don’t.

Between 2016/17 and 2020/21, £1.3 billion in pension tax relief went unclaimed. Over that five-year period, three-quarters of higher rate taxpayers eligible for relief failed to claim it - and almost half of additional rate taxpayers missed out too.

The takeaway is that salary sacrifice, even with the £2,000 cap, still makes claiming your full tax relief automatic and hassle-free.

You can use PensionBee’s Pension Tax Relief Calculator to find out how much tax relief you could get on your pension contributions.

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.

In recent years, Environmental, Social and Governance (ESG) investing has continued to grow, particularly for women. But a new dimension is starting to capture attention: the growing power of women-led companies.

Women in leadership aren’t just a social milestone - they’re shaping up to be a compelling investment story.

Female entrepreneurship is on the rise

As of 2025, women are estimated to make up around 40% of business owners worldwide, marking a shift towards more inclusive leadership across industries. Yet, despite this progress, women-led businesses remain significantly underfunded.

Only around 2% of global venture capital funding goes to women-led companies. This isn’t just about gender equality - it’s a missed opportunity.

Research shows that female founders can generate returns up to 35% higher than male founders. For individual investors, this opens the door to a promising and often overlooked space.

The overlooked ‘S’ in ESG

ESG investing often focuses on the Environmental (‘E’) and Governance (‘G’) aspects. But the Social (‘S’) pillar is where diversity, equity and inclusion come into play.

Gender diversity in leadership is one of the clearest measures of a company’s commitment to the ‘S’. Data collected by GOV.UK and the Institute of Directors has made gender representation in leadership more transparent - and more important.

Companies led by women, or with women in senior roles, tend to have:

• stronger workplace culture;
• better risk management; and
• a clearer focus on long-term sustainability.

These are among the qualities that ESG-minded investors increasingly look for.

Gender diversity drives stronger performance

Having gender diversity in leadership isn’t just ethical - it’s financially sound. According to McKinsey & Company, companies with more women in executive roles are 25% more likely to achieve above-average profitability.

A similar study from Credit Suisse found that companies with at least one woman on the board outperformed their peers in share price growth over six years.

This stronger performance is often linked to:

• better decision-making driven by diverse perspectives;
• leaders who prioritise sustainable and inclusive growth; and
• more transparent and responsible business practices.

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Women-led companies perform better on ESG metrics

Research from MSCI ESG found that companies with greater female representation at board level scored higher across ESG measures.

Here’s how women-led companies typically perform:

• Environmental - more focus on sustainability, from cutting emissions to circular supply chains.
• Social - stronger commitments to inclusion, fair pay and employee wellbeing.
• Governance - higher levels of transparency and accountability.

These leadership behaviours create a ripple effect that benefits employees, investors and communities alike.

The investment opportunity ahead

Women are still underrepresented at the top. Just 10% of Fortune 500 companies are led by women. But for investors, that imbalance presents an opportunity for impact.

Several funds now focus on gender-diverse leadership, such as the SHE ETF and the Impact Shares YWCA Women’s Empowerment ETF. Investing in these companies allows investors to:

• back a growing ESG trend;
• help close the leadership gender gap; and
• align their money with both performance and purpose.

What about pensions?

For those looking to support gender equality and long-term growth through their pension, here are some simple ways to start.

• Consider an ESG-aligned pension plan - look for plans that actively include gender diversity and inclusion in their investment criteria. These funds often favour companies with diverse leadership and sustainable practices.
• Review your provider’s transparency - find out where your pension is invested and how your provider measures diversity across their portfolios. Understanding this can help you make more informed choices.
• Advocate for change - use your influence to encourage your provider to prioritise investments in women-led or gender-diverse companies. Consumer demand plays a powerful role in shaping how capital is allocated.

Maria is a Freelance Editor and Writer who previously worked as Global Editor at Female Invest. Her writing focuses on gender equality in finance and has featured in Harper’s Bazaar, The Telegraph, inews, Metro, Glamour and more.

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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 is part of our monthly series. Catch up on last month’s summary here: What happened to global investment markets in September 2025?

In October 2025, the world’s largest technology companies reported their Q3 earnings. This marked another milestone in the ongoing artificial intelligence (AI) boom.

Nvidia made history by becoming the world’s first $5 trillion company - a sign of how strongly investors back AI’s long-term growth.

US technology companies now account for a significant share of global stock markets. The United States represents around 70% of one of the major global stock markets - the MSCI World Index. While the information technology sector makes up roughly 27% and $25.7 trillion of it.

To put these valuations in perspective, Nvidia is now worth more than the individual GDP of each of the UK, Japan and India. That means this single company is valued at more than the total annual economic output of each of these countries

Keep reading to find out what happened to markets in October, how earnings are supporting performance, and what this could mean for your PensionBee plan.

What happened to stock markets?

In North America, the S&P 500 Index rose by over 2% in October. This brings the 2025 performance close to +15%.

In Europe (excluding the UK), the EuroStoxx 50 Index remained flat in October. This brings the 2025 performance close to +17%.

In the Asia Pacific (excluding Japan), the Hang Seng Index fell by almost 3% in October. This brings the 2025 performance close to +27%.

In Japan, the Nikkei 225 Index rose by over 9% in October. This brings the 2025 performance close to +20%.

In the UK, the FTSE 250 Index remained flat in October. This brings the 2025 performance close to +7%.

Valuations and the rise of US tech

The ‘Magnificent Seven’ (Nvidia, Apple, Microsoft, Alphabet, Amazon, Meta, and Tesla) now represent:

• around 22-25% of the MSCI World Index;
• more than one-third of the S&P 500’s total market value; and
• have a combined market value that’s approaching the entire GDP of China - which is $19.4 trillion.

This level of concentration is historically high. For global investors, that means roughly one in every four pounds or dollars could be tied to the fortunes of a small group of US companies. It’s left many wondering whether we’re all overexposed to an AI bubble that’s set to burst.

Views in the market remain mixed

Some commentators believe technology valuations have climbed too far and are overdue for a correction or price reset. Concerns are growing that the rapid rise in technology shares has outpaced what company earnings can justify over time.

However, others argue that these valuations reflect the genuine long-term potential of a technological revolution. Analysis suggests that AI-driven gains could support corporate profits across multiple sectors in the years ahead.

Investment managers note that strength in technology shares is shown in earnings growth, rather than by speculation alone, in particular from firms leading in cloud computing and semiconductor production.

The earnings season in October reflected this divide clearly. Companies that demonstrated strong revenue growth from their AI investments saw their share prices rise, while those with heavy spending but fewer immediate returns faced sharper declines.

How does this affect pensions?

When Nvidia became the most valuable company in the world in October, its weight in the MSCI World Index increased to over 5%.

Pension funds tracking that market value weighted index automatically increased their Nvidia holding. This occurred not because fund managers decided to buy more Nvidia stock off the back of Q3 earnings results, but because Nvidia’s free float market capitalisation grew relative to other companies in the index.

All pension savers invested in global equity funds have seen their exposure to the largest US technology companies increase over time. For Nvidia this is particularly pronounced, as its stock has risen in value by more than 1,200% in the past five years.

As each of the technology firms have grown in value, they’ve taken up more space in global indices - and therefore in the pensions that track them.

The long-term perspective

Rapid valuation changes can draw attention, but they’re a normal part of long-term investing. Over time, share prices tend to reflect the real value companies create, not the excitement or concern of individual months.

Technology cycles have often followed a familiar pattern, for example:

• a period of heavy investment;
• some consolidation; and
• years of productivity once new infrastructure is in place.

The same was true for railways, internet networks, and mobile technology. Each brought early stock market volatility, followed by long-term gains in global productivity.

