The Buzz.

I feel a strong desire for change amongst my contemporaries, and can see people taking action everywhere. From my friends who buy second-hand clothes, to my family who have switched to a renewable energy supplier, to my colleague Emily, our Head of Talent, who created our generous new parent policy, an important feature of PensionBee’s wonderful approach to being a supportive and inclusive employer.

It’s scary to reflect on the challenges we currently face, such as dangerous levels of climate change and massive wage inequality, with less than half of the FTSE 100 companies paying a living wage. But the energy for change makes me hopeful and optimistic.

The Make My Money Matter (MMMM) Campaign, co-founded by the director of Love Actually, Richard Curtis, CBE, officially launched a couple of weeks ago. It aims to bring awareness to how changing the way a person’s pension is invested can increase their effectiveness in reducing their carbon footprint 27 times, compared to not flying and adopting a vegan diet combined.

The MMMM campaign has the potential to substantially increase consumer demand for more sustainable investments, and thereby redirect much of the trillions invested in the collective UK pension pot to address the challenges of today. The campaign is getting people’s attention, and Gary Lineker, former professional footballer and current sports broadcaster, tweeted to over 7 million followers about how he’s going to engage with his pension providers about how his money is invested.

The campaign aims to educate the public about how most pensions are currently invested; funding fossil fuel, controversial weapons and tobacco producers. It also suggests an alternative vision: for more of the collective pension pot to be invested sustainably, for example, to support clean energy producers, health care providers, and companies with strong records on human rights. MMMM believes that doing good with your money is profitable, ‘investing in businesses that treat their staff well, have a sustainable business model, and consider their impact on people and the planet will be smart investment decisions. There is also a growing body of evidence that shows sustainable pension funds are as profitable - if not more so - than default funds.’

MMMM empowers millions of people to contact their employers and pension funds, and provides digital tools to make this quick, easy and effective. Due to Auto-Enrolment, all employed people in the U.K. are assigned a pension, and so this is an action that almost everyone can take.

We’re proud to be one of the first pledge partners of the campaign, and excited to be involved along with a diverse range of partners such as Oxfam and Triodos Bank.

People are becoming more aware of how their pensions are invested, and our research shows that most want to balance making money with creating positive social outcomes.

The voices of savers are already driving meaningful progress, with our engaged customers leading us to drive the creation of the UK’s first mainstream fossil fuel free fund. After we learned about significant calls from customers for us to remove fossil fuels from their pensions, we initially investigated the market for a mainstream fossil fuel free fund, and found a dearth of suitable options. Therefore we shared our customer feedback with our money managers, who reacted positively to evidence of consumer demand, and Legal & General is currently building the first mainstream fossil fuel free fund. You can join the fossil fuel free pension, and be amongst the first to sign up.

PensionBee shares the MMMM campaign’s vision to live in a world where everyone can look forward to a happy retirement, to be able to enjoy good health in a safe environment, stable finances, and social inclusion. The pensions industry can achieve this using the combined power of many trillions in pension investments. It’s a huge task but there is movement towards this vision, and rapid change is possible.

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I feel blessed as I’m able to spend time speaking to our customers and learning about their rich and unique lives. These conversations help to uncover insights about pensions, more specifically what works for people, and what stands in their way and prevents them from enjoying the journey to a comfortable retirement.

At PensionBee, we think it’s important to amplify our customers’ voices, whether through the national media, industry press, or internally, so that we can help all of our customers achieve better pension experiences.

Looking back over 2020, I feel excited about how our customers have spoken out to a wide audience.

Here are three examples:

28-year-old Sarah is from Stockport and self-employed

The Financial Times recently featured our customer, Sarah, in an article about how pension savers are responding to the pandemic.

The pandemic motivated Sarah to save more. She saw friends being put on furlough and being made redundant, and felt that she should take advantage of the fortunate position she was in, as her company was doing well. “I decided that while I can, I should really pay more money into my pension,” The FT article reports.

Sarah talked to us about the role her family has played in inspiring her to save. She has selected her nephew, who was born last year, as a beneficiary, and her brother initially introduced her to PensionBee.

Her mother also plays a strong role, and has been encouraging Sarah to save into a pension since she was a teenager. Seeing how her mother’s saving decisions had impacted her also highlighted the importance of her pension, “She has to adjust to a lower standard of living in retirement. She didn’t think about her pension until her late thirties,” Sarah told me.

Sarah also described her experiences of increasing her contributions at PensionBee, “When I want to up the payments with PensionBee it’s straightforward. My short-term goal in the next 12-18 months is to up my contributions again. I put it to £280 a month, but my target is £300, because when I was playing around with the tools, that kind of seems like the best amount to be paying in, because that’s what I can afford. If I can do that, it seems like a good outlook for when I come to retirement age”.

Sarah’s story shows that pension providers can support customers by making it easy for them to contribute, and to update their contribution levels as their financial situation changes. Additionally, digital planning tools are effective in helping customers take control of their savings and better plan for retirement

Sarah is one of our many self-employed customers. Our analysis shows that the gender pension gap is least pronounced amongst self-employed customers, at 33%, compared to 38% for employed customers. This grows to 56% for employed women aged over 50, and only 35% for self-employed women in the same age bracket. The self-employed are completely responsible for their finances, and this insight suggests that empowering them with tools that make managing their pensions easy, can help to close the gender pensions gap.

^{_pension_age_from_2028}-year-old Frank is from Hampshire and retired

I spoke to Frank earlier this year, and he told me about his difficulties being able to access his money when he retired, and before he joined PensionBee, “I found it very difficult to get clear information, particularly on charges. Charges are often very complex. Investment charges, fund charges, charges every time you drawdown, and they seem to mount up. My providers insisted that you spoke to what they called their advisors, but when you spoke to them it turned out that they were Independent Financial Advisers. I was not interested in that. I was a chartered accountant by profession and I didn’t feel I needed to speak to them about how to budget and how much money I could spend.”

He also talked about the challenges he faced when trying to understand how much he had already saved, and generally interacting with his pension. “Their systems are just old fashioned. The presentation of it and the amount of information that is available. It is online but looks like something out of the 1980s. It’s on a PC, not an app or a phone. Normally with pension money you don’t look at it that often, so it wasn’t a problem not having it on a phone. Coming up to drawdown I was looking at it more frequently. That’s where PensionBee scores highly, the simplicity of it. The capability to just go ahead and put the funds across and get to drawdown, and the simplicity of the funding charges.”

