Learn more about how gold can be considered as part of a diversified investment portfolio of assets and other investments such as pensions.

Why your pension balance may be fluctuating more than usual

Find out why your pension balance might have gone up and down a bit more than usual lately.

Those of you who check your pension balance regularly might have noticed that it’s been a bit up-and-down in recent weeks. This usually isn’t anything to be worried about in the long term, but we wanted to explain what’s going on to relieve any concerns.

Businesses around the world are facing some challenges

Depending on your plan, your pension will invest a substantial proportion of your money into company shares via the stock market. This is an effective way to grow your money over the long term, since companies focus on improving their performance (and therefore their value) each year. But in the short term, companies have their good days and their bad days. This is influenced by all sorts of things, from the changing price of raw materials to their ability to ship their products on time. And this, in turn, affects how much investors are willing to pay for a share in that company’s future.

Your pension balance reflects the value of the companies your money is invested in. And lately, companies have been dealing with a number of challenges, including:

Labour shortages
Energy price rises
Covid disruption
HGV driver shortages and Brexit changes, particularly in the UK

We don’t know how long these challenges will continue for, and therefore how much they’ll continue to impact businesses. However, it’s possible that some of these challenges could be resolved in the near future with strong government action. And if that’s the case, the long term impact on companies (and therefore their share price) could be relatively minimal.

Investors are concerned about the wider economy

The value of a company is influenced by its performance, which in turn is impacted by the wider economy too. These days, investors are concerned about several trends in the global economy.

Rising inflation

Inflation occurs when the average price of goods increases each year. With current supply and labour shortages driving price increases in many sectors, investors are concerned that central banks around the world (including the Bank of England) will begin raising interest rates. This would make it more expensive for people and businesses to borrow money, reducing the amount of money circulating in the economy and investment in new projects. That could limit business growth and that could impact their share price.

Technology rotation

When investors are concerned about a challenging business environment, they tend to look at investing their money in more stable and traditional companies. For many years, the big tech companies like Apple and Amazon have driven a lot of stock market growth. But now they’re under the scrutiny of governments around the world who are tightening up regulation and considering ways of making them pay more tax. This has got investors concerned, and we’re seeing big tech’s share price growth slow as a result.

Exposure to Chinese debt

China’s impact on the global economy is huge, so any economic challenges there could eventually be felt around the world. Currently, several Chinese property developers are rumoured to be struggling to service their debts. If those developers were to default on their debts, it would be bad news for both Chinese and non-Chinese companies who are lenders or somehow otherwise exposed as suppliers. Investors are understandably cautious, and this is having knock-on repercussions for a number of companies’ share prices.

Should you be concerned?

Pensions are long term savings products that are expected to weather even the worst of short term economic challenges. One way pensions are resilient is through diversification. So when some shares fall, others may rise. More broadly when stocks fall, other asset classes, like bonds, may rise. Over the long term, share prices have increased. So while you might see your pension balance go up and down more than usual today, it’s likely to regain any lost growth over the long term.

If you’re approaching retirement, you may be more concerned since there will be less time left to recover any short term losses. Our older customers will have been able to take up our lower-risk plans which aim to preserve your money by investing in more stable assets like bonds. This will limit your exposure to current challenges.

When markets aren’t doing well, there are more opportunities for investors. So you may want to increase your contributions and take advantage of lower prices than before the market downturn and boost your long term savings.

If you have any questions or concerns about your pension, you can contact your BeeKeeper by live chat, email or phone. We’re always here to help.

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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How does working from home affect your pension?

If you work from home is your pension being affected - for better or worse?

Millions of people have been working from home since the pandemic forced many UK businesses to close their offices. But did you know that over 4.5 million people mostly worked from home before the pandemic, anyway? This trend has been increasing for more than 20 years, and it’s likely to continue.

So how could working from home affect your pension? Let’s find out.

Weighing up the costs

One of the joys of working from home is the lack of commute, which can be expensive. And cities in the UK have some of the most expensive transport in the world. In fact, London takes the top spot and is more than double the cost of other major UK cities.

City	Monthly travel pass cost	Annual cost
London	£160	£1,920
Birmingham	£65	£780
Manchester	£73	£876
Edinburgh	£56	£^{_pension_age_from_2028}2
Cardiff	£53	£636
Belfast	£60	£720

Lunch is another expense that many office-based workers have to absorb. One of the most popular lunch destinations is Pret A Manger, where a Chicken Caesar & Bacon sandwich, an apple and a latte could set you back around £8.60. But those working from home could make all of this with shop-bought ingredients for around £2 - a £6.60 saving.

Those working from home will see one cost rise, however. Work from home employees estimate they’re spending an extra £40 a month to heat their home and boil their kettles, according to one survey.

	Office worker’s monthly cost	Work from home monthly cost
Travel	£160	£0
Lunch	£172	£40
Home electricity	£0	£40

So how do the numbers stack up? When the above costs are factored in, the average Londoner could save £292 each month by working from home. That’s around £3,000 a year, including a month’s holiday leave. Those in Edinburgh would save around ^{_tax_free_childcare} a year.

Investing your work-from-home savings into a pension

Whether you work from home or commute to the office, your workplace pension scheme will work the same way - you and your employer will make a contribution, and the government will top it up.

The key difference for those working from home is that they have the option of investing the money they save on commuting and lunch into their pension.

So let’s see what a Londoner’s pension could be worth if they invested their £3,000 a year work-from-home savings. For simplicity, we’ll break it down by month and won’t include employer contributions because that will likely stay the same.

They contribute their £250 a month savings into their pension
The government tops it up by ^{_corporation_tax}
A total of £313 goes into their pension
Their pension grows 4% each year for 30 years
Their pension could be worth an extra £210,319

And someone working from home in Edinburgh?

They contribute their £182 a month savings into their pension
The government tops it up by ^{_corporation_tax}
A total of £227 goes into their pension
Their pension grows 4% each year for 30 years
Their pension could be worth an extra £152,775

And one more, excluding lunch (because not every office worker eats out every day).

A Londoner contributes their £131 a month savings into their pension
The government tops it up by ^{_corporation_tax}
A total of £163 goes into their pension
Their pension grows 4% each year for 30 years
Their pension could be worth an extra £109,702

Now, the average person in the UK retires with a pension pot worth £61,897. So it seems that wherever you live, working from home could potentially double your pension pot at retirement. And the difference is stark.

Withdrawing £8,000 a year from the average £61,897 pension pot could sustain you for nine years. But withdrawing the same amount from a £171,599 pension pot (average + Londoner excluding lunch example) could last well past your 100th birthday.

Is it worth working from home to boost your pension?

There’s little doubt that for some people, working from home could free up enough money to significantly boost their retirement savings. But is working away from the office really worth it?

Working from home suits some people really well. Some people find it much easier to concentrate away from the distraction of the office, while some parents appreciate spending more time at home with their children. That could even help reduce childcare costs, freeing up more money to put into their pension.

But others miss the buzz of an office environment and the collaboration opportunities that are easier to come by. And less in-person social contact can negatively impact some people’s mental health.

Working from home isn’t for everyone, but there are clear financial benefits for those who do. So it’s worth considering your own needs first before exploring the possible financial gains. And if you’re unsure, you could consider working from home for just a few days a week, as a more workable middle-ground between the two.
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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.

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What happened at PensionBee in October 2022?

From how financial markets have performed to behind-the-scenes news from PensionBee HQ.

It’s been a time of great change in the UK, with the latest political events stimulating a period of uncertainty for both currency and stock markets. While the Pound is stabilising, high inflation and rising interest rates continue to challenge the UK economy. Both have made headlines in recent months, but it’s important to remember that in moderation, inflation and interest rates aren’t inherently bad.

The combination of high energy prices, rising interest rates, and soaring inflation is unfortunately the perfect recipe for a recession. In fact, some news outlets suspect we’re already in a recession. The Bank of England is attempting to limit the damage of inflation by raising interest rates. Yesterday’s announcement by the Bank of England marked the biggest hike in interest rates in more than 30 years as interest rates hit 3%. However, ongoing interest rate rises are likely to slow economic growth.

How are financial markets performing?

With economic uncertainty widespread, information has become the most important detail for investors. Fortunately, October marks an opportunity for insights as many companies reported their quarterly earnings halfway through the month. In UK stock markets, the FTSE 250 Index rose by almost 4%, and in US stock markets, the S&P 500 Index rose by almost 9% last month.

However, these updates can be a double-edged sword. A weaker outlook for Amazon sparked a reduction of more than ^_ni_rate in their share price. Even companies that have seen a successful October may still be far from their 2021 highs after this year’s continued period of market volatility. Although we’re currently in a bear market, the good news is global markets have recovered from every bear market in history.

For a more in-depth look at current market performances, read What happened to pensions in October 2022? And for a breakdown of the latest developments in the UK pensions industry, read What you need to know about pensions right now.

Remember that your pension is a long-term investment when considering short-term performance. Past performance is not a guide to future performance. As with all investments, capital is at risk.

Behind-the-scenes at PensionBee

Refer a friend

We’re revamping our refer a friend programme to help our customers save more for their retirement and we wish to let you know that our previous refer a friend programme ended on 31 October 2022.

We’ll soon be launching a new and rewarding way to refer your friends to PensionBee. Broadly speaking, for every friend you refer under the new programme you’ll get a £100 pension contribution to help you save for a happy retirement. We will let you know as soon as we launch it.

PensionBee Roadshow

Thanks to everyone who joined us on 26 October for the launch of our PensionBee Roadshow. We’re excited to continue our tour of the UK in 2023. Please keep an eye out for more information on dates and locations in the new year.

‘Good Egg’ accreditation

We’re delighted to have recently been awarded Good With Money’s ‘Good Egg’ accreditation, which recognises financial providers that are committed to improving outcomes for both consumers and the planet. At PensionBee our vision is to live in a world where everyone can look forward to a happy retirement.

Keep an eye out for our next update on our blog. We’re always working on new features to make our customers happy so if you have any ideas or suggestions, please email feedback@pensionbee.com or let us know on social media.

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What happened at PensionBee in November 2022?

From how financial markets have performed to behind-the-scenes news from PensionBee HQ.

At PensionBee, we’re committed to being honest and open with our customers, even when times are challenging. Meeting our customers face-to-face, during our first PensionBee Roadshow event, was a wonderful opportunity to discuss some of your most important questions in person. The widespread impact of market volatility on pensions has understandably concerned many investors, so we’ve produced a series of online monthly market performance summaries to help you understand the root cause of fluctuations in your pension balance. And of course, your personal BeeKeeper’s only an email or call away if you have questions or concerns.

How are financial markets performing?

November’s been a favourable month for investors, despite the current ‘bear market‘ environment. In UK stock markets, the FTSE 250 Index rose by over 6%, and in US stock markets, the S&P 500 Index rose by almost 6% last month.

What’s changed? The fog of uncertainty’s lifting, as central banks are expected to make smaller interest rate increases in future announcements. This slower pace has given rise to economic commentators anticipating when inflation and interest rates may peak in 2023.

For a more in-depth look at current market performances, read What happened to pensions in November 2022? And for your plan’s performance, read How PensionBee’s plans are performing in 2022 (as at Q3).

Remember that your pension is a long-term investment when considering short-term performance. Past performance is not a guide to future performance. As with all investments, capital is at risk.

Behind-the-scenes at PensionBee

Building a greener future

We’re participating in the Mayor of London’s Business Climate Challenge (BCC) to aid London’s target of becoming a zero carbon city by 2030. PensionBee’s one of 40 businesses located on the southern bank of the Thames pledging to reduce their building’s energy consumption by at least 1^{_personal_allowance_rate} over the next year. We’re also delighted to have recently won ‘ESG Company of the Year’ at the Investors Chronicle Celebration of Investment Awards 2022.

Season’s greetings from the PensionBee team

Wishing you a merry Christmas and a happy New Year! If you’d like to get in touch with your BeeKeeper during the festive period, you can give us a buzz between the following hours:

Friday 23 December: 9:30am - 3:30pm
Saturday 24 - Tuesday 27 December: closed
Wednesday 28 - Thursday 29 December: 9:30am - 5pm*
Friday 30 December: 9:30am - 3:30pm*
Saturday 31 December - Monday 2 January: closed
Tuesday 3 January: business as usual, 9:30am - 5pm

**During these days phone lines will be closed, however you can contact your BeeKeeper via live chat and email.

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What happened at PensionBee in December 2022?