It’s too soon to know exactly how AI will reshape economies, or which companies will benefit most.

But history shows that patient, diversified investing - staying in the market rather than reacting to short-term shifts - has often proven the more resilient path for long-term savers.

Have a question? Get in touch!

Do you want to know more about your pension plan with PensionBee? You can check out our Plans page to learn how your money is invested in different assets and locations, or log in to your BeeHive to see your specific plan. You can always send comments and questions to our team via engagement@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

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Chancellor Rachel Reeves took the unusual step of giving a pre-Budget speech three weeks ahead of the actual Autumn Budget, scheduled for 26 November.

Speaking from Downing Street, she set out the ‘principles and choices’ behind her approach - hinting that the government faces some careful financial decisions.

Signalling tough choices

Rachel Reeves said the government must “deal with the world as it is, not as we might wish it to be”. She highlighted a range of challenges shaping her approach, including:

• high government borrowing costs;
• global tariffs and supply chain pressures;
• persistently high inflation and everyday costs; and
• the need to strengthen public services such as the NHS.

National debt now stands at around £2.6 trillion - about 94% of national income. Roughly £1 in every £10 of tax paid by the UK taxpayer, now goes on debt interest payments alone.

She linked these pressures to weaker-than-expected productivity and said the government’s task was to rebuild “on difficult ground.”

Tax speculation grows

While the Chancellor didn’t confirm any measures, she refused to rule out tax rises. She said “each of us must do our bit” to restore the nation’s finances.

Some political analysts have suggested she could raise Income Tax - which would break Labour’s election manifesto commitment not to increase Income Tax, VAT or National Insurance (NI).

Maike Currie, VP Personal Finance at PensionBee, says:: “Rachel Reeves is preparing the ground for tough fiscal choices. By signalling her intent ahead of time, she’s setting expectations for what could be one of the most consequential Budgets in recent memory.”

The rumoured increase of 2p on every £1 or 2% to Income Tax would impact everyone from the working population, including landlords and pensioners. There are also expectations that the government could rake in more tax by stealth - freezing Income Tax thresholds and allowances for longer. However, the government hasn’t confirmed any such plans.

How markets reacted

Markets responded in different ways to Rachel Reeve’s speech.

Bond markets steadied

UK government bond (gilt) yields fell slightly - with 10-year yields around 4.4% and 30-year yields near 5.15%. Lower yields suggest investors were reassured by Reeves’ renewed commitment to her fiscal rules, which aim to keep borrowing under control.

Sterling slipped

The pound fell about 0.6% to below $1.31 against the US dollar - its lowest level since April 2025. The move reflected expectations that higher taxes could weigh on household spending and growth.

The FTSE 100 (an index of the 100 largest UK companies) fell by around 0.6%, in line with wider weakness across European markets. Mining and energy shares were among the biggest fallers.

Bond yields represent the interest rate the government pays to borrow money. When they fall, it usually signals greater confidence in the UK’s financial stability - and it can reduce the cost of servicing national debt.

Rachel Reeves’ repeated reference to the 2022 “mini-Budget“ under Liz Truss was a reminder of how quickly confidence can evaporate when markets lose faith in fiscal discipline.

A message of realism and reform

The Chancellor said it was time to be honest with the public about the scale of the challenge. Her message centred on three priorities:

• Stability - maintaining market confidence.
• Investment - supporting growth and productivity.
• Reform - addressing long-term issues in welfare and public services.

She described productivity as a “problem, not a puzzle”, and called for policies that protect those unable to work while empowering those who can.

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What to expect from the Autumn Budget 2025

With the Autumn Budget just weeks away, attention now turns to 26 November - when Rachel Reeves is expected to outline specific measures to address the UK’s public finance gap.

While no policies have been confirmed, current speculation focuses on possible changes to:

• Income Tax - the basic rate could rise 2% or by 1–2p on every £1. The current threshold freeze might be extended beyond April 2028.
• Capital Gains Tax (CGT) - higher rates or changes to the tax-free allowance when selling valuable assets such as property or shares.
• Inheritance Tax (IHT) - updates to lifetime gift rules or continued freezes on tax-free allowances.
• Pensions - the possible introduction of a single flat rate of tax relief for all taxpayers or changes to the 25% tax-free withdrawal lump sum.
• ISAs - potential adjustments to the annual Cash ISA allowance and/ or the introduction of a special allowance to encourage investment into UK equities.

The bottom line

Nothing’s confirmed until Rachel Reeves delivers the Autumn Budget at the end of the month. Between now and then, there’ll be plenty of headlines and speculation - but remember that most details are still to come.

Budget announcements often spark discussion about tax and spending, which can feel uncertain for savers, investors and business owners. But their impact usually unfolds over time rather than overnight.

We’ll be covering the Autumn Budget once it’s announced, explaining what the changes mean for pension savers in clear, simple terms.

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‍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.

Managing your retirement savings should be straightforward. That’s why we’ve improved the way you can withdraw money from your PensionBee pension with our new Regular withdrawals feature.

What are Regular withdrawals?

Our new Regular withdrawals feature is available if you’re aged 55 or over and can be found when you log into your online account (your ‘BeeHive’) via our website (coming to our app soon). Here’s what the new feature means for you.

More flexibility - choose how you take your pension savings, whether that’s a single payment as and when it suits you or the predictability of an automatic monthly payment. If you change your mind, you can change your payment method.

Automated withdrawals - already make repeat one-off withdrawals each month? Skip the manual work with a ‘set it and forget it’ approach to regular monthly withdrawals. That’s one less job to do every month.

Simplified retirement planning - if you’re over 50 and soon able to withdraw from your PensionBee pension (from 55, rising to 57 from 2028), regular monthly withdrawals can help you plan to take your pension more sustainably.

What are my withdrawal options with PensionBee?

From age 55 (rising to 57 from 2028), you’ll have two ways to draw down from your PensionBee pension.

• Regular withdrawals - set up automatic payments that arrive in your account on the same day each month to create a steady income.
• One-off withdrawals - take one-off payments each time you need to.

You can also take your pension as an annuity, offering a guaranteed lifelong income if preferred.

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Why we’re introducing Regular withdrawals

Whilst we’ve long offered one-off pension drawdown and a pension annuity, Regular withdrawals combine some of the key advantages of both options. It continues to offer the flexibility of drawdown, so you can always change how much and when you take your pension and leave the rest invested, whilst affording the monthly predictability of an annuity, removing the need to remind yourself to make another withdrawal when the next month rolls around.

It’s all part of our core values, like innovation and simplicity and ultimately our mission to build pension confidence. By increasing your withdrawal options and flexibility, managing how and when you take your PensionBee pension will help make your planning and adjusting for life in retirement easier. Being able to manage your withdrawals in one straightforward place is another step towards that.

Why use Regular withdrawals?

Many customers find that setting up regular payments once they’re eligible helps them:

• create a predictable monthly income to supplement their State Pension;
• manage their tax position by spreading withdrawals across the year; and
• avoid the hassle of logging in repeatedly to make one-off payments.

Explore Regular withdrawals

To set up a Regular withdrawal, log in to your PensionBee account online (your ‘BeeHive’) and click on your ‘Withdrawals’ tab, then follow the steps below:

1. Read the withdrawal guidance and information about how the withdrawal process works.
2. We’ll ask you some important questions to ensure you understand whether withdrawing from your pension is the right decision for you.
3. Select the bank account you’d like your withdrawal sent to or add a new account. (If you add a new bank account or if this is your first time making a withdrawal, we’ll need to verify the details provided. Once completed, you’ll be able to come back to finish setting your withdrawal up.)
4. You’ll then see two tabs. Select the ‘Monthly’ tab. Here you’ll specify how much you want to withdraw and select the date you want your payment made into your bank account each month.
5. Review and confirm the details of your withdrawal request.