This experience was shared nationally, in the Sunday Express, in a piece about how pensions are not serving the over-55s well, and Frank was quoted extensively, which helped to bring attention to this issue, and highlight what consumers need.

Findings from our survey of consumers earlier this year echoes the need for simplicity and a sense of control, and indicates that this encourages people to keep more of their money invested, with almost 6^{_personal_allowance_rate} of those who have considered taking their money out agreeing that if they knew they could access their pension easily, they would be more likely to leave it where it was. Almost 5^{_personal_allowance_rate} of those who have considered accessing their pensions say that having a phone app to see their balance and pay in would encourage them to keep their pension invested. Similarly, about 5^{_personal_allowance_rate} of those who considered accessing their pensions feel that taking money out means they would feel more in control of it.

Over 2020 we’ve seen customers respond to the pandemic by keeping more of their money invested. Only ^_basic_rate of our customers aged over 55 took money out in Q2 2020, compared to 33% during the same period last year. Similarly, only 24% took money out in Q3 2020, compared to 29% at the same time last year. This indicates that giving customers control of their money helps them to respond to changing financial circumstances, and make decisions that are better for them.

49-year-old Lester is from London and employed

Lester is switching into our new Fossil Fuel Free Plan, and recently shared his motivations for doing so. He is being driven by ethical as well as financial concerns, “The idea that I may be inadvertently funding companies that are not investing for the planet concerns me. Secondly, some of the environmentally sustainable funds could actually be good financial investments - some studies are showing that investing ethically could be a good move. I know that there are regulatory changes happening in that space, I know the market, in terms of consumers, is going to vote with its feet in terms of moving more towards these kinds of investments.”

It’s customers like Lester, speaking to us about their concerns with investing in fossil fuel producers, through phone calls and surveys, that gave us clear evidence of customer demand for a new mainstream Fossil Fuel Free Fund, which we’ve created in partnership with Legal & General. We found that a quarter of customers in our existing climate focused, Future World Plan, would prefer to divest from fossil fuel producers at the outset, rather than engaging with companies to drive more sustainable business practices through their existing plan.

We were given a customer mandate to act. We searched the market, and found a dearth of existing options, and that’s why we took our customer feedback to our money managers, who have now produced a new fund. This new plan will exclude companies that own proven or probable reserves of oil, gas or coal, as well as tobacco companies, manufacturers of controversial weapons and persistent violators of the UN Global Compact.

The asset management industry didn’t think there was demand for this type of investment product. Our customers have since shattered this belief by sharing their views on what kind of companies their money should be invested in, and choosing to drive positive environmental change with their pension.

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At PensionBee, I feel loved and can be myself. Our data suggests that my colleagues feel this way too, as we attract and retain diverse people. More than a third of my colleagues identify their racial or ethnic backgrounds as other than white, compared to only 13% across the UK. 53% identify as female and minority genders, compared to 51% nationally. 16% identify as LGBTQA+, compared to only 2.9% nationally.

Twice a year we run a survey to understand the personal characteristics of our colleagues, this helps us ensure that we are maintaining and furthering an inclusive environment. This is one example of how we use regular data analysis to further our goal for PensionBee to consistently be a workplace where everyone feels like they can succeed as themselves.

Championing diversity in the workplace

I am a Diversity Champion at PensionBee, along with four of my colleagues. In addition to our core roles, we drive initiatives to further a culture in which everyone can belong and thrive.

It’s sad to acknowledge that we live in a world where people are often scared about the prejudices they could experience for being who they really are. (Virtual) workplaces, where we spend a lot of our time, especially need to be spaces where people can flow freely, and feel loved and accepted. Research by McKinsey supports the idea that diverse workplaces make more profitable companies. Fostering inclusiveness is also a more just approach to running a business.

Historically, some money managers have asked companies for data that helps them assess progress towards gender equality, such as gender pay gap reporting, to enable them to make more socially responsible investments.

However, this isn’t enough. Money managers should also demand a fairer workplace for ethnic minorities. Just this summer, there was a petition with more than 120,000 signatures, calling on the government to make ethnicity pay gap reporting mandatory. The government is currently analysing responses to a consultation on this theme, and we await results with our fingers crossed.

Despite good initiatives, overall progress is too slow. Earlier this year, a government sponsored independent review of ethnic diversity on the boards of FTSE 100 companies found that almost ^_higher_rate of companies in the index have no ethnic minority director. We’re far away from a goal set in the 2017 review for all FTSE 100 companies to have at least one ethnic minority director by 2021.

Legal & General Investment Management is one of the first money managers to be taking action. In October 2020, they wrote to all companies in the FTSE 100 as well as the S&P 500, telling them that by January 2022, they are expected to have at least one director of black, Asian or other minority ethnic (BAME) origin in place, and companies who fail to meet this goal will be voted against.

Also in October 2020, the CBI launched a campaign called Change the Race Ratio, which seeks to accelerate racial diversity in businesses. One of the commitments they seek from signatory businesses is to create an inclusive culture, in which everyone can thrive, and one of the ways they encourage this is through fostering safe, open and transparent dialogue and another is to challenge conventional thinking.

Encouraging dialogue and challenging normative perceptions

At PensionBee, it’s important that everyone feels that they can succeed in the company as themselves.We have five core company values that frame everything we do at PensionBee, they are; love, quality, innovation, simplicity and honesty. Our most popular company value is love, and the diversity and inclusion initiatives of 2020 really highlight how much love there is at PensionBee.

The year was packed with cultural initiatives, led by various colleagues, which encourage dialogue and challenge normative perceptions. These included an LGBTQA+ bar where people shared personal stories, gender pension gap research to bring attention to inequality, and ‘about me’ presentations.

I was most involved with anti-racism initiatives over the past year. Here are five of my favourites:

1. A series of talks, led by colleagues

Themes included colonialism and homophobia in Jamaica, a history of anti-racism in Britain and contemporary racism in Latin America. Speakers were a range of colleagues, from people who’ve recently started their careers and are in their late teens and early 20s, to people who have been working for many years, many of whom were brave enough to share their own personal experiences of racism.