From how financial markets have performed to behind-the-scenes news from PensionBee HQ.

There’s no better time to sit down and review your finances than in January. If you haven’t already, make use of the Retirement Planner tool in your BeeHive to set your pension goals and plan for a happy retirement. As the saying goes, ‘the best day to start investing was yesterday, the second best day? Today!’

How are financial markets performing?

2022 was officially the worst year in global markets since the 2008 financial crisis. In UK stock markets, the FTSE 250 Index fell by almost 1% in December, bringing the 2022 performance close to -^_basic_rate. In US stock markets, the S&P 500 Index fell by almost 4% in December, bringing the 2022 performance close to -^_basic_rate.

For a more in-depth look at current market performances, read What happened to pensions in December 2022? And for your plan’s performance, read How PensionBee’s plans are performing in 2022 (as at Q3).

Remember that your pension is a long-term investment when considering short-term performance. Past performance is not a guide to future performance. As with all investments, capital is at risk.

Behind-the-scenes at PensionBee

Our new Refer a friend scheme’s here!

You can now receive £100 (£80 + £20 tax top up) into your pension when you refer a friend! All you have to do is share your unique referral link, which can also be found in your BeeHive under ‘Account’ and then ‘Refer a friend’. Once your friend has opened an account and added £100 or more to their pension, you can claim your £100 reward.

Series Two of The Pension Confident Podcast

In December, we wrapped up Series One of The Pension Confident Podcast, and are thrilled to see our iTunes rating at 4.7/5. If you haven’t already, why not rate us on whichever platform you listen to our podcast on? We’re excited to announce that we’ll be back at the end of January with a brand new series to help you make the most of your finances (here’s a sneak peek of what to expect in Series Two)!

The PensionBee Roadshow’s back

Thanks to everyone who joined us in London for the launch of our PensionBee Roadshow back in October. We’re excited to announce that we’ll be continuing our Roadshow this spring, visiting Birmingham, Manchester, Brighton and Glasgow! It’s our mission to help you save for a happy retirement so all attendees will receive a £25 pension contribution (£20 + £5 tax top up) to add a little honey to your pot.

Over 55? Try out regular withdrawals

Our new regular withdrawal feature provides you with greater control over how, and when, you can take your retirement income from age 55 (57 from 2028). If you’re eligible for pension withdrawals, and want to try our new feature, just drop us an email at feedback@pensionbee.com.

We’re always working on new features to make our customers happy so if you have any ideas or suggestions, please email feedback@pensionbee.com or let us know on social media.

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Top 12 self-employed jobs and the retirement income they could expect

Here’s 12 of the most common self-employed jobs in the UK, the average salaries they’re receiving, and the estimated retirement income they could generate.

If you’ve worked for a company in the past decade, it’s likely you were automatically enrolled into its pension scheme. Under the government’s Auto-Enrolment rules, eligible employees will have 8% of their qualifying earnings (5% from the employee and 3% from the employer), paid into their workplace pension. But what happens when you’re self-employed?

Self-employment gives you the opportunity to set your own hours, decide the projects you want to work on, and be in charge of your own career path. Around 13% of the UK workforce is self-employed.). This could be anything from being a Tutor to a Photographer or Web Designer. With self-employment comes the responsibility to set up and save into your own pension. While around 8^{_personal_allowance_rate} of eligible employees are Auto-Enrolled in their workplace pension scheme, just 16% of self-employed workers choose to pay into a pension for their retirement.

Here’s a countdown of the 12 most common self-employed jobs in the UK according to Indeed, the average salaries each job could receive, and how making pension contributions equivalent to 8% of salary could snowball into a happy retirement. The following scenarios are for illustrative purposes only and assume:

A salary increase of 2.5% each year, from the 2023 average job title salary
Regular contributions of 8% gross salary into one defined contribution pension
Each pension experiences investment growth of 5%, inflation of 2.5%, and an annual management fee of 0.7% each year.

12. Tutor

The Tutor’s Association estimates there are up to 100,000 private tutors in the UK (1). Tutors use their knowledge to privately teach a particular subject to adults learners or children studying towards an exam. In 2023, the average UK salary for a Tutor’s £36,191 per year (2).

Tutors saving 8% of their gross annual salary would have pension contributions worth around £2,939 in the first year, and a pension pot of £32,751 after 10 years. After a 40-year career this could provide a pension worth £189,173.

11. Courier

Each day, over 11 million parcels are delivered in the UK (3) - that’s 132 parcels per second! Couriers travel across the country, delivering packages securely to businesses and households. In 2023, the average UK salary for a Courier’s £12,304 per year (2).

Couriers saving 8% of their gross annual salary would have pension contributions worth around £999 in the first year and a pension pot of £11,134 after 10 years. After a 40-year career this could provide a pension worth £64,314.

10. Social Media Manager

The UK’s home to an estimated 53 million active social media users (4). Social Media Managers create strategies and manage social media campaigns to increase brand visibility for businesses. In 2023, the average UK salary for a Social Media Manager’s £33,378 per year (2).

Social Media Managers saving 8% of their gross annual salary would have pension contributions worth around £2,711 in the first year and a pension pot of £30,205 after 10 years. After a 40-year career this could provide a pension worth £174,470.

9. Personal Trainer

Approximately 62% of British Personal Trainers are self-employed (5). Personal Trainers are fitness experts who plan an exercise regime and coach their clients towards a health goal. In 2023, the average UK salary for a Personal Trainer’s £28,493 per year (2).

Personal Trainers saving 8% of their gross annual salary would have pension contributions worth around £2,314 in the first year and a pension pot of £25,784 after 10 years. After a 40-year career this could provide a pension worth £148,935.

8. Web Designer

There’s almost two billion websites in the world and five billion active internet users (6). Web Designers use their user accessibility knowledge to design an engaging website for various audiences. In 2023, the average UK salary for a Web Designer’s £30,187 per year (2).

Web Designers saving 8% of their gross annual salary would have pension contributions worth around £2,452 in the first year and a pension pot of £27,317 after 10 years. After a 40-year career this could provide a pension worth £157,790.

7. Freelance Writer

According to Semrush, half of companies outsource content writing to independent freelancers (7). Freelance Writers multi-task assignments to write copy across formats and industries. In 2023, the average UK salary for a Freelance Writer’s £20,308 per year (2).

Freelance Writers saving 8% of their gross annual salary would have pension contributions worth around £1,649 in the first year and a pension pot of £18,378 after 10 years. After a 40-year career this could provide a pension worth £106,152.

6. Graphic Designer

The Creative Industries Council estimates that only 5^{_personal_allowance_rate} of design employees are educated to degree level (8). Graphic Designers use design tools to create brand assets, from logos to leaflets. In 2023, the average UK salary for a Graphic Designer’s £27,214 per year (2).

Graphic Designers saving 8% of their gross annual salary would have pension contributions worth around £2,210 in the first year and a pension pot of £24,627 after 10 years. After a 40-year career this could provide a pension worth £142,250.

5. Virtual Assistant

Data from the Office for National Statistics (ONS) revealed that around 14% of the labour market works exclusively from home (9). Virtual Assistants work remotely to support businesses in various administrative capacities. In 2023, the average UK salary for a Virtual Assistant’s £32,217 per year (2).

Virtual Assistants saving 8% of their gross annual salary would equal pension contributions worth around £2,616 in the first year and a pension pot of £29,154 after 10 years. After a 40-year career this could provide a pension worth £168,401.

4. Video Editor

The majority of film editing and television work’s based in London (10). Video Editors compile and compress digital video files to produce adverts or films. In 2023, the average UK salary for a Video Editor’s £27,927 per year (2).

Video Editors saving 8% of their gross annual salary would have pension contributions worth around £2,268 in the first year and a pension pot of £25,272 after 10 years. After a 40-year career this could provide a pension worth £145,977.

3. Event Coordinator

Every year almost 280,000 weddings take place in the UK (11). Event Coordinators organise and execute the logistics of important events, from award ceremonies to weddings. In 2023, the average UK salary for an Event Coordinator’s £24,965 per year (2).

Event Coordinators saving 8% of their gross annual salary would have pension contributions worth around £2,027 in the first year and a pension pot of £22,592 after 10 years. After a 40-year career this could provide a pension worth £130,494.

2. Photographer

Each year, over 1.81 trillion photos are taken worldwide (12) - that’s five billion per day! Photographers are hired on a freelance basis to capture moments such as professional headshots or sporting events. In 2023, the average UK salary for a Photographer’s £26,928 per year (2).

Photographers saving 8% of their gross annual salary would have pension contributions worth around £2,187 in the first year and a pension pot of £24,368 after 10 years. After a 40-year career this could provide a pension worth £140,755.

1. Labourer

Data from 2020 found that close to one in five self-employed people work in the construction sector (13). Labourers work on building sites to renovate or expand the architecture of a region. In 2023, the average UK salary for a Labourer’s £23,071 per year (2).

Labourers saving 8% of their gross annual salary would have pension contributions worth around £1,874 in the first year and a pension pot of £20,878 after 10 years. After a 40-year career this could provide a pension worth £120,594.

Figures provided are rounded to the nearest pound.

Which self-employed job could expect the biggest pension pot?

The biggest estimated pension pot belongs to a Tutor, worth a whopping £189,173! On the other end of the spectrum, a Courier has the smallest estimated pension pot at £64,314. To add context, the average UK worker earns £33,000 (22), and could expect a pension pot of £172,494 using the same pension modelling. Here’s the projected pension pots of the 12 most common self-employed jobs in the UK:

If you’ve qualified for the full State Pension, you’ll currently receive £203.85 per week, or £10,600 a year (2023/24). Depending on what your happy retirement looks like, you’ll need at least a modest amount of personal pension savings to retire comfortably. In fact, the Pensions and Lifetime Savings Association’s Retirement Living Standards gives us an idea of how much a single person needs in retirement: the minimum living standard requires about £13,000 a year, a moderate lifestyle costs around £23,000, and a comfortable lifestyle is around £37,000.

As you can see, the State Pension alone isn’t enough to support even a minimum living standard. You can try our Pension Calculator to see how much income your pension could generate in retirement, and the impact of making regular or one-off contributions. Having savings in a personal, workplace, or self-employed pension can help fill that income gap and support a moderate or comfortable lifestyle. While self-employment rates have been rising over the past decade, the pension savings of this group aren’t keeping pace and there’s now a self-employed pension gap.

Introducing an Auto-Enrolment scheme for the self-employed could be a simple way to help close the pension gap between employed and self-employed workers. The Financial Resilience All Party Parliamentary Group has advocated for this legislation in its financial resilience report on UK households. In the meantime, if you’re self-employed and want to start contributing to a pension, PensionBee’s self-employed pension gives you the flexibility to make contributions that work for you. You don’t need to worry about minimum contributions, so you can contribute an amount that fits your budget as often as you’d like.

Footnotes

Tutor’s Association: https://thetutorsassociation.org.uk/
Indeed: https://uk.indeed.com/career-advice/finding-a-job/self-employed-jobs
Shiply: https://www.shiply.com/articles/uk-delivery-and-courier-industry-statistics
Cybercrew: https://cybercrew.uk/blog/social-media-statistics-uk/
Healthily Toned:
https://www.healthilytoned.com/single-post/self-employed-vs-employed-fitness-instructors
Techjury: https://techjury.net/blog/how-many-websites-are-there/
Semrush: https://www.semrush.com/blog/category/content/content-creation/
The Creative Industries: https://www.thecreativeindustries.co.uk/facts-figures/
Office for National Statistics:
‍https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/
Prospects: https://www.prospects.ac.uk/job-profiles/film-video-editor
Photutorial: https://photutorial.com/photos-statistics/
Office for National Statistics:
‍https://www.ons.gov.uk/businessindustryandtrade/constructionindustry/

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Risk warning

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Four steps to negotiating your salary

We all know about the gender pay gap, but what about the gender ask gap? Find out why women aren’t negotiating their salary at the same rate as men - plus what they can do to earn more money.

