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Six ways to manage your money and your mental health

Financial worries and mental health are intrinsically linked. Find out how to look after your money and your wellbeing with these six tips.

This article was last updated on 19/12/2024

Managing your personal finances can often come with many challenges, from making sure you have enough to pay for household bills and all your monthly expenses, to deciding how and when to save for the future.

With so much to think about when it comes to money, it’s no wonder that finances and mental health are intrinsically linked.

Founder of Psychreg; Dennis Relojo-Howell says: “When we’re thinking about money worries, there is a lack of realisation that there is a mental health aspect to it.”

A survey by Money and Mental Health found 86% of people said their financial situation had made their mental health problems worse. And 72% said their mental health problems had made their financial situation worse.

In England alone over 1.5 million people are experiencing problem debt (meaning they’re in debt and unable to afford their repayments), and are suffering with mental health problems.

If you feel like you’re struggling, it’s important to remember that you aren’t alone and there’s help out there. The key thing to do is seek support if you start to notice that your mental health is deteriorating, whether that’s because of your financial situation or for other reasons.

If managing your money feels overwhelming, try taking things one step at a time - mental health charity Mind have shared a list of six ways to manage your money and mental health to help you get started.

1. Check if you’re eligible for any extra money or support

It can be difficult for many of us to navigate the benefits system, it’s complex and lengthy and in addition, many still feel there’s a terrible stigma attached to claiming benefits. This is due to the media’s portrayal and various misconceptions about why benefits are needed and what they’re used for. Even if you’re unsure whether you’re entitled to any support, you should never be afraid to check. The charity Turn2Us helps individuals access benefits, should you need some advice with what you’re entitled to and how to claim anything if you are.

2. Speak to someone you trust

Talking to someone you trust and sharing your concerns is often the first step to getting help when it comes to your mental health and wellbeing, and the same goes for money and mental health problems. This could be a loved one, a support worker or healthcare professional, like your GP. Ask someone you trust to check in on you from time to time, and do the same for them. Even when people seem well and don’t appear to be struggling, it never hurts to ask if they’re ok. If you’re unsure of who to talk to, there are lots of options - the Money and Mental Health website lists organisations that can help with money advice and further support services can be found on the Mind website.

COO at PensionBee and Mental Health First Aider; Tess Nicholson says: “The most important thing is to talk to somebody - whether that is the company that has sent you the bill or speaking to someone that can help with government support, or speaking to someone in your family.”

3. Get to know your money and mood patterns

You might find it helpful to take some time to think about how you feel about money and why. A good way to do this is to keep a diary and record how much you spend, and what on, as well as detailing how you felt before and afterwards. Looking back over your diary might help you understand your spending habits and patterns which could help when it comes to budgeting and planning for the future. The Money and Mental Health website has a budget planner that could provide you with a good starting point.

4. Change how you manage your finances

Overspending can happen for different reasons, and when you’re unwell you might spend more money than you want or can afford to, to make yourself feel better. But there are things you can do to try and curb overspending. This could be deleting shopping apps, making sure your card details aren’t saved on your devices and shopping websites, or giving your cards to someone you trust. Take a look at Money Saving Expert‘s wealth of tips to help with your overspending.

5. Make a list of monthly essentials

This could be things like rent or mortgage payments, energy bills, phone bills and food shops. It’s more important than ever to keep on top of paying your bills as the cost of living crisis in the UK worsens. With this in mind, it might be helpful to put all your important documents such as bank statements, bills and payslips in one place so you can easily access them when needed. You could also set aside a regular time each week or month to complete your financial tasks, like paying bills, and encourage yourself to stick to this by planning a relaxing activity after.

CCO at FSCS; Lila Pleban says: “Really look at your situation, and talk to somebody. Sometimes when you know the situation you’re in, it may not be as bad as you think it is. It may be, but at least you know.”

6. Seek professional help for managing any debts

If you’re struggling to pay off your debts, consider asking for help from a free professional debt advice organisation, such as National Debtline, StepChange or Citizens Advice. They can help you get a break from paying interest on your debts under a Government scheme called Breathing Space. You can access Breathing Space online, over the phone, or face-to-face and they’ll provide mental health support, as well as helping you look at your financial situation to see what solutions are available to you.

CCO at FSCS; Lila Pleban says: “Whether it’s your fuel bill, your telephone bill, if it’s your Sky bill, whatever bill it is, it’s important to talk to them, because many big corporations have charitable arms that can help out, some of them have grants available and often they have payment plans or cheaper tariffs.”

If you’re struggling right now and need to talk to someone, reach out to the SAMARITANS on 116 123 - they’re open 24 hours a day, 365 days a year.

You can also text the word SHOUT to 85258 to speak to a volunteer from Mental Health Innovations anonymously.

If you’re concerned about yourself, or somebody else, and you feel the situation is an emergency, then always call 999 to get immediate help. Or, alternatively call 111 if you’re looking for non-emergency advice during a period of mental ill health.

Mind are a mental health charity who provide advice and support to empower anyone experiencing a mental health problem. Visit their website, call their support line on 0300 123 3393 (lines open 9am-6pm, Monday-Friday) or, contact their community support.

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. Anything discussed on the podcast should not be regarded as financial advice.

E9: How to reduce the risk of money worries affecting your mental health - with Lila Pleban, Dennis Relojo-Howell, and Tess Nicholson

How can we reduce the risk that money worries will affect our mental health? Lila Pleban, CCO of FSCS, Dennis Relojo-Howell, Founder of Psychreg and Tess Nicholson, COO of PensionBee discuss.

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

PHILIPPA: Hello and welcome back to the Pension Confident Podcast. Pensions can be complicated. PensionBee’s on a mission to make them simple and we’re here to help you get the best out of your personal finances. I’m Philippa Lamb, and this time, we’re going to be talking about how to reduce the risk that money worries will affect your mental health.

Music starts

We’ve all got used to hearing the phrase ‘cost of living crisis‘. Bills are rising and millions of us are anxious about where that might leave us, so it’s fair to say this crisis isn’t just having an impact on our finances, it’s affecting our mental health too. The Money and Mental Health Policy Institute tells us that people facing financial difficulties are far more likely to experience issues with their mental health. 46% of people struggling with household debts also suffer from a mental health problem. So with bigger bills to come, millions of us may see our finances overstretched with all the emotional or psychological distress that can bring.

Times like this can make us feel helpless and being told not to worry really doesn’t help. So, instead today, we’re going to talk about the actions we can take to reduce that risk that money worries might make us unwell. We’ve got three experts from the world of finance and mental health here in the studio to help us with that.

We’re joined by the Chief Communications Officer of the Financial Services Compensation Scheme, that’s the FSCS for short; Lila Pleban. Hello Lila.

LILA: Hello.

PHILIPPA: Founder and Managing Director of PsychReg; Dennis Relojo-Howell is also with us. Hello Dennis.

DENNIS: Happy to be here.

PHILIPPA: And finally, we have PensionBee’s COO and a Mental Health First Aider, Tess Nicholson. Hi Tess.

TESS: Hi.

PHILIPPA: The usual reminder before we jump in: anything discussed on this podcast should not be regarded as financial advice and remember when investing, your capital is at risk.

Who will be most affected?

PHILIPPA: Before we get into more detail, I think it’s important to understand and recognise money anxiety and related mental health struggles can affect anyone. If you’re all comfortable, I think it would be good to hear a bit about our own experiences and Dennis, I know you’ve got a story to tell.

DENNIS: Yes. My formative experience actually taught me about the value of money. So just to offer some context, I grew up in a slum in the Philippines where there was no running water, no electricity, and a lot of the things that we consider necessities in life. At a young age I realised that I have to help my parents. So I did a lot of jobs. I was a street vendor in the Philippines before going to university. And also from a psychological standpoint, because I’m a researcher in psychology, a lot of literature has taught us that if we don’t have money, it could significantly impact our mental health.

PHILIPPA: Yeah, I mean, I have never experienced anything like the struggles you had growing up Dennis, but I do remember a lot of sleepless nights myself stressing about how I would manage my finances when I got divorced and I had a small child. And that stays with you, doesn’t it? I mean, it really does inform the way you think about your future life.

DENNIS: Definitely. So actually, the psychological literature says that it’s kind of an egg and chicken scenario. They’re intimately intertwined, but we don’t know whether it’s the mental health issues that trigger the financial worries, or if it’s the financial worries that trigger mental health issues. But what is clear, from the literature, is that they’re intimately intertwined. In fact, if I could just mention one statistic, the charity Money and Mental Health, they carried out a study in 2019 and what they found out is that 72% of the respondents say that if you have money worries, it can impact your mental health. The same study actually also said that 86% of the respondents said that their mental health issues trigger financial worries, so they’re really linked.

PHILIPPA: Yeah, absolutely. Tess, how about you?

TESS: I have experienced money worries and I think that the thing about money is that it’s so kind of linked to our sense of personal value. We talk about people as being worth money and what we’re really saying is that they have that much money or they have assets that are worth that much money but even the language we use suggests that we’re talking about our own personal value. Even if your money worries aren’t extreme, I think that they can still often feel quite overwhelming and whenever I’ve had money worries, even if there have been other things that have been causing me stress at the same time – that’s always been the thing that’s been the last thing on my mind when I’m trying to get to sleep at night.

PHILIPPA: Yeah, that’s the big one isn’t it?

TESS: Yeah, I saw a thread on Twitter recently actually, that was talking about how it does still stay with you as well, when you’ve had those experiences, and people were talking about still feeling that pang of worry when they go to put their card in the machine. Is there going to be anything in my account? Even though they’re fine now.

PHILIPPA: Lila?

LILA: Yeah, certainly I agree. I think most people have been through some financial worries. Dennis, I can’t imagine how you’ve grown. It’s an incredible story. I think for me, the big time in my life was when I got divorced. If I’m honest, I quite quickly found myself without a roof over my head, without any bank account because everything had been frozen. But I think it was the spiral that happened after that really got me into quite a pickle, if I’m honest. Not checking my bank account, the credit card started to be used. I started to build up a credit card bill, because I was comfort shopping, trying to keep the visage of being in control and being successful, but I wasn’t. I was completely and utterly falling apart and it really came down to a crunch, really at one point, and I had to face it. It took some time to figure it out, and it took some time to pull myself out of the hole. But I totally relate even now, I really struggle to use my credit card. I fear that I’m going to build up another big debt. I pay my bill off every week, because I’m so frightened of it getting any bigger than a little bit and when it does, I do panic even now many, many years later.

PHILIPPA: Yeah. So there’s a bit of insight around the table, isn’t there? About how this stuff can feel. Lila, tell us a bit about the FSCS. What do you do there?

LILA: Well, at the Financial Services Compensation Scheme, it’s quite a long word, we do call ourselves the FSCS for short, but even that doesn’t roll off the tongue very naturally. But basically, we protect people’s money and we can pay compensation if your firm goes bust. We provide a completely free service for consumers. We’re funded by the Financial Services Industry. You’ll see us on your bank account apps, ‘FSCS protected’, and we protect a large proportion of the bank accounts in the UK.

PHILIPPA: So if the bank falls over, you’re the ones that people ring.

LILA: We protect you. You saw us really come into our own in the financial crisis in 2008. But we also protect lots of other things, such as pensions, investments, funeral plans, home finance advice, PPI, debt management plans. So if your money is protected by us, then if something goes wrong, then we step in.

PHILIPPA: Which is a comforting thought. I presume you must see a lot of people contacting you at a particularly vulnerable time for them, very stressed about their financial situation. Are you seeing a lot of that right now?

LILA: Well, because of the nature of the business we’re in, pretty much every single person that comes to us has lost something. Sometimes it’s a large sum of money, often it’s everything they own. Sometimes it’s a relatively small amount of money such as PPI, but every single person that comes to us has a story to tell and there are some really common themes that we see. People are embarrassed, they feel ashamed. They are worried, it’s keeping them up at night. We have seen people who are suicidal. So it is a really challenging time for us at the moment and we have to be really on our toes.

PHILIPPA: Okay, let’s think about practical steps. Tess, earliest signs for people, red flags that they might be starting to lose control of their finances?

TESS: I think I would say that, that would be things like if you find that you’re dipping into your overdraft a bit more than you might normally, or at all. Your savings, credit card - using your credit card, maybe when you don’t normally.

PHILIPPA: Or getting another credit card?

TESS: Well yeah, and I think it’s also when you just have that sort of feeling of like, I don’t know actually where that money’s gone. Sometimes at the end of the month, even if actually you are getting to the end of the month, and you’ve got money leftover, and you’re fine. Sometimes you have that feeling of I’m not really sure where some of that money went. And I think that even that can be a very early sign of like, maybe you’re starting to lose control a little bit.

PHILIPPA: Yeah, absolutely. It’s just kind of dripping away and there’s that confusion about - there’s less than I thought. It’s always less than you thought there should be, isn’t it? Dennis, what about red flags on early-stage poor mental health?

DENNIS: I would categorise them into three. So we could have physical functioning, it could be affecting your emotional functioning, and your cognitive functioning. So as an example, for physical functioning, it might have impacted your sleeping pattern. Another is that you might be someone who is physically active, and who does exercise a lot and all of a sudden, you become easily fatigued. So that’s a red flag. When it comes to emotional functioning, it might be before that you see things in a more rational way but because of money worries, you become sort of illogical in the way you approach your problems. So those are the red flags for me.

PHILIPPA: Now, the cost of living crisis, obviously, it’s hitting people all over the country, all sorts of people. But households in the lowest 20% income bracket are two to three times more likely to develop mental health problems than higher earners. So your level of wealth, your mental health, they are intrinsically linked, aren’t they?

DENNIS: Yes, definitely. So if you’re within a lower socio-economic status, it impacts your health and a lot of psychological literature actually demonstrates that. But the interesting thing here, and what research shows is that it’s not actually the amount per se, that actually impacts your mental health. But it’s actually how you frame that, your perception of it. For some people, if you have a debt of £2,000, that’s a lot. Whereas for some people, £20,000 is not a lot, but it’s actually your framing of how you see it. Whether you have a sense of hope, whether you have a sense of optimism, or resilience even. So these are the things that really impact your mental health. When we don’t have money, we actually think that we’ve lost the ability to control things, we’ve lost our sense of agency, because we can’t provide for ourselves, we cannot provide for our family.

PHILIPPA: Tess, you must be hearing a lot of concerns from PensionBee customers?

TESS: Yeah, we are. I think predominantly right now the concerns for them are around energy prices. That’s what we’re hearing a lot of. We’re seeing more people looking to withdraw money from their pension before retirement age. We’re seeing that from people, as early as in their 20s who are really struggling with money. And then we’re also seeing it with people at retirement who are worried about things like, ‘If I drawdown, is that going to impact on my eligibility for pension credit?’. We’ve obviously had a lot of market volatility this year and so people are watching their balances quite a lot and worrying about that.

PHILIPPA: Lila, Tess mentioned retired people. Obviously there are some groups we know are particularly vulnerable. We’ve got retired people, people with disabilities, there’s a bunch of others as well.

LILA: Interestingly, a large proportion of the people that come to FSCS for help are closer to retirement and actually have less time to make up any gaps. I’m with you, Tess, that people are looking to drawdown, they’re looking to then make their money go as far as possible. I think the worry for me is that people get lured by scams, deals that are too good to be true. But we see people being lured by investments that just simply don’t exist. Wind farms in Croatia, storage pods, hotels.