You can only make one-off or set up a monthly withdrawal at a time. So, if you change your mind and would like to make a one-off withdrawal instead, you’ll need to cancel your monthly withdrawal.

Watch this space, we’re bringing our Regular withdrawals feature to your PensionBee app soon too. So, you can get the same great flexible withdrawal options no matter where you manage your PensionBee pension.

Let us know what you think

We’re always looking for ways to improve your experience. If you have feedback about withdrawals or any other part of your PensionBee journey, we’d love to hear from you at feedback@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.

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Artificial intelligence (AI) tools are fast becoming a go-to for financial questions. For younger savers, it’s often the first place they turn for money advice.

A recent report found that around two-thirds of young adults in the UK now use AI for financial guidance - more than those who ask banks or professional advisers. It marks a major shift in how the next generation is learning to manage their money.

While AI can explain complex topics in seconds, it can’t always replace human understanding. And when it comes to long-term planning, like pensions, a little caution goes a long way.

Why AI feels so useful

Many younger people say they like AI because it’s fast, easy to access and free. You can ask almost anything, anytime, and get an instant answer written in plain English.

AI can also help simplify complicated financial terms, making concepts like tax relief or compound interest feel less intimidating. This could be especially helpful for those who’ve never studied finance or spoken to a financial adviser before.

And with financial confidence slowly improving in the UK, it’s easy to see why curiosity around new tools is growing. Nearly half of adults now feel more confident about their finances than they did a year ago.

However, confidence doesn’t always mean understanding, and some people still find it difficult to make long-term financial decisions on their own.

What AI can and can’t do

AI can be a useful starting point for learning about finance. It can explain how pensions work, what Auto-Enrolment means, or how investment growth happens over time.

But there are clear limits. AI doesn’t know your circumstances, so it can’t consider your income, debts, health or family plans. Instead, it may rely on general data that’s not specific to you or up to date.

When it comes to regulated areas like pensions, these details really matter. For example:

• pension rules change regularly, and not every AI tool reflects the latest updates;
• tax rates and allowances differ depending on your earnings; and
• decisions like transferring a pension or taking money early can have long-term consequences.

That’s why it’s always best to double-check anything AI suggests with a trusted source or your pension provider.

The regulatory gap

If you’re using AI to learn about money, it’s worth knowing that these tools aren’t regulated by the Financial Conduct Authority (FCA).

AI platforms like ChatGPT aren’t authorised to give financial advice in the UK. This means that if something goes wrong - whether it’s outdated information, a calculation error, or advice that doesn’t match your circumstances - you won’t have the same protections that apply to regulated firms.

When you receive advice from an FCA-authorised company, you’re covered by important safeguards. These include the Consumer Duty, access to the Financial Ombudsman Service, and compensation up to £85,000 through the Financial Services Compensation Scheme (FSCS). You also benefit from professional standards and accountability.

AI tools sit outside this framework entirely. In its April 2024 AI Update, the FCA said it’s taking a “principles-based and outcomes-focused” approach to AI - but this currently applies only to regulated firms that use AI, not to the chatbots themselves.

According to the FCA’s Financial Lives Survey 2024, only 9% of UK consumers received regulated financial advice in the past year. Meanwhile, 19% of investors - especially younger ones - used social media for investment research. This shows that more people are turning to unregulated sources for guidance on important money matters.

As AI becomes more common in financial conversations, understanding where regulation begins and ends can help savers use these tools wisely.

What this means for pension confidence

Often, the hardest part isn’t starting a pension - it’s knowing how much to save and whether you’re on track.

AI tools can help here by showing examples, scenarios and projections. They can also help people imagine what retirement might cost and how small increases in contributions could build up over time.

AI can make learning about money simpler, but real confidence grows from knowing how your pension works and what it means for your future.

Engaging with your pension regularly can make a big difference. Here are three tools to help you get started.

• Use our Pension Calculator - see how long your pension could last and how adjusting your contributions might change your savings.
• Explore the PensionBee Academy - watch clear, practical videos that explain how pensions work and build your confidence step-by-step.
• Discover Pensions Explained - learn the pension basics and explore simple guides for retirement planning at any age.

If you’re looking for more personalised guidance, it may help to speak to your pension provider or consider seeking advice from an Independent Financial Advisor (IFA).

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.

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This is part of our quarterly plan performance series. Catch up on last quarter’s summary here: How PensionBee’s plans are performing as at Q2 2025.

In the third quarter, global stock markets performed well thanks to economic growth and strong company earnings, with many US companies reporting higher profits than expected. UK government bonds faced uncertainty due to potential long-term tariff impacts on inflation, while the Chair of the US Central Bank hinted at lowering interest rates, which positively affected global stock markets. Elsewhere, Europe experienced political instability due to concerns about government debt sustainability in France.

Keep reading this article for the Q3 market update and performance in your PensionBee Plan and its key asset classes. For the September market update, see our latest blog.

The performance data covers both Q3 (1 July to 30 September 2025) and year-to-date (1 January - 30 September 2025) and is sourced from our money managers. Figures are before fees and past performance is not a guarantee of future performance.

PensionBee’s default plans

4Plus Plan

The 4Plus Plan is managed by State Street with an equity proportion of 77.8%^. It’s the default plan for our customers over 50 years of age. The plan is actively managed for volatility in times of market turbulence, whilst targeting an annualised 4% return above the Bank of England base rate over a minimum five-year period. It aims to balance certainty with stability for those approaching retirement or making regular withdrawals.

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^Equity % at 30 September 2025, asset allocation can change on a weekly basis due to the plan’s actively managed component.

Global Leaders Plan

The Global Leaders Plan is managed by BlackRock with an equity proportion of 100%. It’s the default plan for our customers aged under 50. The plan invests in around 1,000 of the largest public companies globally. It aims to maximise the growth of pension savings in the years before retirement.

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^The plan was launched in February 2025, so the year-to-date figure isn’t available and has been replaced by since inception. Additional performance data for the 3-year and 5-year periods is also unavailable.

PensionBee’s specialist plans

Climate Plan

The Climate Plan is managed by State Street with an equity proportion of 100%. The plan follows a Paris-Aligned Benchmark and aims to reduce the total carbon emissions produced by the plan’s companies by at least 10% each year.

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^The new Paris-aligned strategy was launched in September 2024, so performance data for the 3-year and 5-year periods is currently unavailable.

Shariah Plan

The Shariah Plan is managed by HSBC and traded by State Street with an equity proportion of 100%. The plan invests in the 100 largest stocks traded globally that also comply with Shariah investment guidelines, as set by an independent Shariah Committee.

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PensionBee’s other plans

Tracker Plan

The Tracker Plan is managed by State Street with an equity proportion of 80%. The remaining 20% is allocated to fixed income. The plan offers a cost effective way to follow global markets as they move.

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Pre-Annuity Plan

The Pre-Annuity Plan is managed by State Street with a fixed income proportion of 100%. The plan invests in bonds to provide you with returns that broadly correspond with the cost of purchasing an annuity. PensionBee is retiring this plan in Q4 2025.

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Preserve Plan

The Preserve Plan is a money market fund managed by State Street. The plan makes short-term investments in highly creditworthy companies to preserve money.

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Learn more about how your pension is invested

Your pension is invested in a range of assets like equities (also known as ‘company shares’ or ‘stocks’), bonds, property and cash. Your pension balance fluctuates depending on how these assets perform. See below for a summary of global markets and the performance of key asset classes in Q3 2025.