Despite progress towards workplace equality, the gender pay gap remains a persistent reality in the UK - with women earning an average of 7.7% less than their male counterparts, according to the Office for National Statistics. While systemic changes are crucial to narrowing the gap, there are a few things women can do on an individual basis - from investing in their personal development to building their professional networks - to advance their careers.

Here are four steps to negotiating your pay.

1. Closing the “ask gap”

CEO and Co-Founder of The Know; Lynn Anderson Clark says: “I think it’s hard to say ‘have more confidence’. But something that helps me is preparation. So when I think about preparation, it’s about doing my research, benchmarking and things like that.”

One key strategy lies in dismantling the “ask gap”. Research reveals a key reason behind the pay gap: women are less likely than men to negotiate their salaries. A staggering 68% of women accept salaries without negotiation, a figure 16% higher than men. This translates to significant missed opportunities, compounding over time.

Before initiating a raise conversation, gather data on your performance and research market rates for similar positions. You can use tools for salary benchmarking to see how your job role and years of experience is typically compensated. This information strengthens your position and allows you to present a compelling case for a raise.

2. Timing the conversation

Social Entrepreneur and Broadcaster; Natalie Campbell MBE says: “Where is the business in the financial planning year? Because budgets are planned in these cycles. So if you go at the wrong time and you get the answer that ‘we can’t accommodate it’, it’s because the budget’s been set already.”

When preparing to ask for a promotion, timing can be just as important as evidencing your contribution. Knowing when the company’s financial planning period is crucial. If you go onto Companies House and look at the company account, you can see the filing date. Your employer’s financial year could run from January to December or more often from April to March.

Alternatively, you could align your request with recent positive developments within the company. Did you just land a major client or successfully complete a significant project? These moments of success are ideal for highlighting your contributions and the value you bring. If a raise isn’t immediately possible, don’t hesitate to inquire about the timeline for future consideration.

3. Navigating the negotiation

Senior Customer Experience Researcher at PensionBee; Priyal Kanabar says: “Make sure you have clarity about what your job role is, and that your manager is on the same page. Because what can end up happening is you absorb tasks from here and there, and your role becomes harder to benchmark.”

When negotiating, it’s best to focus on the value you bring to the company, not your personal needs. You may have found the cost of living crisis stretching your finances and your salary hasn’t kept pace with inflation. While this is valid, it isn’t a business case for progression. Instead highlight your achievements, contributions to projects, and how your work has benefited the organisation.

Although salary is undeniably important, it’s only one piece of the puzzle. You may want to also consider negotiating other elements of the compensation package such as pension contributions, flexible work arrangements, health insurance and professional development opportunities. These can contribute significantly to your work-life balance, well-being, and career development.

4. Be prepared to walk away

Social Entrepreneur and Broadcaster; Natalie Campbell MBE says: “If you know what the salary is, or at least the benchmark of the salary, it means you can have a conversation. When you walk in and they say ‘what’s your salary expectation?’, that’s the biggest bear trap.”

It’s crucial to remember that negotiations are a two-way street. You should confidently advocate for yourself, but be prepared to walk away if necessary. If an employer isn’t willing to meet your expectations and reasonable requests, or if the company culture doesn’t value your skills and contributions, it might not be the right fit for you. As the saying goes: “know your worth, then add tax”.

A Glassdoor survey found that job hoppers experience an average salary increase of approximately 1^{_personal_allowance_rate} - ^_basic_rate compared to those who stay in the same role over a long period. Plus, if you’re concerned about whether your new employer has a gender pay gap - you may be able to check online. Companies with more than 250 employees are legally required to declare their gender pay gap data on the government’s Gender Pay Gap Service.

Summary

Negotiating your salary and benefits package is a valuable skill that can significantly impact your earning potential. By closing the “ask gap”, timing your approach, considering the total compensation package, and being willing to walk away if needed, you can bridge the gap between your potential and your paycheque, ensuring you’re rewarded fairly for your work.

Listen to episode 25 of The Pension Confident Podcast and hear from our panel of expert financial guests as they discuss their experiences of negotiating pay, as both an employee and employer. You can also watch the episode on YouTube or read the transcript.

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How to talk to friends about money

Navigating social circles with different financial priorities can be tricky. Here’s some practical tips for nurturing your friendships without breaking the bank.

What does a politician's pension look like?

It’s well known that politicians receive a comfortable salary, but how do their pensions compare to yours? Read on to find out.

MPs, or Members of Parliament, are individuals elected by the UK public to represent their interests and concerns in the House of Commons. They play a crucial role in the legislative process, considering and proposing new laws, as well as raising issues that matter to the public.

While politicians like to tell voters they’re ‘just like us’, one clear difference is pay. To be in the top 1% of UK earners, you need to earn more than £181,000. The Prime Minister of the UK can expect to earn around £1^{_state_pension_age},786 in the 2024/25 tax year, with Cabinet Ministers earning close to £158,851.

But the financial benefits don’t stop there. Like many public sector workers, MPs will also receive a generous defined benefit pension when they retire.

Who decides what MPs get paid?

In short, the Independent Parliamentary Standards Authority (IPSA) is responsible for MPs’ pay and pensions. But this wasn’t always the case. Parliament used to be in control of their own compensation. MPs would consult experts, such as the Senior Salaries Review Board, then vote on whether their salaries increased or not.

What changed?

In 2005, The Freedom of Information Act 2000 came into effect and immediately campaigners requested details of MPs’ expenses. This began the slow unravelling of the MPs’ expenses scandal of 2009 which had a profound impact on public confidence in British politicians.

In response to the expenses scandal, the government announced the creation of IPSA, which came into effect in 2010. These days IPSA makes decisions on the pay, pensions and reasonable expenses of the 650 elected MPs and their staff in the UK.

MPs’ salaries

The annual changes in MPs’ pay are determined based on the changes in average earnings in the public sector, as indicated by the Office for National Statistics (ONS) figures. This means that the annual basic salary paid to all MPs is adjusted in accordance with the trends in average earnings.

As of April 2024, MPs receive a basic annual salary of £91,346. It’s worth noting that ministers who are also Members of the House of Commons receive two types of salaries: a MPs salary and a ministerial salary. For example, a Cabinet Minister would receive an extra £^{_pension_age_from_2028},505, while the Prime Minister gets a further £75,440.

MPs’ pensions

Most modern workplace and personal pensions are defined contribution pensions. On retirement, the amount your defined contribution pension is worth depends on how much money you’ve contributed and the performance of your investments. With a defined benefit pension, the employer guarantees to pay a set retirement income, regardless of how the underlying investments perform.

In 2015, alongside other public service pension schemes, the MPs’ Parliamentary Contributory Pension Fund (PCPF) was reformed. Prior to this, their defined benefit pensions were based on an MP’s final salary, but now they’re calculated based on their average salary over their career. Additionally, the age at which pensions become payable has been aligned with the State Pension age, rather than fixed retirement ages of 65 or 60.

Parliamentary pension double standard

In July 2023, the Chancellor announced the Mansion House Reforms, which aimed to boost investment in UK companies through pension schemes. The Mansion House Compact is a pledge made by nine UK pension providers to invest at least 5% of their default funds in ‘unlisted UK companies’ by 2030.

Unlisted companies are businesses that aren’t traded on a public stock exchange. These earlier stage businesses are generally considered to be riskier, and many of them could fail. At the same time, investing in unlisted companies usually comes with higher costs for pension savers.

Why does this matter? MPs own pension scheme (the PCPF) has underinvested in the UK by their own standards. While UK companies make up 3.6% of the FTSE All-World index series, a report published in The Times found that the PCPF scheme only allocated around 1.3% of its total equities to the UK.

In short, the government has been pushing for more pension investment in UK companies - except for their own pension scheme. The trustees of the scheme (who are current and former MPs) have made the decision that the UK is a bad bet for their retirement, but not for yours.

How to kickstart your pension savings

While we wouldn’t necessarily recommend you become a politician, there are lots of other things you can do to boost your pension savings. Our calculators can help you plan ahead for retirement. Use our Pension Calculator to understand how much you might need to save into your pension. If you feel there’s a gap between your projected and desired retirement income, you can consider combining your old pensions and contributing to your pension to boost your savings.

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Can money buy happiness?

Ever wondered if your hard-earned income actually translates to more happiness?

For many people diligently building their nest egg, the question of money’s link to happiness is a natural one. After all, financial security can reduce a significant source of stress. But can simply having more money guarantee a life filled with joy?

What does the research say?

A landmark 2010 study by Princeton’s Daniel Kahneman and Angus Deaton found that increased income positively affects day-to-day happiness, but only up to a point - roughly $75,000 annually in the US (equivalent to almost £58,000 in the UK).

This was contradicted by research published in 2021 by the University of Pennsylvania’s Matthew Killingsworth, suggesting happiness continues to rise steadily with income, even above the $75,000 mark!

To settle the debate once and for all, Killingsworth, Kahneman and Professor Barbara Mellers teamed up in 2023 to find the answers. They found that within each income group, some individuals start off unhappy and then experience a significant increase in happiness until they reach an annual income of $100,000 (£75,000). After reaching this point, their happiness levels plateau. So, it’s clear the relationship between happiness and money isn’t always straightforward.

But what can we do if we want to find more happiness from the money we have? Putting income aside, there are two aspects of our money that can greatly impact our happiness: how you get your money and how you spend it.

How you get your money matters

Research by Harvard Business School professor Michael Norton and Ph.D. student Grant Donnelly, found that people who earn their wealth tend to be happier than those who inherit it.

The study surveyed over 4,000 millionaires worldwide to understand the impact of wealth on happiness. The findings revealed that self-made millionaires were happier than those who inherited money or married into wealth.

Occupational Psychologist and chartered member of the British Psychological Society, Kim Stephenson says: “What they’ve generally found is there’s a happiness set point. So, if you have a lottery win, it’ll boost happiness for a while. Then it usually sinks back [to how it was before]. And if you have a serious accident or you lose money, you tend to ping back. Part of the secret of it is learning how to push your set point up.”

Why might this be the case?

Lottery wins or unexpected inheritance can bring a sudden influx of wealth. While this may initially create a sense of excitement and euphoria, the sudden change in financial circumstances can also lead to challenges in adjusting to the new lifestyle.

Windfalls can create strains in managing finances, as you may not have developed the financial skills necessary to handle large sums of money. Without proper financial planning, the wealth can quickly diminish, leading to financial stress and instability.

On the other hand, income earned through work typically offers a sense of control and stability over your financial situation. Regular paychecks allow individuals to plan and budget, providing a greater sense of security and peace of mind.

Work often plays a central role in shaping your identity and providing a sense of purpose. It can also foster social connections, as colleagues and professional networks offer opportunities for social interaction and support.

How you spend your money matters

Research from Dr. Elizabeth Dunn, Chief Science Officer at Happy Money and PhD student Iris Lok found that people who had donated to charity were happier than those who hadn’t.

The study found that people who spent on social experiences and time-saving services were happier. In other words, when we use our resources to benefit others and prioritise our time wisely, we tend to feel more life satisfaction.

Co-Founder of The Humble Penny and The Financial Joy Academy, Ken Okoroafor says: “How can you commit a little bit of money, or maybe even no money, to [something] that gives you joy every week. So, for me, on Fridays I go on a date with my wife. We go to the cinema, go for a walk and maybe stop off for a mocha. I’m really experiencing joy every week. It’s planned, it’s intentional, it could be low cost, and it works, and everyone can attain that.”

Why might this be the case?

There are several reasons why spending money on others and investing in experiences and time-saving services (such as hiring house cleaners or ordering food delivery) can contribute to greater life satisfaction.

Firstly, when we give to others or contribute to charitable causes, it creates a sense of purpose and fulfilment. Knowing that our actions have made a positive impact on someone else’s life can bring a deep sense of joy and satisfaction.

Secondly, spending on social experiences allows us to connect with others, fostering meaningful relationships and a sense of belonging. Human beings are social creatures, and the quality of our relationships play a significant role in our overall happiness.

Lastly, investing in time-saving services frees up valuable time that can be spent on activities that bring us joy and fulfilment. By outsourcing tasks that we don’t enjoy or that consume a lot of our time, we can focus on activities that align with our passions and values.

