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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E15: How can we achieve financial inclusion? With Nina Mohanty, Emma Barrow and Matt Loft

The Pension Confident Podcast

PensionBee Content

27 Feb 2023

minute read

Feb 2023

Inside the BeeHive

Women and Finance

The following’s a transcript of our monthly podcast, The Pension Confident Podcast. Listen to episode 15 here, watch on YouTube, or scroll on to read the conversation.

PHILIPPA: Hello, I’m Philippa Lamb, and welcome back to The Pension Confident Podcast. This time we’re going to be talking about financial inclusion, because more than seven million people are financially excluded in the UK alone. So what does that mean and what needs to happen to make sure that financial services work well for all of us?

We’ve heard a lot of talk from politicians lately about levelling up. Put simply, that’s all about creating opportunities for everyone, wherever they live, and making sure no one falls behind. But when it comes to financial services, falling behind isn’t always about where you live. Sometimes, it’s a system or a service that just isn’t set up to work well for you. Things like payments, savings, credit and even insurance.

So why isn’t it working for you? Well that might be down to your ethnicity, sex, religion, gender or your age. It could even be about your relationship situation or your health status. Lots of factors can play a part, but exclusion can have very serious consequences. So what can be done about it? Helping us level up financial services, today we have three guests. Nina Mohanty’s the CEO of Bloom Money, which is a community saving platform that helps people moving to the UK from other countries to save for their future. Hi Nina.

NINA: Hello. So glad to be here.

PHILIPPA: Emma Barrow’s Head of Communications at the Financial Services Compensation Scheme or FSCS. Hi Emma.

EMMA: Hello. Thank you for having me.

PHILIPPA: And, as always, our third guest is one of PensionBee’s own experts. This time, Chief Design Officer; Matt Loft. Hi Matt.

MATT: Hello.

PHILIPPA: Because we’re talking about money and finance. Here’s the usual disclaimer before we start:

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

WHAT’S FINANCIAL INCLUSION AND WHO’S AFFECTED?

PHILIPPA: Now, we’re talking about financial exclusion today. I know we’ve got lots of expertise around the table. I’m wondering if we’ve also got some personal stories. Have any of you ever felt excluded from a financial product or service? Have you Nina?

NINA: Yes. So like many of our customers at Bloom Money, I’m an immigrant myself, to the UK. I come from the United States and was born and raised in California. When I first moved to this country, I couldn’t, for love nor money, get a bank account or a mobile phone contract.

PHILIPPA: Why?

NINA: Because opening a bank account comes with a lot of information requirements. So in the end, I had to actually go to the university where I was doing my masters degree and say, ‘please, could you write me a letter so that I can open a bank account?’ And that was also part of the mobile phone contract situation because when you take out a mobile phone contract, they’ll run a credit check on you, and of course, having just arrived in the country, I didn’t exist.

PHILIPPA: You didn’t have a credit record?

NINA: I didn’t have a credit record in this country. I was saying, ‘please, I just want a phone!’

EMMA: That’s something so simple, right?

NINA: Something so simple.

PHILIPPA: And so essential.

NINA: Exactly.

PHILIPPA: What about you Emma?

EMMA: I’ve got to acknowledge that I’ve been quite privileged in a lot of ways and I’ve not had that kind of experience. When I was growing up, we weren’t wealthy by any stretch of the imagination, but I was never in poverty. So I think my feeling of exclusion has come as I’ve progressed in my life, so as I’ve gotten into a better financial situation than my parents were at my age. That transition from very basic finance; from having a bank account, insurance and accessing credit to things like investments, and pensions. I found that incredibly difficult because culturally, when I was growing up, that just wasn’t a thing in my sphere. Levelling up from very basic finance into more advanced things and being able to grow your wealth through investment, I found that very difficult and felt excluded.

PHILIPPA: You just didn’t know how to do it?