Global market summary in Q3 2025

In the third quarter, investors felt positive about global stock markets reaching new highs. This was due to economic growth and companies reporting high earnings. By late July, about 83% of S&P 500 companies reported higher earnings than expected. (The S&P 500 is an index that tracks the performance of 500 of the largest public companies in the US.) This supported market growth throughout the quarter. Meanwhile, UK government bonds (also known as ‘gilts’) posted a cautious outlook. This was due to uncertainty about how US tariffs might affect UK inflation in the long term.

In August, central bankers met in Wyoming, US (known as the Annual Jackson Hole Symposium). Global stock markets, including in the US and China, climbed up again after Jerome Powell (Chair of the US Central Bank) hinted at lowering interest rates in September.

On the other hand, Europe faced political instability. Former French Prime Minister François Bayrou lost a vote of confidence and was replaced by Sébastien Lecornu. This is because François Bayrou suggested spending less and raising taxes in 2026. The French government was worried that France might not be able to pay off its debt in the future.

How did global stock markets perform in Q3 2025?

Asian stock markets led global performance during the quarter, with the MSCI Asia ex-Japan Index (an index that tracks the performance of large and mid-size public companies across Asia, excluding Japan), posting an impressive 11.1% return. The rally was primarily driven by strong gains in tech stocks across the region, supported by surging demand for AI infrastructure and improving trade dynamics that reduced tariff risks. Notably, the weakening US dollar further enhanced the competitiveness and earnings of export-oriented Asian markets, particularly in tech-heavy economies like China, Taiwan and South Korea.

In the US, the S&P 500 delivered strong gains of over 8%, reaching multiple new highs during the quarter. This performance was underpinned by outstanding earnings results from the majority of large-cap companies, particularly from the Information Technology and Communications sectors. A significant contributing factor was again the weakening US dollar, which boosted the overseas earnings of US multinational companies. Additionally, markets priced in a highly anticipated 0.25% Federal Reserve (US Central Bank) interest rate cut at the September meeting, providing further growth to equities.

The UK also delivered a strong performance for the quarter, with the FTSE 100 (an index that tracks the performance of 100 largest UK public companies) up 7.5%, its strongest quarterly gain since 2022. A weaker British pound lifted overseas earnings for global companies in oil, healthcare, and mining. Defence stocks rose due to high demand, with ongoing geopolitical tensions and rising defence budgets. As well as non-essential consumer goods, equities saw solid returns, supported by the Bank of England’s (‘BoE’) interest rate cut, thereby increasing spending with hopes of easing inflation.

In contrast, the MSCI Europe ex-UK (an index that tracks the performance of large and mid-size public companies in Europe, excluding the UK) rose just 2.8%, lagging behind other markets. Sluggish growth in the Eurozone, underwhelming performance in German stocks, and ongoing political uncertainty in France muted investor sentiment and limited gains across the region.

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Please note that the performance figures above are reported in local currencies, except for the MSCI Asia ex-Japan, which is reported in USD due to the use of multiple currencies among its constituents.

The bar graph below shows US exposure and quarterly performance for our 100% equity and multi-asset plans. US stocks, largely driven by AI-related gains, boosted returns, especially for equity-heavy plans. However, despite strong quarterly returns for all plans, year-to-date results do differ, highlighting that short-term performance shouldn’t drive long-term investment choices.

^The 4Plus and Tracker Plans are multi-asset funds, and all others are 100% equity funds. The Preserve and Pre-Annuity Plans do not have exposure to US stocks, as they are composed of cash and fixed-income assets, respectively.

Key themes in the stock market over the quarter included AI infrastructure investment, interest rate cuts from central banks, and strong sector performance. While resilient earnings and easing trade tensions lifted sentiment, concerns are rising about the sustainability of AI-driven growth.

How did UK bond markets perform in Q3 2025?

UK bond investors remained cautious despite a 0.25% BoE interest rate cut in August. Gilts fell -0.8%, while corporate bonds rose just 0.8%. The 30-year gilt yields hit their highest levels since 1998, a trend also mirrored in UK investment-grade corporate bonds.

Two main factors driving this underperformance were persistently high inflation, with the August Consumer Price Index (‘CPI’, a metric used to measure the UK inflation) at 3.8% (the highest since January 2024), and increased uncertainty around inflation. Ongoing tariff-related pressures since April have kept inflation elevated, undermining investor confidence in the near-term outlook and limiting the effectiveness of policy easing.

Source: MSCI and Bloomberg

Long-term gilt yields reflect persistent inflation pressure

The graph below shows how UK inflation and long-term gilt yields moved through 2025. Inflation, measured by CPI, has risen since April’s US Liberation Day Tariff announcement. The full impact of these tariffs on prices remains unclear, creating uncertainty for investors.

Bond markets tend to react negatively when the outlook for inflation is uncertain, as it is today, prompting a selloff in long-dated gilts. As a result, 30-year gilt yields climbed to their highest level since 1998, reflecting investors’ caution about persistent inflation and long-term fiscal pressures.

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Looking ahead, UK bonds face a cautious outlook. Persistent inflation uncertainty may keep yields elevated despite further interest rate cuts. Additionally, the upcoming Autumn Budget in November will influence market sentiment, especially if fiscal measures add pressure to inflation expectations.

As of 30 September 2025, PensionBee’s Tracker Plan has 4.73% of its funds invested in long-dated gilts (over 10-year maturity).

Have a question? Get in touch!

Do you want to know more about your pension plan with PensionBee? Learn more about the top 10 holdings in your pension fund on our blog, which is regularly updated. You can also look at our Plans page to learn how your money is invested in different assets and locations, or log in to your BeeHive to see your specific plan. You can always send comments and questions to our team via engagement@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 invested. This information should not be regarded as financial advice.

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The following is a transcript of our monthly podcast, The Pension Confident Podcast. Listen to episode 43 or scroll on to read the conversation.

Takeaways from this episode

• If you start at age 25, monthly pension contributions of £680 could grow to £1 million over 40 years.
• If you start at age 25 and increase your monthly contributions each year by 3%, your payments could be as low as £430.
• Based on the 4% withdrawal rate, a pension pot worth £1 million could give you £40,000 per year in retirement.
• £40,000 per year in retirement is seen as just below a comfortable standard of living for a single person, according to Pensions UK.
• Starting early gives you the best chance of saving £1 million in your pension as you’ll benefit from compound interest, tax relief from the government, employer contributions and potential investment growth.

PHILIPPA: Welcome back. Now, how does £1 million in your pension pot sound to you? Unachievable? Well, not necessarily. Aiming high, it’s always a great mindset when it comes to your pension. So keep listening because we’re going to hear exactly how some people do it.

I’m Philippa Lamb, and if you haven’t subscribed to the podcast yet, why not click right now? You’ll never miss an episode that way.

Now, as always, I have expert guests here to help me including long-term friend of the podcast, Faith Archer. She’s a Financial Expert and Founder of Much More With Less, and importantly for this episode, A whizz with numbers. Damien Fahy, also back on the podcast, Founder of Money to the Masses, a website helping millions of us take good care of our finances, and from PensionBee, brand new VP Personal Finance, Maike Currie. Welcome, everyone.

FAITH: Hello.

DAMIEN: Hello.

MAIKE: Hi there.

PHILIPPA: Now, 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, and when investing your capital is at risk.

Now, I want to kick this off around the table by asking everyone, without naming names, do you know anyone who has £1 million in their pension pot?

FAITH: Yes.

PHILIPPA: More than one person?

FAITH: One in particular I’m thinking about. They were talking about how their pension pot was running into problems with the lifetime allowance.