Summary

Money provides us with the means to fulfil our needs, pursue our goals, and enjoy certain pleasures in life. It offers a sense of security and freedom, allowing us to experience a higher quality of life. However, it’s important to recognise that money alone doesn’t guarantee happiness.

Here are three key takeaways on how to use your money to increase your happiness.

Focus on experiences, not spending - invest in experiences for lasting memories and long-term happiness. Prioritise activities and resources that enhance your physical and mental wellbeing, like gym memberships, yoga classes, therapy sessions, or wellness retreats.
Invest in personal growth - use your money to develop new skills and expand your knowledge. Take classes, participate in workshops, or seek guidance from a mentor.
Practise mindful spending - align your expenses with your values and priorities. Support your hobbies, passions, or values by spending on books, art supplies, or charitable donations. By being intentional, you’ll derive greater happiness from your purchases.

Listen to episode 30 of The Pension Confident Podcast and hear from our panel of expert financial guests as they discuss how you can use money to maximise your own happiness and the pitfalls to avoid. You can also watch the episode on YouTube or read the transcript.

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How PensionBee’s plans are performing in 2024 (as at Q3)

Find out the performance of the PensionBee plans at the end of Q3 2024, when compared to the UK and US stock markets.

This is part of our quarterly plan performance series. Catch up on last quarter’s summary here: How PensionBee’s plans are performing in 2024 (as at Q2).

As we near the end of 2024, it looks like it will be a noteworthy year. Recent data from the Office for National Statistics (ONS) shows that UK inflation is at 1.7% in September, the lowest in over three years. Over in the US, inflation has also dropped for six consecutive months to 2.4%. These trends indicate a stabilising economy, which can boost investor confidence and positively affect pension funds. Given the fear of global recession making headlines in recent years, this apparent ‘soft landing’ from the volatility of 2022 should be reassuring news for savers.

The Federal Reserve cut interest rates to a range of 4.75% - 5%, marking the first reduction since the COVID-19 pandemic began in March 2020. Meanwhile, the Bank of England has kept its Bank Rate at 5%. When interest rates go down, the prices of existing bonds usually go up. This is because new bonds are issued with lower yields, making the older bonds with higher yields more appealing to investors. This is positive news for customers with longer-dated bonds in their pension, such as our Tailored Plan vintages closest to retirement.

Most pensions are heavily invested in company shares across the globe. If we rewind back to July, Japan’s Nikkei 225 Index seemed poised to lead global indices with the US’s S&P 500 Index trailing closely behind. However, growth for the Nikkei 225 has slowed in the last quarter. This was linked to the country’s incoming Prime Minister and concerns about maintaining high interest rates. For context, around 6% of the equity portion of our Tailored (Vintage 2043 - 2045) Plan is invested in Japan.

On the other hand, China’s Hang Seng Index began the year slowly and has since surged impressively following the Chinese government’s easing of restrictions. By the end of September, the Hang Seng had taken the lead as the best-performing major index of 2024, followed closely by the US’s S&P 500 Index. Why does this matter? Asia (excluding Japan) makes up around 11% of the equity portion of the Tailored (Vintage 2043 - 2045) Plan.

Keep reading to find out how global markets and our PensionBee plans have performed over 2024 so far.

2024 performance figures cover the period between 1 January and 30 September 2024 only.

This blog is only meant to provide information. The data comes from our money managers or plan factsheets. Performance figures are before fees. Past performance isn’t an indicator of what will happen in the future. As with all investments, capital is at risk.

Company shares in 2024 (as at Q3)

What are company shares?

Company shares are units of ownership in a company. When a company wants to raise money, it can issue shares to investors who pay a certain amount of money for each share. By buying shares, investors become part-owners of the company and can enjoy its profits or growth. But, they also take on the risk of a decline in share prices if the company performs poorly or even goes bankrupt. Company shares are also known as ‘stocks’ or ‘equities’, and they’re commonly traded on stock markets.

Global stock markets

In the Eurozone, shares performed well, particularly in real estate and healthcare. Over in the UK, company shares rose after the Labour Party’s election win, but concerns about a tough Autumn Budget and rising taxes tempered optimism.

In the US, company shares grew. But the performance across industries was a mixed bag: with investors preferring the stability of utility companies over the excitement of the technology sector.

Japan’s stock market saw high volatility, with a significant drop after the Bank of Japan raised interest rates, but it stabilised later as fears eased. In Asia, markets outside Japan saw solid gains - especially China due to government stimulus.

Index	Investment location	Performance over 2024 (%)	Equity proportion (%)
FTSE 250 Index	UK	+6.9%	10^{_personal_allowance_rate}
EuroStoxx 50 Index	Europe (excluding UK)	+10.6%	10^{_personal_allowance_rate}
S&P 500 Index	North America	+20.8%	10^{_personal_allowance_rate}
Nikkei 225 Index	Japan	+13.3%	10^{_personal_allowance_rate}
Hang Seng Index	Asia Pacific (excluding Japan)	+24.^{_personal_allowance_rate}	10^{_personal_allowance_rate}

Source: BBC Market Data

PensionBee’s equity plans

Plan	Money manager	Performance over 2024 (%)	Equity proportion (%)
Shariah Plan	HSBC (traded via State Street Global Advisors)	+19.3%	10^{_personal_allowance_rate}
Fossil Fuel Free Plan	Legal & General	+12.5%	10^{_personal_allowance_rate}
Impact Plan	BlackRock	+8.1%	10^{_personal_allowance_rate}
Tailored (Vintage 2061 - 2063) Plan	BlackRock	+12.4%	10^{_personal_allowance_rate}
Tailored (Vintage 2055 - 2057) Plan	BlackRock	+12.4%	10^{_personal_allowance_rate}
Tailored (Vintage 2049 - 2051) Plan	BlackRock	+11.8%	96%
Tailored (Vintage 2043 - 2045) Plan	BlackRock	+10.7%	85%
Tracker Plan	State Street Global Advisors	+12.7%	8^{_personal_allowance_rate}
Tailored (Vintage 2037 - 2039) Plan	BlackRock	+9.5%	72%
4Plus Plan	State Street Global Advisors	+9.4%	71% ^
Tailored (Vintage 2031 - 2033) Plan	BlackRock	+8.3%	59%

^Equity % at 30 September 2024, asset allocation changes on a weekly basis due to the plan’s actively managed component.

Bonds in 2024 (as at Q3)

What are bonds?

Bonds are a type of investment where you lend money to an organisation, like a government (sovereign bonds) or company (corporate bonds). In return, they agree to pay you back with interest over a fixed and pre-agreed period of time, this is known as the coupon. A bond yield is the anticipated rate of annual return that an investor gets from a bond for its duration (maturity of the loan).

Bonds have different ratings, with AAA grade also known as “investment grade”, signifying the highest quality with minimal risk of default. Due to their historical stability and predictability, bonds are a popular choice for shorter-term investors such as retirees who plan to draw down in the near future. Bonds are also known as ‘fixed-income securities’ or debt.

Global bond markets

Interest rates can impact pensions, especially for savers nearing retirement. When interest rates rise, newly issued bonds provide better returns, which can help pension funds grow. On the other side, low interest rates can reduce returns.

In the US, a surprising drop in jobs and inflation led the Federal Reserve to cut rates by 0.5% in September. In the UK, the Bank of England began cutting interest rates in August - for the first time since the pandemic. This cycle of interest rate cuts has also been mirrored in other major economies, such as Canada and Europe.

Plan	Source	Performance over 2024 (%)	Fixed-income proportion (%)
Schroder Long Dated Corporate Bond Fund	Morningstar	-0.5%	86%

Source: Morningstar

PensionBee’s fixed-income plans

Plan	Money manager	Performance over 2024 (%)	Equity proportion (%)
Pre-Annuity Plan	State Street Global Advisors	-1.9%	10^{_personal_allowance_rate}
Tailored (LifePath Flexi) Plan	BlackRock	+6.2%	72%
Tailored (Vintage 2025 - 2027) Plan	BlackRock	+6.9%	41%

PensionBee’s money market plans

Plan	Money manager	Performance over 2024 (%)	Cash equivalent proportion (%)
Preserve Plan	State Street Global Advisors	+4.^{_personal_allowance_rate}	94%

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.

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Can you save your way to a lottery-size win?

Discover how switching from lottery tickets to smart saving could lead you to a jackpot size win - without relying on luck!

10 pension changes and what they mean for your money

As we start the new year, it’s the perfect time to reflect on the significant changes in the pensions industry. Read about the key changes from the last decade and what’s to come.

As we start the beginning of a new year, we’re reflecting on changes in the pensions industry - past, present, and future. The past decade has brought significant changes to British pensions. We’ve seen initiatives like:

Auto-Enrolment;
advancements in technology; and
more flexible regulations.

This has made it easier for individuals to manage and use their retirement savings. Recent changes announced by the Chancellor in the Autumn Budget raised an important question: what further changes could we expect in the coming years?

The past 10 years of pensions

Let’s take a closer look at five key changes in the pensions industry over the last decade.

1. Introduction of Auto-Enrolment

PensionBee’s Founder and CEO, Romi Savova says: “I think Auto-Enrolment has put a new generation on a better footing for the future. Especially if you’re in your early 20s and you’re auto enrolled. If you’re saving throughout your life, come the age of 65, you’re probably going to be doing quite all right. I do think that’s been absolutely transformational.”

Auto-Enrolment is a system where eligible employees are automatically enrolled in a pension scheme by their employer, unless they choose to opt out. This initiative has made it easier for individuals to save for retirement.

In April 2019, the minimum contribution rate increased to 8%. Of which 5% comes from employees’ salaries (including tax relief) and 3% from employers. This change has encouraged more people to participate in pension schemes, helping to boost their financial futures.

2. Pension freedoms reforms

The introduction of the ‘pension freedoms‘ in 2015 made a big difference in retirement planning. Savers aged 55 and over (rising to 57 from 2028) have more choice on how to take an income from their defined contribution pension. Under these reforms, eligible retirees have the freedom to withdraw an income from their defined contribution pension, accessing as much as they want.

The tax rates on these withdrawals will depend on their total income for the year. Up to ^{_corporation_tax} of the pension pot can be taken tax-free. Currently beneficiaries can access that money without having to pay Inheritance Tax (IHT) if you pay away before 75.

Although this is set to change - more on IHT and pensions later! This has empowered individuals to manage their pensions according to their needs, although it has also highlighted the importance of understanding retirement costs.

3. The State Pension criteria

Money Advice Editor at The Telegraph, Sam Brodbeck says: “To date, pensioners have largely had final salary pensions and the State Pension. There’s probably going to be a generation, perhaps Gen X, that has none of that. And actually retires quite poor with only the State Pension.”

The introduction of the new flat-rate State Pension in 2016 marked a significant shift in eligibility requirements. To qualify for the new State Pension, individuals must have at least 10 years of National Insurance (NI) contributions, with 35 years needed for the full amount.

In December 2018, the State Pension age for women increased to 65. By October 2020, it rose to ^{_state_pension_age} for both men and women. These changes have prompted many to reconsider their retirement plans and the timing of their State Pension claims.

4. The triple lock promise

The triple lock system, designed to ensure that the State Pension keeps pace with inflation, was suspended in 2021. This system guaranteed that the State Pension would increase based on the highest of:

average earnings;
inflation; or
2.5%.

Due to the impact of the furlough scheme, average earnings rose significantly, which may have distorted figures artificially.

This prompted the government to pause the earnings element of the triple lock for the ^{_tax_year_minus_three} tax year. Instead of increasing based on earnings, the State Pension rose by 3.1% in line with the Consumer Prices Index (CPI). But it was reinstated in April 2022 to support pensioners facing rising living costs amid ongoing economic challenges.

5. Abolition of Lifetime Allowance

In April 2023, the Lifetime Allowance (LTA) tax charges on funds exceeding the limit were removed. This allowed individuals to save more without facing penalties. The LTA itself was only abolished in April 2024, when it was replaced by two new allowances:

the Lump Sum Allowance (LSA); and
the Lump Sum and Death Benefit Allowance (LSDBA).

This significant change was part of the previous government’s Budget announcements in 2023 aimed at encouraging higher pension savings.