EMMA: I didn’t know how to do it. I still feel today that it’s very hard to access. There’s this gulf between basic finance and savings, and being wealthy enough to be like a high net worth investor. And that middle part’s really difficult. I have felt excluded in that.

PHILIPPA: Yeah. And we are going to talk about financial education because it’s a big issue in this. How about you Matt?

MATT: Yeah, a recent example is how my wife and I were trying to open a joint account, which is something, I thought in the day and age of fintech banks, that would be very simple. Unfortunately that wasn’t the case. We went through a number of banks to try and set this thing up. There was no feedback as to why they wouldn’t give us a joint account; they just flat out wouldn’t allow us. A ‘computer says no’ kind of problem. It’s just really frustrating. I’m born and raised in the UK. I’ve got all of that history here, but still even then, it just wasn’t possible to do.

PHILIPPA: So there’s a few examples of the sort of problems we’re talking about. Emma, financial inclusion’s a bit of an umbrella phrase, isn’t it? What sort of things might it cover?

EMMA: When we think of financial inclusion or exclusion, that being the opposite, there’s two things that you can divide that into. There’s the more tangible and physical ways that people are excluded. They can’t access cash, they can’t access a bank account, they can’t access a phone contract account or get a joint account. Very physical and tangible things that you think should be fixable. They seem really logical. You would think you should be able to fix that.

PHILIPPA: And basic as well.

EMMA: Yeah. You should be able to legislate, you should be able to manage it so that it works. But I think, like my example, there’s the intangible part of inclusion as well, which is that cultural piece. Have you been exposed to that? Have you had the education?

PHILIPPA: So thinking about groups, Nina, as you say, you’re dealing with people who are coming to the country, but there’s a whole array isn’t there? Because it’s people with disabilities, women, people from low income backgrounds, of different religious backgrounds. Lots of different groups.

EMMA: Absolutely. And I think to an extent, I believe everyone’s probably going to be excluded at one point in their life. It mightn’t be a permanent feeling of exclusion. It might be a temporary thing that eventually you can get over. But I do think pretty much all of us will experience it at some point to some level. But as you say, there’s certain groups that are particularly affected by this and on a more long-term basis.

PHILIPPA: So we’re talking about a lot of people, aren’t we? Do we have any sort of sense of numbers?

NINA: I only know that the Financial Conduct Authority (FCA), our regulator here in the UK, recently stated that there are 1.2 million British adults that don’t have a bank account. When you think about that, it’s quite a large number of people just walking around without a bank account.

WHAT BARRIERS DO PEOPLE FACE AND WHAT NEEDS AREN’T BEING MET?

PHILIPPA: We’ve talked about the what and the who. Should we dig a bit more into the why and the how that groups might run into these problems? Some people are excluded because they’ve tried and they’ve been turned away. Others, I think it’s fair to say, are effectively excluded because they choose not to use financial services. Why would people do that?

EMMA: I think some people might be sceptical of financial services. It’s seen as a very wealthy club. In Britain, our culture is not to talk about money. That all means that people, whether it’s an actual choice or it’s more a fear and confidence thing, they do choose to maybe not participate.

NINA: If I could add to that? What we often find in immigrant communities in the UK is people prefer to use cash and they prefer to have it with them. We refer to this mysterious box under the mattress where Granny has all of her cash just sitting there, right? And people say, ‘oh, that’s ages ago now’ and, ‘people don’t do that anymore’. But we still find that people actually do and there’s a certain reluctance to trust financial institutions. When I talk to immigrant communities, often people of colour, they say it’s due to the fact that they’ve been discriminated against in some shape or form in the past. I’ve spoken to people who’ve applied for a loan, they’ve been rejected and because of that there’s this feeling of shame. They say, ‘right, well I don’t want to interact with the bank ever again’. They just decide to live in cash-based economies that aren’t part of our formal economy here. Also, we’ve talked about religion. There’s approximately 3.87 million Muslims living in the UK. So there’s a broad spectrum of reasons why people don’t want to engage with the formal financial system.