Talks were well attended, with 5^{_personal_allowance_rate} of colleagues joining some. This series was created as a response to feedback from colleagues, who requested educational sessions, and expressed a desire to share their own knowledge and experiences. We’ve had positive feedback about these talks, with one colleague, saying that leading a talk made her feel more of a sense of belonging at work. She spoke about her experiences of anti-semitism in Britain.

We uploaded this series onto our digital training platform which is accessible by all staff, and a mention of this series was also recently published by the trade press, allowing it to inspire others in the pensions industry to foster a sense of belonging through inclusion.

2. Poetry performances by colleagues

We have a weekly ‘Show&Tell’ session where all colleagues come together and present to each other. During Black History Month, we invited people to share creative performances, and two colleagues shared poems about anti-racism. One of the performers had only recently joined the company. Their performances were met by love heart emojis and a lot of applause, as we were blown away, I even had shivers!

Sharing that collective experience at work feels radical and transformative. We also published these poems on our blog. Creating a platform for people to share their talents and speak out about issues that are important to them is powerful.

3. Book club discussions

We have regular book club sessions at PensionBee.Our last session was a discussion about a brilliant book called, ‘When they Call you a Terrorist: A Black Lives Matter Memoir”, written by one of the co-founders of the Black Lives Matter movement. Many colleagues attended, including a PensionBee baby! We shared extracts from the book, and invited colleagues to discuss questions that we had formulated beforehand. During the session, colleagues shared their reactions to the extracts, as well as personal experiences that they were reminded of.

4. External speakers

We recently invited two external speakers to PensionBee. The first was the founder of Legal & General Investment Management’s Culture Club, an initiative to increase diversity and representation at the company and beyond.The second was a Black Lives Matter activist. Each spoke for about an hour, and took live questions from PensionBee. It was fascinating to hear two different perspectives, from different positions, in the struggle for diversity and inclusion. Colleagues commented that they valued these sessions and would like more in the future, we think that’s a great idea!

5. Submission to City of London Consultation on statues and historic landmarks

PensionBee has called for statues with links to slavery to be removed from the city of London, where our office is based. Our CEO, Romi, submitted a letter to the City of London Consultation on behalf of our team. Drafts of this letter were shared on Slack so that everyone could participate, share their feedback, and add their voice to the argument.

In the letter, PensionBee acknowledges that the financial sector is diverse and makes a significant contribution to the UK, and exists to make people’s lives better. But the City’s aim to ensure that everyone can thrive as themselves is being undermined by the presence of statues with links to slavery. PensionBee highlights how the City of London played a historic role in the transatlantic slave trade and represented the financial interests of slave owners. For example, it was at Guildhall, which is just a stone’s throw from our office, that an infamous court case ruled in favour of slavers who had deliberately drowned 133 Africans to claim insurance, and the Royal Exchange hosted a slave market.

Given this history, the presence of statues, buildings and street names with links to slavery impedes a sense of belonging to the people that live and work in the City. It’s disrespectful that people have to walk past these glorifications of oppressors on our way to and from work every day, a constant reminder of a traumatic history. In the letter, PensionBee strongly advocates for statues with links to slavery to be removed and placed in museums, and for decision making that leads to a City of London that’s a great place for everyone.

Colleagues celebrated this action, and commented that they want to continue advocating for change outside of PensionBee as well as making progress internally. The City of London closed submissions on 24 November, and we eagerly await a positive result!

We’re now near the end of the year, and shortly we’ll survey our colleagues to understand what they would like to see from the Diversity Champions in 2021. I know they’ll share great ideas and feedback, and we’ll have the honour of helping to make their visions come to life.

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In March, we ran our annual survey of customers in the Tailored Plan, our default plan, to learn more about the kinds of companies that they expect their money to be invested in, and what kind of action they want us to take on companies and industries with controversial business practices.

At PensionBee, we believe that sustainable business practices have a positive impact on long-term pension returns. Therefore we consider it important to regularly seek our customers’ views on how their pension, and the companies it invests in, should evolve in a changing world.

As usual, we received strong levels of engagement, with almost 1,700 respondents. We’ve published a summary of our findings on our website.

Here’s what we learned:

1. Customers believe that companies should treat their workers fairly

Respondents across all age groups and genders rank the treatment of workers in core business and supply chains as a number one priority for voting. Money managers often attend meetings with the companies they invest in and can force change by voting against management.

83% of respondents were clear that companies should pay the Living Wage, and most also want companies to publish their ethnicity and gender pay gaps. One female respondent, aged over 51, commented that companies in her pension should, “Pay people a decent and proper wage and ensure working conditions are adequate as well as their hours,” while one male respondent, aged 30 or under, commented, “Discrimination is a huge deal-breaker for me”.

We know that diversity is important to our customers: 76% of female respondents and 53% of male respondents expect diversity on boards and in senior management teams. Additionally, most customers (^{_state_pension_age}%) expect companies to have a level of diversity in their workforce that is representative of UK society.

2. Pension savers are concerned about the environment

76% of respondents support action on oil companies. The survey reveals changing views on engagement with oil companies, as only 1^{_personal_allowance_rate} of savers support this approach in 2021, less than half of those in 2020 (23%).

One female customer, aged 41-50, remarked that she wants to invest in companies that are “Fair and sustainable. It’s the only way business will offer long-term returns. Not interested in short-term returns”. Additionally, a male respondent, aged 41-50 commented, “Environment is very important to me so any business that is not doing anything to protect the environment is a no from me”.

3. Respondents don’t trust fast fashion

More than half of respondents agree with the view that fast fashion has a negative impact on society, including more than 8^{_personal_allowance_rate} of women aged 30 and under.

In comparison, most savers believe that big tech makes a positive contribution to society (59%), and only 8% believe that it makes a negative contribution. Savers are mostly neutral about nuclear energy (^{_additional_rate}) and many also believe that the sector makes a positive contribution (39%). When it comes to the meat and dairy industry, almost half of respondents (46%) believe it makes a positive impact.

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4. The coronavirus pandemic has increased customers’ motivation to save

Most respondents agree that the coronavirus pandemic has made them feel apprehensive about whether they will have enough money to retire, but also that they now feel more inspired to save and build up their pension. Women are slightly more likely to express both views.