Additionally, the annual allowance for pension contributions increased from £40,000 to ^{_annual_allowance} (2023/24). This further incentivises individuals to boost their retirement savings. This increase remains in effect for the 2024/25 tax year as well. This move was expected to benefit many savers, providing them with greater flexibility in their pension planning.

What could the next 10 years look like?

Looking ahead, here are five proposed or potential changes we might see in the pensions industry over the next decade.

1. Inheritance Tax on defined contribution pensions

For a long time, it’s been possible to pass on pension funds to beneficiaries without them incurring Inheritance Tax (IHT). This has led many individuals to draw down on other assets as they age, allowing them to leave their pensions intact.

Under current rules, if someone passes away before age 75, their unused pension funds can be paid to beneficiaries tax-free. If they die after 75, their beneficiaries still don’t pay IHT, but they’re liable for income tax at their marginal rate on any withdrawals.

From April 2027, unused pension funds and death benefits will be included in IHT calculations. This could increase the tax burden on estates with large pension funds. It’s worth mentioning that the details of this change are still under consultation and the specifics of this new policy are currently unknown.

2. Rising pension age

Founder of Money to the Masses, Damien Fahy says: “I think the rules around pensions are changed too frequently. It’s a game they’re playing, but the rules are always changing. The age at which you can access your pension would’ve changed since you first put money in. I think we need to have a period of calm around pensions.”

The number of centenarians (people reaching 100 years old) has more than doubled in the past 20 years, according to the Office for National Statistics (ONS). The State Pension age is currently ^{_state_pension_age} but will rise to ^{_pension_age_from_2028} starting 6 May 2026. Future changes will depend on population size and life expectancy.

The normal minimum pension age is the earliest point at which individuals can access their personal or workplace pensions without facing hefty tax penalties. From 6 April 2028, this age is set to rise from 55 to 57 years old.

3. The arrival of the Pensions Dashboard

Back in 2002, the Secretary of State for Work and Pensions suggested a web-based retirement planning tool. Fast forward over two decades and this still hasn’t been implemented. In September 2016, the government first announced its plans to deliver pension dashboards. The suggested Pensions Dashboard would allow savers to view their combined pensions information online, helping to reconnect lost pension pots.

This is more important than ever. New analysis conducted by the Centre for Economics and Business Research revealed that nearly one-in-five (^{_corporation_tax_small_profits}) UK adults feel certain they have lost a pension pot. This equates to approximately 8.8 million individuals.

As such, there’s a critical need for timely implementation of the Pensions Dashboard to help millions of savers manage their pensions effectively. However, in October 2024, the Pensions Minister announced a prioritisation of the MoneyHelper Pensions Dashboard launch. This is a government backed and non-commercial digital service to enable people to access their pension information in a single place online.

In contrast, the Pensions Dashboard is specifically designed to enable commercial organisations to give users a detailed view of their pension savings. The launch of the Pensions Dashboard is currently delayed, which will affect how soon savers can access important information about their pensions. This delay means that consumers will have fewer options until the launch of commercial pension dashboard services. Once these services become available, it’ll increase savers’ options and encourage greater involvement in managing their pensions.

4. A 10-day pension switch guarantee for consumers

PensionBee’s Founder and CEO, Romi Savova says: “A ‘Pension Switch Guarantee’ is the obvious reform that we’ve been asking for many years. [It works] the same way that if you want to move any other financial asset. You tell one company that you’re joining and another company that you’re leaving. They have 10 days to move the money from one place to another.”

PensionBee analysis of Origo’s latest Pension Transfer Index has uncovered a 17% increase in transfer times over the last three years. Despite slow transfer times being identified as a problem by the Financial Conduct Authority (FCA) back in 2015, the issue remains prevalent amongst a number of key players.

The ‘Pension Switch Guarantee‘ initiative is campaigning for all providers to use electronic transfers for defined contribution pensions. Not only is this quicker, but it’s much safer for customers as payments are tagged and traced. This way you’ll know where your money is at every step of the process.

5. Expansion of Auto-Enrolment

The government needs to decide on the future of minimum pension contributions, including potential increases. The Pensions (Extension of Automatic Enrolment) Act passed in 2023 aims to expand enrolment to younger workers aged 18 to 21. It also removes the ^{_lower_earnings} lower earnings limit for qualifying contributions.

This change would result in additional contributions, significantly impacting take-home pay for low earners. By making pensions more accessible to younger workers, the government can help foster a culture of saving for retirement from an early age. This could boost the financial security of future generations.

Summary

The pensions industry is evolving quickly to meet the needs of today’s savers. In the past decade, we’ve seen key changes like Auto-Enrolment and pension freedoms that have made saving for retirement simpler.

Recent announcements from the Autumn Budget indicate that the government is keen to make further improvements. Looking ahead, we’re set to see new rules such as:

IHT on pensions;
changes to what age you can access your savings; and
the launch of the Pensions Dashboard to help people keep track of their savings.

Ideas like a 10-day pension switch guarantee and the expansion of Auto-Enrolment could also make pensions more accessible. As these changes unfold, it’s important for everyone to stay informed and engaged with your retirement plans.

To learn more, listen to episode 34 of The Pension Confident Podcast. You can also watch the episode on YouTube or read the transcript.

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Starting a pension at 50

Feeling behind on retirement savings in your 50s? You’re not alone! Find out how even when starting from zero savings you can still snowball a pension to fund your happy retirement.

This article was last updated on 28/04/2025

If you find yourself in your 50s, with nothing set aside for retirement, it can feel like a daunting mountain to climb. Yet, this scenario is more common than you might think, with an estimated seven million people over 50 in the UK having no private pension savings at all.

Let’s face it, when you were younger, there wasn’t the financial awareness or planning tools we have today. Even benefits like Auto-Enrolment - which has meant more employees were automatically saving into a workplace pension - are relatively recent. However, it’s not too late to start saving, and the power of compound interest can help you make up for lost ground.

It’s never too late to start

The first thing to understand is the power of compound interest. Albert Einstein once famously referred to it as the ‘eighth wonder of the world’. Compound interest works on the principle that the interest you earn on your savings also earns interest. So, even if you’re starting to save later in life, your money can still grow significantly over time.

Example: Sarah’s 50 years old with no private pension savings, but she’s able to start saving £400 a month into a personal pension. For every £400 she contributes, the government adds an extra £100 in basic rate tax relief, effectively boosting her savings by ^{_corporation_tax}.

Assuming a growth rate of 5% after fees and inflation, she’d have a pension pot worth around £200k in 20 years time. This could give Sarah an extra £8k of income in retirement. Combined with her full new State Pension entitlement, she’d comfortably have over £20k a year to live on from her 70th birthday.

Many people now consider 70 to be the new 60. Research even indicates that baby boomers are experiencing a slower aging process compared to previous generations. With retirement ages already on the rise, it seems that not only is retirement being postponed, but so is the experience of old age.

Delaying retirement offers several advantages. Emotionally, remaining in the workforce can create more social connections, reducing the feelings of loneliness many retirees face. Physically, maintaining a routine that includes even light exercise can lead to improved health outcomes and increased life expectancy. Financially, the benefits of compound interest continue to grow, meaning that working longer and continuing to contribute to your pension can further bolster your retirement savings.

How much do I need to save?

Fortunately, for those curious about the potential expense of retirement, the Retirement Living Standards provided by Pensions UK offer a helpful resource. These standards estimate the costs associated with retirement living at three different levels.

The living standards for 2024/25 are:

Minimum - which covers all your needs, with some left over for fun. This costs £14,400 a year for one person, or £22,400 for a couple.
Moderate - which offers more financial security and flexibility. This costs £31,300 a year for one person, or £43,100 for a couple.
Comfortable - which includes more financial freedom and some luxuries. This costs £43,100 a year for one person, or £59,000 for a couple.

Here’s a graph to illustrate how much income you’d need from workplace and personal pensions, on top of a full new State Pension entitlement (more on this later!), to achieve these different lifestyles in retirement.

If you want to retire at 60, a good rule of thumb is that you’ll need savings of about 20-25 times your desired annual income in retirement. With this, you’ll also need to consider when you can access your pension money. You can start taking your personal and workplace pension at 55 (rising to 57 in 2028). But if you’re eligible for the new State Pension, you won’t be able to claim it until you reach ^{_state_pension_age} (which will rise to ^{_pension_age_from_2028} in 2028).

Waiting to take an income from your pension gives you more time to save and allows your investments to grow. This potentially could lead to a more comfortable retirement and better financial security in the future.

How to start from zero savings

Starting your pension savings from scratch can feel daunting, but you can still make great progress in your 50s. Here’s a simple guide to help you get started.

1. State Pension

Your State Pension entitlement is based on the National Insurance contributions you make and the number of ‘qualifying years’ you accumulate. You can see how much you could receive, when you can claim it, and ways to increase it at gov.uk. Simply fill in a few details to check your National Insurance record.

As of ^{_current_tax_year_yyyy_yy}, the full new State Pension is worth ^{_state_pension_weekly} per week, amounting to ^{_state_pension_annually} per year. To receive any State Pension, you need at least 10 years of contributions, while 35 qualifying years are required for the maximum amount.

Checking your State Pension forecast is essential for retirement planning, as it helps you understand what you’ll receive from the government. If you’ve been a caregiver, you may qualify for National Insurance credits through Child Benefit claims, so make sure to claim everything you’re entitled to.

2. Workplace pension

A workplace pension is a pension that’s arranged by your employer. If you’re eligible, you’ll be automatically enrolled and contributions will be taken directly from your wages and paid into your pension each month. Usually, your employer also adds money to your pension and contributions from the government will be added in the form of tax relief. Usually basic rate taxpayers get a ^{_corporation_tax} tax top up, meaning HMRC adds £25 for every £100 you pay into your pension making it ^{_lower_earnings_limit}.

If you’re unsure whether you already have a pension, you can use our ‘Do I have a pension?‘ tool could be a good starting point. You can also search for your previous employers and find out which pension provider they likely used.

New analysis conducted by the Centre for Economics and Business Research reveals that over £50 billion pounds in hard-earned pensions are at risk of being misplaced or lost. If you have several pension pots, consolidating your pensions can be a good way to get on top of your retirement savings.

3. Personal pension

While a workplace pension is set up by your employer, you can choose and set up a personal pension yourself. When you start a personal pension you’ll usually be given a choice of investment options. Once you’ve chosen a plan, you can begin making regular contributions and one-off payments.

Why not take a moment to check which plan you’re currently in and think about how much risk you’re comfortable with? You might also want to look into specialist plans that really resonate with your values and financial goals. Taking this personalised approach can help you feel more confident that your investment strategy is right for you.

For ^{_current_tax_year_yyyy_yy} the tax-free annual allowance is 10^{_personal_allowance_rate} of your salary or ^{_annual_allowance} (whichever is lower). This is the amount you can save into a pension each year while still receiving tax relief. If you earn less than £3,600, or you don’t earn anything at all, you’re still allowed to receive tax relief on pension contributions up to £3,600 gross. That means you can save up to £2,880 net plus a ^{_corporation_tax} tax top up.

Summary

Starting your pension saving from scratch in your 50s may not feel ideal, but it’s still worthwhile. With a clear plan and some discipline, you can still grow a sizable pension pot for your retirement. It’s your future that matters, so begin your planning today.

Consider it like planting a tree: the best time to plant one was 20 years ago, but the second-best time is now. Even if you’re starting in your 50s, you could have 20 more years to prepare for your future - which can truly make a difference.

Risk warning

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4 reasons why investing in your pension beats those Black Friday deals

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Your guide to going green (and saving money)

Here’s 7 simple swaps you can make to save the planet - and the pounds.

What happened at PensionBee in May 2022?

From how financial markets have performed in May to our latest Pension Confident Podcast episode - get all the latest news from PensionBee HQ.

May was another busy month at PensionBee as we made an exciting announcement: ‘regular withdrawals’ are coming soon! Our existing withdrawal feature enables customers who are of retirement age to draw down money from their pension pot whenever they choose. Following the release of this feature in the mobile app earlier this year, it’s now much easier for many of our customers to withdraw from their pension as they can now do it directly from their phone in a few clicks, as well as via our website

Keep reading to find out how financial markets performed last month and what we got up to at PensionBee HQ.