PHILIPPA: We made a podcast about this a couple of episodes back. They’re so quick on their feet to jump into a financial crisis, aren’t they?

LILA: They give people hope. People start to think, ‘Oh, I can make my money back’, and it’s quite frightening. We don’t cover scams and fraud, so we can’t help these people. So it’s really important that people really look at what they’re about to do.

PHILIPPA: At the other end of the age scale, I’m thinking about gig workers, self-employed people.

LILA: Yeah. And I think then we have a different challenge, which is, people aren’t investing in their future. They’re unable to invest in their future. And then we have other things, exciting things like cryptocurrency, etc. that are a lure to make a few fast pounds. More often than not, we call them risky, high risk investments. They can leave people without anything.

PHILIPPA: The other group, which we haven’t really talked about, is all these people largely in the middle, people who’ve been comfortable, always been comfortable, not really had to worry too much. And now or looking ahead to next year, suddenly those people are thinking, ‘We could be in real trouble here, even though we’re still earning quite a lot of money. We’ve got a lot of outgoings’. That’s new, isn’t it?

LILA: Yeah, I think it’s an area that we’re looking at. I think you see that come through with people, again, the same problems around scams and fraud increasing, but also their behaviours. Some of the early signs we see of people being in quite a lot of distress, is their behaviour. Whether that’s how they speak to people on the phone, when they call up asking for an update, for example, on their claim, becoming increasingly agitated. Ordinary people who are genuinely really nice, are starting to get very angry. You do see that starting to come through in the calls.

How to protect yourself?

PHILIPPA: Let’s talk a bit about how to protect yourself and learn coping strategies, things we need to know about managing this burden of money worry, because it’s not like it’s going away. What is the first useful step you can take if you think stuff is getting out of control? Money is getting out of control?

LILA: I’ll draw on my personal experience for this one, and I think it’s about facing it, and looking at it and really being honest. I hid away from my money worries, and they weren’t going anywhere, but downwards. So I think it’s about really facing into it and talking to somebody about it.

PHILIPPA: So taking stock?

LILA: Taking stock and just being really honest with yourself. I was only able to take some practical steps to help myself, once I really faced into what was going on.

PHILIPPA: That brings us to the harsh reality of, if you just know you cannot pay a bill. Temptation is just to ignore it, stuff it in a drawer, or just not look at it on your laptop. But actually, reaching out to whoever has sent you the bill is the key thing to do, isn’t it?

LILA: I think reaching out, because many companies have procedures in place to help people who are struggling. And then there are some great organisations who can help you. We’ve got the Money Advice and Pension Service, we’ve got Money Saving Expert, Money and Mental Health. There are many organisations out there who, just, even if you don’t want to speak to anybody, just Google online and you can start to feel reassured that there is help. For me, taking control really helped me. I wasn’t in control of my money, but taking those steps made me feel in control and gave me my confidence back.

PHILIPPA: You got there didn’t you? And I should say at this point, in the show notes attached to the app, you’re going to find links to some of the organisations that Lila has been talking about. I mean, then of course, there is, what are you entitled to from the government? That’s always worth talking about because, as we know, people don’t know and a lot of that stuff goes unclaimed, doesn’t it?

LILA: Yeah, and I think that’s where people like the Money Advice and Pensions Service can really help because they’re part of the government, so they will help to point you in the right direction of any benefits that you’re entitled to. And Citizens Advice, where you can also get really, really great advice from somebody who knows the system, because that can feel quite overwhelming when you’re already feeling a bit embarrassed and shameful. And now you’ve got to navigate a system that isn’t easy to navigate. There are some brilliant organisations out there who can help.

PHILIPPA: Tess, anything you want to add to that?

TESS: No, I would agree with that. There’s so much available and there’s probably quite a lot, I think, that people don’t even realise is available. I also think that it’s about understanding your own situation as well though. I have a spreadsheet that I keep – it has all my regular outgoings. I put in transactions for everything that goes out of my bank account and it does sound a bit over the top, but it does mean that I can always see how much money is still going to come out of my account before payday and how much money have I got left now? And then I know, ‘how much money have I got leftover to spend on the nice things?’

PHILIPPA: And this is why you’re COO at PensionBee, isn’t it?

TESS: I do love a spreadsheet.

PHILIPPA: But actually, it is a good idea, isn’t it? That thing of really understanding what’s going on. And financial education, I mean, we made a podcast about that episode eight, it’s still there, you can stream it, have a listen to that. But it does stress that point about financial literacy. It might not solve your money worries, but it helps you deal with the stress, doesn’t it? Understanding your situation, even if it’s bad, is really, really good. The more you know, the better you can cope.

TESS: Yeah, because I think that money worries cause such panic in us and we don’t know how to react to them. We don’t know how to respond to money worries. People have a real sense of shame around money worries, they don’t want to admit to struggling with their money. And I think the more that you know and understand your own situation, and also what’s available to you out there, the better you’re going to be able to cope.

PHILIPPA: It does seem to me that because everyone is going to be in difficulties, some of that embarrassment may go away. I’m already seeing people a bit more ready to talk about the difficulties than perhaps they might have been even a year ago, because it’s - everyone’s in the same situation to a degree. The degree really varies, but it’s becoming a day-to-day conversation, isn’t it? Money worries, bills.

LILA: I think, culturally, it’s not something we talk about very openly in the UK. It will be interesting to see what happens. But doing podcasts like this, it is a great way for all of us to start sort of making it okay to talk about money. And I think young people are really good at talking about this stuff. I think we will start to see more of it as we all enter into what is a fairly gloomy period ahead. Although I don’t want to try and dwell on that, as you’ve probably learned, I like to put my head in the sand on some of these things.

PHILIPPA: I hear what you say, but the financial jargon really gets in the way doesn’t it? And we are going to make a podcast about this soon, about what all that jargon actually means, because I think it can be a real barrier to people, to actually doing what we’re suggesting they do. But in the meantime, Dennis, everything we’ve talked about, it’s all very well, but it’s time consuming. It’s tough to do it on your own, isn’t it? What mental health support systems can people reach out to if they’re feeling overwhelmed?

DENNIS: Just to top up what Lila and Tess have already said, I think it’s really important that you prioritise things when financial worries start to take a toll. If financial worries are already impacting your mental health, I think it’s really important that you stick with your routine. If you get up at the same time, it will help your mood. I think it’s also important that you stay active, exercise, and you update your CV and you keep on looking for jobs. It’s really important.

PHILIPPA: It’s hard to do on your own though, isn’t it?

DENNIS: Yeah, it is a hard thing to do, but the internet is a fantastic tool and we’ve got lots of resources now. There’s the Royal College of Psychiatrists, they have useful articles about how to deal with your mental health issues, and also the charities Mind, and Shelter. They have excellent toolkits when it comes to managing your own mental health specifically for financial worries.

What changes need to be made?

PHILIPPA: And of course, there is the government. Supposedly there to look after us. We’re recording this early September, we’ve got a new PM. I’d be interested to know what you’d all like to see from her and her cabinet that might ease the situation. Tess?

TESS: I think energy bills feel like a really crucial thing right now.

PHILIPPA: We’re recording this just ahead of the point when we’re expecting to hear a bit about that, but it doesn’t sound like it’s going to solve the problem.

TESS: No, it doesn’t. But for me, that would be the thing that I would want from her right now.

PHILIPPA: Yeah, Dennis?

DENNIS: I think when we’re thinking about money things, we think that the government should freeze the energy bills or put a cap on prices. But we don’t seem to acknowledge that there’s a mental - or there’s a lack of realisation that there’s a mental health aspect to it. It would be good if the government would have something in place to help people who have mental health problems.

LILA: Investing in the National Health system and making sure that we have the necessary resources - coming out of COVID, we already have a world where mental health problems have grown massively. Then I think the last thing is - there’s some bills going through Parliament at the moment, the Online Safety Bill for example, which really starts to look to protect consumers from online scams. It’s really important that those get put through. I’m quite passionate about that.

PHILIPPA: Yeah, some of the stuff we know that’s coming down the road. Now look, we’re almost out of time. Before we go, I’m gonna ask you all for your best practical suggestion for anyone listening to this who knows that their money worries, they’re already putting their mental health at risk. I’ll start with Tess.

TESS: I mean, aside from starting a spreadsheet. I think that the most important thing is to talk to somebody, whether that is the company that sent you the bill, or whether that is someone who can help with government support, or whether it’s just talking to somebody in your family. I think when you carry the burden, it obviously does have a toll on your mental health and that’s when you’re more likely to make bad decisions, so it is like a cycle. So I think I would say, just make sure you’re not dealing with it on your own and talk to somebody.

PHILIPPA: Dennis?

DENNIS: Don’t drink too much alcohol. When we have financial worries, or even without financial worries, it’s easy to turn to alcohol as a way to manage your emotions and pass the time.

PHILIPPA: And expensive.

DENNIS: It’s expensive.

PHILIPPA: Lila?

LILA: I think, really face it, really look at your situation and talk to somebody because sometimes, it may not be quite as bad as you think it is. It may be, but at least then you know, and you can do something about it.

PHILIPPA: It’s starting that journey with a single step, isn’t it? Pick up a bill that you know you can’t pay, call them.

LILA: But I agree about alcohol. I mean, it might feel quite nice at the time, but the impact in the long term is not so good.

PHILIPPA: Yeah, moderation.

DENNIS: It doesn’t drown the problem, it irritates it.

PHILIPPA: Thank you all very much, really useful discussion. Now remember, if you are struggling right now, and you need to talk to someone, call Samaritans on 116 123. They’re open 24 hours a day, 365 days a year. You can text the word ‘SHOUT’ to 85258. That’s 85258. You can speak to a volunteer from Mental Health Innovations there. You can do it entirely anonymously if that’s what you would like best. As we’ve said, the first port of call for any mental health issues, big or small, is your GP. They can connect you with your local NHS Mental Health Trust to support you with any sort of treatment you might need. For links to all the resources and organisations we mentioned in today’s episode, go to the show notes on your app. You can find more links to useful articles from the PensionBee website.

A final reminder that everything you’ve heard on this podcast should not be regarded as financial advice and wherever you invest, your capital is at risk. Next time we’ll be continuing the discussion on money and mental health. We’ll take a look at how to manage your finances when you’re already suffering with a mental health condition. We’d love to hear any questions you have for our expert guests, so please do email them to us. Here is the address: [email protected]. Thanks for listening. Join us again next month on the Pension Confident Podcast.

Catch up on episode 8 and listen, watch 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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How will my pension be affected by new PM Liz Truss?

Liz Truss has been named the UK’s new Prime Minister. But what does that mean for economic policy and pensions?

Liz Truss has been named the UK’s new Prime Minister. And whilst the vast majority of the country didn’t get to vote on the decision, households across the country will want to know how the new boss in Number 10 will affect their finances. She has an avalanche of issues to deal with as she takes office - with sky high inflation and unmanageable energy bills threatening to blow a hole in individuals’ budgets.

The bulk of Conservative party members skew older, so Liz has been keen to stress her support for pensioners. However, with the current economic climate, those still saving for retirement are being forced to cut back on pension contributions, or stop altogether. Liz has pledged to lay out her plans to tackle the rising cost of living within her first week in office.

Here is what we already know about the new Prime Minister’s tax and spending intentions.

Liz Truss on pension plans

State Pension protection

Liz Truss has promised no changes to the triple lock - that the State Pension will once again rise by earnings, inflation or 2.5% whichever is higher, every year. After last year’s switch to a double lock, pensioners were concerned the move would be made permanent. But with a new government in charge, this looks not to be the case.

With inflation at record highs, those in receipt of the State Pension are in line for bumper increases to their incomes. September’s inflation figure will be the one to look out for, with the Bank of England predicting a peak of 13% at some point later this year. At that rate, the basic State Pension would rise by £18.45 to £160.30 per week (£8,335.60 per year) in April 2023. The new State Pension would increase by £24.10 to £209.25 per week (£10,881 per year).

Annuity rates up

Annuity rates could rise under a Liz Truss Premiership. An annuity is a regular yearly payment you can buy in exchange for some or all of your pension pot. The annuity rate is how much an annuity will pay out each year. Annuity rates are linked to what’s called the yield on government bonds, also known as gilts. Higher interest rates mean higher gilt yields, and higher annuity rates.

Market watchers predict Liz Truss’s tax and spending plans will keep inflation high and put further pressure on the Bank of England to raise interest rates to try to bring inflation down. The Bank of England has already raised interest rates several times this year, and this has led to higher annuity rates. Annuity rates are still low by historical standards, however. It’s worth noting that when buying an annuity, this can’t be reversed so it’s important to think carefully if it’s right for you before doing so.

Pension transfers down

Defined benefit pension transfer values could fall with Liz as PM. This too relies on predictions that inflation will be sent higher by Liz’s tax and spending plans, forcing long-term interest rates (set by market expectations more than the Bank of England) to rise. A defined benefit transfer value is the lump sum you get for leaving a defined benefit pension scheme instead of staying in and receiving regular payments.

Transfer values are linked to government bond, or gilt, yields. When interest rates and inflation are low, gilt yields are low, and pension transfer values increase. But when there’s a belief higher inflation is on the horizon, like now, and interest rates and bond yields rise, pension transfer values fall so you get a smaller lump sum.

If you’re considering a pension transfer, you’ll need to get advice from a qualified pension transfer specialist if your pot is worth more than £30,000.

Liz Truss on taxes

National Insurance cut

Liz has signalled she would reverse the 1.5% National Insurance hike that was introduced this April to help pay for spiralling care costs in the future, to instead help ease the cost of living crisis happening now. If this goes ahead workers will find a bit more in their pay packets, which could persuade those thinking about opting out to stay in their company pension scheme (a smart move).

But Liz will need a new plan to deal with the cost of caring for Britain’s ageing population.

VAT cut

A potential cut to VAT from ^_basic_rate to ^_ni_rate is another plan to help individuals struggling with the cost of living. Some experts have warned it could add further to inflation, however, adding, rather than easing, the burden on people struggling with higher prices.

Inheritance tax review

Liz Truss has pledged a review of the current tax system, which includes inheritance tax (IHT). Nothing specific has been promised here yet, just the potential for more tax cuts further down the line.

Any changes to IHT rules would likely take some time to put in place, but be prepared to make changes to your financial plans if IHT rules improve in your favour.

Key pensions points

State pension triple lock will remain in place
Annuity rates could rise further
Defined benefit pension transfer values could fall

Laura Miller is a freelance financial journalist.

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.

What happened to pensions in September 2022?

Find out how the performance of your pension plan is directly impacted by the performance of its investments.

This is part of our monthly pension update series. Catch up on last month’s summary here: What happened to pensions in August 2022?

Pensions are invested in global stock and debt markets, and therefore what happens around the world will also be felt in our pensions. September saw the continuation of the domino effect created by the international energy crisis and the ongoing war in Ukraine. The combination of low energy supplies, and high demand for them, has pushed prices upwards. These costs are passed from business to consumer, making the cost-of-living higher and increasing wages, which in turn leads to higher demand for goods and higher prices. In short, a vicious cycle that the world’s central banks have sought to break through rising interest rates.