5. Most respondents support action on irresponsible business practices

Just a minority of respondents express the view that pension providers should focus only on making a profit. One man, aged over 51, commented, “Despite all participation, sharing ideas, chasing ideals, the main goal must be to ensure, as much as possible, that investors can enjoy their retirement through the funds they have worked for all their lives and the money managers are handling on our behalf”.

At PensionBee, we regularly survey customers to make sure that our pension plans continue to be aligned with the changing investment expectations of savers. In survey feedback in 2020, many of you told us that you no longer wanted to be invested in oil, resulting in the launch of our Climate Plan.

We regularly share these insights with the wider world through the press to inform the debate on what kind of companies pension savers expect to invest in. We also have an excellent working relationship with our money managers, who manage trillions of pounds worth of investments all over the world, as well as PensionBee’s plans. We regularly share our customer insights with them to inform their thinking on stewardship, exclusions, and the changing sentiments of pension savers in the UK.

We believe that spreading awareness of your views will help nudge company leaders to adopt fairer and more sustainable practices.

If you have any thoughts you’d like to share, please email us at [email protected]. We’re very keen to hear from you!

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“If we don’t start to lever change with investments now, the breakdown of ecosystems and society will render investments worthless anyway,” PensionBee Fossil Fuel Free Plan customer.

At PensionBee, it’s our customers who lead on our product development. Over the last few years, many have become increasingly vocal about their desire to address some of the world’s biggest problems, such as climate change, through their investments. In 2020, customer survey feedback led to the creation of the Fossil Fuel Free Fund, a plan that excludes companies with proven or probable reserves of oil and gas, tobacco, and violators of the UN Global Compact. We run an annual survey to understand whether our plans continue to meet their investment expectations. In our most recent survey, Fossil Fuel Free Plan customers told us that they are happy with the plan, but do want us to go further with the exclusions. We took this data to our money managers and secured their agreement to broaden exclusions to companies that provide services to the fossil fuel sector.

A small group of customers also expressed a desire for a plan that only invests in companies that are addressing the world’s biggest social and environmental problems. A positive change or impact fund. We searched the market and found a range of potential options, though we struggled to find any that fully meet our customers’ needs. As just a small number of global companies meet the strict investment criteria requested by our customers, these pension plans can only typically be invested in around 30 to 60 handpicked companies. This level of risk is much more concentrated than PensionBee’s other existing plans, which tend to be invested in thousands of different companies. All plans of this type are actively managed, with a team of analysts picking stocks based on their understanding of impact and value. Actively managed plans tend to have higher costs.

Committed to our practice of always being led by our customers, we took the question to them about which of the four options they like best, as well as their views on the risk, cost, and exclusions. This research helped us understand more about what our customers expect from this type of plan.

Insights from the research include:

• Respondents are broadly aligned in feeling comfortable with taking on more concentrated investment risk as long as it delivers more positive outcomes. However, they also want to balance making a positive impact with securing their own financial futures.
• The most popular option was invested in the highest number of companies (40-60), whilst maintaining a relatively low level of concentration per company. Only up to 4% of the plan can be invested in one company. On the other hand, the least popular option can be invested up to 1^{_personal_allowance_rate} in one company and is only invested in 25 to 50 companies.
• Customers also commented on exclusion criteria, supporting the plan with the highest level of all the options. Respondents believed that plan to be more environmentally focused; as the only plan option that explicitly excluded deforestation, a major cause of climate change (1).

Full survey results are available here.

Our findings suggest that the current options on offer in the market don’t fully meet customer needs. Whilst customers are happy to take more risks to drive more positive change, the default plan is invested in the highest number of companies. Respondents also want to balance their financial futures with investing for good. We want to explore the market to find a plan that has hundreds or thousands of companies but with more stringent exclusions and a focus on impact. Stringent exclusion criteria were praised by respondents, so we want to see if such criteria can be combined with a higher number of holdings in a more diverse range of companies. This, we believe would be a better way to manage risk and cost, whilst meeting customer preferences around exclusions.

Our next steps are to deepen our research to work out how we can best meet our customer needs and build a pension that enables a comfortable retirement whilst going further in creating the kind of world in which savers can enjoy retiring. This includes conducting in-depth customer interviews and focus groups. These findings will also help us continue our talks with money managers and to explore the potential to create a new type of plan. This plan would remove sectors of concern and focus on impact, but without taking on so much concentrated risk. In an era where it’s difficult to separate the greenwash from the genuine, we strongly believe that our customers are leading the way to a transformative and responsible investment system. We’ll keep working very hard to make their approach to investing the future.

If you have any thoughts you’d like to share, please email us at [email protected]. We’re very keen to hear from you!

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I have the immense privilege of working in an environment with people who champion equality, and recognise that women have been disadvantaged by our socio-economic structures for too long.

My colleagues, of whom half are women - with ^{_pension_age_from_2028}% representation at board level - consistently take action to drive forward this equality. PensionBee is unusually diverse compared to the rest of the Technology industry, where 8^{_personal_allowance_rate} of workers are male, and women hold only 5% of leadership positions.

We believe that everyone benefits from gender equality, and our CTO, Jonathan Lister Parsons, alongside our CEO, Romi Savova are huge advocates for this. This makes coming to work incredibly meaningful, and is why, when I think of my workplace, feminism comes to mind.

But when I say we embrace feminism at PensionBee, what do I really mean? Well, recently we’ve learnt and focused on four main business areas.

Including women’s data

Most of the world is designed using men’s data, from medicines to cars, to the retirement savings system, men’s needs and preferences have shaped the world around us. However, this needs to change so women can enjoy better lives and happy retirements.

Last year, PensionBee started working with specialist diversity and inclusion communications consultancy, More Diverse Voices, on consumer workshops. We delved deep into women’s experiences to understand barriers to saving for retirement through focus groups, individual interviews, and surveys. We invited female customers and non-customers to help us reimagine the pension system for women.

We know it’s not enough to simply collect women’s data, organisations need to use it too. Diverse teams, along with data, can ensure that products and services are inclusive and consumers don’t suffer from the blind spots of biased teams. That’s why this project has influenced product and marketing ideas that we’re planning to take forward into this year and beyond.

