If you’re looking for a flexible way to build your retirement pot while enjoying tax advantages, a SIPP could be a great option. In this guide, we’ll cover everything you need to know about SIPPs, including how they work, who they’re best suited for, and how to start investing.

What is a SIPP?

A Self-Invested Personal Pension (SIPP) is a type of pension wrapper that allows individuals to manage their own retirement investments. Unlike traditional personal pensions, which are often restricted to a limited selection of funds, SIPPs offer a much broader range of investment choices. This flexibility can potentially lead to greater returns over the long term—if managed wisely.

Types of Investments Allowed in a SIPP

SIPPs give investors access to a wide variety of assets, including:

• Stocks and Shares: Invest in individual company shares.
• Unit Trusts & Open-Ended Investment Companies (OEICs): Professionally managed investment funds.
• Investment Trusts: Pooled investments that are traded like shares.
• Corporate & Government Bonds: Fixed-income investments.
• Cash: Hold cash within your SIPP for flexibility.
• Commercial Property: Invest in business properties, such as offices or warehouses.

The ability to diversify across different asset types makes SIPPs an attractive choice for experienced investors looking to build a well-balanced pension portfolio.

Is a SIPP Right for You?

SIPPs are best suited for individuals who:

• Have experience with investing and are comfortable making financial decisions.
• Want greater control over their retirement savings.
• Are willing to actively manage their investments or work with an advisor.
• Have a sizable pension pot or plan to make significant contributions.

Things to Consider Before Opening a SIPP

While SIPPs offer great flexibility, they come with responsibilities:

• Investment risk: Your retirement savings depend on how well your investments perform.
• Time commitment: You’ll need to review and manage your investments regularly.
• Fees & charges: SIPPs can have higher costs than traditional pensions, so it’s essential to compare providers.

If you prefer a hands-off approach, a traditional personal pension with professionally managed funds might be a better fit.

How to Start Investing in a SIPP

Setting up and managing a SIPP isn’t as complicated as it sounds. Here’s how to get started:

1. Choose a SIPP Provider

There are many SIPP providers available, each with different fees and features. Some top providers include:

When choosing a provider, compare these key fees:

• Setup Fees: Can range from £0 to £500.
• Annual Management Charges: Either a percentage of assets or a flat fee.
• Dealing Charges: Fees for buying and selling investments.
• Admin Fees: Costs for transferring, withdrawing, or closing your SIPP.

2. Select Your Investments

Once your SIPP is open, it’s time to choose where to invest your money. Your provider will offer a range of funds, stocks, and other investment options. Be sure to diversify to reduce risk and aim for long-term growth.

3. Manage and Review Your SIPP

Regularly reviewing your SIPP is crucial to ensure your investments are performing well. If certain assets underperform, consider reallocating your funds to maximize returns.

Alternative Options to Consider

A SIPP isn’t the only way to save for retirement. Here are some alternatives:

ISAs

• A tax-efficient way to invest in stocks and shares.
• Offers investment flexibility but doesn’t provide pension tax relief.
• No requirement to lock away funds until retirement.

Read: Everything you need to know about stocks and shares ISAs

Personal Pension Schemes

• A traditional pension managed by a provider.
• Less flexibility but simpler for those who don’t want to self-manage investments.

Stakeholder Pensions

• Designed for accessibility with capped charges.
• Limited investment options but a good choice for low-maintenance savers.

If you’re unsure which option is best for you, speaking with a financial advisor can help tailor a retirement strategy that suits your needs.

Final Thoughts

A SIPP is a great option for those who want full control over their pension investments. With a broad range of investment choices and tax benefits, it can be an effective way to grow your retirement savings—provided you’re willing to put in the time and effort to manage it wisely.

If you’re new to investing, take the time to research and seek professional advice before making any decisions. With the right approach, a SIPP can be a powerful tool in securing your financial future.

The post What Is a SIPP? Guide to Self Invested Personal Pensions appeared first on MoneyMagpie.