Of course, rising interest rates themselves can cause a lot of turmoil for businesses and households by increasing the cost of borrowing and reducing expenditure. This in turn reduces inflation (by reducing the demand for goods) but can simultaneously lead to business closures and job losses, which September continues to bring news of. At the same time, rising interest rates reduce bond prices, meaning diversification of pension assets is less effective in the short-term.

Keep reading to find out how markets have performed this month, and how this may impact your pension balance.

What happened to stock markets?

Company shares are traded on stock markets, and their value’s influenced by all sorts of factors, including: a changing political climate, business performance, interest rates, local and global economies and the rate of inflation.

September marked a subsequent chapter in this year’s unfolding story of market volatility. Uncertainty over measures taken by central banks to combat inflation (interest rate rises), along with the energy crisis, has clouded any optimism for an imminent recovery.

In UK stock markets, the FTSE 250 Index fell by over 1^{_personal_allowance_rate} in September, bringing the year-to-date performance close to -29%.

Source: BBC Market Data

In European stock markets, the EuroStoxx 50 Index fell by almost 6% in September, bringing the year-to-date performance close to -24%.

Source: BBC Market Data

In US stock markets, the S&P 500 Index fell by almost 8% in September, bringing the year-to-date performance close to -24%.

Source: BBC Market Data

In Asian stock markets, the Hang Seng Index fell by over 12% in September, bringing the year-to-date performance close to -26%.

Source: BBC Market Data

What happened to currencies?

Currency is a system of money commonly attached to an economic region or an individual country. For example, in the UK our currency is pound sterling. As currencies fluctuate in value they’re often phrased as being ‘strong’ or ‘weak’, compared to others. Exchange rates are those points of comparison, as you move money from one currency to the equivalent buying power in another.

September saw pound sterling fall by almost 5% against the Euro, by almost 4% against the Japanese Yen and by almost 8% against the US Dollar. This reflects the UK’s weaker economic outlook, as inflation is hovering at 9.9%. In reaction to the rise in inflation, the Bank of England raised interest rates to 2.^{_corporation_tax}. There’s speculation about further rises in coming weeks, at time of writing.

Customarily funds, such as pensions, invest internationally as part of diversification, the approach of spreading your investment eggs in more than one basket. Chances are many UK investors hold more of their retirement wealth in US companies than UK companies. Therefore, it’s possible to have benefited from a falling pound in your pension.

However, if you’re close to retirement or if your fund manager uses ‘currency hedging‘ as a way of reducing volatility, you’ll be protected from negative currency moves on your overseas investments (such as a weakening of the US Dollar), but also won’t benefit from positive ones (such as a strengthening of the US Dollar).

You can read our blog, The pound and its impact on pensions, to learn more.

What happened to bonds?

Bonds are basically loans given by investors to companies. In exchange for their funding, the company usually pays investors fixed interest on the bond amount before repaying it in full. Bonds have different characteristics (like mortgages) from their interest rates to their term length. There are two types of bonds: corporate and government.

Like many fixed income assets, bonds thrive on market stability as they aim to provide moderate growth for investors. Recent surges in inflation and rising interest rates have pushed bonds between the proverbial rock and a hard place - leaving investors understandably concerned. While asset classes such as company shares are used to the ups and downs, bonds have been relatively sheltered from volatility until this point.

At the time of writing, the S&P Global International Bond Index is reporting over 3^{_personal_allowance_rate} losses this year alone. The downside is obvious; investments that are bond-heavy will have seen dramatic losses. Bond’s haven’t seen losses this severe since back in 1865. Since 1939, when the Great Depression ended, the bond market has created annual returns of approximately 5%, overtaking the rate of inflation by a slim margin in most years.

The upside is that hopefully we’ll recover some or all of these falls in the medium-term, and not see double digit losses like we currently are for another 200 years, give or take. Many pension funds will be diversified, including investments in bonds and shares. It’s impossible to completely isolate your retirement savings from the wider economy - even investing in cash means you could lose value due to inflation.

You can read our blog, How does inflation affect pensions?, to learn more.

Summary

We’re currently in a bear market (a period of economic decline). The good news is global markets have recovered from every bear market in history, without exception. Moreover, the value of company shares has not only recovered but typically goes on to reach new highs. Even the biggest market crash since the Great Depression, the 2008 global financial crisis, was followed by the longest period of sustained growth in market history until the coronavirus pandemic struck markets in 2020.

As a general rule of thumb, when markets are down company shares become more affordable to investors. For example, if you buy company shares during a downward trend at £1 per share, then when markets recover and they increase to say £1.50, you’ll have seen a 5^{_personal_allowance_rate} increase on your initial investment. Of course, there’s no guarantee that this will happen, but if you’re able to, then adding to your pension pot could allow you to effectively grow your pension in the long term.

You may find yourself rethinking your pension savings during the cost of living crisis, or worrying about whether you’re making the right choices. PensionBee customers can rest assured knowing that our pension plans are being managed by some of the world’s leading money managers. Again, it’s worth remembering that it’s normal and expected for pensions to go up and down in value. If you’re over the age of 50 and are considering your retirement options, you may benefit from a free Pension Wise appointment. You can book your appointment online.

This is part of our monthly pension update series. Check out the next month’s summary here: What happened to pensions in October 2022?

Have a question? Get in touch!

You can check out our Plans page to learn how your money is invested in different assets and locations. 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.

The effects of debt and how we can break the cycle

The effects of debt on mental health and wellbeing can be massive. So how can we break the cycle?

This article was last updated on 17/03/2026

Debt is a universal problem. In fact, the average UK household debt is around £197,811. While this figure takes into account things like mortgages, it also includes unsecured debt too, such as credit cards and personal loans. With the rising cost of living, organisations like the Financial Conduct Authority (FCA) and MoneyHelper are urging consumers to get help as soon as possible if they’re struggling financially.

Unfortunately, there continues to be a lot of stigma, shame and embarrassment when it comes to talking about debt and, more importantly, seeking help to deal with it. And with mental health problems being so closely linked to debt, it can be even harder for people to get the help they need.

Senior Research Officer at Money and Mental Health Policy Institute ; Chris Lees says: “There is a concern that it will take forever to check your eligibility but these tools are designed to make it easier for people to use and the information is provided in a way that people can easily understand.”

According to the Money and Mental Health Policy Institute, people with experience of mental health problems are three and a half times more likely to be in ‘problem debt’. The term problem debt is used when individuals who are in debt are simply unable to afford their repayments. On the other hand, being in problem debt can sometimes cause mental health problems by driving feelings of anxiety, shame and depression and so it turns into a vicious cycle.

1. Actions for individuals to take

Reaching out and speaking to someone is a great first port of call when it comes to sharing the burden of debt. For some people, this can be a very difficult step to take so in the meantime, there are online resources that can support and show individuals what help is available when it comes to managing their debt. Citizens Advice and Turn2Us both have a range of resources including tools to calculate what benefits you might be entitled to.

2. Awareness and understanding in the wider infrastructure

Understanding the link between mental health problems and financial difficulty is important, and this is even more true within organisations that are in place to support people who are suffering. Chris believes frontline healthcare workers, like GPs, need to recognise the financial impact of mental health problems. In some cases, a financial strain like debt might be the driver of their patient’s illness, so signposting to resources and organisations that can support is crucial at this stage.

3. The role of creditors

In the same way that organisations supporting people with their mental health should be aware of financial difficulty, organisations, like banks and other creditors, should also be aware of the impact debt can have on people’s health. Chris believes clear and supportive communication from creditors is crucial to helping people overcoming debt. One-in-five individuals who are in debt feel dread when opening bills and letters, so ensuring creditors are well trained to communicate in a non-threatening way is something the Money and Mental Health Policy Institute think is an essential step.

Senior Research Officer at Money and Mental Health Policy Institute ; Chris Lees says: “When people are getting treatment for mental health problems, there needs to be an understanding of how that can impact their finances.”

Where to get help now

If things are starting to get on top of you, mental health charity Mind recommends six ways you can manage your money and mental health, from speaking to someone you trust to understanding your money habits. Find out more on our blog.

If you’re struggling with debt, MoneyHelper offers lots of information to support you and help get your finances in order. These include planning how to tackle your debts and speaking to a free debt adviser. MoneyHelper are also on hand to give free, expert debt advice whether you need help with prioritising bills or support with living on a smaller income. The service is government backed.

In episode 10 of The Pension Confident Podcast, Philippa Lamb is joined by Senior Research Officer at Money and Mental Health Policy Institute; Chris Lees and Chief Operating Officer at PensionBee; Tess Nicholson as they discuss the effects of debt and what to do if you find yourself in it. Listen, watch 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. Anything discussed on the podcast should not be regarded as financial advice.

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

What are the effects of debt and what can you do if you find yourself in it? Chris Lees, Research Officer at the Money and Mental Health Policy Institute and Tess Nicholson, COO of PensionBee discuss.

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

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

Music starts

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

CHRIS: Hi. It’s good to be here.

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

TESS: Nice to be back.

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

The effects of debt

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

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

PHILIPPA: Own brand.

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

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

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

PHILIPPA: Packed lunches.

TESS: Yeah, exactly.

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

TESS: It’s a reminder.

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

TESS: Yeah.

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

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

PHILIPPA: Really frightening.

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

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

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

PHILIPPA: Yeah.

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

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

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

PHILIPPA: Yeah.

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

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

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

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

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

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

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

PHILIPPA: Right.

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

PHILIPPA: That’s a big number too.

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

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

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

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

PHILIPPA: Yeah. It’s quite closely correlated.

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

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

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

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

PHILIPPA: Already?

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

PHILIPPA: That’s sad isn’t it?

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

PHILIPPA: There’s too many parts to it.

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

Customer stories

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

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

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

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

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

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

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

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

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

TESS: Yeah, I think it is.

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

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

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

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

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

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

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

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

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

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

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

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

PHILIPPA: Still?

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

PHILIPPA: Are you?

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

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

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

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

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

PHILIPPA: It’s good you can laugh.

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

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

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

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

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

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

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

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

PHILIPPA: The rules are the rules.

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

Escaping debt and improving your circumstances

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

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

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

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

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

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

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

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

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

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

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

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

PHILIPPA: Payments pending…

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

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

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

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

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

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

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

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

Risk warning

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.

50-30-20: How the budgeting ‘rule of thumb’ is changing in the face of the cost of living crisis

Money Coach and Founder of The Money Whisperer, Emma Maslin, examines the 50-30-20 budgeting framework in light of the cost of living crisis.

This article was last updated on 20/07/2023

A good spending and savings plan helps you understand what income you have, what needs to be allocated to immediate living expenses and what you plan to do with the rest. The 50-30-20 framework has traditionally been a popular rule of thumb to follow for budgeting your outgoings and savings. The idea is that you split up your total income as follows:

5^{_personal_allowance_rate} on current ‘needs’ (essential living expenses): food, transport costs, mortgage/rent, utility bills, essential clothing costs, minimum repayments on debt balances.
3^{_personal_allowance_rate} on current ‘wants’ (non-essential luxuries): gym memberships, gadgets, eating out, hobbies, subscription services.
^_basic_rate towards future savings and debt repayments: putting money aside for unexpected financial emergencies, saving for future goals, investments, pensions, debt overpayments.

As an example, for someone with ^{_tax_free_childcare} income after tax, they would broadly allocate:

^{_basic_rate_personal_savings_allowance} towards ‘needs’
£600 towards ‘wants’
£400 towards savings or debt repayments.

But a rule of thumb is just that - a guide. If you looked at the outgoings of 100 people earning the same amount of money, none of them would split their outgoings in exactly the same way because everyone’s financial situation is different.

If your choices around where you spend and save your money don’t follow the 50-30-20 rule, that’s fine as long as you have a healthy balance across current and future spending and saving. Personal finance is personal after all. However, if you want to increase your savings or pay down debt balances, the framework provides a good reference point to keep in check your spending on those things which are not necessities, and make sure you keep half an eye on the future.

Spending on ‘needs’

Our ‘needs’ are costs we have to incur in order to survive and so they’re a constant feature in our budget; you need somewhere to live, clothes to wear, and adequate food and water to stay in good health. These things are non-negotiable. So the starting point for budgeting our money begins with looking at how much money we need to allocate to those essential living costs. The issue is that over the last few months, almost all of our essential living costs have seen significant price increases, and some are still going up.

The cost of our grocery shopping has been rising steadily over the past few months, as a result of legacy issues from factory shutdowns during the pandemic, the Russia-Ukraine conflict and increased energy costs for the food and beverage sector.
Similarly, the amount we’re paying to fill our cars at the petrol station or charge them at electric charging points has increased substantially over the past year.
The new Energy Price Guarantee came into force on 1 October 2022 and although it has alleviated the threat of further energy prices rising over the next two years, bills for the typical household are still more than double what they were this time a year ago.
In an attempt to curb inflation, the Bank of England has hiked rates several times since December 2021, when the cost of borrowing was 0.1^{_personal_allowance_rate}, to its current level of 5%. Banks have since passed this increase through to mortgage holders. This impacts both homeowners on variable mortgage rates or needing to refinance, and landlords who will undoubtedly pass the cost on to tenants through increased rent.
Credit cards with rates linked to the base rate will cost consumers more in increased borrowing costs.

So in light of this, does the 50-30-20 rule of thumb still apply in the current economic climate? If not, what needs to change?

What needs to change in the face of the cost of living crisis?

For many people, their spending on essential living costs is now considerably more than 5^{_personal_allowance_rate} of their income after tax. You can’t simply sacrifice spending on your ‘needs’ - these are things you can’t live without, or at least not without a significant decline in your standard of living. But you can make sure that you’re optimising what you do spend on these items.

Firstly, it’s crucial to make sure that you’re not overpaying for those items that you need to live comfortably. Compare your current deal to the best deals on the market for all your essential bills. This might result in you switching your mortgage provider or utility supplier to get the best deal available based on your circumstances. When it comes to groceries, it may mean changing where you shop, meal planning to avoid wastage and buying in bulk to make sure you’re getting the most for your money. It can be time consuming but it’s time well spent.

Once you have clarity on the lowest level your essential spending can go to, then you can work out how much of your income is left to split between the other two options; ‘wants’ and savings.

Take a good hard look at your everyday spending; grab a highlighter and highlight on a printed bank statement all of those things which you spend money on that aren’t needed to keep you fed, clothed or housed. It’s often shocking to see on paper how many ‘wants’ creep into our lifestyle. Then ask yourself what can you do without? This is the brutal reality of creating an effective spending and saving plan for your monthly income which doesn’t involve you needing to rely on credit each month. Sacrifices may be required.

Do you need to press pause on subscriptions for a period of time? Are there things you haven’t used enough to justify spending money on each month? Can you do without certain things in the short-term and instead defer the spending into the future? Remember these changes don’t have to be forever, just until you have more disposable income to add back in the money for spending on luxuries.

The danger comes if you don’t make sacrifices around your luxury spending, but instead opt to reduce your outgoings towards future savings and debt. If you lower the amount you put away each month towards savings and debt repayments, you’ll be doing a huge disservice to ‘future you’. It’s important that you don’t lose sight of the value of making sure you’re doing the right thing with your finances both now and for the future. We’ll come out the other side of the cost of living crisis and your future self will thank you for not making sacrifices now which will make life all the harder for you in the future.