Data-driven, internal policies that promote equality are fundamental to growing diverse teams. For example, PensionBee offers gender-inclusive paid leave to all new parents. Research supports that this can make a huge impact in eliminating the gender pension gap by encouraging men and women to share childcare and unpaid work equally from the very beginning, giving women more space to participate in paid work and continue their careers.

Embracing intersectionality

To build truly inclusive products, organisations should look beyond data about gender. PensionBee’s Senior Finance Manager, Ginola lead a talk during Black History Month, in which she advocated for embracing intersectionality, a lens for seeing the way in which various forms of inequality often operate together and exacerbate each other.

At PensionBee, we’re blessed to work with colleagues that strongly believe in social inclusion and who strive to build it, both within the pensions industry and beyond. We have 51% representation of women, while ^_higher_rate of the PensionBee team self-identify as belonging to a minority ethnic group, on par with representation in London, which at the last census, was the most ethnically diverse region in England and Wales. When it comes to socio-economic backgrounds, 31% of our colleagues were eligible for free school meals, compared to ^_ni_rate of the UK population.

Building and maintaining diversity, in addition to bringing an intersectional lens to our data analysis, is a central point in our mission to become even more inclusive as a pension provider.

Engaging with the industry and regulators

In order to increase the impact of our work so far, we chose to engage with two Financial Conduct Authority Consultations which looked at diversity and inclusion in the financial sector and within listed companies.

Our asks for the regulator included setting more ambitious targets, defining diversity through personal characteristics (such as gender, race, and sexual orientation) rather than personality type and thinking styles, and requiring firms to disclose company-wide data annually through the Workforce Disclosure Initiative (WDI). The WDI questionnaire is the most detailed and comprehensive measurement that currently exists and can expedite progress if all firms complete the survey, particularly if they publish responses on their websites and in their annual reports. This can demonstrate progress over time, and enable stakeholders to hold firms accountable.

With a desire to learn from our peers, we also brought our ideas to various networks such as the Diversity Project, The Social Mobility Commission, and the Fintech Delivery Panel.

Creating dialogues and safe spaces

One of the ongoing initiatives we’re most proud of is our ‘PensionBee Speaks’ series, which provides the opportunity for colleagues, or friends of PensionBee, to lead talks on issues that are close to their hearts and simultaneously raise awareness around the topic. These have included anti-racist and anti-sexist hiring, the body positivity movement, and campaigning for abortion rights in Ireland’s historic 2018 referendum.

By empowering employees to speak up, we’re collectively building PensionBee’s culture, rather than pressuring colleagues to conform to a dominant culture set by the board. Not only does this give our team a greater sense of ownership of our workplace, but it also shapes and influences the direction of our company.

I have a conviction that, despite setbacks, quiet revolutions are happening throughout the world, and collectively we’re moving closer to a world where girls and women can enjoy equal levels of agency and advantage as men. There is much more work to be done, and I look forward to playing my small part, along with my colleagues at PensionBee, where we’ll work even harder to make UK pensions simple and inclusive of all.

We believe that everyone benefits from gender equality. Find out how we’re striving to ensure that we build equality into the heart of our workplace.

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The new Consumer Duty regulation expects businesses to understand their customers. Companies must design product features in a way that helps people.

The User Experience (UX) field contains researchers, designers, product managers and marketers. These professionals focus on improving lives through data-led empathetic design. In other words, outcomes one and three of the new Consumer Duty.

I recently shared my experiences as a UX researcher when Quietroom invited me to speak at their excellent event about pension communications.

Here are my top three tips for making an impact with your research.

Share little and often

Have you ever worried that nobody appears to be reading your research reports? This is a common worry among researchers. Luckily, there’s an easy, though not obvious, solution. To build engagement with your colleagues, involve them from the beginning. Speak to people from across the business.

Ask questions, such as:

• what do they want to learn about customers?
• what are they trying to achieve through their day-to-day work?; and
• what do they believe about customer needs?

Share results as they come in. Don’t wait until you’ve finished the project.

You can bring your colleagues along with you on the learning journey by sharing:

• interview clips;
• survey results;
• external study insights;
• analytics trends; and
• anything else that you learn.

I share research insights on a weekly basis. This ongoing process helps colleagues learn as I learn. This can help them make decisions based on recent insights.

The world is always changing. Sharing insights little and often helps keep everyone informed about changing consumer needs.

Let them hear it from the customer

The power of a < two-minute customer clip is amazing. Even better if accompanied by some supporting stats. I often see colleagues have ‘lightbulb moments’ when watching a clip.

We come to work to make the lives of our customers better in some way. At PensionBee, we focus on making pensions easy. Your workplace most likely focuses on another consumer need.

You might feel at some distance from the people whose lives you’re impacting with your work. Watching customers talk about their experiences can help centre the focus on them.

You can connect with their ways of seeing the world, their pain points, and their hopes for the future.

I show a customer clip when I have a captive audience. This includes:

• all-company weekly Show ‘n’ Tell;
• researcher-led presentation sessions;
• team innovation hour; and
• more where relevant.

This builds customer knowledge across the company little and often.

Treat underrepresented people with care

Diversity in research samples is crucial. We must also take care not to link specific outcomes to inherent characteristics.

For instance, being a woman doesn’t have to mean you’re more likely to have lower pay than men. It doesn’t have to mean that you’re more likely to have a smaller pension pot.

Instead, pay and pension gaps often result from women taking on more unpaid care work. Policies like maternity leave tend to nudge parents into unequal sharing of responsibilities. Women in heterosexual couples are often less able to take part in paid work. This leads to less money, savings, and smaller pension pots.

Social and economic factors impact individuals in different ways based on their characteristics. As Judith Butler noted, gender is a cultural construct, not a product of nature.

As a society, we often make decisions that impact other people’s lives. We create policies, expectations, and products based on our beliefs. Too often, we exclude people from accessing the resources they need. We do this by accident or on purpose. Empathy and research allow us to get closer to ‘seeing’ people as they are, and not through the ideas we already have.

Interpret results from surveys, interviews, or other research methods with care for context. Think about the world around the people you’re learning about. How might it influence the way they behave or the outcomes they have? What pressures do they face that others don’t? Think about your own biases and blind spots. How might this be affecting what you learn and share about people you’re researching?