PHILIPPA: So you knew how much they had?

FAITH: Absolutely.

PHILIPPA: I do know one. It’s not me. How about you two?

DAMIEN: Someone personally I know is somebody who talks a lot about money. And that’s the only reason I know that they’ve got more than £1 million in their pension pot.

PHILIPPA: Because they’ve told you?

DAMIEN: Because they regularly talk about it. And they want some guidance on my view on what’s happening in the world. So it’s really for their benefit that I know.

MAIKE: I know quite a few high earners, fund managers and the like, also in large part because they mentioned that they had the challenge with the lifetime allowance, but also a few ordinary people that have made that mark.

PHILIPPA: And PensionBee customers, Maike. Presumably, some of them have very big pension pots?

MAIKE: Well, interestingly enough, and taking into consideration that we now have almost 300,000 customers, just over the 285,000 mark, there aren’t that many pension millionaires in our customer base. If I had to put a figure on it, it’s in the double digits.

PHILIPPA: OK, so there’s some?

MAIKE: There’s some. Far more with pension pots over £500,000.

Monthly payments needed to grow a £1 million pension

PHILIPPA: But Faith, just to be clear, to get £1 million in your pension pot doesn’t mean you’ll have to contribute £1 million yourself?

FAITH: No, it doesn’t. One of the most important things with pension planning is that you’ve potentially got time on your side. The earlier you can start, the more [that] smaller contributions are going to add up. I think if you want to go for the £1 million mark, you’re probably going to have to save into your pension pretty aggressively starting as early as you can and hope for a following win from the stock market that the growth is going to take you through.

PHILIPPA: Yeah, OK. Well, should we put some numbers on it? I mean, if you were doing, as you say, and starting at, say, age 25, what sort of money would we be talking about in monthly contributions?

FAITH: OK, so let’s put some assumptions out there. You’re 25. We’re going to assume that growth is 5% a year after fees, and you’re running straight through - 40 years to 65. If you’d probably need to pay £680 a month for that 40 years to hit the £1 million. However, I think most people, if you’re starting at 25, you’re not expected to have the same salary all the way through.

PHILIPPA: Of course, yeah.

FAITH: If you can get pay rises and make sure that you increase your pension contributions as your pay goes up. That same 25-year-old, if we were assuming that they’ve got pay rises, so they’re increasing their pension contributions by 3% a year for the 40 years, and you got the same 5% growth after fees, their contributions might be - you could start as low as £430 a month, and it’d generate the £1 million by 65.

PHILIPPA: Obviously, if you start later, it’s going to cost you more in monthly contributions. But then, I guess, if you start later, chances are you might have a bit of pension already saved up.

FAITH: Absolutely. I mean, if you were going to start at 30 with no pension saved up, then rather than the £680 with the flat contributions at [age] 25, then you’re looking at £900. You delay for another 10 years, until you’re 40, then it’s getting pretty hefty, like £1,700. So earlier you can start and if you’ve already built up pension saving, so you’re not starting from zero, but you’re taking a more aggressive approach. The figures won’t be quite so painful.

How to make your child a millionaire

PHILIPPA: Damien, I know you’ve done a lot of work around this with parents helping their kids to get going on this. Actually, the first thing I’m thinking of is - [if] anyone is listening to this with kids or grandkids, tell them to listen to the podcast and encourage them to start now. But what do you say to parents who want to help out?

DAMIEN: Well, the thing is, it’s about the time in the market. So if you have that ability to compound over time, it does a lot of the heavy lifting for you as the figures that Faith has just said demonstrate. And we did a piece about how to make your child a millionaire because we all get to a stage where in life you start to look at this £1 million number. And if you started early or you started for your children, they have a much greater chance of becoming a millionaire on much lower numbers.

We looked at the numbers and crunched them. Let’s say, for example, you had somebody who was five years old. When we did this example, we were looking at putting it into a Junior ISA. If you assume growth rates that are slightly more punchy, let’s 8%, which is the higher of the Financial Conduct Authority’s (FCA) guidelines and the numbers in which they’ll allow people to project with.

PHILIPPA: OK, so it’s optimistic.

DAMIEN: It’s optimistic, but if you’re investing for a very long time, we’re talking about somebody from age 5 to 65. You can get to the point where for that person, if they have £56 a month put into a Junior ISA to start with, which when they get to 18, it’ll become a Stocks and Shares ISA, which they take control of themselves as adults, then that amount of money will grow to £1 million over time.

PHILIPPA: That’s a flat contribution that doesn’t go up?

DAMIEN: That’s a flat contribution that doesn’t go up. And so you can see by starting early, you have something to compound because that’s the thing about compounding. If you have nothing, it doesn’t compound to anything. So you have to have some money.

So the key thing is if you start early for your children, I now do this. So I have Junior ISAs for both of my children, and we put in a small amount and they compound over time. That’s the hope. And they’ll hopefully take the baton, we teach them, and they’ll continue this into the future. But the thing is, you can work it with pensions as well because there are things called Junior Self-Invested Personal Pensions (SIPPs). So there are pensions you can contribute to for children, so they don’t get access to the money at age 18, which is an incredible thing because it means you can start them onto a pension very early.

PHILIPPA: And they can’t blow the money when they leave home?

DAMIEN: They can’t blow the money. But the other thing I just want to add on that - if you increase the contributions each year by, let’s say, 5%, then that £1 million becomes a much bigger number. So it ends up being closer to £2 million. Each year, you’re just incrementally increasing the amount you put in each month. And that means you can therefore combat inflation. Because if you have a pot of a million in the future, so that child who I originally just started putting in £56 a month for, it compounded to £1 million by age 65. In reality, it’d only be worth around about £500,000 in today’s money. So that’s why it’s important to keep increasing the amount that you put in.

PHILIPPA: Yeah, but it’s quite an eye on it. I mean, that’s a relatively small amount, isn’t it? £56 a month, did you say?

DAMIEN: Yes.

PHILIPPA: Yeah. I mean, that feels quite doable, doesn’t it?

DAMIEN: And when they get older, don’t forget that a lot of the heavy lifting will be done by them when it comes to their own pension contributions. So that’s the thing. The numbers that we’ve already mentioned are really big when you start later. And unfortunately, most of us start focusing on our pensions when we’re in our 40s.

How much retirement income can you take from a £1 million pension?

PHILIPPA: Maike, this £1 million, it sounds great. And as Damien has said, you have to think about what is that really going to do for you when you’re older? Because we’re projecting decades ahead into the future. It sounds like a lot, but if you had £1 million in your pension pot right now, what would that give you in the way of annual income when you retired?

MAIKE: Well, if we base it on the standard 4% drawdown rate, that’s going to give you £40,000 a year. Now, whether £40,000 is enough will differ from one person to the next, all depending on whether you’ve paid down the mortgage, what your standard of living is, what’s important to you, do you have dependents? All those things will play a role. But really, if you think about £1 million, it sounds like a lot. But then an annual income of £40,000, when you’ve still got a mortgage to pay, you might still have dependents. That’s not that much money.

PHILIPPA: Yeah, I’m afraid that’s true, isn’t it? So, Faith, can you explain just how we got to that £40,000?

FAITH: It’s based on a handy rule of thumb, the 4% rule, which is known as - I’m slightly putting inverted commas around this - the ‘safe’ withdrawal rate.

The idea is that if you withdraw 4% from your pension pot, and in year one, the next year, it’s 4% plus inflation, and you keep doing that, your money won’t run out over a 30-year retirement. It’s based on the Trinity Study in the 1990s that looked back over American stock market performance, did it with lots of different withdrawal rates, and it came out and said, “right, OK, 4%, you’re going to be OK”.