Make sure you’ve weighed up the consequences of any actions which impact your future finances:

Canceling standing orders into savings accounts for the things that are important to you in the future. This may seem an easy option to free up cash for the things you ‘need’ and ‘want’ today, but it means you’re likely going to miss out on those financial goals you have beyond the immediate future. Ask yourself how much those goals mean to you on a scale of one to 10 and ask yourself the same about the alternative choice for spending that money now. Give yourself the opportunity to reflect on the longer term consequences of your current actions.
Reverting back to paying only the minimum balances on credit cards or loans. Paying off debt, whilst it’s hard, has benefits in so many areas; your mental health, your credit score and your financial resilience to withstand future financial knocks. If you revert back to minimum payments, you’ll end up paying more in interest payments over the lifetime of your debt. Ultimately this means less money to spend on the things you enjoy in life, now and in the future.
Canceling payments towards investments. You’ll miss out on the benefit of compound interest increasing the value of those investments over time. Money loves the power of time to grow; compound interest is where your money and the interest it earns continues to grow over time as a result of interest being earned on the interest as well as the initial deposit or investment. It’s always possible to restart payments again in the future, but it will require larger deposits to get the same financial outcome in the future if you stop for a period of time. Be aware that your actions now can be costly in the future.
Dialing back pension contributions, or stopping them altogether, because you feel as if retirement is a long time away and there’s plenty of time to catch up later. Not only do pensions grow with the power of compound interest but your pension contributions are topped up by tax relief from the government. If you’re a basic rate taxpayer you’ll usually get ^_basic_rate tax relief. In practice this means if you wanted to add £100 into your pension you’d only need to pay in £80 and HMRC will add the rest. Reducing or stopping pension contributions is essentially saying ‘no thank you’ to this free money. At a time when everything is getting more expensive, free money is a wonderful gift. Remember, too, that in order to have enough money saved for a comfortable retirement, it is advisable to aim to save ^_ni_rate of your salary into retirement savings throughout your working life.
Don’t make the mistake of using your emergency savings for anything other than emergencies. Keep a stash of cash available for those things that you haven’t planned for in your budget and which have the potential to really knock you financially. If something unexpected happens and you don’t have a cushion to fall back on, you may need to resort to credit cards or loans which will ultimately cost you a lot more over the longer-term.

The ‘new’ rule of thumb

There is no one-size-fits-all rule when it comes to effective money management because it needs to be right for your circumstances and your life goals. However, aiming to allocate ^_basic_rate of your income towards saving or paying off debt remains a good aspiration, regardless. How the remainder is split between ‘wants’ and ‘needs’ will be unique to your circumstances. Your allocations may look like 65-15-20 or they may look like 80-0-20. Whatever it is, remember that good money management starts with getting clarity around where you’re currently spending and saving and, from here, you can make better decisions.

The 50-30-20 rule does need to be adapted to reflect the changing economic climate. With the cost of essential living expenses rising, the key to being financially secure starts with being able to optimise your spending on needs and get visibility on how much this leaves for everything else, then reigning in how much you spend on ‘wants’ so you can be disciplined to continue saving for the future and paying off debt.

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.

Emma Maslin is a certified Financial Coach and Mentor, Financial Wellness Speaker and Founder of multi award-winning personal finance education website The Money Whisperer. A former Chartered Accountant, Emma believes financial health and wellbeing isn’t a luxury just for the wealthy; it’s a basic need for all of us.

Are you ready for your 100-year life?

With many people living much longer, and some to 100, what does this mean for our way of living, working and thinking?

What makes a happy retirement?

What do we need to consider when it comes to planning for a happy retirement?

What happened to pensions in October 2022?

Find out how the performance of your pension plan is directly impacted by the performance of its investments.

This is part of our monthly pension update series. Catch up on last month’s summary here: What happened to pensions in September 2022?

It’s been a time of great change in the UK, with political events unfolding alongside global economic themes, including high inflation and rising interest rates. There’s an interconnected relationship between inflation and interest rates; often when one is high, the other is low. Both have made headlines in recent months, but it’s important to remember that inflation and interest rates aren’t inherently bad. In moderation, they’re integral to growing the prosperity of a country. The difficulty occurs when one experiences instability and becomes too high or low.

High inflation is an economic ‘fever’ where symptoms include: a loss of appetite to spend money (due to rising prices), and a weakness in currencies. Central banks endeavour to provide the financial stability needed for a healthy, growing economy. So when inflation is running high, central banks may prescribe raising interest rates to lower the levels of inflation. This antidote of raised interest rates doesn’t correct inflation overnight and may have side effects of its own, such as it being more costly for you to borrow money for loans or mortgages, whilst also meaning more competitive rates for cash savers.

The danger of untreated inflation and interest rates is a recession, which economists are speculating is largely inevitable in the current climate. In fact, some news outlets have hypothesised we’re already in a recession. The combination of high energy prices, rising interest rates, and soaring inflation is the perfect recipe for a UK recession. The UK’s central bank, the Bank of England, is attempting to limit the damage of inflation by raising interest rates. Currently the Bank rate is 2.^{_corporation_tax} and the next update is due on 3 November 2022. However, ongoing interest rate rises are likely to dampen economic growth, leaving prominent risks to the UK economic outlook.

Keep reading to find out how markets have performed this month, what a recession is, and how a UK recession may impact your pension balance.

What happened to stock markets?

With economic uncertainty widespread, information has become the most important detail for dubious investors. Fortunately, October marked an opportunity for insights as many companies reported their quarterly earnings halfway through the month. For some, these mid-month trading updates launched an uplift in the value of company shares and stock markets alike, because many companies had better than expected profits, despite the economic turmoil. However, these updates can be a double-edged sword. A weaker outlook for Amazon sparked a turbulent downfall of more than ^_ni_rate in their share price. Even companies that have had a successful October may still be far from their 2021 highs after this year’s continued period of market volatility.

In UK stock markets, the FTSE 250 Index rose by almost 4% in October.

Source: BBC Market Data

In European stock markets, the EuroStoxx 50 Index rose by almost 9% in October.

Source: BBC Market Data

In US stock markets, the S&P 500 Index rose by almost 9% in October.

Source: BBC Market Data

In Asian stock markets, the Hang Seng Index fell by over 14% in October.

Source: BBC Market Data

Are we headed for a recession?

Qualities of a healthy economy include: increasing growth rate, high employment levels, and moderate inflation. The opposite, a weak economy, often features a decrease in economic activity, rise in unemployment, and volatile inflation. After two consecutive quarters of an economy contracting, a recession is confirmed.

What’s happening to the UK economy?

Gross domestic product (GDP) is a measure of the size and health of a country’s economy over a period of time. Similar to quarterly reporting conducted by companies, the country will announce similar results for how much they’ve grown or contracted. The table below shows the GDP of the UK economy since the previous recession, demonstrating a decline in the growth rate:

Quarter of financial year	Performance of UK’s GDP
Q3 (July to September) 2020	+ 16.^{_personal_allowance_rate}
Q4 (October to December) 2020	- 9.8%
Q1 (January to March) 2021	- 1.6%
Q2 (April to June) 2021	+ 5.5%
Q3 (July to September) 2021	+ 1.1%
Q4 (October to December) 2021	+ 1.3%
Q1 (January to March) 2022	+ 0.8%
Q2 (April to June) 2022	+ 0.2%

Source: Office for National Statistics.

When was the last UK recession?

In the past 40 years the UK economy has experienced three recessions: the ‘Early 90s Recession’ (lasted five quarters between 1990 and 1991), the ‘Great Recession’ (lasted five quarters between 2008 and 2009), and most recently the ‘COVID-19 Recession’ (lasted only two quarters in 2020). Each occurred due to a unique combination of economic factors.

What does a UK recession mean for my pension?

During a recession, where numerous companies may report low growth, consumer confidence is relatively low and stock markets will usually reflect that. Pensions invested in stock markets may follow this trend downwards while the recession is ongoing. On the other hand, stock markets are usually forward looking, meaning a negative future economic period is already priced into company shares. Overall, it seems that volatility has good cause to continue.

Summary

We’re currently in a bear market (a period of economic decline). The good news is global markets have recovered from every bear market in history. Moreover, the value of most global markets not only recovers, but typically goes on to reach new highs. Even the biggest market crash since the Great Depression, the 2008 global financial crisis, was followed by the longest period of sustained growth in market history until the coronavirus pandemic struck markets in 2020.

As a general rule of thumb, when markets are down company shares become more affordable to investors. Putting your pension under a microscope, you’ll see that you probably own a very small percentage of many of the world’s largest and most successful companies, like Apple and Microsoft. When company shares have reduced in value, the same level of contributions can buy more shares. If you’re able to, consider adding to your pension pot to grow your pension in the long term as purchasing shares below their average price could give them more opportunity to grow.

You may find yourself rethinking your pension savings during the cost of living crisis, or worrying about whether you’re making the right choices. PensionBee customers can rest assured knowing that our pension plans are being managed by some of the world’s leading money managers. Again, it’s worth remembering that it’s normal and expected for pensions to go up and down in value over time. If you’re over the age of 50 and are considering your retirement options, you may benefit from a free Pension Wise appointment. You can book your appointment online.

This is part of our monthly pension update series. Check out the next month’s summary here: What happened to pensions in November 2022?

Have a question? Get in touch!

You can check out our Plans page to learn how your money is invested in different assets and locations. 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.

E11: How to prepare for a happy retirement with Faith Archer, Mark Smith and Priyal Kanabar

How can you plan and save for a happy retirement? Faith Archer, Personal Finance Expert, Mark Smith, Head of Media Relations at PLSA, and Senior Engagement Manager at PensionBee, Priyal Kanabar discuss.

This article was last updated on 12/01/2023

The following’s a transcript of our monthly podcast, The Pension Confident Podcast. Listen to episode 11, watch on YouTube or scroll on to read the conversation.

PHILIPPA: Welcome back to The Pension Confident Podcast with me, Philippa Lamb. This month we’ve got a question for you, what does a happy retirement look like?

The good news is that we’re living longer than we used to. When Queen Elizabeth was born in 1926, average life expectancy for women was just 62. Now it’s 83, so most of us can look forward to around 20 years of retirement or even longer. But what is retirement nowadays?

Well, it might be stopping work completely or working part-time, volunteering maybe, or even starting your own business. So, today we’re going to look at visualising your ideal retirement and the financial and lifestyle steps to make it a reality.

We’ve got three guests here today, Financial Journalist and Founder of Much More With Less, Faith Archer.

Hello Faith.

FAITH: Hello.

PHILIPPA: Mark Smith’s in the studio too. He’s Head of Media Relations at the Pensions and Lifetime Savings Association. That’s the PLSA. Hello Mark.

MARK: Hello.

PHILIPPA: And lastly, PensionBee‘s Senior Engagement Manager, Priyal Kanabar.

Priyal spends a lot of her time talking to customers about their ideal retirement, so she’s the perfect person for today’s discussion. Hello Priyal.

PRIYAL: Hello.

PHILIPPA: Before we start, please remember, anything discussed on this podcast shouldn’t be regarded as financial advice and when investing, your capital is at risk.

What could retirement look like?

Now, I know everyone around the table is used to talking to everyone else about their pensions and retirement, but I’m intrigued to know about your own plans. Mark, have you got a vision of your retirement years?

MARK: Yeah, I suppose I have. I’m 35, so hopefully retirement’s still a long way away. But I’ve got this fantasy of retiring early, perhaps going down to part-time work at some point as I get older. Maybe money’s less of a worry as I get older. And getting some space in the country somewhere, I know my partner would love to have some animals. So, just winding down and doing something like that.

PHILIPPA: You’ve got it all worked out. What sort of age are you thinking?

MARK: Oh, as soon as I can afford it.

PHILIPPA: Really?

MARK: Tomorrow if I can afford it. I absolutely can’t afford it tomorrow, but I want to be done working. I want to have the option to choose when I work, not have to work.

PHILIPPA: Okay. I think we’re clear about what Mark wants. Priyal, have you got an idea?

PRIYAL: It’s actually the opposite of Mark. I love working and I can’t see myself not working, especially for around 20 years in retirement. And I want to feel financially secure and I want to spend lots of time with people that I love.

PHILIPPA: This sounds like a packed program, Priyal. That’s all I’m saying, there’s only so many hours in the day! Faith, tell me.

FAITH: I think in some ways I don’t see my retirement as being too different from the life I lead right now. We’ve already moved out to the country, I’m self-employed and I think I’ve got quite a good balance between work and my own time and I enjoy what I do. I’m not sure I want to quit it completely. But the big thing I would love to do more of is travelling. It’s something that my husband and I used to do a lot of pre-kids. And obviously with the pandemic, that’s been reigned in massively. So I think carving out more time, hopefully if we’ve got enough money, to go travelling.

PHILIPPA: I’m on exactly the same page as you about that, working and travelling. Yeah, it’s a lovely combination, isn’t it?

Now look, Priyal, as I said, part of your role at PensionBee is talking to customers about their pensions and their retirement ambitions. What sort of things do they tell you that they want to do?

PRIYAL: Yeah, I’m very lucky. I get to spend a lot of my time talking to our amazing customers and it’s really interesting. A lot of them say they can’t imagine stopping work, but they want to focus on work that they have more passion for. So, Dermott’s a customer in his 40s, and he’s from Zimbabwe. And he’d love to open up a shop where he can sell Zimbabwean food and not run it for a profit, but just to benefit his community by bringing them the food. And another customer, Joe, recently retired early as he was kind of on the cusp of his 60s, and he married his wife at that time. He’s known her for 25 years, they got married and they’ve got lots of travels planned for their retirement.

So, I hear a variety of stories and I think what’s common is that all the customers hope to be very financially secure so that they can do what they dream of doing.

PHILIPPA: Yeah, would it be fair to say, I mean our expectations have grown, haven’t they, as our standards of living have grown over the years? And we don’t just want to get by in later life. I think most of us want to enjoy ourselves, don’t we? We’ve all said it around the table, our plans aren’t going to be that cheap are they?

PRIYAL: I think it varies. In some ways, we’ve got higher expectations and enjoy a higher quality of life. And certainly people of the boomer generation are very lucky because they were able to benefit from house price inflation, wage growth, and defined benefit pensions. Not all of them, but more so than millennials, which is my generation. I’m 31.

Whereas for my generation, we’re worried about the housing crisis and wage stagnation. So I think a lot of us are worried about whether we can even afford to have a retirement.

How to plan and save for that happy retirement

PHILIPPA: Mark. Let’s think about when people can retire. Because, you said you want to retire as soon as you can. Largely there’s no mandatory retirement age for most people nowadays, is there? So it’s kind of different to how it used to be. But there are rules, aren’t there? About when you can claim State Pension, when you can access your personal and workplace pensions. What are they?

MARK: Yeah, that’s right. I think that kind of carriage clock retirement where you work in that one job - the only job you’ve ever had, for the rest of your life - and then you get given a carriage clock and sent on your way with your gold plated final salary pension, those days are probably behind us.

PHILIPPA: That’s my parents’ generation. Yes, a long time ago.

MARK: Mine too. Yeah, you’re right. Most of us won’t be so lucky. But most people, I think, will probably be in a position that think they might be able to afford to retire when they get the State Pension. If they are eligible for it, the State Pension still makes up a really big proportion of most people’s retirement income, when they get to that retirement age. To be eligible to claim the basic State Pension, you’ll need 10 qualifying years of National Insurance contributions and for the full State Pension, you’ll need 35 qualifying years of National Insurance contributions.

PHILIPPA: Just remind us how much it is nowadays?