Human experiences are fascinating. Bring love and care of your fellow humans to your research. Bring your colleagues on the learning journey with you. In this way, you’ll make a positive impact as a researcher.

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There’s no limit to the number of pensions you can have. However, there are annual and lifetime limits on the amount you can pay into your pensions while claiming tax relief; £40,000 and ^{_lump_sum_death_benefits_allowance}, respectively (for the 2020/21 tax year). These limits may vary based on your circumstances.

How many personal pensions can you have?

A personal pension is a type of pension you can set up yourself, and is common amongst the self-employed. Personal pensions include the Self Invested Personal Pension (SIPP).

There’s no limit to the number of personal pensions you can set up, and you can pay into more than one personal pension at a time.

How many workplace pensions can you have?

A workplace pension is a type of pension set up by your employer. Since employers have been required to automatically enrol their employees into a workplace pension from 2018, the number of workplace pensions people are picking up during their working careers is increasing.

You can belong to more than one employer’s workplace pension scheme. If you work more than one job, each of your employers will have to check whether you’re eligible to join their workplace pension scheme. If you’re eligible, you’ll be enrolled into a workplace pension with them. You can opt out of your workplace pension scheme, and request to opt in if you weren’t automatically enrolled.
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How many stakeholder pensions can you have?

A stakeholder pension is a type of pension that can be set up by anyone, for themselves or others. It was introduced primarily for those who may not meet the criteria of other pension schemes, such as those on low incomes and the self-employed.

There’s no limit to the number of stakeholder pensions you can have, and you can pay into more than one stakeholder pension at a time.

How much can you pay into a pension while receiving tax relief?

So long as you’re an eligible tax payer, the government will grant tax relief on pension contributions. This can work as a tax refund or a tax top-up, depending on how you make your contributions. In either case, the government effectively contributes extra towards your pension. But they’ll only do so up to a certain point, so it’s best to keep this in mind.

Annual pension allowance

The annual pension allowance is the maximum amount you can pay into a pension each year while claiming tax relief. For the tax year 2020/21, you can pay in up to £40,000 or 10^{_personal_allowance_rate} of your salary (whichever is lower). It applies to all types of pension.

However, this limit changes if you have a low salary or have already started drawing down from your pension.

To learn more about the annual pension allowance, read How much can I pay into a pension each year?

Lifetime pension allowance

The lifetime pension allowance is the maximum amount you can receive from a pension without having to pay a tax penalty. Therefore, it’s not advised to pay more than that amount into a pension during your lifetime.

For the tax year 2020/21, the lifetime pension allowance is ^{_lump_sum_death_benefits_allowance}. It applies to all forms of pension.

What are the downsides of having more than one pension?

If you have more than one job during your lifetime, it’s almost inevitable that you’ll have more than one pension due to new auto-enrollment rules. But while it may feel like having lots of pensions is a good thing, there are significant downsides:

• You may end up paying more in fees than you should, since fees can range wildly between providers.
• Every pension plan has a different investment strategy, so having multiple pensions could dilute the overall effectiveness of each pension.
• Managing and tracking the performance of multiple pensions is inefficient and time consuming, and you may lose track of older pensions as time goes on.

Should you combine multiple pensions into one?

It’s simpler to manage one pension, fees are more transparent, and you’ll be able to choose a pension plan that’s most suited for your goals. However, you’ll first want to check your existing pensions to see if you’d lose any benefits if you transferred them to another provider.

PensionBee allows you to combine your old pensions into one simple and effective plan. You’ll be able to easily manage your pension through the secure app, and our single annual fee keeps costs simple. It’s also free to make withdrawals, unless you drawdown everything within 12 months in which case a full withdrawal fee of £150 will apply.

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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Wealth inequality in the UK is broad and varied. It affects what people earn today, and also what they’ll earn from their pension in retirement.

There are lots of ways to look at wealth disparity, such as the difference in wealth between age, gender and ethnicity.

In this article, we highlight some of the causes of wealth inequality and the measures you can take to best position yourself to receive a good retirement income. However, we fully acknowledge that these are complex topics and we don’t have all the answers. A larger effort from industry and government is required to eliminate these inequalities for good.

How your age affects your future pension income

In the 1960s, the most common company pension was the defined benefit scheme. Also known as the ‘final salary pension’, these schemes were considered generous as the amount paid out during retirement was calculated based on the number of years an employee worked at the company and their salary during that time.

But defined benefit pensions were expensive for companies to run. And after the UK Government introduced the Social Security Act in 1986, which relaxed workplace pension rules, the 1990s saw companies shift towards much more affordable defined contribution pension schemes (which most people pay into today via workplace and personal pensions).

In most cases, the change saved companies a lot of money, but resulted in most employees receiving less into their pension each year.

Not every employee was affected. Often people over a certain age were allowed to keep their defined benefit pension, while younger and new employees weren’t.

In less than a decade, the burden of most people’s pension contributions was moved from the employer to the employee. Today, just over 1 million people are actively contributing to a Defined Benefit pension - down from 8 million people in the 1960s.

The below chart shows the expected annual retirement income of two people retiring at 65, who both earned an average salary of £30,000 for 45 years. The only difference is that one had a defined benefit pension and the other had a defined contribution pension while they were working.(1)

The difference is stark. After working for 45 years, the person with the defined contribution pension could receive £12,700 less each year. And that’s after contributing 4% of their income into their pension as a gross contribution for 45 years, which the other person didn’t have to do.

Even if the person with the defined contribution pension contributed 1^{_personal_allowance_rate} of their income into their pension each year, they’d still receive £300 less than the person with the defined benefit pension.

So what’s this got to do with wealth inequality?

Generations that worked through the 1960s, 70s, and 80s (the Silent Generation and the Baby Boomers) are much more likely to have had defined benefit pensions, and therefore retire with a good pension income. But younger generations that entered the workforce since the 1990s (Gen X, Millennials and Gen Z) are likely to retire with less than a quarter of that income.

Is the wealth gap widening between the generations? The pension gap along with the rise of house prices and student fees certainly isn’t helping.

What you can do about it

Don’t let the generational wealth gap put you off from making the most of your pension.