PHILIPPA: Yeah, the Shariah thing is interesting. We made a podcast about Shariah finance last year actually. And as you say, loads of financial services are just not set up for that yet. But Matt, I know you’ve done a lot of work at PensionBee about accessibility for people with disabilities, haven’t you? What sort of challenges do they face?

MATT: Sadly, they face similar challenges to those they encounter in other industries. The world has moved online and that brings its own particular challenges. The way technology moves is quite interesting to think about. If you’ve got to go to a building, that’s a mobility issue, if you physically find it hard to get there. If you’re doing something over the phone and you’re hard of hearing, that’s a problem. Now the world has the internet and apps, and if you’re visually impaired, that’s a considerable barrier. So a lot of the work we’re doing at PensionBee’s around trying to utilise the latest technology to help those people because, by and large, having apps and the internet is fantastic. For example, if you do have mobility issues, for instance, suddenly the world’s opened up to you because you have so much power in the palm of your hand. But yes, of course, it’s really dependent on your particular disability and your particular situation.

PHILIPPA: And equally, if you’re a person who doesn’t want to use handheld technology, like phones - I’m thinking of older people here, but it isn’t necessarily older people is it? It can be all sorts of people. That’s an issue, isn’t it? Because obviously bank branches where you can go and talk to someone in the flesh, face-to-face, they’re disappearing, aren’t they?

MATT: They are.

PHILIPPA: There’s a movement towards shared banking hubs, isn’t there? Is that a good solution?

NINA: I think it’s a tough one. I’ll give the example of my Co-Founder and our CTO at Bloom. He’s living in North Wales, in a small village, and he’s gone to look after his Mum and his Grandma. The last High Street bank closed and they said, ‘well don’t worry, we’re going to do a mobile van for you and everyone can do their banking through the mobile van’. And they said, ‘OK, let’s try it’. But the problem is the mobile van, for whatever reason, sometimes can’t make it because there’s traffic or something else, and just doesn’t show up. Or it’s only available on certain days, at certain times. So what happens if you’ve caretaking responsibilities and you can’t make it down to the van, or you’re working during that time and you’re not off shift yet and you can’t go to the van? There are definitely areas for improvement. I’ve seen there’s a partnership with a company called OneBanx where they’re trying to have multiple banks represented in one physical space. I’m very keen to see how that plays out because at least it’s a physical space and people can speak to a human being representative. But that remains to be seen.

EMMA: I think the vans are really a bit mad because, like you say, there’s so many problems with them. And actually, if you just want to do basic cash withdrawals and cash deposits, you can do them in the Post Office. I think there’s about 11,000 Post Offices still in the UK. The van thing’s a bit odd. I think the shared branch idea is interesting. There’s only four of them open. It’s a new initiative and there’s plans to open 38 more. A fairly large number, but similar to your example, I’ve got an Aunt and she’s 90 now, and sadly she lost her two siblings last year. So she’s now left to look after everything. She’s never had children. And as you mentioned about everything moving online, she’s never had the internet and wouldn’t have a clue. She’s never had a mobile phone, not at all. All her bank branches have shut, but she’s stuck in this interesting quandary where she would happily transact over the phone, but how do you find the phone number?

PHILIPPA: Oh yeah.

EMMA: How do you find the phone number when you can’t go to a branch, you haven’t got an app, you haven’t got the internet and you haven’t got a debit card? She’s never had a debit card, she’s never been interested in that. She’s always worked with cash. She literally cannot find that phone number. Finding phone numbers is almost impossible without the internet.

PHILIPPA: Yeah. And the digital thing, there are a lot of people like her, who prefer cash, but a lot of that generation still like cheques and they’re basically gone aren’t they?

EMMA: It’s so bizarre to me. I feel like cheques just passed me by. I feel like I saw one, at one point, in about 2010 and then have just never dealt with them since. It’s really weird.

MATT: Maybe from the Grandparents at Christmas time? You used to be quite appreciative of that. But as the years went on you started thinking, ‘oh no, not a cheque. What do I do with this?’