MARK: The full State Pension is £9,627.80 per year, which is £185.15 per week (^{_tax_year_minus_three}). Following the Autumn Statement on 17 November, this is rising in line with inflation in April 2023 to £10,600 per year, which is £203.85 per week. Depending on what age you are now, you can take it between the ages of ^{_state_pension_age} and 68 - currently you can take it at ^{_state_pension_age}, by 2028 this will rise to ^{_pension_age_from_2028}, and by 2037 this will rise to 68. But of course, you can flexibly take some of your private pension and your workplace pension when you get to the age of 55 (rising to 57 by 2028).

But there are lots of rules governing when you start accessing that, and then you’re limited to how much you can contribute to your pension afterwards. So you need to think really, really carefully before you start accessing that, because it does sort of change your circumstances quite drastically. But it’s quite common for people to start accessing some of that and moving to part-time, perhaps trying retirement out in a sense, and using that to supplement their income that they’re getting from whatever work they’re doing.

PHILIPPA: I mean Faith, if people are visualising their later life and when they might want to retire, have we got a shopping list of a few things they should be thinking about for sure?

FAITH: When it comes to planning your retirement and how you’re going to fund it, there’s a whole bunch of factors that you have to weigh up.

So, some of it’s when you start your retirement. So what age you’re going to retire, if you’re going to work part-time or if you’re going to stop completely. You’re also thinking about your life expectancy. I don’t know exactly when I’m going to die, but you can certainly kind of estimate how long your money’s going to need to stretch. You can toggle around with what income you can take - because if you take more income earlier rather than later, there’s more chance of running out of it.

And then there’s a whole range of factors that will impact you. Depending on how you take your money in retirement, what the stock market does, what inflation does, if you’re going to have to cope with rising prices, how the tax is going to be taken off your pension. And also thinking later on, whether you want to leave any money to your children.

PHILIPPA: So the whole thing can seem quite overwhelming, there’s quite a lot to think about?

FAITH: Definitely.

PHILIPPA: But handily, Priyal, I’ve been on the PensionBee website. There are a lot of tools and tips on there, aren’t there? Do you want to run us through what’s there?

PRIYAL: Yeah, a first powerful step is using the pension calculator you can use the sliders to put in when you want to retire, at what age, what income you expect to receive, how much you’re currently paying in, and how much you already have. And that can help you work out how much you need to pay in every month. Now, it’s not that the first time you log in you’re going to have the perfect plan, but it’s a process and it’s a habit, and getting into that habit can help you plan and save.

PHILIPPA: It’s a bit of a self education process, isn’t it? So it struck me when I went onto the site, as you said, there’s loads there. There’s the Pension Academy video series, there’s blogs and what struck me was that there’s really basic things on there. So, if you know nothing about pensions, you can go there and just start to understand what this is all about. You don’t need to know anything?

PRIYAL: Exactly.

PHILIPPA: The main thing is to start.

PRIYAL You can find our pension calculator. You just need to type into Google - PensionBee pension calculator. It’s amazing hearing customers say that the transformation, the level of confidence, that they develop through engaging with the content on the website. And we’ve really been focused on creating as simple an experience as we can because we feel that’s the way to help people develop that confidence. Pensions tend to be way too complicated and they really don’t need to be.

PHILIPPA: So Mark, let’s get down to the harder things. Most of us underestimate how much money we’re going to need, don’t we?

MARK: Yeah, I mean, working out how much you need is really, really difficult. When you ask anybody now, I mean how much do you spend in the average year now? I mean, most people won’t be able to answer that question. It’s a really difficult thing to work out.

In recognising this kind of shortcoming, in people being able to understand this stuff, the Pensions and Lifetime Savings Association, a few years ago, developed the Retirement Living Standards. Now when I joined the PLSA, these things were still under construction and I was really excited to get my teeth into them as someone whose job is to communicate complicated, sometimes confusing information about pensions to savers, I really sensed that these would really be able to bring things to life.

PHILIPPA: Yeah, these are really nice because they’re really understandable. Tell everyone how they work.

MARK: So they’re based on goods and services that people would typically buy or use when they’re retired and they’re pitched at three different levels - minimum, moderate and comfortable.

And they allow you to go on and have a look at the types of things that you might be able to enjoy doing at three different income levels. So the annual budget for the minimum standard is £12,800 for a single person, and £19,900 for a couple. And that’s going to include a week’s holiday in the UK, eating out about once a month and some affordable leisure activities about twice a week. But, on the other hand it’s probably not gonna include the budget to run a car. Now that level through the combination of a full State Pension, and normal Auto Enrolment that you would get in your workplace pension, that level should be very achievable for most people. We projected about three quarters of single employees are likely to achieve that level. Everyone who’s in a couple should be able to reach that because they are likely to share their costs.

PHILIPPA: Okay, so that would be a comfortable minimum. And if people felt they wanted to have a bit more wriggle room to enjoy themselves, what’s the next level up?

MARK: A bit more? So the moderate standard is £23,300 for a single person, and £34,000 for a couple. Now in addition to the minimum lifestyle, that’s gonna provide a little bit more financial security and more flexibility. For example, you could have a two week holiday, perhaps in Europe, and you’re going to be able to eat out a few times a month rather than just once a month. So a bit of a nicer lifestyle, but not shooting the lights out.

Not luxury, by any stretch of the imagination.

PHILIPPA: Yeah. And higher up?

MARK: And higher up, what we call the comfortable retirement living standard. Now I think this is probably really quite luxurious indeed. So you expect to enjoy regular beauty treatments, and theatre trips, and three week holidays to Europe, perhaps twice a year. Now this isn’t something that everybody’s going to want to be able to do in retirement. But at that level, it’s going to be £37,300 for a single person and £54,500 for a couple. So you can already see this is already reaching quite a luxurious standard.

Now, I should point out that these figures, because we want to keep them as universal as possible and as easy to understand as possible, they don’t include housing costs. So at the moment when people retire, still, most people would’ve paid off their mortgage and are likely to own their own home. But of course, societal trends are changing. So if you think you’re going to be renting at that point, you need to take that into account. Of course it’d be impossible for us to say the amount. That varies from county to county. So it’s really difficult for us to include that. So we’ve kept it as simple as we can.

There’s too much complication in pensions communications, I think, as it is. So housing’s kept out of it for now.

PHILIPPA: But useful, to kind of give you a sense of how much money you might need. I mean Priyal, you alluded to this earlier, what are your customers saying about their financial worries? It’s a tricky time. Are people worrying more than they did, that they won’t be able to save enough for retirement?

PRIYAL: Yeah, I mean we already saw high levels of consumer debt amongst people who are approaching retirement age. Another thing that I’m very aware of is the gender pension gap. Women tend to have different working patterns in terms of paid employment and tend to be assigned the main kind of care role.

PHILIPPA: Yeah. Childcare and healthcare. We talked about this on the podcast before actually, the gender pension gap. It’s significant, isn’t it?

PRIYAL: It really is. And while society’s attitudes have moved on and are much more in favour of gender equality, with women being appreciated in the workplace, many policies haven’t moved on. But yes, I’ve spoken to many women who are worried about the time they’ve had outside of employment, doing unpaid care work.

PHILIPPA: And they haven’t been contributing to their pension?

PRIYAL: Yes. And they’re looking at their pension pot when they’re 50. And often when they’re around that age, they also get assigned the care work for elderly relatives. So that has an impact on their pensions. So that’s a concern. Another concern is the cost of living crisis. People who are at an age where they want to make massive contributions into their pensions because they’re approaching retirement, maybe in their late 40s, early 50s and they can’t because of the pressures of the current crisis. And then we also have a growing number of people who can’t afford to buy their own home. So yes, many concerns.

PHILIPPA: I mean Faith, we’ve been talking about various different sorts of pensions. I’m thinking we should probably actually just run through the main ones. Can you give us a translation on what the State Pension is? Not everyone knows what that is. What is it?

FAITH: The State Pension is money you get from the government provided that you’ve made National Insurance contributions which are paid out of your salary, or your income if you’re Self-Employed. You need to rack up a certain number of full years of National Insurance contributions to qualify for a full State Pension. It’s currently 35 years for the full State Pension and 10 years for the basic State Pension. So the good thing about the State Pension is that typically, it increases. It goes up, at the moment, it goes up in line with the triple lock, which is the largest of three figures, 2.5%, inflation and the increase in average earnings. And it’s the highest of those three?

MARK: That’s right. Yeah. The highest of; inflation, wage growth or 2.5%.

PHILIPPA: And our new government is considering this right now?

FAITH: They’re weighing it up. I don’t think it’s in their interest quite yet to scrap the triple lock. But the point is, it goes up with inflation. The other kind of pension you’re going to have is a pension from your workplace, if you’re an employee. Once you earn over ^{_money_purchase_annual_allowance} in the UK, are at least 22 years old, and have not yet reached State Pension age, there’s Auto-Enrolment. That means that you’ll automatically have money towards your retirement savings unless you choose to opt out. That has the major advantage that you’ll get employer contributions and free money from tax relief. If you earn less than ^{_money_purchase_annual_allowance}, but above ^{_lower_earnings}, your employer doesn’t have to automatically enrol you, but if you ask to join, your employer will be unable to refuse you and must make contributions on your behalf. Opting out of a workplace pension is like turning down a pay rise.

FAITH: Now the workplace pensions, they used to be a ‘final salary’, defined benefit, where the money you got in retirement was related to how many years you’d paid in and what your salary was. And that was really nice.

PHILIPPA: Yeah, those days are long gone.

FAITH: You knew, you were just kind of guaranteed a certain amount of income.

PHILIPPA: You knew what you were gonna get and it was just happening.

FAITH: Yeah. And there are some people that still do benefit from defined benefit pensions, particularly if you work for the public sector. But it’s a much smaller proportion of the population.

PHILIPPA: Very few now.

FAITH: And, the rest of us have what’s called defined contribution pensions. Whether it’s a workplace pension or, whether it’s a private pension. So what you get in retirement depends on what you paid in, and what the stock market has done.

Things to think about when you’ve nearly reached retirement

PHILIPPA: We should talk about compounding shouldn’t we? Because this is the thing that’s not talked about enough. The joys of - the sooner you start and the longer you save, the better it gets. Just explain compound interest and how that plays in.

FAITH: Well, I think everybody’s familiar with the concept of interest. You put £100 in a savings account, maybe you get 1% interest. So at the end of the year, you get £1 added on. Brilliant, there’s your 1% interest. But if you don’t spend that money, if you leave it in the account, at the end of the next year, you don’t just get another £1 added to your £100, you’ll also get interest earned on top of the interest.

PHILIPPA: On your pound?

FAITH: So what it means is, your money goes up, not in a straight diagonal line, but it’s a curve. And the longer you leave it, the more the curve will tip upwards, and the more money you will have amassed.

PHILIPPA: So the younger you start, even if it’s tiny amounts, the better?

FAITH: Absolutely.

PHILIPPA: As time goes on and you get closer and closer to retirement, you’re going to be thinking about how you might start withdrawing from your pension. We’ve talked about this a little bit already. Before you start doing this, if you’re 50 or over, I think this is new, isn’t it, Faith? Your pension provider’s now required to suggest that you have an appointment with an organisation called Pension Wise. Now what is Pension Wise? I know you’ve had one of these meetings, tell us about that.

FAITH: I have, I’m now over 50 and I’ve actually done my Pension Wise appointment.

PHILIPPA: It’s okay Faith, that’s both of us. We can both admit to being over 50.

FAITH: Well, I’m over 50 and proud. I’m excited. I’m getting closer to getting my hands on that pension money.

PHILIPPA: Yeah.

FAITH: All those years of saving. And finally I might get to spend some of it. But it really is a good idea to talk to Pension Wise before you start spending your pension money. It’s a government body. The appointments are completely free. I’m gonna say that again, the appointments are free! And what Pension Wise can do is give you guidance about your pension options.

PHILIPPA: This is a great starting point.

FAITH: It absolutely is. I think mine was about 45 minutes and I was actually really impressed at how clearly they explained what the options were.

PHILIPPA: I mean, they didn’t tell you anything you didn’t already know, I’m assuming? But you thought it was a really good process?

FAITH: I thought it was a really good process, I think they covered a lot of ground during the interview. And I think crucially, one of the reasons I recommend anybody over 50 to have a Pension Wise appointment, is that if you actually put the preparation in beforehand, you are going to get the most out of the interview. If you actually go through the exercise of working out what money you have.

So, track down where your pensions are, where they’re held, in what funds, what the charges are, what else you have in terms of any cash savings, ISAs, investments. Actually look at your budget and work out what you spend now and how much you might like to spend in retirement. So just doing the exercise of sitting down, getting that information together, starting to think about what you would like your retirement to look like. That preparation for the interview is enormously helpful.

PHILIPPA So Mark, I’m gonna put you on the spot now. If you decide you’re ready to start withdrawing from your pension, it can be tricky to work out exactly how you want to do that and how you should do that. Can you just run us through the various ways you can take money out of your pension pot when the time comes?

MARK: Yes, that’s right. So, first and foremost you have to be 55 (57 from 2028) to start withdrawing from your pension. It’s not always advisable to start withdrawing at 55 because, if you want to carry on working and contributing to your pension, then you are limited at that point. So first thing’s first, make sure you actually need the money, or that you actually want to start accessing the money.

PHILIPPA: So, don’t take it just because you can?

MARK: Don’t take it just because you can. Especially to pay off, frivolous - I say frivolous things - but to buy luxuries, don’t take it out and buy a sports car for instance. Just because you really want one.

PHILIPPA: People do though, don’t they?

FAITH: Do they?

MARK: The data says that fewer people do than you’d think.

PHILIPPA: Oh you don’t think so? You read about these things, but is it not true, Faith?

FAITH: I think anybody who’s spent years and years paying their money into a pension does not suddenly change their complete financial personality at 55 and go, whoa, I’m gonna blow the lot!

PHILIPPA: So not even people who’ve been in a workplace scheme where they didn’t really feel they were having anything to do with their pension payments. Because you’re quite detached if you’re a workplace scheme, aren’t you?

FAITH: I think it depends on how much you’ve accrued and I think if your pension is a relatively small amount, ^{_starting_rates_for_savings_income} or ^{_money_purchase_annual_allowance}. Then, that might not feel so significant. But anybody who’s built a bigger pension, I’m willing to bet that they think about it slightly more.

PHILIPPA: Okay, so Mark, I’m gonna go back to you because you’ve got more to tell us, haven’t you? So, consider not taking the money out unless you need it at 55.

MARK: It might be that you’re older, you’re closer to retiring and at that point you can take ^{_corporation_tax} of your pension tax free. It’s a really good idea to pay down things like debt at that point. Paying off your mortgage might be a good way to set yourself up for a decent retirement.

Then with the money that you’ve got left, there’s several ways you can take that. You can either use that money and buy what’s called an annuity. Now, essentially you swap a lump of money for a guaranteed level of income.

PHILIPPA: You can’t change your mind about that though, can you? Once you’ve brought that annuity, that’s done. There’s no going back?

MARK: Yeah, you’ve got the guaranteed amount but it’s irreversible. That’s right. The other way you can access your money is what’s known as drawdown, which is where you leave the money you’ve accumulated in some sort of investment pot. So some of it still remains in the stock market and in other types of investments that your pension fund normally holds.