PHILIPPA: And it’s really important, isn’t it? Particularly with longer lives.

FAITH: Absolutely.

PHILIPPA: So, Maike, we’re talking about a £1 million pot. We’re talking about an income of 40,000 a year. What lifestyle would that give you?

MAIKE: Well, of course, it’s a difficult one to answer because there’s no ‘one size fits all’. But a good benchmark, which is often referred to is the Pensions UK, which sets three different retirement lifestyles: minimum, moderate, and comfortable, which gives people a general indication of what lifestyle they may be on track for in retirement.

Now, the cash amounts for each standard are regularly updated. This is after tax, and it’s also important to bear in mind that this assumes that you own your own home.

PHILIPPA: OK.

MAIKE: Right. So for a single person, you’ll need £13,400 per year for a minimum retirement. £31,700 a year for a moderate retirement, and £43,900 per year for a comfortable retirement. So my deduction from that is if you’re a single person and you want a comfortable retirement, you’ve got no dependents, you already need to pass that £1 million pension mark.

PHILIPPA: What about if we include the new State Pension? That helps a bit.

MAIKE: Yes, it does. But the one thing we need to bear in mind with the State Pension is it all depends on how many years of National Insurance contributions you pay. To get the full new State Pension, you need 35 years of National Insurance contributions. And the reality is, especially for women, at some stage in our careers, we’ll take a career break, and that might impact how many years of National Insurance we pay. So relying on that full new State Pension, not a lot of us will get the full new State Pension. That’s a fact.

PHILIPPA: But you can make up the numbers, can’t you? You can look up where your record is online and make up the numbers or some of them.

DAMIEN: So you can go online and you can get the State Pension forecast. So [for] people listening to this, it’s a good useful piece of admin to do, to go and check your State Pension to see if there are any gaps. If there are, then you do have the ability to fill some of those gaps.

FAITH: It’s also worth saying that if you make sure that you register, you claim Child Benefit. If you have a career break because you’re having children, you’re not working, then you can get credits towards your National Insurance contributions if you’re looking after children under the age of 11. So all isn’t lost in State Pension terms, if you take time off to raise children.

PHILIPPA: Yeah, but always worth thinking about, isn’t it? Because when you’re raising kids, life’s busy. These are the things that slip through the gaps, aren’t they?

Then, of course, we come to inflation, don’t we? As I’ve said before, we’re talking about decades in the future. We’re talking about big numbers. Damien, talk to us about inflation. If we’re saying a million now gives us £40,000, if we think about it in 10, 20, 30 years time, it’s not sounding like a big income, is it?

DAMIEN: It’s not. And that’s the thing with inflation that people have to work out. So a good rule of thumb is that if you ever want to know how long it’ll take your money to double in value, then what you do is you take an interest rate and you divide it into the number 70. So, we call it the rule of 70. It’s technically the rule of 72, but the numbers are easier if it’s 70. So I’m going to be very simple and use a 10% rate of return. You wouldn’t think I’ve got a maths degree. I’ll stick to the simple example. So that’d take you seven years for your money to double.

But conversely, you can use that same rule to work out how long it’ll take your money to halve in value. If you start having a very high rate of inflation, then if you divide that number into 70, you can work out how many years it’ll take for your money to actually halve. When we talk about halving, and what people need to realise, that means that you aren’t going to be able to buy as much with your money in the future.

PHILIPPA: This is buying power, isn’t it?

DAMIEN: It’s buying power.

How can you save £1 million in your pension?

PHILIPPA: It seems to me [that] we started off thinking £1 million was a crazy number, a huge number. We’ve now got to a place where we’re thinking you definitely want to aim at it, if you can. Faith, shall we talk a bit about how to make those contributions a little less painful for people?

FAITH: Well, I think we’ve made the point about starting as early as you can and that even small contributions, if you do it for long enough, are going to make a difference. But fundamentally, if you can increase those contributions over time, perhaps thinking, for example, of paying a percentage of your income into your pension rather than a flat sum of money. I think also taking advantage of any of the ‘free money’ that gets added on top of pensions because you’re bribed to save for your retirement.

PHILIPPA: Yes, the government bribes us. Tell us about that.

FAITH: That’s how I think about it.

MAIKE: That’s a great bribe.

PHILIPPA: It’s a legal bribe.

FAITH: With pensions, currently, if you pay money into a pension, you aren’t allowed to withdraw it until you reach the age of 55, that’s rising to 57 from 2028. In exchange, the government is willing to give you tax relief on top of your contributions.

PHILIPPA: This is a good thing and always a really important thing to think about. If we think about that 25-year-old and the contributions you talked about earlier, can we apply that calculation to this?

FAITH: Yeah, absolutely. If you’ve got the 25-year-old, so their growth is at 5% a year, they’re increasing their contribution by 3% a year, and so they need to start out at £430. Now, if you’re a basic rate taxpayer, then the government, for every £80 you put in, you’re going to get £20 added immediately in tax relief. So that’s a really nice boost. The other addition you can get is if you’re an employee, then your boss will add money into your pension.

PHILIPPA: Yes. I want to talk about workplace pensions in a bit.

FAITH: If you’ve got a generous enough employer that they’re doing [employer] matching, they’ll match your contributions, then for a £430 total pension contribution, if you put in £172, it gets topped up with another £43 in tax relief, and then your employer matches it. Suddenly, the employer is putting in £215, suddenly that £430, the bit that’s coming from you is just £172 that’s then topped up with tax relief and then topped up with the employer contribution.

PHILIPPA: Which feels a bit less painful, doesn’t it? Obviously, as you say, you’re talking about a basic rate taxpayer there - 25% - but you could be on a higher rate?

FAITH: Absolutely. If you’re a higher rate taxpayer, then you’re going to get more tax relief. So whether you’re paying high rate or additional rate tax, you put the same £80 in, you’ll get the £20 added immediately in basic rate tax relief. But then if you’re a high rate taxpayer, you can then claim back additional tax relief on your tax return, another £20. If you’re an additional rate taxpayer, you claim another £25. That £80 as an additional rate taxpayer, that £80 you put in, you’ve got £20 immediately added, £25 back on your tax return, it’s costing you a lot less than you originally thought.

PHILIPPA: Yeah. And the key point there is you do have to claim it. It doesn’t come to you automatically.

FAITH: Yeah.

PHILIPPA: Maike, you can check this on the PensionBee Pension Tax Relief Calculator, can’t you?

MAIKE: Absolutely. So PensionBee has a brilliant calculator on its website, and you can play around with the numbers.

But I actually want to tell you a story because I was 25 once, and I was in a workplace pension, and I was a basic rate taxpayer. And I went back and I checked on that pension. And I looked at the numbers, which was really interesting. The sum total of what I contributed at the time was £3,500, right? My employer at the time contributed £7,000, around double what I was contributing. But with the power of compound interest, and of course, the power of tax relief, which is that ‘free money’ from the government, so if I put in £2,880 as a basic rate taxpayer, the government adds £720. So I looked at that pension, right? Now, bearing in mind, the total contributions were £10,000, give or take in total. That pension, which wasn’t very aggressively invested, which was also a mistake I made when I was younger, I should have taken far more risk -

PHILIPPA: We’ve talked about this on the podcast before, the whole risk profile when you’re young, you can be a bit more -

MAIKE: Absolutely, because you’ve got time on your side. But that pension is now worth almost £60,000. Bearing in mind, I only put in £3,000 of my own money. And that really is the power of starting early. It’s all about time. It’s not about how much you invest, but about when you start. Time is the most powerful ingredient.