PHILIPPA: Matt, we spoke a lot in the last episode about the disadvantages that women can face financially depending on their relationship status. It’s the same with accessing finance, isn’t it? 742 million women all over the world are outside the formal financial system. Do we have a number on what’s happening here in the UK?

MATT: I know the difference between pot sizes for men and women is 39% across the UK, which is an incredibly disappointing figure. At PensionBee we’re thinking about that quite a lot at the moment, and what we can possibly do about that. You have to look at the causes of it and that’s actually very difficult to unpick. We do have a gender pay gap, that’s an issue, but it’s not 39%. That’s a huge figure. We know that women are often primary carers, be it for children or for adults. So quite often they drop out of the working environment for some time, if not more permanently. I think it’s a very complicated subject, one that we’re really just trying to get to grips with now.

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

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

PHILIPPA: So she’s invisible?

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

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

NINA: Exactly.

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

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

EMMA: It’s weird.

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

EMMA: I remember when my boyfriend and I bought a house together, we’ve had the house for a long time now, but I remember when we were buying that house, he didn’t have the best credit rating. In a prior relationship, his ex-partner had got into debt from what I remember. I remember the worry and the panic of thinking, ‘are we going to be able to buy a house?’. And he was worried about whether it would affect my credit rate because I’d, by that point, worked on it. To be fair, I didn’t really understand how it would impact me. That’s the other thing, again, going back to education and understanding feels like a bit of a dark art sometimes - a credit rating. People don’t really understand how those joint relationships affect it. If you’ve got into bad credit, how do you get out of it? If you’ve got no credit rating, how do you build it? It does seem to be a knowledge gap for sure.

PHILIPPA: And that’s going to apply to all sorts of people. Divorced people and newly independent people. As you say, this business of being affected by previous relationships that you mightn’t have had the agency about. Is there anything to be done about that? What do you do about it?

NINA: I wish I had a magic wand.

EMMA: I was going to say, that’s why we’re discussing it, right? Because it’s really hard.

PHILIPPA: I mean, can you engage with the credit agencies? You can look at your credit score.

EMMA: I genuinely don’t know, beyond checking my credit score, how I would go about fixing it.

NINA: I think one of the things that I’ve had to do, I’ve talked often about how I’ve money dates with myself and they’re the most dreaded dates.

PHILIPPA: This isn’t a fun date?

NINA: Maybe I’ll pour myself a glass of wine and say, ‘right, let’s just get through this’. But I came to realise that one of the credit rating agencies, I have no idea why, said I had a terrible credit rating and the other two said I was in good standing. I started going through and I realised that it had my address as a place that I lived three or four years ago. So whatever was going on with that particular residence was negatively affecting me. There’s usually a link on the websites of the credit rating bureaus where you can file a correction. It’ll take ages and it’s very paperwork heavy, but I highly recommend having a quick audit and looking to make sure. Sometimes there are duplicates or if you have a common name, you might be confused with someone else. So it’s always worth doing that and just having a quick check to make sure that everything is above board, and as it should be. But I don’t think there’s a silver bullet for it.

EMMA: And even accessing those credit agencies can feel hard, because it’s not always obvious that there’s a free way of doing this stuff and the first thing that’s presented to you is…

NINA: Pay £15 a month!

EMMA: Yeah, for each single agency and like you say, there’s three main ones in the UK. That itself can feel like a barrier to a lot of people. That’s going to be £70 before we’ve even started.

PHILIPPA: That’s the thing, low income. This is a running issue with all these exclusion issues. Because now I’m thinking about contents insurance. I was reading the other day, about three million British households, this is social housing, don’t have contents insurance. But they’re twice as likely to be burgled than people living in privately owned homes. It just highlights how vulnerable people are.