We’re strong believers in voting for principles over personality, so hope that this easy to digest article will help you compare each party’s financial promises side-by-side. We will cover the nationally recognised parties: Conservative, Labour, Liberal Democrat, Reform UK and Green Party, as regional parties are not accessible to everyone in the UK to vote for (someone in England can’t vote for the SNP, for example).

Income, Taxes, and Jobs

Pensions

Property

Transport

Energy

Children and Families

Benefits

Read Manifestos in Full

Income, Taxes, and Jobs

There are very common claims across all four party manifestos about stimulating the economy by creating new jobs. It’s something that is promised at every election, so while we like to see commitments to increase training and skills for people, it’s tough to say which will actually happen and/or have an impact. So, we’re going to look at the hard facts of what each party says about job rights and taxes, and how that could impact your take-home income.

Conservative Party

The Conservative party haven’t announced anything groundbreaking compared to what they’re already doing for the jobs market, or planned to do. They insist:

• They’ll continue with the plans for another 2p National Insurance cut, putting someone on an average £35,000 salary around £1500 better off each year (not taking into account fiscal drag – see below)
• They plan to abolish main National Insurance for self-employed people ‘by the next Government’, which is a slow commitment compared to the PAYE National Insurance changes
• Income Tax thresholds will continue to be frozen until at least 2028

An example of fiscal drag can be seen here: the next National Insurance cost is supposed to put more money into people’s pockets. However, as wages go up with inflation (or close to it), the frozen tax thresholds mean more people will be pushed into a higher tax bracket. Those who previously didn’t pay any tax (earning under £12,750 a year) may now pay tax if they get a pay rise yet still be a low earner – taking them from 0% tax to 20%. Similarly, those in the higher bracket could easily be pushed over into the additional rate bracket – meaning they not only lose out more to tax but also lose out on the annual personal allowance, tax-free savings allowance and more.

Labour

Labour haven’t committed to much in terms of concrete assurances in their manifesto, but the key points in terms of income taxes are:

• They promise to end the non-dom loophole for tax evaders who are technically domiciled offshore. This would impact around 70,000 of the highest earners in the UK.
• Just as the Conservatives, Labour will freeze the income tax threshold to at least 2028
• A clampdown on Inheritance Tax and Capital Gains Tax avoidance to recoup some money

Liberal Democrats

The Liberal Democrat manifesto has many more concrete and specific claims than the other three. They promise to:

• Counter tax changes that currently burden individuals to instead create larger taxes on the big banks and a windfall tax on oil and gas profits
• Instate a 20% higher National Minimum Wage for those on zero hours contracts, to counter the unreliability of such work and encourage employers to create more fixed-hour contracts
• Provide Statutory Sick Pay at National Minimum wage rates, from the first day of sickness rather than the fourth.

Reform UK

The Reform party is new and entering its first General Election (it was formerly the Brexit UK party). They want to:

• Increase the Income Tax threshold to £20,000 which would take 7 million people out of paying tax and leave most workers £1500 better off
• Boost the higher rate tax threshold to £70,000 from £50,271
• Remove Inheritance Tax for estates worth up to £2million, with estates over that threshold paying at 20% or donating to charity instead

Green Party

The Green Party want to ‘make work fair’. As such, they say they would:

• Limit a maximum 10:1 pay ratio for public and private sector organisations (the highest earner cannot earn more than ten times the lowest earner)
• Increase National Minimum Wage to £15 for all ages
• Offset the increase of NMW costs for small businesses with tax reliefs
• Introduce a four-day working week
• Ensure all employment rights are day-one rights and include gig workers and zero hours contract workers
• Longer term, introduce a Universal Basic Income for everybody
• 

Pensions

Pensions impact not just those in retirement or soon to retire – everyone planning for a comfortable retirement, even if it’s decades away, should be interested in the plans for pensions. Small changes now could impact your retirement fund thirty years away, so it’s important to know what’s what. However, there isn’t much in the manifestos which stands out to be glaringly different or surprising.