Defined benefit pensions are a rare find, these days. But some companies do still offer them, particularly in the public sector. But if you’re more interested in following a career path where companies are more likely to offer defined contribution pensions, consider following these tips:

1. Start paying into your pension early. The earlier you start, the more quickly your money is likely to grow in real terms, thanks to compound interest.
2. Pay in as much as you can afford. The more you pay in now, the more your pension pot is likely to be worth when you retire.
3. Pay in lump sums if and when you can. Occasionally, you might receive money from a pay rise or inheritance. By paying that money into your pension, you’ll be helping future you.
4. Find an employer that has a generous pension scheme. Not all defined contribution pensions are the same. Employers are required to contribute at least 3% of your qualifying earnings, but some employers pay much more.
5. Adjust your contributions if you go on maternity or paternity leave. If your monthly income decreases, consider increasing the percentage of your income you pay into your pension so you don’t fall behind.

Despite defined contribution pensions being less generous than their predecessors, it’s still possible to retire with a healthy pension income. See our article, How you could build a million pound pension.

How your gender affects your future pension income

Women in full-time work are paid 7.4% less than men, on average. And when it comes to pensions, the difference is even more pronounced - we analysed our own customer data in March 2021, and found that the average pension pot for women was around ^_higher_rate less than men.

For both income and pensions, the gap widens as people get older. And there seems to be a range of factors at play.

If you’re paid less, you’re likely to save less. Thanks to the introduction of Auto-Enrolment in 2012, more people are paying into a pension. But the amount people are able to contribute is dependent on what’s left over after other essential costs. While women might not be immediately affected by paying less into their pension, their long-term finances are likely to suffer as they’ll receive a smaller retirement income. And this can impact more than just finances, but their freedom of independence too.

Historically, women have been more likely to take time out of work to raise children. Traditional gender roles and few companies offering adequate paternity leave have likely contributed to this. While there have been positive developments in parental leave, a mother’s earnings will drop during the months they’re at home. With the added financial pressure of caring for a child, women are therefore much less likely to be able to keep their pension contributions at the same level during this period.

Returning to work after maternity leave can also limit a woman’s earning potential. Some may find they’ve been overlooked for a promotion, or learn that their colleagues’ salaries have increased while theirs hasn’t. And while some women may look for a more flexible or part-time working arrangement, most employers aren’t set up for this, limiting the options available for mothers heading back to work.

All this can drastically impact women’s income, both today and in the future when they retire.

What you can do about it

The gender pay gap appears to be narrowing, but the rate of change isn’t fast enough to fix itself anytime soon. Here are some tips that both women and men can consider to help them retire with a good pension.

1. Don’t opt out of your workplace pension. Despite the introduction of Auto-Enrolment, it’s still possible to opt out from paying into your pension. But to do so would be to turn down free money. Not only will your employer pay 3% of your qualifying earnings into your pension, the government will usually top up your contributions too in the form of tax relief.
2. Start saving early. This will give your pension more time to grow. And thanks to compounding returns, it should grow by a slightly faster amount each year.
3. Adjust your pension contributions during parental leave. Most people will contribute a percentage of their income each month. But if your income goes down, the amount you pay in will be smaller too. So consider increasing your contribution percentage to keep your contributions at the same level (you can always lower it again when you return to work).
4. Contribute to your partner’s pension. If you or your partner take time off work to raise a child, the other might consider using part of their income to pay into their partner’s pension. This will prevent the person raising the child (traditionally, the mother) from experiencing a severe dip in pension contributions, and later receiving a smaller pension than their partner.
5. Share caring responsibilities. Our Gender Pay Gap Report shows that if men took responsibility for an equal share of unpaid care work, women could increase their pots by more than £106,000, and the gap would be eradicated.
6. Register for Child Benefit if you have children. To receive the full State Pension, you’ll need to have paid National Insurance for 35 years. If you take time off work to raise a child, you can claim National Insurance Credits which will count towards your State Pension entitlement.
7. Combine any old pensions into one. If you’ve had more than one job, you might have more than one pension. And because fees differ so much between providers, you might find yourself paying more than you need. Combining them into one plan could reduce costs, and you’ll find it much easier to manage too.

The pension gap is a big and important topic. For more details, read the PensionBee Gender Pay Gap Report.

How your ethnicity affects your future pension income

Is there a racial wealth gap? According to the Department for Work and Pensions (DWP), pensioners of non-white backgrounds received less income from both occupational pensions and the State Pension than their white counterparts.

Another report from the DWP showed that a higher percentage of people from non-white backgrounds were likely to fall into the lowest income group (earning less than £9,200 per year after housing costs).

It’s harder to put money aside into a pension when you have less income to work with. And if, for example, you need to spend time at home to raise children (perhaps because you can’t afford child care) or an elderly relative, your work opportunities will be limited.

The rate of unemployment is higher amongst ethnic minorities, and those who do work may find their annual income is below the threshold required to qualify for Auto-Enrolment (^{_money_purchase_annual_allowance} for the year 2020-2021). People earning less than this - perhaps those in part-time work, for example - would need to voluntarily opt-in to their workplace pension scheme. But if you’re not familiar with the UK pension system, or your first language isn’t English, you’re far less likely to be aware of your options.

Finally, to qualify for the State Pension, a person will need to have paid National Insurance for at least 10 years. To receive the full State Pension, they must pay in for 35 years or more. But as many ethnic minorities will be first generation immigrants, they might not have accrued the necessary contributions to qualify.

What you can do about it

The challenges facing people from ethnic minority backgrounds are diverse, but there are a number of things you could try that might help improve your pension situation.

1. Speak to your employer about your pension options. The first step towards a happy retirement is to engage with your pension. If you don’t have one, or you’re not sure, ask your employer directly. If you earn more than ^{_money_purchase_annual_allowance} a year, and are aged over 22, you should have been automatically enrolled into their pension scheme. But your employer should be able to explain all your options.
2. Ask on behalf of a relative. If you live with someone who doesn’t speak English as their first language, you can speak with their employer on their behalf. The employer should be willing to speak with you, with your relative’s permission.
3. Contribute what you can afford. If you’re on a good salary, you might have more disposable income to put towards your pension. But if you’re on a lower income, you’ll need to balance what you can afford to put into your pension with your daily living expenses. The earlier you start, the more your retirement income will be, so don’t delay.
4. Check your National Insurance Contribution record. To receive the State Pension, you’ll need to have paid National Insurance for at least 10 years. To receive the full amount, this rises to 35 years. You can check your status on the Gov.uk website.
5. Apply for National Insurance Credits. If you receive benefits because you’re too ill to work or you’re otherwise unemployed, you might be able to claim National Insurance Credits. These credits will count towards your State Pension entitlement.