EMMA: So the FSCS can actually compensate for insurance failures, like if an insurance company goes out of business. It wasn’t contents insurance, but we had a failure about a year and a half ago now, at a large insurer that went out of business, and there were about 120,000 policy holders on the books. It was motor insurance, rather than contents. But it actually transpired, as we went through this failure, that most of them were motorbike insurance. So motorbikes, scooters, mopeds, that kind of thing. And again, as we dug into it further, those policy holders had been insured by that company because it was by far the cheapest and they literally couldn’t afford another policy. Digging into that further, they were using that policy for business. They were using it because they were takeaway drivers, bike couriers, etcetera. So that insurer went pop, we could pay people what was left of their premiums. So if they had a years cover and they had six months left, we’d give them that money back, but then they couldn’t access insurance because there was no other provider offering anywhere that value.

PHILIPPA: That’s a market failure.

EMMA: Overnight, they were excluded from not only being able to insure their vehicle, but being able to work because of that one failure. Like you said, those are the people that don’t have the resilience to change that situation, get another job or whatever. I think insurance’s a very hidden expense. We don’t talk about that with exclusion a lot, but it’s really important.

PHILIPPA: Particularly when you’re high risk.

HOW DO WE IMPROVE ACCESS TO FINANCIAL SERVICES FOR THOSE IN GREATER NEED?

PHILIPPA: Matt. we’ve laid out a lot of problems here, haven’t we? Should we talk about solutions? Financial education, it’s a running theme on this podcast. We’re always happy to talk about it again because it’s really important isn’t it? We’ve got 11 million adults in this country with what’s called ‘low financial resilience‘. That’s the sort of thing we’ve been talking about, there’s just no cushion when things go wrong. 12 million are lacking the digital skills to access the sort of platforms and products that we’ve been talking about. That’s open banking, using a phone, apps, all that sort of stuff. It’s a big problem, isn’t it?

MATT: It’s a huge problem, absolutely. Where do I start unpicking that one really?

PHILIPPA: Should we start with the government? I’ve read their latest report on this. Financial inclusion is supposedly a priority, isn’t it? They’re talking more in that report about financial education for kids. Is it happening?

MATT: Not that I’m aware of. I haven’t been to school since the eighties and nineties. I’m aware that it’s supposedly better than it was then. Financial education back then started and ended with adding and subtracting. There was really nothing beyond that.

PHILIPPA: I mean this is the road we’re on, isn’t it? App-based financial services. We’re doing everything on our phones. There’s no turning that around, is there? But as you say, the pitfalls are there. The opportunities for fraud, people making mistakes and digging themselves into holes that they don’t really fully understand. On the other hand, of course Matt, forms and paperwork, they had their problems too, didn’t they? And they still do.

MATT: Exactly. Yeah. We’ve subtly changed where the problems lie and how we understand them, but they still exist. I think overall it’s extremely positive what’s happening in the technology space. Internet and app-based access to finances. But it does come with certain risks and I think just general understanding and knowledge about what it is you’re playing with here. Because it can feel like playing. You download an app, you’ve tried it out and then suddenly you’ve done something you didn’t fully understand. You’ve accepted the terms and conditions and off you go. And yes, there quite often aren’t the guide rails in place to help you understand what you’re doing.

PHILIPPA: That’s the balance isn’t it? Obviously PensionBee has an app. All organisations in this space have the same issues, you want to make it convenient, quick and easy to use, but those safety nets do need to be there don’t they? For you and for the customer.

MATT: Absolutely, yes.

EMMA: I think what you said about terminology’s really, really important and that’s something that we’ve. . .

PHILIPPA: Jargon. We’ve done a podcast about that too.

EMMA: So a lot of companies, ours included, have gone through the Plain English Campaign and Crystal Mark. We’ve been working with a company called Plain Numbers recently, which is the numerical equivalent of that, which is helping people to understand when we give them compensation calculations and things like that. But what I found really difficult goes right back to what we said at the beginning. Financial services is full of, at a very senior level, wealthier people from wealthier backgrounds and higher educated backgrounds. Getting them away from the mindset of - big complicated language equals higher value, ‘I look better, I sound more important’, is so difficult. I think that’s why your fintech companies have done, in my view, a better job of that because they tend to be founded and run by younger people, less are from those wealthy backgrounds, less are from those traditional industries. You’re more aware of the benefits of doing this stuff well.