Conservatives want to introduce a Triple Lock Plus, which protects the Triple Lock and introduces a new personal allowance that also rises with inflation for pensioners

Labour will protect the Triple Lock

Liberal Democrats will also protect the Triple Lock. They will also tackle the problem of the ‘WASPI women’ born in the 1950s who have been unfairly affected by the increase in the State Pension Age, as well as review rules to help the self-employed in the gig economy access the same support as PAYE workers.

Reform UK make no mention of protecting the Triple Lock, instead claiming they will ‘review pension provision’ looking at models in other countries like Australia. They will end the Mineworkers Pension Scandal, also.

Green Party say they will reform pensions taxes and, while not using the words Triple Lock, would guarantee a similar system of inflation rise guarantee.

Property

Property is a big one in terms of the impact on the economy. That, in turn, affects things like local economies and job markets, as well as industries such as hospitality and education. All major parties have committed to building new houses, though some more than others.

Conservatives

The Conservatives focus on ownership with most of their property policies. They want to:

• Restart the Help to Buy scheme for first time homeowners
• Build 1.6million homes over 5 years
• Ban no-fault evictions (this was a 2019 policy)
• Introduce a ‘local connection’ and ‘UK connection’ test for social housing applicants
• Keep the developer-funded cladding remedial projects
• Improve planning processes to speed up development and build of houses, with a focus on increasing density in London

Labour

The Labour party have promised to:

• Ban leaseholds and turn all to commonholds
• Introduce a Freedom to Buy scheme, including an extension of the existing Mortgage Guarantee Scheme
• Raise an additional Stamp Duty Land Tax fee on all non-UK resident property purchasers
• Abolish Section 21 ‘No Fault’ evictions
• Build 1.5million new homes over their tenure
• Review Right to Buy and focus on building social housing and repurposing existing stock
• ‘Tackle’ ground rent
• Improve planning processes to speed up the release of land for developers

Liberal Democrats

The Lib Dems have focused on both private ownership and social housing in their manifesto with quite a lot of detail about their plans. They say they will:

• Introduce Rent to Own which will give social housing tenants increasing equity in their property to full ownership after 30 years, and abolish Right to Buy
• Create a Home Energy Upgrade Programme to provide grants for improving energy efficiency in homes
• Abolish leaseholds and cap ground rents
• Give new powers to local authorities to allow them to charge up to 500% council tax on second homes
• Scrap the bedroom tax
• Introduce a non-UK resident Stamp Duty Land Tax surcharge
• Pay for cladding repairs so costs don’t fall to property owners caught in the problem
• Build ten new garden cities
• Build  380,000 new homes a year (including 150,000 social housing) with all new builds being zero carbon

Reform UK

Reform want to focus on home ownership. They say they would:

• Introduce a 0% stamp duty on purchases up to £750,000, 2% thereafter to £1.5million, and 4% over £1.5million
• Scrap 2019 SDLT on landlords
• Allow landlords to claim finance costs and mortgage interest as expenses
• Review planning processes and speed planning with ‘pre-approved’ guidelines
• Abolish the Renters’ Reform Bill, as they say existing and previous legislation provided enough protection for tenants
• Insist on clarity of leasehold charges and ground rents (but not cap or abolish them)

Green Party

The Green Party say they would:

• Scrap the bedroom tax
• Build or repurpose 150,000 social homes each year
• Remove individual right to buy and introduce community-based right-to-buy
• Introduce rent controls to limit how much rent can be increased

Transport

While rather thin on the ground for detail in each manifesto, transport can have an impact on broader financial changes. Infrastructure directs where new houses are built, for example, and that in turn leads to where people will find jobs and schools.

Conservatives

The word ‘transport’ only appears five times in the 80-page manifesto. The existing policies, such as the £2 bus fare cap for low income and young people, free bus passes for pensioners, and fuel duty freeze, remain. There is also a promise for local authorities to receive pothole repair funding.