And we spoke earlier about the power of making your child a pension millionaire or an ISA millionaire. So it’s really interesting because I wrote a piece for The Times this week, which is the power of Junior Pensions, Junior SIPPs. They’re brilliant because, again, you can put some money into a Junior SIPP for your child, put in £2,880. That’s all you do. The government tops it up with £720. And then you invest it in a relatively aggressive high equity fund. So you get that growth. That investment, by the time your child reaches age 18, you could have around a £115,000 in that Junior SIPP. Then, and here’s the real kicker, you leave it. You don’t put another pence into that pension. Your child reaches age 57, retirement age, and that pot could very well, the numbers that we crunched, shows that that pension pot could be worth over £1.24 million.

So that is - I’m not going to say it’s easy because we know times are hard and budgets are tight - but putting some money away for your child from birth to age 18, and they’ve got the power of time, they’ve got time on their side, you could make them a pension millionaire, even if you can’t make yourself a pension millionaire.

PHILIPPA: Yeah, I mean, Damien is nodding. Yeah, this is what you’re saying, isn’t it? It’s a great story.

DAMIEN: It’s a great story. And to add to that, I think pensions for children is almost something that isn’t spoken about. It’s almost like a secret that people don’t realise there’s a product.

PHILIPPA: I think that’s true.

DAMIEN: But I tell you the people who do know about it, and it’s the people who do have millions in their pension. So pension millionaires do know about it. Because I can go back to when I was working in the city, people who were already maxing out their pension contributions and their ISA allowances were putting money, just as you described, into pensions for their children and their partners if they weren’t working.

PHILIPPA: Were they?

DAMIEN: Because they knew the power of the tax relief, the compounding, and they were actually sheltering some of their wealth as well.

PHILIPPA: But perfectly legally.

DAMIEN: Perfectly legally.

MAIKE: And on the topic of sheltering your wealth, we know that Inheritance Tax is in the headlines. It’s a very thorny issue because we know in two years time, in April 2027, pensions will now be part of your estate for Inheritance Tax purposes. But if you gift money as a grandparent to your child into a Junior Pension, that’s a very good way of reducing your Inheritance Tax liability. Grandparents putting some money into a Junior SIPP it’s a really good way. It’s called gifting.

PHILIPPA: Faith, you talked about workplace pensions earlier. We talked about it a bit, but I’m thinking about our 25-year-old. If that person was younger at 20, you’re not auto-enrolled at 20 into workplace schemes? Is that right?

FAITH: In theory, you have to be 22. That’s when Auto-Enrolment starts. You can potentially ask to join the pension younger than that. At 22, at that point, you’ll be signed up for the pension. You put in 4% of your qualifying earnings. There’s 1% point added from the tax relief, and your employer will add 3%. So it comes to a total of 8%, and it’s paid on ‘qualifying earnings’. So it’s not starting at zero, it’s [your] earnings between £6,240 a year and £50,270 a year.

PHILIPPA: OK. It’s worth saying, that’s the basic arrangement, isn’t it? Some employers may be more generous than that.

FAITH: Absolutely. And it’s completely worth checking whether they are or not.

PHILIPPA: We’ve talked about this in the podcast, and I’ve got to say, I never did that in my 20s. It never crossed my mind. But it’s a really important thing to do, isn’t it? Ask the question. If they’re not saying to you how much they’re going to contribute, ask them.

DAMIEN: Ask them. I can tell you a worse story than that. I worked in the Pensions Review for one of the major high street banks. I knew a lot about pensions, and I still wasn’t engaging with my pension at that point. So it just shows you you can be working in pensions and still not engaging with them.

PHILIPPA: We briefly mentioned earlier the question of risk level, risk appetite when you’re young. You don’t necessarily need to be that conservative, do you?

MAIKE: And quite often with employers, they’ll put you into the default pension plan. So it’s really important to look under the bonnet of your pension, your workplace pension, and decide, could I take a bit more risk? Do I need to be in the default? Because often the default also has higher fees, and fees, as we know, has a major impact on your returns over the long term.

PHILIPPA: Faith, we’re talking about employed people here, and it’s well worth remembering, of course, not everyone’s employed. Self-employed people, freelancers, entrepreneurs, they’re not getting those employer’s contributions, are they?

FAITH: They’re not only not getting the employer contributions, but they don’t benefit from Auto-Enrolment either. So if you’re self-employed, you not only don’t have the boss to pay money in, but you don’t have a boss to set up a pension. You have to make the choice yourself. That can be, I think, quite an overwhelming choice. If your business isn’t pensions, what on earth do you pick? And I think my main tip is almost progress, not perfection. Don’t tear your hair out. Far better to pick a pension plan, set up the direct debit, get regular payments going in, knowing that if subsequently you change your mind, you can move the money.

£4 on a coffee vs. £4 in your pension

PHILIPPA: So we’ve been talking about young people and how important it is to start young. Thinking about our 25-year-old again, or even younger, 22, money is almost invariably tight. I mean, unless you’re extremely fortunate, you’re not in a very high paying job at that stage in your career. So where do they find this money? What savings can they make? This is the avocado toast question that, you know, poor Gen Z always get beaten over the head with the ‘wasting money on avocado toast and coffee’. But do we have any thoughts on what they might do to find those few extra pounds a month?

FAITH: I think it’s like anything. The small contributions can add up. And so maybe it’s that £4 a day, £4 every working day, £20 a week, £80 a month. Suddenly, that can add up to a distinctly higher sum by the time you’re hitting 65, 68. You’re suddenly looking at tens of thousands of pounds.

PHILIPPA: So those small discretionary sums we spend every day?

MAIKE: Yes. But I also think a lot of financial guidance on that can be quite patronising because it’s those small items - I love to go to the station and buy my cup of coffee every morning, and I’m not going to stop buying that cup of coffee. It brings me great joy.

Sometimes we need to look at the big ticket items, too. When we’re talking about lump sums, like a bonus or just spending less on something like a big wedding or a big trip abroad, that’s a really good way to give your pension that boost, which is hard when you’re in your 20s. But remember, as we said at the beginning, it’s not how much you’re putting in. It’s about time. You’ve got time on your side.

PHILIPPA: You make a good point, though. As time goes on, we start spending money in bigger chunks on bigger things, cars, rental choices, that sort of thing. Damien, those choices, they can make quite a big difference.

DAMIEN: They can make a difference because no one’s ever got rich, as far as I’ve found out, by not eating avocado on toast or not getting coffee. It’s about making the bigger ticket decisions. Now, one of the biggest ones I made was to not have a car on finance. So I used to have a car on finance. And for most people, that is about £200-£300 a month. And you get caught in that cycle. But I broke that cycle and now I don’t have a car on finance. I just own the car outright. And by doing that, I’ve suddenly got a couple of hundred pounds a month that I didn’t have before that I can then choose to do as I wish, which is being able to put it to one side.

Then on top of that, try and avoid lifestyle creep. So let’s have an example of somebody that gets a pay rise and you think, “I’ve got a pay rise. That’s amazing. I’m going to go and blow it”. Maybe put a portion of that or more of that into saving things, investments or a pension because you’re no worse off. You can be marginally better off if you keep some of that extra money you have a month and you use that on discretionary. We’ve got to have fun. But as long as it’s planned for, then that’s fine.

PHILIPPA: Planned fun?

DAMIEN: Planned fun!

PHILIPPA: It doesn’t sound so great, does it? I like a bit of spontaneous fun now and again, but maybe that’s just me.

FAITH: The thing about what Damien said, there’s an American book called The Millionaire Next Door. And the author went out to study all these normal people that had amassed significant assets. I think one of the phrases stuck with me was that they’d had same car, same house, same wife! These consistent things that weren’t expensive, and they’d kept their lifestyle.

