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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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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E21: Why don’t women invest? With Ayesha Ofori, Anna-Sophie Hartvigsen and Lara Oyesanya FRSA

The Pension Confident Podcast

PensionBee Content

30 Oct 2023

minute read

Oct 2023

Money Matters

Women and Finance

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

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

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

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

AYESHA: Hi, thanks for having me.

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

ANNA: Hi, happy to be here.

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

LARA: Hello.

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

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

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

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

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

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

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

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

THE FINANCIAL BARRIERS WOMEN FACE

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

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

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

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

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

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

AYESHA: It’s a bit of a combination of both. So, I’d say historically, one could argue that it was the case that women had less because of the gender pay gap. Because women often take time out to be carers, become mothers or care for elderly relatives, for example. And so if women are working for a smaller period of time and earning less, then you could say that they have less money at their disposal to actually invest. But if you look at the data, and depending on where you go, the stats are indicating, particularly in the UK, that women’s wealth is increasing. Some say that by 2025, 6^{_personal_allowance_rate} of UK wealth is going to be controlled by women, which is absolutely fantastic. But if that money is being saved and not invested, then that’s a problem.

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

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

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

PHILIPPA: So you can get at it?

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

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

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

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

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

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

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

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

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

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

HOW DO WE GET WOMEN TO INVEST?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

PHILIPPA: It feels quite daunting.

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

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

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

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

LARA: Me neither!

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

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

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

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

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

PHILIPPA: And what did you start with?

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

PHILIPPA: Residential property or commercial property?

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

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

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

PHILIPPA: So it was a good time?

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

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

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

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

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

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

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

AYESHA: And you can’t predict.

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

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

PHILIPPA: Got it. Lara?

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

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

PHILIPPA: Education?

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

PHILIPPA: How much are you giving her?

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

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

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

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

AYESHA: Around £4,800.

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

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

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

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

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

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

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

Thanks for listening.

Risk warning

‍

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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