Labour

As well as promising to fix one million potholes, Labour says it will:

• Tackle increasing car insurance costs
• Reform the railways into public ownership
• Improve electric vehicle infrastructure

Liberal Democrats

The Liberal Democrats promise to:

1. Reinstate the zero emission vehicle rule for new cars and vans from 2030
2. Built electric infrastructure to support more electric vehicles on the road
3. Cut VAT on public electric vehicle charging to 5%
4. Freeze rail fares
5. Simplify rail ticketing
6. Review HS2 and the cancelled plans to see if an alternative could be created
7. Introduce a Young Person’s Bus Card for 19-25 year olds for reduced bus fares (like Railcards provide)

Reform UK

While the other three parties are focused on improving rail infrastructure and improving carbon-zero or electric opportunities, Reform support drivers. They say they’ll:

• Lower fuel duty by 20p a litre
• Scrap the ULEZ charge
• End the planned ban on selling petrol and diesel cars
• Scrap HS2 altogether
• Bring 50% of each transport network into public ownership

Green Party

As the name might suggest, the Green Party are invested in improving the environmentally friendly options of transport. They would:

• Introduce free bus travel for all under-18s
• Renationalise the railways

Energy

We’ve all seen our energy bills rocket while the suppliers report record profits and huge bonuses. Here’s how each party intends on tackling the challenges with energy costs across the UK.

Conservatives

The Tories have overseen the highest rise in domestic energy bills in recent decades. On a larger scale they will invest in nuclear power and more renewables. They say they will also:

• Continue the windfall tax on oil and gas companies until 2028 unless prices fall back to normal sooner
• Reduce green levies on domestic energy bills
• Keep and ‘evolve’ the Energy Price Cap
• Introduce an energy efficiency voucher scheme for people to improve the energy efficiency of their homes

Labour

Labour want to focus on boosting clean energy and addressing the rising costs. They promise to:

• Create a publicly-owned energy company to boost energy security (created by a one-off windfall tax on oil and gas profits)
• Review standing charges with regulators
• Provide grants and low-interest loans for homeowners to improve energy efficiency and reduce their bills

Liberal Democrats

The Liberal Democrats have a strong focus on clean energy, carbon zero, and improved energy infrastructure. They want to:

• Introduce a ten-year home upgrade programme including grants for energy efficient home improvements
• Requiring landlords to bring properties up to EPC C or higher
• Boost incentives for households to have solar panels and profit selling energy back to the grid
• Introduce a social tariff for energy costs for the poorest households
• Help with domestic energy bills with a one-off windfall tax on oil and gas profits
• Abolishing regional energy price differences

Reform UK

Reform UK have very brief energy details in their manifesto but it is clear they are the only party focused on developing more oil and gas infrastructure rather than clean energy. They say they want to:

• Scrap VAT on energy bills
• Reduce household bills by £500 a year
• Scrap energy levies

Green Party

The Green Party want to move towards carbon zero, remove nuclear power, and want wind to produce 70% of the UK’s power by 2030. They would:

• Invest £42billion for homeowner and landlord energy efficiency incentives and grants

There is no mention of domestic energy bill discounts, levies, or cuts.

Children and Families

From parental leave to free childcare, each party has a stance on improving the income of families with children.

Conservatives

The Tories will continue their existing plan for 15 hours of free childcare a week for children up to 2, rising to 30 hours for children age 3-4. They will also:

• Raise the free childcare hours to 30 a week for all under-5s in 2025 which they say will save families an average of £6,900 a year
• Change Child Benefit so that it is household-linked income not individual
• Raise household income limit for Child Benefit to £120,000 a year

Labour

Labour’s policy is similar to the Conservatives’. They say they’ll:

• Not change the existing free childcare plan as outlined above
• For free childcare, parents must not individually earn more than £100,000 a year (and must earn more than £9518)
• Ensure breakfast clubs in every primary school

Liberal Democrats

The Lib Dems have expanded on existing parental and family rights in their manifesto. They promise to:

• Introduce paid neonatal care leave
• Give free access to sign language lessons for parents and guardians of d/Deaf children
• Double statutory maternity and shared parental pay to £350 a week
• Introduce an extra use-it-or-lose-it month for fathers at 90% of earnings
• Ensure parental leave and rights will be a day-one right and include the self employed
• Deliver free school meals to families in poverty, eventually extend to all children
• Remove the two-child limit and the benefit cap

Reform UK

Reform are focused on ‘traditional family values’. As such, they want to:

• Incentivise marriage by allowing 25% tax allowance transfer between spouses
• Provide tax relief for private schools with no VAT on school fees to reward families who can afford private education

There is no mention in the manifesto of childcare hours, Child Benefit, or parental leave changes.