So it has the potential to grow and you draw down from that flexibly, as much as you need. And the trouble with this strategy is that the amount you get isn’t guaranteed. So it fluctuates with how much you take out at any one time, but also how stock markets perform. So for instance, if you have a bad year where the stock market falls - it’s not unusual for the stock market to fall, 1^{_personal_allowance_rate}, 12%, ^_ni_rate in some of its leaner years - and suddenly you find yourself having to draw money that’s reduced in value, that hurts your fund even more.

So you have to be in a really comfortable position, I think, to sort of rely on that drawdown strategy.

But I think actually more and more increasingly, the most relevant way for people to access their pension is to do it through a blend of all of these options.

PHILIPPA: Anything to add, Faith?

FAITH: There’s one other option, which is, if you’re in a position where you don’t have to take the ^{_corporation_tax} tax free lump sum at the beginning, you could instead choose to take payments, take lump sums as and when you need them, where ^{_corporation_tax} of that amount is tax free. And that sometimes could be useful if somebody’s got the State Pension, maybe they have pensions coming in from other directions, and they’re trying to bring their taxable income down.

MARK: If listeners are thinking, oh gosh, all this sounds incredibly complicated, then believe me, it is. Don’t rush into it and think very carefully before you do it.

PHILIPPA: But the flip side of that is that, you know, the nice thing is, there’s a lot more flexibility in the system now, isn’t there? Maybe not as much as you’d like, Mark, but you know it’s coming. It’s not like the old days where you start work, you get your pension. That’s it. I mean there’s a more flexible way of managing the money you’ve saved isn’t there? Would it be fair to say that, in your retirement?

FAITH: Absolutely. It’s far more flexible and I think it means that there’s much more flexibility in the fact that you don’t necessarily have to stop work on a set date. Because if you wanted to, for example, drop your hours and go part-time after the age of 55, then you could top up your income with either part of your tax free lump sum or using the payments that have part of them as tax free, rather than just buying an annuity which pays you a set amount every year regardless of whether you want all that money or not. You’ve got much more flexibility. And it doesn’t stop you from potentially later in life - because the older you get, the higher annuity payments you will get - if you start it later in life, you’ll get more money each year.

PHILIPPA: Basically, because they know they’re not gonna have to pay you that money for very long?

FAITH: Exactly. But it does mean that while you’re still in a situation where you’re quite comfortable taking stock market risks and you can kind of manage your money, you could drawdown. But then later in life, when you don’t want the hassle anymore, you could hand over money in exchange for a certain income.

MARK: It’s one of those frustrating areas in pensions where the savers are saying ‘What should I do?’ And the answer from the pensions industry is ‘Well, like everything in pensions, it depends.’ So it’s really important that you go and have individual tailored conversations with someone, like Pension Wise, before you do this stuff.

What will retirement look like in the future?

PHILIPPA: We’ve talked a bit about how pensions have changed and are evolving even now, and we need to wrap this up. But I’d like all your thoughts on how you’d like to see that process continue. What else would you like to see in terms of evolutions of the pension system, so that people can match their older years to the kind of flexibility we’re all looking for now? What would you like to see that isn’t there?

FAITH: I think there needs to be more support for the self-employed.

PHILIPPA: Yeah.

FAITH: I don’t know exactly how you’d do it, but I think there’s a massive chunk of the working population that aren’t being compelled to put money into pensions. What we’ve seen is that while for the working population, pension saving has increased and increased and increased after Auto Enrolment, during the same time period, the contributions to pensions by the self-employed have just fallen off a cliff.

PHILIPPA: Yeah, it’s a good point. Mark, any thoughts on what you’d like to see?

MARK: Yeah, for the Pensions Lifetime Savings Association, the question is perfect because we’ve very recently launched a publication which makes five recommendations, five pleas for the government to improve the pension system.

And the first one of those - amazingly, there are no national objectives for what the pension system is trying to achieve - so we want to see the creation of very clear objectives for what the UK pension system actually is. And we think the definitions for those should be around whether it’s adequate for people, whether it’s affordable for the government and whether it’s fair in the way that everybody’s able to get similar outcomes with the same rules that apply for them. We think the State Pension’s too low. I think by international standards and by other G7 economies, it’s lower compared to our counterparts in Europe.

We want to see reform of the State Pension so that we stick with the triple lock, but it needs to gradually increase so that we reach the level of the minimum Retirement Living Standard. We think contributions are still too low via the Automatic Enrolment system.

PHILIPPA: That should be more?

MARK: It should be more. In recent modelling we’ve done, half of people are still gonna retire with less than what we call the ‘target replacement rate‘ - which is the amount they should get.

There are also lots of under pensioned groups, so we’ve already talked about women, but the self-employed, gig economy workers, there are lots of people that are being a little bit let down by the system because they work strange hours, or they might have two jobs or three jobs or four jobs and the system doesn’t really help them.

PHILIPPA: It hasn’t caught up with work with working patterns has it?

MARK: Exactly. So we’re still living in a slightly antiquated, you know, the idea that we’re all working one job and one salary, but it’s just not the case for many, many people. And the other thing is more industry initiatives to help people better understand their pensions.

So, there are actions that pension schemes can take, that employers can take to, to improve pension contributions themselves. You don’t have to put the minimum in if you’re an employer, you might want to make your company more attractive to work for, by having a more attractive policy. And we’ve seen some creative policies around employers paying during periods of parental leave, they continue to pay the pension contributions at the normal salaried rate while that person’s away on parental leave. So there’s some creative ways that can really help people’s pension outcomes in the future. So lots for the government to do, we’ve given them a shopping list of things we’d like to see. But we think if all of these things were adopted, a median earner would see their pension income increase by about £4,000 a year or increase about ^{_corporation_tax} through the entire life of a pension saving journey. So there are some big outcomes to be achieved, if we can get there.

PHILIPPA: It’s good to know you’re all over making it happen.

MARK: Yeah, we’re banging the drums, certainly.

PHILIPPA: I think we’re going to leave it there. There’s so much more we can talk about, but I think we’ll leave it. Thank you everyone for being here today. It was a great discussion.

If you’d like to find out more about everything we have discussed, then check out the show notes where there are links to lots of useful articles. A final reminder that everything you’ve heard on this podcast should not be regarded as financial advice and whenever you invest your capital is at risk.

Join us again next month when we’ll be joined by Stand Up Comedian, Vix Leyton, and PensionBee’s CMO Jasper Martens for an episode all about translating financial jargon. Dividend yields, annuities, APR, what does it all mean? Do not miss that one. Thanks for listening.

Catch up on episode 10 and listen, watch on YouTube or read the transcript.

Dislaimer: The PLSA’s Retirement Living Standards were updated in January 2023 and the figures in this transcript have been updated to reflect this.

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.

How PensionBee’s plans are performing in 2022 (as at Q3)

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

This is part of our quarterly plan performance series. Catch up on last quarter’s summary here: How PensionBee’s plans are performing in 2022 (as at Q2).

Investments have dropped significantly in 2022, and while this past quarter started on a more positive note, investor sentiment was a continuation of what we witnessed in the first two quarters of this year. Across the UK, pension balances are still volatile and many savers have experienced substantial falls over the last months. Many savers nearing retirement will have been impacted by falling share and bond prices.

Stock markets have been reacting to an unfolding story of three economic shocks: the war in Ukraine, the UK’s rising inflation rate, and China’s supply chain disruptions.

This year market volatility has veered into bear market territory, where markets are in significant decline for a few months, at least. As investors, it’s concerning, but this period is never permanent. In fact, global markets have recovered from every bear market in history. Even the biggest market crash since the Great Depression, the 2008 global financial crisis, was followed by the longest period of sustained growth in market history until the coronavirus pandemic struck markets in 2020.

Whilst we experience this volatility, please be reminded that bear markets are a typical feature of the capital markets cycle and are eventually always followed by a bull market, a period of sustained growth. Undoubtedly, stock markets will need more time to fully recover from the scale of volatility in global stock markets that have characterised 2022 to the present date.

After months of investments tumbling in a downward trend, July saw marginal growth as markets appeared to stabilise after six deeply unsteady months. In fact, China was the only leading stock market to fall in value. This brief rebound had given investors optimism for further stability and perhaps even growth. However, August reminded us all that we’re still firmly in the grips of a bear market.

In fact, September saw the continuation of the domino effect created by the international energy crisis and the ongoing war in Ukraine. Uncertainty over measures taken by central banks to combat inflation (rising interest rate), along with the energy crisis, has clouded any optimism for an imminent recovery. September saw the Pound Sterling fall by almost 5% against the Euro and by nearly 8% against the US Dollar. This reflects the UK’s weaker economic outlook, as inflation is at 10.1% at the time of writing. In reaction to the rise in inflation, the Bank of England raised interest rates to 3%.

Rising interest rates profoundly impacted fixed income markets, especially bonds. Historically, bonds have been seen as ‘safe assets’, as they thrive on market stability and aim to provide moderate growth for investors, however, bonds and bond-heavy investments have suffered dramatic losses this year.

2021 and 2022 have been the worst years for bonds since 1842 due to inflation, which bonds are ‘allergic’ to. This is because the existing interest rates on bonds currently in the market become much less competitive relative to newer bonds coming onto the market, as the newer bonds are expected to have higher interest rates. Consequently, the prices of the current bonds in the market fall, which is what has now occurred. As a result our Pre-Annuity Plan, like all 10^{_personal_allowance_rate} bond plans, has been impacted.

Pensions are designed to be long-term investments and have historically weathered all short-term financial storms that have been thrown at them. In fact, as you can see from the tables below, PensionBee’s plans performed better than the US and UK main markets this year.

Remember that past performance is not a guide to future performance and this blog has solely been prepared for informational purposes and not with the intent to influence future investment decisions. As with all investments, capital is at risk.

Savers under 50

Plan / Index	Money manager	Performance over 2022 (%)	Proportion equity content (%)^
UK stock market	N/A	-27%	10^{_personal_allowance_rate}
US stock market	N/A	-^{_corporation_tax}	10^{_personal_allowance_rate}
Fossil Fuel Free Plan	Legal & General	-1^{_personal_allowance_rate}	10^{_personal_allowance_rate}
Shariah Plan	HSBC (traded via SSGA)	-14%	10^{_personal_allowance_rate}
Tailored (Vintage 2037-2039) Plan	BlackRock	-18%	73%
Tailored (Vintage 2055-2057) Plan	BlackRock	-16%	^_rate
Tracker Plan	State Street Global Advisors	-^{_corporation_tax_small_profits}	8^{_personal_allowance_rate}

Sources: Data is taken directly from the money managers or stock market factsheets. Performance is reported gross of fees (based on unit price) and net of irrecoverable withholding tax. Past performance is not an indicator of future performance. Capital at risk. These tables do not take account of any fees that may be levied for a particular investment. Factsheets are available here: /uk/plans. Plan performance may vary slightly from published factsheets due to timing differences and other negligible methodological differences. ^Equity content refers to the amount of exposure each plan has to global stock markets.

Savers over 50

Plan / Index	Money manager	Performance over 2022 (%)	Proportion equity content (%)^^
UK stock market	N/A	-27%	10^{_personal_allowance_rate}
US stock market	N/A	-^{_corporation_tax}	10^{_personal_allowance_rate}
4Plus Plan	State Street Global Advisors	-9%	^{_corporation_tax}
Tailored (Vintage 2019-2021 / Flexi) Plan	BlackRock	-^{_corporation_tax_small_profits}	36%
Tailored (Vintage 2031-2033) Plan	BlackRock	-^{_corporation_tax_small_profits}	61%
Preserve Plan	State Street Global Advisors	+1%	^{_personal_allowance_rate}
Pre-Annuity Plan	State Street Global Advisors	-37%	^{_personal_allowance_rate}

Sources: Data is taken directly from the money managers or stock market factsheets. Performance is reported gross of fees (based on unit price) and net of irrecoverable withholding tax. Past performance is not an indicator of future performance. Capital at risk. These tables do not take account of any fees that may be levied for a particular investment. Factsheets are available here: /uk/plans. Plan performance may vary slightly from published factsheets due to timing differences and other negligible methodological differences. ^^Equity content refers to the amount of exposure each plan has to global stock markets.

An important note of caution: It’s impossible to forecast what will happen from quarter to quarter, and past performance should never be used to predict future performance.

For our customers who are already in retirement and are perhaps thinking about withdrawing all of their pension, you may want to consider only drawing down what you need and keeping a close eye on the markets. Our Investment Pathway guide can help you select a plan based on your personal retirement aims. We’ll continue to keep you regularly updated on what’s happening with your savings and if you have questions about your plan’s performance, this blog, or anything else, you’re welcome to get in touch with our Engagement Team or your BeeKeeper.

This is part of our quarterly plan performance series. Check out the next quarter’s summary here: How PensionBee’s plans are performing in 2022 (as at Q4).

Have a question? Get in touch!

You can check out our Plans page to learn how your money is invested in different assets and locations. 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.

How do we reduce the self-employed pension gap?

Auto-Enrolment's seen a big increase in the amount of people contributing to a pension. This doesn't apply to the self-employed, who are falling behind in saving for retirement.

Autumn Statement 2022: What are the key pension changes to know?

What do the changes in the Autumn Statement mean for pensions?

The Autumn Statement on 17 November provided a big boost to pensioners, from raising the State Pension to announcing additional cost of living payments. But Chancellor Jeremy Hunt was far from universally generous, heavily targeting wealth saved and invested outside of a pension or ISA.

So, for those trying to avoid the Treasury tax grab, pensions and ISAs have become more attractive places to keep your money growing tax-free. We take a look at some of the need-to-know impacts on our pension savings and pension incomes.

State Pension increases

The State Pension will rise by 10.1% from April 2023, in line with September 2022’s inflation figure. This keeps the ‘triple lock’ on the State Pension that ensures it rises in line with the highest of; earnings, inflation, or 2.5%. The move will cost the Treasury £9 billion.

The full State Pension, for those retiring after April 2016, will rise to £203.85 per week or £10,600 per year – taking it above the £10,000 benchmark for the first time. The maximum basic State Pension, payable to those who reached State Pension age before April 2016, will rise from £7,376.20 to approximately £8,121 a year (£156.18 a week).

It was also announced that pensioners will receive an extra cost of living payment of £300 in the tax year 2023/24. Additionally, Pension Credit, paid to the poorest pensioners to top up their State Pension, will be uprated by 10.1% from April 2023. They’ll also be in line for cost-of-living payments of £900 in 2023/24. Many public sector pensions in payment will also increase by 10.1% in 2023/24.

Dividend allowance cut

In the 2023/24 tax year, the dividend allowance will be reduced from £2,000 to £1,000. It’ll be further halved from tax year 2024/25 down to £500. The dividend tax changes means more people will be paying tax from their investments. It’s also a real blow to business owners, many of whom pay themselves dividends in lieu of salaries. However, it’s not all bad news as there are still ways to save in a tax efficient way, such as into a pension or ISA.

This year (2022/23) a basic rate taxpayer with £20,000 in dividends outside of a pension or ISA will pay £1,575 in tax. A higher rate taxpayer will pay £6,075 in 2022/23.

Assuming dividend tax rates remain the same, in 2023/24, once the £1,000 cut to the dividend allowance comes in, a basic rate taxpayer will pay £1,662.50, and a higher rate taxpayer will pay £6,412.50.