MATT: We see that at PensionBee for sure. When we get feedback from people, it’s not, ‘oh your app’s fantastic, I can do this and that’. It’s, ‘oh, you explained this in a way I understood’. How simple is that? So much of the finance industry still communicates in a b2b fashion. When actually they should be working b2c.

PHILIPPA: Business to business rather than business to customer? Talking of jargon!

MATT: Sorry. You see, it’s so easy to do!

EMMA: It’s so easy to do though. A lot of people have worked in financial services for a long time. I remember when I first got my job at The Building Society, which is the first financial services company I worked for. The very first thing I was asked was, ‘how did you get this job? You’ve not worked in finance before’. And it really opened my eyes to that revolving door of people who have always worked in the industry. And it wasn’t meant maliciously, it was a genuine question. The thought process was that most people tend to go into the industry fresh out of university, then that’s all they’ve ever done. I think that’s why using jargon becomes so easy because they’ve been doing it for so many years, and then they’re trying to include people who’ve never been through the door.

PHILIPPA: So that’s a recruitment issue, isn’t it, for everyone in this sector? It can’t just be people who come from those sectors. There has to be people that don’t because otherwise, how else are you going to help others that just don’t know what those terms mean?

NINA: If I can just add to that note of who’s actually building the product. I think a lot of the problem is about who’s making the decision about what a product or service is going to look like. And Emma, you’ve spoken about Progress Together. This idea of having a more diverse workforce in financial services that actually reflects the broader population. I think often about different financial exclusions. We haven’t talked about gambling, right? That was a shock to me when I moved to this country. The betting shops are everywhere. The number of people who’re at risk, or have terrible credit scores and can’t get a mortgage because they’ve gambling transactions in their bank accounts. They can find it really difficult to come back from that. Well, someone, I assume, at Monzo Bank had lived experience of that and built a feature where you could actually block gambling transactions. That’s now become ubiquitous across banks in the UK. I think often about same-sex couples who’re trying to get a loan for surrogacy or adoption. We often don’t think about these things if we’re not part of that community. If we had more same-sex couples working in banks who understood that, actually, it’s really hard to fund something when the NHS isn’t covering it and, for example, they just want to have a child. How’re we going to build that product for them? I’m very, very bullish on this idea of a more diverse workforce that can build better outcomes for everyone else.

PHILIPPA: OK. As you say, lots of work still to be done, but a great discussion to remind us all just how important financial inclusion is. Thank you everyone.

NINA: Thank you so much for having us.

MATT: Thank you.

EMMA: Thank you.

PHILIPPA: A final reminder. Everything you’ve heard on this podcast should not be regarded as financial advice. And whenever you invest, your capital is at risk.

Next time - how the pensions industry is trying to be a force for good in society. We’ll be talking about impact investing. What it is and which companies are leading the charge on the world’s greatest environmental and social issues. And Nina is cheering in the background. She’s a big fan.

Further ahead - we’re looking forward to seeing you at our live podcast recording on Thursday 4 May. It’s at White City Place in London. We’ll be talking about saving and whether your money’s better off in an ISA or a pension. We’ll be joined by special guests: Founder of Money to the Masses; Damien Fahy, Financial Expert and Host of The Conversation of Money Podcast; Peter Komolafe, and Consumer Editor of the Financial Times and Presenter of the Money Clinic Podcast; Claer Barrett. Don’t forget to sign up for your free ticket via the Eventbrite link in the episode description. In the meantime, please rate, review and share this episode, and subscribe on your podcast app so you never miss another one. Thanks for being with us.

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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Capital at risk

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1. Get a ^{_corporation_tax} tax boost, not a ^{_corporation_tax} markdown