Green Party

The Greens want to:

• Ensure free transport for all special educational needs and disabled children to school
• Remove the two-child benefit cap
• End tuition fees for higher education
• Introduce free personal care (similar to Scotland) for the elderly and disabled

Benefits

Benefits are always a hot topic when it comes to elections. Even if you don’t need the social security safety net right now, there is never any guarantee you won’t need it in the future. Supporting those on low incomes and who are unable to work is also important to keep the economy ticking over and improve mental health outcomes.

Conservatives

The Conservatives want to focus on reforming the benefit system around long-term illness. As such, they will:

• Introduce a six-tier system for Personal Independent Payment
• Increase the time between claiming Personal Independence Payment and being assessed for it, to reduce the number of ‘short term illness’ claims (Magpie note: PIP is for those in work and out of work, is not means tested and is for people with chronic conditions, it is already not for short-term illness)
• Consider reducing ongoing cash payments for PIP and replace with one-off grants for items required to support disabled living such as wheelchairs
• Change the Access to Work process
• Crack down on people with mental health conditions claiming out of work benefits
• Change the capability for work assessments to include only the most severely ill, putting 424,000 off benefits and back to work
• Close unemployment claims for those unable to find work within 12 months

Labour

At time of writing, there is only one mention of Universal Credit in the manifesto, and no reference to specific benefits like Personal Independence Payment. Labour say they are “committed to reviewing Universal Credit so that it makes work pay and tackles poverty.”

Liberal Democrats

The Liberal Democrats have declared broader changes than other parties. They say they will:

• Increase Carers Allowance, including those in education
• Reduce the hours required to qualify for Carers Allowance
• Will not pursue punitive Carers Allowance overpayment tribunals
• Reduce the wait for Universal Credit first payments from five weeks to five days
• Restore full Universal Credit entitlement for parents of any age (removing the reduced rate for parents under the age of 25)
• Reform Personal Independence Payment assessments and bring them in-house (instead of private sector)
• Bring Work Capability Assessments in-house
• Ensure that military compensation for injury or illness is not counted as income for means-tested benefits

Reform UK

Reform UK have only a small section related to benefits in their manifesto, with their main slogan being: “In Britain, if you can work, you must work”. They say:

• Job seekers must find employment within 4 months or accept a job after two offers otherwise benefits will be withdrawn
• Work Capability Assessments and Personal Independence Payment assessments by independent (private sector) medical assessors

Green Party

The Green Party focus on reforming the current benefits system. So they would:

• Reform the intrusive PIP and WCA tests
• Introduce an immediate 5% uplift on disability benefits
• Increase Universal Credit and legacy benefits by £40 a week

Read Manifestos in Full

Of course, we have only summarised the key financial points that would impact your everyday lives in each core manifesto for comparison. Before you make your decision on who you want to vote for (or rather, which policies you want to vote for), take your time to research the manifestos in full.

Conservative Manifesto

Labour Manifesto

Liberal Democrat Manifesto

Reform UK Manifesto

Green Party Manifesto

The post Election News: What Each Major Party Promises for Your Wallet appeared first on MoneyMagpie.

Sadly that’s not how it is for everyone.

However, if you do some planning – even if you’ve left it really late – you can create more wealth for yourself for that lovely time of life so that you don’t have to scrimp and save or keep on working to get the cash in.

Here are eight pitfalls you must avoid in order to gather up enough cash to keep you going and going and going!

1. Don’t withdraw your savings from your pension too early
2. Make sure you understand how your pension is invested
3. Grab any forgotten pensions using our free service
4. Get some advice from someone who really knows
5. Don’t worry about leaving it too late
6. Watch out for pensions scams
7. Shop around
8. Remember the tax (ugh)

1. Don’t withdraw your savings from your pension too early.

According to retirement specialists, Wealth at Work, the rising cost of living has meant that one in 10 (10%) over 55s in full-time employment have withdrawn some of their pension savings earlier than they originally intended to in order to supplement their income. Actually, nearly a third also say they might have to withdraw savings early, in the future.