How did financial markets perform in May 2022?

During the first few months of the year we’ve faced several challenges affecting pensions; inflation, supply chain issues and the ongoing war in Ukraine. This combination of factors is driving down market prices, which you’ve probably seen reflected in the value of your pension pot.

It’s normal for the value of your pension to go down as well as up each day as the markets fluctuate. Naturally, though, it’s most concerning when the markets, and typically the value of your pension too, appear to be trending downwards for a sustained period of time.

The old saying “sell in May and go away” (referring to the historical pattern of an underperforming stock market between May and October), may have inspired the widespread sell off across even profitable stocks. The downward trend markets are following has raised the dreaded term: ‘bear market’.

For a more in-depth look at market performances, read What happened to pensions in May 2022?

Remember that your pension is a long-term investment when considering short-term performance. Past performance is not a guide to future performance. As with all investments, capital is at risk.

The Pension Confident Podcast Episode 6: Shariah investments

Globally, Shariah investment is on the rise. Recent data from Reuters estimated that the global market for Shariah funds has ballooned by more than 30^{_personal_allowance_rate} in the last decade. In this episode, Shariah investments: what are they? And are halal pensions only for Muslims?, we break down what Shariah investments include and exclude - and whether a Shariah pension may be right for you, even if you’re not Muslim.

We were joined this month by Ibrahim Khan, former lawyer and Co-Founder of investment and personal finance platform Islamic Finance Guru, and Martin Parzonka, Head of Product at PensionBee.

Subscribe and download our latest episode on Spotify or your favourite podcast app. You can read the transcript of this episode on our blog, or you can watch the episode on Youtube. Don’t forget to share your thoughts on social media or by leaving a review!

And don’t forget to tune in to next month’s episode where we’ll be discussing how to protect yourself from financial scams.

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What happened at PensionBee in June 2022?

From how financial markets have performed in June to our latest Pension Confident Podcast episode - get all the latest news from PensionBee HQ.

Few people could’ve predicted the economic turmoil the first half of the year has brought: headline inflation, market volatility, and rising interest rates. Suffice to say, 2022 has had a rocky start. But what effect has this had on personal finances?

You may have seen your investments, including your pension, take some unexpected turns. While it’s normal for your balance to go up and down, our current situation in the UK is (and forgive the term) ‘unprecedented‘. So, what do you need to know?

Inflation is a general increase in the prices of goods, the current rate of inflation rose this month to 9.1%.
Interest rates measure the cost of borrowing and reward for saving cash. The current interest rate is 1.^{_corporation_tax}, which means when you borrow money you’ll have more to repay, and when you save money you’ll earn more interest.

Why does this matter? In the UK, both inflation and interest rates are the highest they’ve been in decades. As inflation erodes the value of your pension, and high interest rates impact pensions too, those saving towards retirement will have been doubly hit this year.

Keep reading to find out how financial markets have performed this month and what’s new in PensionBee HQ.

How did financial markets perform in June 2022?

June began a sharper global market downturn as the UK officially entered into a ‘bear market‘ (a continued period where prices of company shares fell ^_basic_rate or more). Yet arguably the greatest surprise was the decline in the performance of bonds. So, what are bonds?

Bonds are basically loans given by investors to companies. Historically, bonds have been seen as ‘safe assets‘. As such they’re often included in pensions, especially for those approaching retirement, as they tend to fluctuate a lot less than stock markets.

Thriving on market stability, bonds aim to provide moderate growth for investors. However, recent surges in inflation and rising interest rates have pushed bonds between the proverbial rock and a hard place - leaving investors understandably concerned.

For a more in-depth look at bonds and the current market performances, read What happened to pensions in June 2022?

Remember that your pension is a long-term investment when considering short-term performance. Past performance is not a guide to future performance. As with all investments, capital is at risk.

The Pension Confident Podcast episode 7: The rising tide of financial scams

Last year saw a 3^{_personal_allowance_rate} hike in swindlers’ profits compared to the year before. Our latest episode of the Pension Confident Podcast discusses the rising tide of financial scams: what to look out for and how to stay safe from fraud.

We were joined this month by Michelle Cracknell CBE, Independent Non-Executive Director of PensionBee and former Chief Executive of The Pensions Advisory Service, Lisa Markey, Head of Security and Counter Fraud at the OBIE, and Jonathan Lister Parsons, Chief Technology Officer at PensionBee.

Subscribe and download our latest episode on Spotify, or your favourite podcast app. You can read the transcript of this episode on our blog, or you can watch it on YouTube. Please share your thoughts on social media or by leaving a review!

And don’t forget to tune in to next month’s episode where we’ll be discussing the importance of teaching kids about money.

What else is new?

At PensionBee HQ we’re constantly innovating to help make managing your pension simple. Following the success of our Easy Bank Transfer mobile feature (where you can make safe and easy payments to your pension from your phone) we’re now working towards rolling this out across the web too.

We’re looking for volunteers to help provide feedback on everything from exciting new products to existing features. If you’d like to participate in surveys, focus groups, prototype testing and more, sign up to become a HoneyMaker.

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What happened at PensionBee in July 2022?

From how financial markets have performed in July to our latest Pension Confident Podcast episode - get all the latest news from PensionBee HQ.

Investments have tumbled in a downward trend during 2022. Stock markets are reacting to an unfolding story of three economic shocks: the war in Ukraine, rising global inflation rates, and China’s supply chain disruptions. Due to these shocks, many investments within your pension will have felt the effects of this economic pressure. However, in July we saw positive movements, so are pension investments entering a recovery period?

Keep reading to find out how financial markets have performed this month and what’s new in PensionBee HQ.

How did financial markets perform in July 2022?

This year market volatility has veered into bear market territory, which is where markets are in significant decline for a few months at least. As investors, it’s concerning but this period has never been permanent.

July saw marginal growth as markets appeared to stabilise after a turbulent six months. Whether pension investments are entering a recovery period, or this is simply a brief moment of respite from this year’s volatility, remains to be seen. What we do know is in the US the S&P 500 rose by 6.64%, and in the UK the FTSE 250 rose by 5.83% in July.

For a more in-depth look at current market performances, read What happened to pensions in July 2022? And for your plan’s performance, read How PensionBee’s plans are performing in 2022 (as at Q2).

Remember that your pension is a long-term investment when considering short-term performance. Past performance is not a guide to future performance. As with all investments, capital is at risk.

The Pension Confident Podcast episode 8: How to teach kids about money

Our latest episode of the Pension Confident Podcast discusses how to teach kids about money. According to the Money and Pensions Service, almost ^_higher_rate of adults in the UK don’t feel confident managing their money.

We were joined by Laura Miller, Financial Journalist, Will Carmichael, Co-Founder and CEO of NatWest Rooster Money, and Emma Maslin, certified money coach, PensionBee customer and Founder of The Money Whisperer website.

Subscribe and download our latest episode on Spotify, or your favourite podcast app. You can also read the transcript of this episode, or watch it on YouTube. Please share your thoughts on social media or by leaving a review!

It’s not just the kids that are taking a summer holiday! We’ll be off this month and back in September to discuss how you can stop your money affecting your mental health.

What else is new?

We’re delighted to have recently won four Europe FinTech Awards for ‘Pensions Tech of the Year’, ‘FinTech of the Year’, ‘Diversity and Inclusion’ and ‘Best Employer’. In addition, we won ‘Employer of the Year (Small Firm)’ at the FTAdviser Diversity in Finance Awards and ‘FinTech Company of the Year’ at FinTech Awards London.

At PensionBee HQ we’re always enhancing features for your BeeHive - with the help of our user experience community of HoneyMakers! Using Open Banking technology we’re working to give our customers more flexibility to manage their finances from our website with our latest update: Easy bank transfer. In future, when initiating a contribution, you’ll be able to select from a list of supported banks and authorise your payment either in their mobile app (via a QR code you can scan) or via their website - whichever you prefer. This feature is currently an exclusive preview for HoneyMaker customers.

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E10: What are the effects of debt and what can you do if you find yourself in it with Chris Lees, Lynn Beattie and Tess Nicholson

The Pension Confident Podcast

PensionBee Content

26 Oct 2022

minute read

Oct 2022

Inside the BeeHive

The following is a transcript of our monthly podcast, The Pension Confident Podcast. Listen to episode 10, watch on YouTube or scroll on to read the conversation.

PHILIPPA: Hello and welcome to episode ten of The Pension Confident Podcast with me, Philippa Lamb. Last month we spoke about what to do if you’re worrying about money. This time, we’ll be looking at what you can do if you are already in debt and how that can affect your day-to-day circumstances.

Music starts

We’re all seeing the domino effect created by global and national events on our finances. True, our energy bills are now capped, but they’re still a lot higher than last year. And of course, everyday life events will always be a factor in our finances. You may be out of work, about to retire or going through a divorce. So today we’re going to hear listener stories about their own debt struggles and we’re joined by two experts to talk about coping strategies. First meet Chris Lees, who’s a Research Officer at the Money and Mental Health Policy Institute. Hello Chris.

CHRIS: Hi. It’s good to be here.

PHILIPPA: And welcome back to Pension Bee’s own COO, Tess Nicholson. She was with us for the last episode. Lovely to see you again, Tess.

TESS: Nice to be back.

PHILIPPA: Before we start, the usual disclaimer, anything discussed on this podcast should not be regarded as financial advice. And remember when investing your capital is at risk.

The effects of debt

Now last month, as I said, we talked about how money worries can affect anyone’s mental health. We know that a lot of people who haven’t had to worry too much in the past are now watching their spending really carefully because they’re worried about getting into debt. Now given the current economic situation in the UK and that reality that more and more people may be fearing sliding into debt, is there anything that you two are doing to keep debt at bay right now?

CHRIS: Definitely, when going into the supermarket, thinking about the more expensive things and asking do I really need to be buying that? Probably makes sense just to be buying, you know, the basic versions.

PHILIPPA: Own brand.

CHRIS: Yeah, exactly. But also just, you know, do I need to be going to a restaurant this week so you know, I can eat in instead. And obviously these are the kind of things that I need to be doing, but lots of people at the moment, you know, are facing much harder choices. So for a lot of people right now, yeah, it’s a really difficult time.

PHILIPPA: Yeah, and it’s hard isn’t it, because I mean some spending you have to spend on, because I’ve been thinking about this with things like travel costs, trains, planes, that sort of thing, booking months in advance to keep the cost down. So I mean, and I have to say that is not something I was doing before. What about you Tess?

TESS: Yeah, I mean food I think is one thing, you know, that I’m keeping an eye on. I work from the office five days a week pretty much, which lots of people don’t now. But there’s obviously a temptation there to go out and buy your lunch. And so, you know, trying to think a bit more carefully about things like that is one of the things I’m doing.

PHILIPPA: Packed lunches.

TESS: Yeah, exactly.

PHILIPPA: Yeah because we were talking about this certainly before the recording - that thing of having notifications pop up on the screen of your phone every time you swipe for a coffee or a sandwich.

TESS: It’s a reminder.

PHILIPPA: It is, isn’t it? It makes you think.

TESS: Yeah.

PHILIPPA: I do that. Well as I said in episode nine, we spoke about the link between money worries and the effect that can have on your mental health. So, if it’s beyond the point of concern and you’re actually at the point where your money struggles have gotten the better of you then, I mean Chris surely that must put an even bigger strain on your state of mind. What kind of concerns are you coming across at Money and Mental Health?

CHRIS: Well, definitely, yeah, that’s something that we come across so much. So people who are in problem debt, where people are seriously behind on credit agreements and bill payments - nearly half of those people have a mental health problem. So there’s definitely that connection there and being in problem debt can drive these feelings of anxiety, depression, and then this feeling that it’s your fault. I think a lot of the time there’s this stigma around problem debt. So there’s this belief that it’s the individual’s fault, whereas there’s obviously a lot of different factors that are at play in society and the economy, etc. But that means that people really struggle to talk about it, whether that’s with their friends and family or then actually seeking help from different organisations or actually speaking to their creditors. And there’s also this other challenge where people are often getting quite difficult communications from their creditors. So, maybe aggressive debt letters or their phone ringing constantly.