PHILIPPA: This is the Warren Buffet argument, isn’t it? The great investment guru. A man who never spent any more than he had to, would it be fair to say?

DAMIEN: He’s a great example to bring up because Warren Buffet was, he’s arguably called the greatest investor of all time. But one of the things that Warren Buffet had is he invested from, I think it was the age of 10 or 11, and he’s now in his 90s. So yes, he was amazing at investing and he put money in investments, but it was actually compounding. If you compound money for 80 years, you’re going to be one of the richest people in the world. So it’s one of the - again, going back to that point, it’s about time.

PHILIPPA: Can we put some numbers around it? Because the PensionBee Pension Calculator will do that, won’t it? You can think, if I put £10,000 in, what would it do for me?

MAIKE: Sure. So let’s assume you’re 20 and you put a £5,000 one-off lump sum into your pension. Now, that could be worth £13,953 by the time you’re 68. £10,000 could be £27,895. £20,000 could be £55,790. So if you’re lucky enough to come into a lump sum, make that work hard. Put it into your pension because you’re also going to get that ‘free money’ from the government in the form of tax relief.

PHILIPPA: Yeah, though it’s important to remember there are limits, aren’t there, on how much you can contribute?

MAIKE: Yes, that’s an interesting one. And that’s one to note. The annual allowance for the current tax year is up to £60,000 to still receive tax relief. But obviously for higher earners, there’s a tapered allowance, which could mean that you could put as little as £10,000 into your pension. And that is why it’s not that easy to build that £1 million pension pot anymore.

FAITH: Also you can’t put more into your pension in any one year than you actually earn in that year.

PHILIPPA: Assuming you inherited a huge amount of money, you couldn’t throw it all at your pension pot?

FAITH: If you earned less than £60,000 in that year, you couldn’t even put the £60,000 in.

PHILIPPA: It’s all about consistent contributions, really, isn’t it? This is the way to get to what we’re talking about.

MAIKE: Absolutely. Set and forget. Set up their regular investment plan and just forget about it.

PHILIPPA: All right. So Maike says, ‘set and forget’, which is a nice maxim to live by. Final tip from you, Faith?

FAITH: I think don’t give up on pensions just because you’re not 20 anymore. Don’t think you’ve missed the boat if you’re in your 40s, if you’re in your 50s, because fundamentally, for every - the £80 you put in, you’re getting that £20 tax relief top up plus extra if you’re a higher or additional rate tax payer. That’s absolutely worth happening. It’s absolutely worth putting contributions in later in life to get that tax relief to help boost your retirement savings.

PHILIPPA: Yeah, that’s an excellent point. Damien?

DAMIEN: I want to be optimistic because even though some of these numbers seem huge, you do have levers to pull, like lowering your charges and things like that, that can make those contributions that you need to build a bigger pension pot that much lower.

PHILIPPA: This is about engaging. The thing we talked about earlier, understand what your pension is doing.

DAMIEN: If you’ve not engaged before, now’s the time to start to engage in your pension.

PHILIPPA: That’s great. Thank you so much, everyone.

FAITH: Thank you.

MAIKE: Thank you.

PHILIPPA: That’s it for this time. If you’re enjoying the series, please do rate and review us because it really helps us reach more listeners like you. If you missed an episode, as I always say, don’t worry, you can catch up anytime on your favourite podcast app, YouTube, or of course, if you’re a PensionBee customer in the PensionBee app.

Next month, we’re going to be talking about the real cost of Buy Now, Pay Later. And later in the month, we’ll be covering the Autumn Budget that we’re all on tenterhooks about, so keep an eye on the feed for both of those.

Here’s a final reminder, anything discussed on the podcast shouldn’t be regarded as financial advice or legal advice. And when investing, of course, your capital is at risk.

Thanks for joining 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.

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In 2024, many UK default pensions for those nearing retirement didn’t grow as much as savers hoped they would. A default pension is the fund that you’re automatically placed into if you don’t choose a specific fund yourself. They’re designed to be suitable for the average saver by age group and most UK employees are likely invested in their workplace’s default pension fund.

A PensionBee survey last year found ^{_pension_release_tax_amount} of savers aged 55 or over see 5% or more as a ‘good’ return. In 2024, average performance for many UK default funds for this age group dipped below that threshold.

While some performed better than others, Corporate Adviser’s Master Trust annual benchmark shows that the average annualised returns fell from 5.73% in 2023 to 4.91%*.

For savers who’re just five years away from State Pension age (which is currently ^{_state_pension_age}), these annualised returns are lower than they’d hoped. PensionBee’s 4Plus Plan outperformed most default funds with annualised returns of:

• 10.34% in 2023; and
• 10.24% in 2024.

The 4Plus Plan has been part of the PensionBee plan range since 2018 and became the default fund for savers age 50 and over from February 2025.

*Data from Corporate Advisers Master Trust and GPP Defaults Report 2024 and 2025. PensionBee data supplied directly from State Street Investment Management. Data from 1 January 2024 - 31 December2024. All figures are gross of fees.

How is the 4Plus Plan invested?

The 4Plus Plan is our default pension plan for savers aged 50 and over. As retirement approaches, and savers start to make withdrawals, most savers want to balance certainty with stability when it comes to their pot. The 4Plus Plan is designed to help savers transition into retirement while delivering consistent performance during those years.

It does this by investing in a range of assets that are adjusted on a weekly basis. The mix of assets includes:

• company shares (also known as equites) for higher growth potential; and
• bonds and cash for lower but steadier returns.

A team of experts at State Street monitor market conditions to ensure a balance between growth and stability. The plan aims to deliver long-term growth of 4% above the Bank of England’s base rate over a minimum five-year period.

Despite volatile stock markets, in 2024, the annualised returns for the 4Plus Plan were 10.24% - more than double the market average.

Find out more about the 4Plus Plan.

How can I check my pension fund?

If you’re close to retirement, there are a few things you can do to ensure your pension is on track.

Clare Reilly, Chief Engagement Officer at PensionBee, says: “Despite volatile markets, our 4Plus Plan’s double-digit returns demonstrate that with an actively managed approach, it’s possible to achieve strong performance and offer greater protection for those approaching or in retirement.”

1. Review your plan’s performance

To check your pension’s performance, you can look at your annual statement or log onto your online account. If you’re enrolled in a workplace pension and aren’t sure who the provider is or where to find the information, ask your employer.

If you’re a PensionBee customer, you can find your annual statements in your online account (also known as your ‘BeeHive’). Simply log in, head to ‘Account’ and then ‘Resources’.

You can also find historic fund performance information in your BeeHive. Once you’ve logged in, tap the ‘Analytics’ tab and then ‘Performance’. Your plan’s fund performance chart shows how ^{_money_purchase_annual_allowance} would’ve grown if you’d invested that money five years ago. Remember, past performance isn’t an indicator of future performance and the value of your pension can go down as well as up.

2. Think about your retirement plan and goals

Think about the kind of retirement lifestyle you want and when. What is your desired retirement age? And how long do you have to keep saving before you get there? You can use PensionBee’s Pension Calculator to see how much income your pension could generate in retirement. Plus you can use the toggles to see how adjusting your contributions could impact your pot.

3. Consider switching plans

If you still have a few decades before you plan to retire, you might consider switching to a higher risk plan for more growth potential. Whereas if you’re approaching retirement age, you might want to gradually reduce risk. PensionBee has a range of pension plans for various savings needs. Find out what you need to know before you consider switching plans and how to do it.

Risk warning

As always with investments, your capital is at risk. Past performance isn’t an indicator of what will happen in the future. 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.