And in the tax year 2024/25, when the dividend allowance drops to just £500, a basic rate taxpayer will pay £1,706.25, and a higher rate taxpayer will pay £6,581.25.

Higher rate tax threshold down

The threshold at which the top rate of tax is payable has been cut from £150,000 to £125,140 from 6 April 2023. This means that anyone who had earnings of £150,000 previously paid 40% on the amount above £125,140 and, from the start of the new tax year they’ll pay 45%, at an additional cost of £1,243 in tax.

Capital gains tax allowance cut

Capital gains tax (CGT) is paid on things like buy-to-let landlords selling their properties, or gains on investments outside of an ISA or pension. While the rate of tax hasn’t changed, the amount you pay tax on has. This is because the capital gains tax free allowance is being cut from its current level of £12,300. For the tax year 2023/24, it’ll be more than halved to £6,000 and then lowered again to £3,000 in 2024/25.

CGT is usually charged at 10% to a basic rate taxpayer for any gain falling within that tax band, and then usually 20% for any gain falling in the higher rate tax bracket.

So a basic rate taxpayer with gains over the current tax-free limit will face an additional cost of £630 in 2023/24, while a higher rate taxpayer will be paying £1,260 more in tax in 2023/24.

Assuming the CGT rates remain the same, in 2024/25, this rises to an extra £930 for a basic rate taxpayer, and £1,860 for a higher rate taxpayer.

Laura Miller is a freelance financial journalist.

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.

What happened to pensions in May 2022?

Find out how the performance of your pension plan is directly impacted by the performance of its investments.

We’ve written during the first few months of the year about the challenges affecting pensions; inflation, supply chain issues and the ongoing war in Ukraine among other things. This combination of factors is driving down market prices, which you’ve probably seen reflected in the value of your pension pot.

Whilst the current market downturn is unwanted, it’s not completely unexpected. It’s normal for the value of your pension to go down as well as up each day as the markets fluctuate. Naturally, though, it’s most concerning when the markets, and typically the value of your pension too, appear to be trending downwards for a sustained period of time. The most severe kind of market downturn is referred to as a ‘bear market’.

Although the current outlook may continue to be rocky for the near term, there’s also reason to be hopeful that pension balances will rise again. In order to understand why we see the silver lining, it’s helpful to take a step back and see what’s happened to the markets historically. We’ll also describe some of the things you can do to ensure as far as possible your retirement savings are protected.

What happened to the markets in May?

May broadly continues the global market downturn.

In the UK, the FTSE 250 fell just over 2%.

Source: Google

In the US, the S&P 500 fell nearly 5%.

Source: Google

What is a bear market?

When the value of the markets goes down it’s generally a reflection of investors’ more pessimistic sentiment towards current economic conditions, believing that economic growth is slowing. Investors tend to react by protecting more of their money by investing in traditionally ‘safer’ types of assets such as gold and traditionally bonds. As investors sell their company shares this drives down the prices of these stocks and therefore the cumulative value of investment funds such as a private pension.

Although there isn’t a strict definition of when we’re considered to have entered a bear market, one is generally acknowledged when the value of company shares has fallen by at least ^_basic_rate from their most recent high, over a period of at least two months.

You’ve no doubt seen the value of your investments fall in recent times, but you’re probably wondering if this means we are now in a bear market? Let’s take a brief look at the recent performance of some of the main markets.

How big is the current market decline?

The US S&P 500 reached levels very close to that ^_basic_rate threshold on 20 May, down 18.7% this year. In fact, it briefly crossed into bear market territory before ultimately closing up at the end of the day’s trading. However, the US Nasdaq 100 is currently in a bear market, having dropped by 3^{_personal_allowance_rate} from its last high point in November 2021. In China, the SSE Composite Index has fallen 14% since the start of the year. By comparison, the UK’s FTSE 100 has fared better, up about 0.5% overall this year, but some market watchers believe it’s only a matter of time before it sees a sustained bear-like decline too.

The overall picture given of the major global markets is certainly characterised by a number of bear market-like features without signs that recovery is immediately around the corner. Though we’re still in the midst of a market downturn, it’s worth seeing how the current market situation compares to the bear markets of the past.

Bear markets of the past

It’s important to recognise that not all bear markets are as severe as others. At the time of writing, there have been 14 bear markets since the end of WW2 all with varying degrees of duration and fall in values. Let’s take a look at the last three bear markets.

2020

Prior to this year, the most recent bear market was in 2020 when global markets dropped by about 34%, following worries about the effects of the COVID-19 pandemic on the global economy. Whilst this was the fastest decline into a bear market it was also the shortest in history, lasting just 33 days.

2007 - 2009

One of the worst bear markets since WW2 came in 2007 following the housing market crash, when there was a drop of more than 5^{_personal_allowance_rate} over the following 18 months in what came to be known as the Great Recession.

2000 - 2001

Right at the turn of the 20th century, the infamous ‘dot com bubble’ market crash saw around 35% wiped off stock valuations as a bear market took hold between March 2000 and September 2001.

S&P 500 bull and bear markets since 1956

Even in the midst of a sustained market downturn, such as we’re in now, the markets sometimes see an uptick in the value of company shares, in what is known as a bear market rally.

A bear rally was seen in the S&P 500 on 23 May as it jumped 1.8%. Similarly, the DOW grew by 2% which came off the back of seven consecutive weeks of decline in stock market values.

However, such rebounds tend to be short-lived and don’t necessarily signal the end of the bear market. Of course, what everyone wants to know is will the bear market end and, if so, when?

As with all investments, past performance is not indicative of future performance and you may get back less than you start with.

How long will the bear market last?

Unfortunately, there’s no defined time when a bear market will end but it’s helpful to know that every bear market in history has eventually come to an end.

The nature of the markets is cyclical, for every bear market we enter, a bull market (characterised by a sustained period of rising market prices), follows. Thankfully, bear markets are typically much shorter-lived than bull markets with an average duration of roughly 10 months and a recovery from bear market values in about 15 months. In contrast, a bull market may last around three years.

A bear market typically ends when market values bottom out and no longer continue to fall. Investors’ sentiment becomes more positive and they take the opportunity to buy company shares at lower prices. If your pension is made up of any company shares your investment will also take advantage of these lower values. As shares are more affordable, your investment is able to buy more and potentially see greater returns during a market recovery.

What should you do during a bear market?

We understand that seeing your investments decrease in value can be unsettling and you may be tempted to withdraw your investments or consider switching to an alternative provider. However, this may not be the best option for the value of your investments.

It’s important to remember that even when the value of an investment drops you only lock in the loss if you actually withdraw from your funds. The performance of our plans has shown the ability to bounce back from previous market downturns. Therefore, we recommend finding ways to allow your pot time to grow again.

For those at or nearing retirement here are a few ways you can help protect your pension income.

Delay or withdraw less from your pension

Delaying or withdrawing less from your pension means that the money you leave invested will have more time, and therefore opportunity, to grow in value again, once markets stabilise.

Use other sources of income

If possible, look to use any other sources of income you may have, particularly those which may not grow as much as your pension in the long term such as personal savings. Utilising other sources of income such as savings or a cash ISA gives any investments you have in stock markets the opportunity to see out the bear market period and recover.

Consider increasing your contributions

If you’re able to, then adding to your pension pot could allow you to grow your pension in the long term. As the value of company shares is lower during a bear market your money is able to buy an increased number of shares at a more affordable rate with the potential for greater returns.

Delay your retirement

Once you retire and start withdrawing from your pension you will be locking in the dip in the value of the money you withdraw. Though retiring later is not what most people hope to do, it’s another option that can allow your retirement savings time to ride out the market decline.

Looking to the past gives us hope for the future

As we’ve explored, bear markets are nothing new, some are deeper and last longer than others, but global markets have recovered from every bear market in history without exception. Moreover, the value of company shares has not only recovered but typically goes on to reach new highs.

Even the biggest market crash since the Great Depression, the 2008 global financial crisis, was followed by the longest period of sustained growth in market history until the coronavirus pandemic struck markets in 2020.

It’s important to keep a long-term view of pension performance. Allowing time for your investments to ride out the temporary economic storms should pay dividends (literally), by the time you come to retire.

So, while the situation may continue to be rocky for now, the past gives us hope for the future.

Key takeaways

Bear markets are normal and will come to an end
The average duration of a bear market is 10 months
Bull markets typically last longer than bear markets, and the gains made during them are often larger than the losses in a bear market.
If possible, avoid withdrawing from your pension to allow time for your investments to recover and grow again.

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.

What happened to pensions in April 2022?

Find out how the performance of your pension plan is directly impacted by the performance of its investments.

This is part of our monthly pension update series. Catch up on last month’s summary here: What happened to pensions in March 2022?

It’s been an unexpected year and this has been reflected in the performance of the stock markets as they’ve responded to uncertainty and change. March gave us a glimmer of hope, but April has resumed a generally weaker economic outlook. So what’s happening?

The usual suspects have continued to impact markets, including: record breaking inflation, supply chain disruption, the effects of coronavirus, labour shortages, an uncertain interest rate trajectory, and the ongoing geopolitical crises. With income levels remaining the same, but everyday costs rising, essentials have become less affordable leading to a cost of living crisis. Less spending affects company profits, meaning investments dip in value. All pensions across the UK are likely to have experienced the impact of this macroeconomic uncertainty.

Fortunately, there’s a precedent of recovery following market falls and pensions are long-term investments. If the global economy grows over time (which historically it has), then your pension should also recover over time.

The current challenges affecting pensions

Let’s have a look at the current events impacting global investments - including pensions.

A big problem currently facing global economies and stock markets is supply chain issues. Russia’s invasion of Ukraine has created a complex list of problems. Countries including the UK have placed sanctions on Russia, which has weakened its economy. However, in retaliation Russia has threatened to stop supplying gas to Europe, which has contributed to rising fuel prices.

In Ukraine millions of people have been displaced and thousands of buildings destroyed, weakening the economy. Beyond their gas supplies and manufacturing, both countries are significant food producers. Together they’re a global supplier of ^{_corporation_tax} of wheat, 3^{_personal_allowance_rate} of barley, and 6^{_personal_allowance_rate} of sunflower oil. Consequently, the price of these goods has also risen as the effect of inflation is seen on household essentials like bread.

Elsewhere we’re seeing the impact of China’s latest shutdown as a result of rising coronavirus cases. Starting in Shanghai these restrictions have been extended to more regions. From iPhones to Tesla cars, many technology companies use China for their manufacturing. China accounts for nearly 3^{_personal_allowance_rate} of all global manufacturing and the shutdown of these regions has real consequences on businesses.

In summary, these global supply chain issues are directly contributing to a weaker outlook for households and businesses and have played a part in the rocky start to the year in stock markets. When you’re a PensionBee customer, your pension is managed by one of the world’s leading money managers: BlackRock, HSBC, Legal & General, or State Street Global Advisors. Each one of our money managers will design and adjust your investments to mitigate the impact of these challenges on your pension and keep your pension on track to continue growing in the long-term.

What happened to the markets in April?

April saw a sharper fall following the brief recovery stock markets made in March.

In the UK, the FTSE 250 fell by over 3%.

Source: Google

In the US, the S&P 500 fell by over 8%.

Source: Google

In China, the SSE Composite fell by nearly 8%.

Source: Google

The price of gold fell less than 1%.

Source: Business Insider

This is part of our monthly pension update series. Check out the next month’s summary here: What happened to pensions in May 2022?

Have a question? Get in touch!

You can check out our Plans page to learn how your money is invested in different assets and locations. 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.

Under-pensioned: finding disability support

We all want a happy retirement. But for the 1 in 5 working age adults who have a disability, building a pension to get there may require more planning.

Most people build up a retirement income during their careers - through employee pension contributions, paying National Insurance which becomes State Pension credits, and perhaps even making personal pension contributions too. However, a stable career isn’t always a given for those with a disability. In fact, recent ONS data highlights how having a disability doubles your likelihood of being unemployed, when compared to people without disabilities.

Even household costs are higher when sharing a home with someone who has a disability. Few people are familiar with the disability price tag. The disability price tag is the extra costs faced by disabled people and families with disabled children. For instance, those with mobility issues may need to spend more each month on transport or purchasing speciality equipment to make day-to-day life more manageable. Extra costs can quickly add up and when income is already lower this can push some into poverty.

If you’re able to work, there’s support available for finding jobs and negotiating flexible arrangements with your employer to suit your individual needs. If you’re unable to work, there are benefits available to provide you with social care and support you financially. Securing an income - from benefits or employment - can help you live more comfortably.

Whatever your situation, help is out there. In this article we’re going to outline available employment and retirement support for disabled people.

Support for employed disabled people

Under The Equality Act 2010, employers must remove barriers and make reasonable adjustments to support people with disabilities. In practice this could range from an interpreter being present at interviews if you’re deaf or adding ramps to make the workplace more accessible. If a company refuses to comply it’s unlawful discrimination and you could file a claim under the Equality Act.

Disability spans a broad spectrum and presents differently amongst different people. Not all disabilities are physical or permanent. In fact, recent increases in those reporting a disability has been largely driven by a rise in mental health conditions being diagnosed.

The government’s goal is to support one million more disabled people into work between 2017 and 2027 through various initiatives. This is part of their plan to reduce the gap between the employment rates of people with and without disabilities, known as the disability employment gap. Access to Work is a good example of a government programme aimed at supporting disabled people to take up or remain in work. You can apply for:

Advice about managing your mental health
Grants for practical support with your work
Money for communication support at job interviews

Here are four tips on navigating employment as a person with a disability, from before you even start working, through to once you are already in employment:

1. Higher education and apprenticeships may improve opportunities

The disability employment gap was 28% in 2021. In fact, data from the government found the disability employment gap is wider for those with no qualifications. An education may provide employers with additional confidence that candidates are experienced in meeting deadlines or working effectively. Whether it’s studying at university or training for an apprenticeship, qualifications may create a real impact on career outcomes.

Research from the Association of Graduate Careers Advisory Services (AGCAS) found there was only a 7% disability employment gap when comparing university graduates. Apprenticeships can also present an opportunity to earn and learn simultaneously. If you’re studying at a college or university you may have access to a Careers Adviser who can coach you on making the next step into the world of work.

2. Going through application and interview process

Intensive Personalised Employment Support is a government scheme providing a personalised support plan for people with disabilities who need additional help to move into work. You’ll receive assistance in accessing training, identifying skills, searching for jobs and succeeding in interviews - all from a dedicated support worker. You can ask a Work Coach at your local Jobcentre Plus to learn more.

Reasonable adjustments can be requested for an application or interview. This could include different formats of written communication (Braille or large print) or rearranging interviews because of disability-related reasons. Information about your impairment is protected under UK law, so don’t worry about having to reveal any specific details to potential employers when requesting reasonable adjustments.

3. Finding a disability-friendly employer

By law, companies can’t discriminate against candidates over their health conditions. However, not all businesses are disability confident employers. These are employers pledged to supporting their disabled workforce. Choosing an inclusive company comes with many advantages, such as policies in place for tailored support when needed. You can discover disability-friendly employers through sites like Careers with Disabilities. Alternatively you can apply more widely and ask employers what measures they offer.

In 2016 the government launched The Disability Confident campaign, replacing the previous Two Ticks Scheme. The scheme is designed to challenge employers to rethink disability and improve their recruitment and retention of employees with disabilities. Participating companies like PensionBee are assessed and awarded levels (Committed, Employer, or Leader) which can indicate how inclusive your prospective employer is.