(1) Defined contribution income calculated using our pension calculator, assuming employee and employer both contributed 4% of employee income, and pension drawdown was fully used up in equal annual amounts by age 85. Defined benefit income calculated using https://www.which.co.uk/money/pensions-and-retirement/company-pensions/defined-benefit-and-final-salary-pensions-ajvnw4q07rlm
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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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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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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.

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.

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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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 [email protected] or let us know on social media.

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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.

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 [email protected] or let us know on social media.

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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 [email protected].

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

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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

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

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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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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.

Risk warning

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

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This article was last updated on 24/10/2024

Friendships are a cornerstone of our lives. They provide us with support, laughter, and a sense of belonging. But what happens when money enters the equation? The truth is, friendships can become surprisingly complex when friends have different financial priorities. Here’s some practical tips for nurturing your friendships without breaking the bank.

The awkwardness of money talk

Psychologist and Associate Fellow of The British Psychological Society; Dr. Tara Quinn-Cirillo says: “How does your body and your mind respond when you’re under stress? So that can be stress around money, gifting or going away for the weekend. If you recognise how it shows up, that will help you to know when there’s a problem.”

Let’s face it, talking about money can be uncomfortable. According to Intuit’s Prosperity Index Study, Gen Z would rather talk about politics, parenting struggles, sex and infertility rather than debt, their salaries and bad investments.

Avoiding financial conversations may create tension in friendships. But discussing money matters goes beyond breaking the ice, it can have a significant impact on your financial health as well. The Money and Pensions Service (MaPS) says talking about money can help people make better, less risky decisions about their finances.

Tips for talking to friends about money

Head of Brand and Communications at PensionBee; Brooke Day says: “I’m naturally a bit of a people pleaser. Especially in my 20s, I’d feel like if I say ‘no’ to this, I’m not going to be invited again. They’re never going to speak to me again. They’re going to think I’m the worst person.”

When it comes to dealing with money and maintaining friendships, the key is open communication. Talk about your budgets, how much you’re comfortable spending, and suggest alternative activities that everyone can enjoy without feeling left out.

This could be a potluck dinner, game nights, or free outdoor activities. Feel like you’re paying a premium to keep up with your friend’s lavish lifestyle? You can use apps like Splitwise to track group spending and make sure group expenses are divided fairly.

When you’re the wealthier friend

Being the friend with more money can also be challenging. In fact, a LifeSearch survey found that wealthier Britons are more likely to end friendships, with 56% of the highest earners dropping an average of seven friends during 2020 and 2021.

It’s easy to assume that those with the most money also are the most financially healthy. However, this assumption fails to consider the many factors that can influence one’s true financial wellbeing.

The truth is that financial income doesn’t necessarily equate to disposable income. Just because someone earns a lot of money doesn’t mean they have the freedom to spend it as they please. They may have other financial responsibilities that take precedence, such as saving for their retirement or supporting their loved ones.

While it’s natural to want to treat your friends from time to time, always paying for others can lead to resentment. It’s important to set healthy boundaries and be considerate of everyone’s budgets - including your own.
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Tips for making lifelong friends

Co-Founder of Millennial Money UK; Niaz Azad says: “It depends on the friendship you have with people. I’ve been reconnecting with friends from my childhood. That’s a pre-status, pre-wealth bond that you have and none of us care what we’re doing.”

Friendships change as we grow older, and money is one of many things that can affect how long they last. Other factors such as health, work schedules, and life goals can also play a part. Here’s how to focus on the things that truly matter.

• Focus on experiences, not spending - instead of focusing on expensive outings, prioritise making memories together. Engaging in meaningful conversations over coffee can often be more fulfilling than going out for a fancy dinner.
• True friendship isn’t about money - don’t judge friendships by how much you spend when together. Find happiness in shared hobbies, emotional support, and enjoying each other’s company.
• Know when to let go - when money becomes a recurring source of conflict or stress within a friendship, it might be worth considering whether the relationship is still right for you. It’s okay to reassess and make decisions that prioritise your overall well being.

Transitioning through different life stages

As time goes on, differences in financial situations between friends can become more noticeable. Milestones like buying a home, going on holidays, or starting a family can highlight these gaps.

Sometimes it’s the unexpected that creates an emotional distance between friends. Events such as losing a job, going through a divorce, or receiving an inheritance, can change your financial situation and priorities.

It’s important to remember that each person’s journey is unique, and these transitions can bring about changes in our relationships. However, understanding and empathy can help maintain strong bonds, even as our life circumstances evolve.

Summary

Friendships improve our lives in countless ways. While money can sometimes add complexity, focusing on shared values can help friendships weather financial storms.

Here are five key takeaways on how to talk to friends about money.

• Push past the awkwardness - however awkward the conversation might feel, it’s better to be open than create tension with friends or have your own financial health take a hit.
• Being the wealthier friend - it’s important to set healthy boundaries and be considerate of everyone’s budgets, including your own. Always paying for everything may lead to resentment.
• Focus on experiences, not spending - prioritise making memories together rather than focusing on expensive outings.
• Know when to let go - it’s OK to reassess friendships that no longer bring you happiness. Financial behaviour can reveal differing priorities or values. If money becomes a source of strife, it may be the right time to question whether you’re still compatible.
• Engage in open communication - discuss budgets, spending limits, and suggest alternative activities that everyone can enjoy without feeling left out.

Listen to episode 27 of The Pension Confident Podcast and hear from our panel of expert financial guests as they discuss their experiences of talking about money with friends. You can also watch the episode on YouTube or read the transcript.

Risk warning

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

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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.

Risk warning

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

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For 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.

Risk warning

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

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

Source: BBC Market Data

PensionBee’s equity plans

^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.

Source: Morningstar

PensionBee’s fixed-income plans

PensionBee’s money market plans

Have a question? Get in touch!

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

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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