PHILIPPA: Really frightening.

CHRIS: Exactly. And even things like bailiffs turning up at your door. That’s really difficult for people and they often don’t know what to do about it. And that just drives these feelings and unfortunately there is a connection between problem debt and suicidality. People in problem debt are around three times more likely to have thought about suicide in the last year. And unfortunately around a hundred thousand people in England per year have tried to attempt to take their own life if they’re in problem debt.

PHILIPPA: Yeah, I mean, as you say, it’s a vicious spiral, isn’t it? But how do we break that cycle?

CHRIS: Well that’s a really great question. There are obviously things that individuals can do, but I think I’ll focus more on what is needed from the wider infrastructure. One of the things is raising awareness of this connection between mental health problems and financial difficulty. So for example when people are getting treatment for their mental health problems, it’d be really great if there was this understanding for people about how that can impact their finances. But also then if doctors and medical professionals then spot that maybe it’s actually a financial driver that they can then be signposted or offered support and guidance so that they know where to turn to. And then I think on the other side of that is the role for creditors. So, make sure that the letters you’re sending out - that the creditors are sending out - that they’re clear, that they’re easy to understand, that they’re supportive, that there are links to where people can get support from and it’s easy for them to get in touch. But also, then there’s the training for frontline staff. Because obviously a lot of people who are struggling with their finances will also be struggling with their mental health. So when they’re ringing up they’re probably distressed and often maybe, they might get a bit angry because they feel like they’re not being understood.

PHILIPPA: Yeah.

CHRIS: So if frontline staff have this training to recognise, you know, there is this connection and they know what to do. That would be really great.

PHILIPPA: I mean, Tess, you mentioned last time I think that you’ve been hearing from customers at PensionBee, they’re worried about the cost of living crisis, the impact of all that market volatility on the value of their pension pots and how that’s affecting them. But what effects can already being in debt have on your ability to save for the future? Because I mean, the two must be connected.

TESS: Yeah, I mean I think, the one thing that you might imagine could happen is that people stop contributing to things like pensions. Actually what we’re seeing at PensionBee at the moment is that we’re not seeing a drop in contributions, which is promising.

PHILIPPA: Yeah.

TESS: I’m hopeful. I think hopefully that suggests that people are valuing their pension as a tool to support them in later life. But that’s something that could happen, somebody might decide, well that’s the thing I’m gonna stop putting money into. And, obviously the impact of that then is that you don’t have that money growing alongside you and, and you increase the risk of being in difficulty in later life. And then the other thing that we are seeing is an increase in people looking to withdraw from their pension before the age of 55, which is when they’re allowed to withdraw money.

PHILIPPA: Yeah. And you can’t do that can you?

TESS: No, you can’t do that apart from in very special circumstances. But yeah, you know, people are obviously wanting to do that and you want the money to stay in there as long as it can so that it has more opportunity to grow. So yeah, it can definitely have an impact on those kinds of savings.

PHILIPPA: Well for today’s episode we wanted to hear from you, the listeners on how you are currently coping financially. So before our recording, PensionBee reached out to its customers on social media and they asked people about their experiences with debt. So Tess, what sort of responses did you get?

TESS: The headline number is that 83% of respondents said that they had experienced debt at some point in their life.

PHILIPPA: It’s a big number. Is it higher than you thought?

TESS: It is very high, but I think it just goes to show what a universal problem it is, and I think we’ve talked a little bit about the shame that people feel around debt and I hope that hearing that number helps some people to recognise that it’s not your fault. It’s gonna happen to most people and it’s not something to be ashamed of. The biggest reason people gave for getting into debt was credit cards.

PHILIPPA: Right.

TESS: Personally, I’ve experienced what it’s like to use a credit card in my life and obviously it can be something that you sort of have there as a fall back. And so that can almost encourage you to think, oh it’s okay, I’ve got my credit card there. We also had over 50% of people tell us that they were concerned about going into debt this winter.

PHILIPPA: That’s a big number too.

TESS: It’s a really high number. And the things that people were particularly worried about were, unsurprisingly, the cost of energy and also groceries. So it’s such a universal thing - we all have to heat our homes and we all have to eat. So, these things are affecting everybody and we really saw that in the survey.

PHILIPPA: I mean Chris obviously we are talking about the current cost of living issue, but what circumstances do you see coming up most frequently from people when they, when they get in touch with you.

CHRIS: So we hear a lot from people who are struggling with their mental health. We find that common symptoms can often impact this ability to manage spending. So for example, when people are unwell, they might have difficulty processing information, they might struggle to control their impulses, but also things like memory problems. So this can make it really difficult for people to keep track of what they’re spending and make sure they’re getting the best deals. It can then be really hard for people when they’re unwell to then seek help and things like low motivation, low energy. But also avoidance is a common coping mechanism for people with anxiety and other associated conditions. So that could be really hard for people to then reach out.

And if you’re thinking then about people who are really struggling with their mental health, so maybe they’re in crisis support care, we often find this is where there is that worse financial impact. Because people just really can’t manage their finances. They might go into treatment and come out and find out they’re massively in debt now because they’ve just not been able to deal with that. Another common thing is that we know that people with mental health problems are often more likely to be on lower incomes.

PHILIPPA: Yeah. It’s quite closely correlated.

CHRIS: Definitely. Yeah. And we find that for people with common mental disorders, which might include things like anxiety, there’s a mental health income gap of around £8,400 on average. So that’s pretty significant and there are lots of different reasons for that. So for example, people might struggle to stay in full-time employment so they might turn to part-time work. But then lots of people might not be able to work. So then they have to rely on benefits which often really haven’t kept pace with increased costs. So lots of people then find it really hard to afford the essentials, which means then that’s how people can start to turn to credit and then they can struggle to afford the credit and they then get into debt.

Other things often I think you mentioned earlier about life events, that’s something that we hear about where people may be going through bereavement or divorce.

PHILIPPA: Yeah. I mean they just keep on happening, we don’t hear much about it.

CHRIS: Definitely. Yeah, well that’s, yeah as you said, that’s still ongoing and there’s the financial impact so maybe loss of income or whatever it is. But then there’s the impact on their mental health. But then there’s the final thing, just the cognitive overload that people have where there’s a lot going on, so being able to actually stay on top of your finances at the same time, that’s so difficult for people. And you mentioned the cost of living, that’s definitely something that is a real concern. So when we did polling recently around three quarters of people said they’ve had to make a change due to the cost of living crisis already.

PHILIPPA: Already?

CHRIS: Yeah. But then people are turning to credit to pay for essentials. So around half of people said they’re anxious about the cost of living crisis. But also one in five said they felt dread when they were opening letters from their creditors.

PHILIPPA: That’s sad isn’t it?

CHRIS: Exactly. And that then drives the feeling that this problem is too big.

PHILIPPA: There’s too many parts to it.

CHRIS: Exactly. Yeah, there’s just lots going on.

Customer stories

PHILIPPA: Look, let’s hear some personal stories from PensionBee customers who’ve very kindly given us permission to share them with you. You’ll understand we’re keeping their names anonymous. So the first customer told us…

CUSTOMER 1: The cost of living crisis has definitely impacted me. Unfortunately my last job ended in January this year, so for the first four or five months I was out of work and as my partner’s a teacher, we can’t claim any benefits. It’s been really difficult. We’ve had to cancel holidays we had booked pre-covid to try and get that money back to pay our bills. We’ve no spare money for going out and we’re cutting back on what we’re able to buy.

PHILIPPA: So you know, this couple, they were fine and then they suddenly found this year that their finances are just nowhere near as stable as they previously were. They’re clearly worried about getting into debt and they will not be alone with that, will they? Lots of people who thought it was fine, suddenly it’s not fine.

CHRIS: Oh, definitely. I think the mention of cutting back on the different spending and one of them was holidays. Now, holidays can be something that’s really great for people’s mental health and yeah definitely, a lot of that spending is stuff maybe when you’re socialising and that can mean spending less time with friends and family again, things like isolation can then make it harder for people with their mental health and then that just drives these feelings. When people get into that situation it can be scary but there are lots of organisations out there who have advice that people can turn to if they need to. But definitely when you first face those kinds of situations, it can be really scary.

PHILIPPA: Tess, your customer spoke about not having any money to spare, it must be really difficult to even think about saving in that situation.

TESS: Yeah, it is. Lots of people will obviously be considering the different places that they can cut back. I mean we would always say, you know, with pensions that, if you can try to keep contributing, even if you cut down the amount that you contribute, that can help keep your pot growing. Yeah and also just keep up the habit really because if you stop it altogether, starting again is quite tough.

PHILIPPA: Yeah. I mean Tess you say even if it’s a tiny amount, which seems like almost a waste of time to be saving it, this is where compound interest comes in isn’t it? Even a tiny amount gets bigger.

TESS: Yeah. You know, if you’re not gonna retire for 20 years, then even if maybe you’re contributing £20 a month and you cut that down to £5 a month, that £5 has got 20 years to grow and help provide you with a bit more support and income when you do reach retirement.

PHILIPPA: It’s mentally reassuring in a way, isn’t it, to know it’s there.

TESS: Yeah, I think it is.

PHILIPPA: I mean, Chris thinking about solutions, lots of us are not claiming the benefits and payments we’re entitled to. This is, I mean this has always been the case, hasn’t it? And right now people really need to know what they’re entitled to, don’t they? What is the easiest way to find that out?

CHRIS: Yeah it’s such a big problem because like you said there’s, there’s a lot of financial support out there for people but people just don’t know about it. And unfortunately at the moment there’s so much placed on the individual to try and work out where to go. But there are some great organisations you can turn to. So for example, Citizens Advice, they have a lot of information on their website about eligibility for benefits, but also other kinds of financial support and how you can access that.

PHILIPPA: I think especially if you haven’t claimed benefits before, or not claimed benefits for a while, the idea of trying to find out where you’re entitled to, it’s really daunting isn’t it? Cause you thinking I’m gonna have to wade through some government website and it’s gonna take half a day. But actually it’s not is it? Because I looked at some of these benefit checkers, it’s like a 10 minute job, isn’t it?

CHRIS: Yeah. I think there is that, that concern that it will take forever and that’s understandable. But these tools are quite simple and often the information they provide is in a way that people can easily understand.

PHILIPPA: It’s interesting you talked about Citizen’s Advice because I was reading some of their reports earlier in the week and they were saying that they’ve seen a 60% increase in helping people with crisis debt this year already.

CHRIS: I know it’s quite scary and we work quite closely with other debt advice organisations and speak to them quite a lot and yeah, the amount of support they’re having to give is really large and often it’s things like energy support where they were supporting people in the summer. Whereas normally this is an issue that we see in the winter when people are worrying about energy costs because obviously it’s so cold but this was something in summer. So yeah, it’s very scary and I think and then there’s the pressure on their staff and their ability to meet this demand.

PHILIPPA: Let’s hear another story from a customer. This one really shows that extra layer of difficulty that we’ve been talking of having a mental health condition as well.

CUSTOMER 2: A few years ago I became incredibly unwell due to a decline in my mental health and as a result had no job, I had no money to pay bills, therefore had to rely on help from my family, who could barely afford it themselves. I was denied benefits after a personal independence payment assessment due to the fact I had taken myself to the interview on the train. This was despite the fact I was having suicidal thoughts at the time. I felt the assessor wasn’t necessarily qualified to make that decision and as a result I was forced to apply for Jobseekers Allowance despite being in no condition to work.

PHILIPPA: Now Chris, it’s a terrible story isn’t it? I mean, looking for work when you’re suffering from mental health problems. It’s a horrible combination, but it’s true, there will be times when people simply aren’t well enough to do that, aren’t they? I mean, what advice do you give to people if the system is forcing them to seek work when they just don’t feel mentally capable of doing that?

CHRIS: I mean that is such a common thing that we come across and mental health problems can affect people in different ways and they can vary in intensity. And for some people they might go for periods where their mental health means they’re able to work, other times, there might be short periods where it’s just too hard for them.

For other people, it might be longer-term where they struggle to work. So there are three groups of people; people who obviously can’t work, people who can work, but they have to work part-time because they’re managing their mental health whilst trying to find work and, there are some people who can work full-time. And we do find in our research that people with mental health problems are more likely to be in receipt of benefits, especially if one’s more related to health. And one thing we want to see is more training for frontline DWP staff so that if people come to say that they’re struggling with their mental health and it means that they can’t work, that there is that understanding of how it impacts people.