4. Exploring alternative ways of working

Before 2020 the UK job market favoured office spaces and inflexible 9 to 5 hours. However, coronavirus restrictions forced employers to rethink their working patterns and many companies still offer work from home or flexible hours. Working fewer contracted hours or predominantly from home could prove less demanding on your disability, while still benefiting from employment perks like paid sick leave.

Instead of arrangements with employers, being your own boss is one way to work flexibly. Finding your side hustle is the first step and your Jobcentre Plus work coach can discuss your options and sources of funding to get you started. The Prince’s Trust’s Enterprise Programme gives workshops and grants funding to entrepreneurs aged between 18 and 30. If you’re paying National Insurance you’ll accrue pension credits towards your State Pension.

Retirement income for disabled people

You may be eligible for benefits like Pension Credit you’ll need to:

Less than ^{_money_purchase_annual_allowance} in savings*
Live in England, Scotland, or Wales
Reached State Pension age**
Every ^{_higher_rate_personal_savings_allowance} over ^{_money_purchase_annual_allowance} is counted as £1 a week income. * However, since 2019 if you’re cohabiting with your partner this could impact your ability to qualify for Pension Credit. Both of you will need to have reached Pension Credit qualifying age to apply.*

There are two parts to Pension Credit: Guarantee Credit and Savings Credit.

Guarantee Credit is available to everyone of State Pension age, on a low-income. You can work out your State Pension age by using the government’s State Pension calculator. If you do qualify your income will be topped up to £182.60 per week for individuals and £278.70 per week for couples in _current_tax_year_yyyy_yy.
Savings Credit is an extra income available to those who have saved some money towards their retirement, however only those who reached retirement age before 6 April 2016 can claim Savings Credit. If you do qualify you’ll receive an extra £14.48 per week for individuals and £16.20 per week for couples.

But Pension Credit isn’t only an income boost, it can give you access to other benefits too. These can include:

Cold weather payment of £25 if temperature drops to or goes below 0°C for seven days in a row
Exemption from paying Council Tax (if you live alone)
Free dentistry on the NHS, together with subsidies towards glasses and transport if you need to go to hospital
Homeowners could qualify for help with surplus charges such as ground rent, while private tenants could get their rent covered by Housing Benefit
Those aged 75 and over are exempt from having to pay for their TV licence if they receive Pension Credit

Once you’ve checked that you are of State Pension age you should call the Pension Credit claim line on 0800 99 1234. Or find out more information at gov.uk.

Are you struggling to make sense of your options?

Figuring out your financial situation isn’t always straightforward. If you’re unsure about your options please seek support from a trusted agency or charity:

Contact Citizens Advice to talk through circumstances
Message your local council to get assistance
Talk to someone you trust

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.

What's happening to UK pensions as global investment markets plummet?

Find out what's happening to UK pensions as global investment markets plummet.

Investments have dropped in 2022. A cost of living crisis in the UK, an ongoing war in Ukraine, international supply chain issues due to shutdowns in China, on top of rising interest rate expectations, have created the perfect storm for market volatility. And your pension, like all investments, has not escaped these global shocks and will likely have experienced some extreme knocks. Taking all these elements into consideration, we examine what’s been happening to UK pensions as global investment markets plummet.

A rocky start to the year

The current economic downturn began in January this year, when both the FTSE 250 in the UK and the S&P 500 in the US fell by around 9%, sparking global concerns over investments. February saw many global stock markets continue to fall as more investments were shifted into traditionally more stable assets such as gold and government bonds. At last stock markets appeared to stabilise in March, with growth in some sectors giving rise to some cautious optimism about how the rest of the year might progress. This hope was quickly extinguished as poor market performance resumed in April. The FTSE 250 fell by over 3% and the S&P 500 fell by over 8%. These drastic declines in markets signalled that the volatility we had seen at the beginning of this year would likely persist for some time. Economic forecasts for the next six to 12 months appear dreary. At time of writing, the S&P 500 is down almost 17% year-to-date.

It’s important to understand that it’s normal for the value of your pension to go up and down over time, and that periods of extreme volatility are common over history, as witnessed in 1987, 1999, 2008 and 2020. Despite this, over the past five years the S&P 500 has seen growth of approximately 68%. At PensionBee most of our plans are diversified, meaning they’re invested across different countries and/or asset types (such as company shares, property and bonds). But when global markets are down across the world, pension balances will be impacted.

The impact on pensions in the UK

Across the UK, pension balances are volatile and many have experienced substantial falls over the last few months. Many savers nearing retirement will have been impacted by falling share and bond prices. We’ve selected a range of at or nearing retirement plans from a few different providers, to compare the performance of similar plans across the market. As you can see all plans have been negatively impacted by recent market conditions.

Performance of PensionBee’s 4Plus Plan over the past six months:

Source: Morningstar

Performance of Aegon’s Balanced Tracker Annuity Target ARC 2023 Pension Fund over the past six months:

Source: Morningstar

Performance of Aviva’s My Future Focus Annuity S2 Pension over the past six months:

Source: Morningstar

Performance of Scottish Widows’ Pension Portfolio Four Series 2 Pension Fund over the past six months:

Source: Morningstar

Performance of PensionBee’s Tailored plan (Vintage 2025-27) over the past six months:

Source: Morningstar

How to approach pension saving in times of market volatility

It’s hard to know in times like this if you’re making smart choices with your money. When problems arise it’s a natural instinct to want to take action to prevent further damage or loss. You may find yourself rethinking your pension savings during the cost of living crisis, or worrying about whether you’re making the right choices during the market volatility we’re facing.

But when investments are struggling to grow against the backdrop of persistent market losses, what can you do? The Financial Conduct Authority (FCA) is the regulator for over 50,000 financial services firms and financial markets in the UK. In their own market volatility messaging, they outlined three important considerations for when you’re making decisions about what to do with your investments:

1. Withdrawing your money won’t recover losses

When markets are considerably down many people are tempted to withdraw from their investments under the assumption their money is safer in their pockets than in stock markets. Or even move their pension because they believe their provider is to blame for the losses caused by market volatility. However, withdrawing your money won’t recover losses, in fact all withdrawing does is guarantee your investment loss.

2. Money invested may see recovering markets

It’s easy to forget right now that investments go up, as well as down. So the more you withdraw, the less you’ll have invested to recover when markets rise in value. Withdrawing during a downturn guarantees a loss, whereas waiting for markets to bounce back gives you an opportunity to regain and grow your investments again.

3. Access your rainy day savings before realising losses

Finally, if you’re in need of money in the short to medium term then consider withdrawing from cash savings before accessing your investments (like pensions). Having a rainy day fund is really valuable as it’s better to spend from cash savings than realising losses on your investments.

What if you have further questions about your pension?

We understand that you may have concerns about your pension during times of economic uncertainty. So we’re here to help and answer any questions you might have.

You can contact your BeeKeeper either by:

Emailing them (find their details in your BeeHive)
Calling 020 3457 8444 (Mon-Fri 9:30am-5pm)

You can also contact our dedicated engagement team on [email protected].

If you are over the age of 50, you may also benefit from a free Pension Wise appointment. You can book your appointment here.

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.

Rethinking your pension savings during the cost of living crisis

When expenses overtake incomes we experience a cost of living crisis. Find out why this is happening and how you can rethink your pension savings during this time.

The Office for National Statistics reported that the price of consumer goods are increasing at the highest rate in almost 30 years. Similarly, the BBC reported that your food bill may increase by £271 this year because of inflation. In an ideal world (and economy) both our incomes and our outgoing expenses would rise in pace with each other. For example if the price of bread increased by 2% (along with our items in our shopping baskets) we wouldn’t necessarily notice it as much as our salary would have seen a similar growth that year.

However, when expenses overtake incomes we experience a cost of living crisis.

Along with the soaring inflation households in the UK are feeling the impact of rising interest rates, geopolitical tensions, supply chain disruption, labour shortages and the lasting effects of the coronavirus pandemic. All of these factors have contributed to where we are now.

What is the cost of living crisis? And why is this happening?

Simply put, the cost of living crisis is a direct result of income levels remaining the same while everyday costs have risen. This has meant that essentials have become less affordable to households here in the UK. The rising costs of shopping over the last year, is as a result of soaring inflation. Inflation is the rate at which the cost of things goes up each year.

The Government can measure inflation, using the Consumer Prices Index. They do this by comparing prices of basic goods and services each year (everything from bread to energy bills). From this, they can understand the change in household costs. The Bank of England sets a target of 2% for annual inflation. It’s important for inflation to be stable: both for businesses to set their prices and consumers to plan their spending.

March saw inflation hit the highest levels since 1992, and it continues to hover at around 7%. Between energy price hikes, geopolitical tensions throughout Europe, and recovering from a global pandemic - it’s unsurprising that inflation keeps rising. In response the Chancellor, Rishi Sunak, introduced policies to ease some of the pressure in the Spring Budget. Many people feel these measures haven’t gone far enough as the cost of living crisis continues to bite.

If you were alive in the early 90s, today’s economic outlook will be familiar. Inflation peaked at 9.5% in 1990 before gradually decreasing to 3.7% in 1992. During these years Prime Minister Margaret Thatcher resigned, a recession was announced, and people rioted over tax rates. 20 years later, we experienced another financial crisis. While the ‘2008 crash‘ had different causes, the outcomes remained similar. Then in 2020 the coronavirus pandemic triggered another recession for the UK economy.

Currently, we’re facing the risk of yet another recession if inflation doesn’t improve. However, there is good news. The Office for Budget Responsibility anticipates that inflation will decrease during 2023. While this doesn’t stop us feeling the pinch today, it also doesn’t stop us from planning for the future. There’s a precedent of recovery following market falls and pensions are long-term investments. If the global economy grows over time (which historically it has), then your pension should also recover over time.

So how does inflation affect pensions?

How does the current cost of living crisis impact your pension pot?

High levels of inflation impact pensions; both in the present and future.

The cost of living crisis has a ‘trickle up’ effect on our economy. When people have less money to spend, companies begin reporting losses as revenues plummet. For the first time in a decade Netflix lost subscribers, leading to almost a ^_basic_rate fall in their share price. This isn’t surprising when every money guide out there advises cutting non-essential spending (such as subscriptions) then starting an emergency fund when we’re struggling financially.

Yet while we might make gains from reducing our outgoings as individuals, we may collectively feel the impact as savers with investments in the stock market, through Stocks & Shares ISAs and defined contribution pensions. If you had invested £100 in Netflix last year, the recent drop in share price would reduce your balance to £80. Fortunately, most investments are spread across many shares and different asset classes so we’re not usually reliant on a single company’s success for our money to grow. This is known as diversification.

Unfortunately, the cost of living crisis we’re currently facing has a long reach. And even diversified investments are experiencing slower growth, and losses in some cases. This combination of high inflation and a stagnant economy is known as ‘stagflation’. Navigating your finances safely through this turbulent period is tricky. However, there are a few simple steps that you can take now to boost your pension - without spending a penny.

1. Make workplace pension contributions

Although there’s legislation in place for employers to automatically enrol employees into workplace pensions, you can still opt-out. However, while regaining a small percentage of your gross salary each month may seem appealing it can be costly in the long run, as you’ll lose a ^{_corporation_tax} tax top up on your contributions from the government and a minimum employer contribution of 3% of your gross salary.

Yet the biggest benefit you’ll lose from opting out is compound interest. When your interest is added back to the original amount it begins a ‘snowballing effect’. Because it works by accumulating over time, compound interest can turn a small pension pot into a significant amount when left untouched for a long period of time. Opting out of your workplace pension can save you pounds now, only to cost you thousands in potential gains later - when you’re reliant on your retirement income to live.

2. Combine your pension pots

PensionBee CEO, Romi Savova, commented: simple steps such as combining any existing pension savings into one pot can have a noticeable effect on a savers’ eventual retirement income. Whilst this avoids savers losing out on any hard-earned savings, it also means that they only have to pay one set of fees, rather than multiple fees for various pots, which can erode a pension’s value over time.

If you’re already following step one, great! But opting in to all your workplace pensions could translate into many scattered pension pots as you switch jobs over the course of your working life. Defined contribution pensions (the most common type of workplace pension) are often managed and as a result have management fees. At first glance these fees may appear small but high charges can erode the value of your pension over time, if left unchecked.

You can find out where your old workplace pensions are using the Government’s free Pension Tracing Service, or by contacting your previous employer directly. Knowing the name of your pension provider and the policy number is key to consolidating your pensions.

3. Let your savings grow

It can be hard to know if you’re making the right decisions. And sometimes it’s tempting to take action for the sake of feeling in control again. An important thing to remember is that long-term investments don’t benefit from lots of short-term changes such as switching plans repeatedly. Financial products like pensions are designed for the long-term and thankfully aren’t reliant on investments consistently returning profits year on year.

Once you’ve committed to consolidating your pensions you should feel confident in your decision. While it can be difficult, try not to worry about short-term fluctuations as the value of your pension will ultimately be shaped by decades of stock market ups and downs. Instead, being conscious of your target retirement income and slowly building up a pension to support you in later life is a healthy habit you can start now.

Risk warning

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

The Buzz.

1. Check if you’re eligible for any extra money or support

2. Speak to someone you trust

3. Get to know your money and mood patterns

4. Change how you manage your finances

5. Make a list of monthly essentials

6. Seek professional help for managing any debts

Who will be most affected?

How to protect yourself?

What changes need to be made?

1. Lower income tax rates means less in your pension

What does this mean for me?

Relief at source

Pension carry forward rule

2. Lower pension contributions could mean a smaller pot and less retirement income

What does this mean for me?

3. ISAs may look more attractive

What does this mean for me?

Lifetime ISAs

Other ISAs

4. Dividend income boost

What does this mean for me?

Liz Truss on pension plans

State Pension protection

Annuity rates up

Pension transfers down

Liz Truss on taxes

National Insurance cut

VAT cut

Inheritance tax review

Key pensions points

What happened to stock markets?

What happened to currencies?

What happened to bonds?

Summary

Have a question? Get in touch!

1. Actions for individuals to take

2. Awareness and understanding in the wider infrastructure

3. The role of creditors

Where to get help now

The effects of debt

Customer stories

Escaping debt and improving your circumstances

Spending on ‘needs’

What needs to change in the face of the cost of living crisis?

The ‘new’ rule of thumb

100 year life finances

Learning and working beyond age _state_pension_age

1. Apprenticeships

2. Starting a business later in life

3. Portfolio living

Final thoughts

What does retirement look like these days?

Working life

Financial stability

Health and life expectancy

Social life and goals

Planning for a happy retirement

When should you start saving?

What happened to stock markets?

Are we headed for a recession?

What’s happening to the UK economy?

When was the last UK recession?

What does a UK recession mean for my pension?

Summary

Have a question? Get in touch!

What could retirement look like?

How to plan and save for that happy retirement

Things to think about when you’ve nearly reached retirement

What will retirement look like in the future?

Savers under 50

Savers over 50

Have a question? Get in touch!

Why aren’t the self-employed contributing to pensions?

1. Cost of living

2. Keeping money elsewhere

3. Lack of Auto-Enrolment

Closing the gap

1. Set up your own personal pension plan

2. Consolidate your old pensions

Learning and working beyond age ^{_state_pension_age}

Put your pension
in the palm of
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