So hopefully we’ll get into a place where people can feel free to come talk about their mental health. And also then when they’re approaching employers, we often find there’s this feeling that if someone has gaps in their employment history, which is due to mental health, that there is almost like a bit of discrimination going on there.

PHILIPPA: Still?

CHRIS: Still, exactly. Yeah. So hopefully employees will have more training there and more commitments to support people with their mental health and things like flexible working. But like I said, you know, for people in this situation who’re trying to work out where to go, and what your rights are is one of the crucial things. But again, it’s left to the individual so that’s just really difficult. There are ways that people can get that support whilst claiming universal credit, but it’s not a really great system at the moment. So one of the things we’re calling for is for that system to be easier.

PHILIPPA: Are you?

CHRIS: Yeah. So there is a system in place but it’s quite complicated to find and complicated to use. So we’ve called on the DWP to make that a bit easier. It’s something that is relatively simple when you’d think because you know, it’s, we’re not necessarily asking for them to completely change the way it’s done. Just make it easier for people to get that support.

PHILIPPA: Do you think you’re getting much traction with that?

CHRIS: Well we were starting to make a bit of traction. We were speaking to officials and ministers and it did seem that we were starting to make traction and then obviously there was a slight change in government and things started to happen there. So I don’t know where we’re at at the moment with that.

PHILIPPA: So, you have to start all over again with new people, do you?

CHRIS: Pretty much, yeah. And actually it’s quite, well I say it’s funny.

PHILIPPA: It’s good you can laugh.

CHRIS: We were about to launch a report on levelling up. So looking at where you live and how that impacts your money and mental health and then that was when a lot of the resignations happened. So we were like, oh there’s no one actually left it in the department to make these recommendations to. So that was a bit of a difficult period for us.

PHILIPPA: Yeah, because obviously benefits are being discussed at the moment aren’t they?

CHRIS: Yes. Well obviously yeah, there’s a lot in the news about it and whether they’re going to rise in line with inflation.

PHILIPPA: Which, presumably, you definitely want them to?

CHRIS: Yeah because obviously as I said, one of the big drivers for lots of people who struggle with their mental health is low income. And so if costs are rising and people are really struggling to make those costs, the money they’re receiving, we think that should be rising in line with that.That would be something that would make a big difference.

But things like, having an adequate Statutory Sick Pay system, and things like support for people when they’re struggling with their mental health earlier so that their mental health gets better so that they’re able to progress through work. That’s if they’re able to work. And then you know, things like flexible working by default, that would be something that would be really great. Cause we know that’s really important for people. So, these kinds of blunt instruments often don’t necessarily have the desired impacts because as you said, they don’t really take into account people’s lives and there’s not necessarily nuanced thinking around it.

PHILIPPA: It sounds like you feel that there should just be more compassion in the system?

CHRIS: Oh definitely. Yeah. And, lots of times people probably working on the frontline will have compassion but I think -

PHILIPPA: The rules are the rules.

CHRIS: Yes, yeah. That they have to work with. Yeah, exactly.

Escaping debt and improving your circumstances

PHILIPPA: Look, we’ve spoken quite a lot about the effects of debt and how serious the problem can get if you don’t take action. Debt, obviously it can affect anyone, and one of the biggest challenges is keeping perspective on your situation, because getting out of debt is possible. Let’s hear from Lynn Beattie. Lynn is a Personal Finance Expert. She’s founder of the Mrs MummyPenny website and author of The Money Guide to Transform Your Life. She’s also a PensionBee customer.

LYNN: So I used to be employed, I had a good corporate job, I worked for a telco company and earned quite a chunk of money. But I decided to leave that world and set up Mrs Mummy Penny and my income literally crashed down to nothing. I had £40,000 worth of redundancy money, and I’d set a budget that I had 18 months to spend that £40,000 and that’s just basically going on like mortgage and council tax and bills and food, feeding my three children.

And I ended up funding an unsustainable lifestyle via my credit cards. I knew things were getting worse after 12 months, but I literally buried my head in the sand. I know I did. Because I felt the shame of being in debt because I’m a Personal Finance Expert. Like, how embarrassing would that be to admit to people I was in debt? It took about six months to actually face up to my problem. And by then I was literally paying for food to feed my children on a credit card. I’d got into a complete pickle.

So, it’s constantly on your mind. I would think about it 50 times a day. So I’d wake up and the first thing I’d think about was, oh, I’m in debt but I’m too scared to add up how much I’m in debt. Or, I’ve got £10,000 on that interest free credit card, but that deal’s gonna run out soon and I’m not sure if I’ll be able to get another interest free deal because I’m not employed anymore, I’m now self-employed. So all this sort of spiralling goes through your head. The mental burden of having that much debt is huge. Not only because of the impact it has on your own mental health, but it, you know, it causes arguments in relationships and it changes decisions you make with your children. So my light bulb moment was when I’d just returned from my 40th birthday celebration. Literally on the first day back from holiday, I was like, I’ve just gotta face this. And I added it all up and then it was £16,000. It was a sort of rock-bottom moment. How did it feel to realise I was £16,000 in debt? I think, a lot of emotions. So embarrassed, full of shame. It also empowered me that okay, I now know what my situation is. I know I’ve got £16,000 of debt, £12,000 of it is on 0% credit cards, some of it I need to restructure and get another 0% deal. And then you sort of go through the semantics of, right, what are the interest rates? How long have I got that 0% deal for? One of the debts was on a business credit card and I was paying like a 20% APR on it.

So, I then came up with a strategy of the order in which to pay off my debts. My first angle was to cut all of my bills back to the bare minimum. So I got rid of everything that was non-essential, you know, no gym memberships, only one TV subscription, you know, get rid of Netflix. I spoke to a friend and I told her my budget ideas and she went through my budget and she stripped out another sort of £200 a month. And then I did a few extreme, frugal challenges. I didn’t buy any clothes for me or my kids for a year. If we needed clothes, we just asked friends. I’m a makeup addict, like I love makeup and I didn’t buy any makeup for a year. And I know that sounds really ridiculous, but it’s something that I love. And I did some no spend months where the only thing you’re allowed to spend money on is your groceries and commuting to work. The only time where it got really difficult was in the summer holidays where my income dropped to like £1,000 a month and you know, you’ve got six weeks with your children at home. So that was a difficult one to explain to my children. Like, no we, we can’t go to the trampoline park. That was really, really hard. And my debt actually went backwards during the summer holidays.

I set an unrealistic challenge that I would pay my £16,000 off in 16 months - 16 months was so unrealistic. But I did manage to pay it off in two years. So by April 2019, I was credit card debt free. And that day I remember so clearly. It’s like you feel a physical weight being lifted from your shoulders. It’s incredible.

PHILIPPA: It’s an incredible story isn’t it? I mean Lynn mentioned common themes there that we’ve talked about. This idea of burying your head in the sand and not opening letters. I mean what are your best tips for not doing that? For getting out of that cycle of avoidance? Because it’s tempting isn’t it? If you know the news is gonna be bad, you don’t wanna open the envelope.

CHRIS: Yeah, I mean that’s something we hear about a lot through our research. Just the feeling that the debts are mounting up and that people then really struggle to reach out and seek help. I think it’s important, and obviously firstly thanks to Lynn for sharing that story because it’s a great story. And it’s really important to, to hear from people with lived experience about not only the drivers but also how they got help and support. Turning to free advice providers - that’s something people can do. So there’s lots of great providers out there like StepChange and Christians Against Poverty who can help people understand their debts, how much they owe, who to, and then the steps that need to be taken. And often they’re guided through that process. So that can be really useful.

PHILIPPA: I mean Tess, obviously Lynn shared a particularly hard time with credit card debt. It was just rolling and rolling and rolling and then she was using it to pay, you know, buy food. That links back to the poll that we were talking about earlier, doesn’t it? Even for people who’ve never been in debt before, a huge number of them mentioned credit cards. It was 73% who mentioned credit cards, didn’t they? Why do you think it is that so many people find their credit card debts so hard to control? Is it that invisibility, they just don’t see the money being spent?

TESS: It almost feels a little bit like free money, doesn’t it? Like it’s just, it’s there and therefore when you are getting maybe to the end of your actual income, maybe you’re thinking, well I know I can go a little bit over because I’ve got my credit card there. But then if you’re doing that every month, then it builds up and builds up and builds up. But also if you don’t actually know what’s going out. I know somebody, she’s in her 90s with dementia, living alone and she recently discovered that she was being charged - this is before the increase - being charged £500 a month for her energy bills. Which then went up to £750 a month with the increase. And so obviously if you are putting your head in the sand and not looking at things, there might also be things happening like that that you’re not aware of. If you leave it alone, you’re just giving the problem room to get bigger and worse.

PHILIPPA: I sometimes wonder whether doing away with paper statements hasn’t been such a great idea as we all thought it was at the time. I mean, I loved all that, not having the paper. But getting those paper bills - if you can bring yourself to open them and you see the lists of the stuff you spent on, you don’t have that now, do you? I mean, I don’t have that because I don’t get paper bills.

CHRIS: Yeah, I think that’s such a good point. And something that we hear a lot about is people can struggle to understand when they’re looking at their banking apps and saying ‘Actually what does this mean? How much money do I have in my account?’ Because there’s things like money going out at certain times -

PHILIPPA: Payments pending…

CHRIS: Yeah. So I think maybe, the idea of putting it back to basics and actually understanding yeah, how much is here and how much is there. That can be really useful.

PHILIPPA: Tess, we need to wrap this up, but I’m gonna ask you again. You mentioned on the last podcast about your spreadsheet. Tell us about Tess’ spreadsheet.

TESS: I do have a spreadsheet and I keep track of all of my outgoings and it’s just helpful because if you, I mean, I’m literally inputting every line on a spreadsheet, so I’m reminding myself every month where I’m spending my money. If you’re doing it regularly, then I think it’s helpful for you to sort of stop yourself getting in too much debt, I think. So, I think even if you feel like your finances are in a good place, I think it’s a good idea to be monitoring it in whatever way. You don’t have to have a spreadsheet like mine, but to be monitoring it in whatever way works for you so that you know what’s happening.

PHILIPPA: Tess, Chris, thank you very much. That is about all we have time for today. For links to all the resources and organisations we mentioned in the episode, take a look at the show notes on your podcast app.

You’ll also find links there to handy articles from the team at PensionBee. Just a final reminder that everything you’ve heard on this podcast should not be regarded as financial advice and wherever you invest your capital is at risk.

Join us again next month, we’ll be asking ‘What does a happy retirement look like?’ If you’ve got any feedback on any of our episodes, good or bad, or want to share your ideas for future shows, send us an email to podcast@pensionbee.com. We would love to hear from you.

Thanks for listening. See you next time on The Pension Confident Podcast.

Catch up on episode 9 and listen, watch on YouTube or read the transcript.

Risk warning

Period	Market Event	FTSE World TR GBP (%)	4Plus Plan (%)
4Plus Plan’s inception – 6 Sept 2013	QE Tapering, China Interbank Crisis and its aftermath	-5.44	-2.41
3 Oct 2014 – 15 May 2015	Oil price drop, Eurozone deflation fears & Greek election outcome	-5.87	-1.77
7 Jan 2016 – 14 Mar 2016	China’s currency policy turmoil, collapse in oil prices and weak US activity	-7.26	-1.54
15 June 2016 – 30 June 2016	BREXIT referendum	-2.05	-1.07

Period	Market Event	FTSE World TR GBP (%)	4Plus Plan (%)
4Plus Plan’s inception – 6 Sept 2013	QE Tapering, China Interbank Crisis and its aftermath	-5.44	-2.41
3 Oct 2014 – 15 May 2015	Oil price drop, Eurozone deflation fears & Greek election outcome	-5.87	-1.77
7 Jan 2016 – 14 Mar 2016	China’s currency policy turmoil, collapse in oil prices and weak US activity	-7.26	-1.54
15 June 2016 – 30 June 2016	BREXIT referendum	-2.05	-1.07

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