Try and do everything you can to avoid dipping into your pension pot early.It’s better to take on extra work or get a side hustle (we have LOADS of ideas for those) to help you and your family through the tough times, rather than reducing your retirement fund.

Taking some of your pension out early should be seen as a last resort, because even taking a few thousand out of your pension early can mean a big drop in your income later on. It could either mean that you have to work longer or you live on less in retirement.

If you’re in your fifties or early sixties and looking for a long and prosperous retirement, you should be adding in as much of your money as possible to your retirement fund.  As the cost of living goes up you actually need more money, not less, in retirement to keep some sort of standard of living, specifically if you need senior living accommodations.

That’s not to say that it’s not also a great idea to keep your hand in with some sort of work when you’re retired. Loads of people do that and it adds some fun and interest to their lives. So don’t beat yourself up if you find that you really need to do at least some part-time work when you’re retired. For many people it gives them a reason to get up and puts them in touch with the public in a way that they might not do if they didn’t work.

2. 2. Make sure you understand how your pension pot is invested

Pension managers tend to move the investments in your pension to less risky (and therefore less rewarding) products when you come closer to retirement. It’s called ‘lifestyling’ your pension and the ideas is that it stops nasty shocks when you come to use the pot of cash in there.

However, although Lifestyling pensions used to make sense when people had to buy an annuity in retirement, now many people access their pensions using income drawdown (kind of using your pension pot as a bank account), so it doesn’t work so well.

In fact, it could be better for your pension to stay invested in riskier (and more rewarding) investments long into retirement, to give the money the potential to keep growing. It’s worth speaking to your pension provider to find out what the pension is invested in and if it’s making enough money for you If you have a company pension, ask HR to talk to you about it and put you in touch with the pension managers.

3. 3. Grab any forgotten pensions using our free service

Did you know there were £26.6 billion in lost pensions in the UK in 2022? Some of that money could be yours so why not go and grab it?!

Loads of people have pensions from old jobs that they had forgotten about or lost sight of. It’s a really good idea to trace these and, possibly, move them into one pension, if that’s feasible.

It’s not always a good idea to consolidate pensions as there might be extra benefits attached to one or more of the pensions, but it is definitely worth having those lost pots anyway.

It’s actually not that hard to find old, lot pensions. You can use the free pension-finder service, Gretel.co.uk, which will search the pension companies for you and then let you know if they have found anything. It might take a few days or weeks for them to trace these old pensions, but it’s worth the wait!

Find out here how to trace lost or forgotten pensions and what to do with then once you’ve found them!

4. Get some advice from someone who really knows!

Your retirement is likely to be a good long time. Average retirements now last 20-30 years, which is quite a stretch to pay for if you’re not planning on working anymore.

Research  from Wealth at Work has found that more than half of workers say they get advice about their pensions from family, friends or colleagues. Sometimes they don’t even bother asking anyone at all. Certainly very few speak to a professional like their pension provider, employer, a regulated financial adviser, which means many people go into retirement without much of a clue of how they can maximise their savings. This is not a good idea!

It’s really important to make the very most of the money you have invested in pensions and other investments. The more, proper advice you get on it early on, and close to retirement the better. It means you can maximise your money and avoid any nasty shocks!

It’s worth paying for some good advice. You can get one free session with Pensiohwise once you are 50 or over, which you should grab with both hands because…well…it’s free! But it’s also worth paying for advice from a proper financial advisor, even if it’s just as a one-off, to go through your investments, make suggestions as to whether you should do drawdown or take an annuity, or both, and look at other aspects of your finances such as life insurance, making a will, cutting down inheritance tax and making provision for care.

It you don’ tpersonally  know a good financial advisor, there are step-by-step instructions here on how to find a good, independent financial advisor here including how to get free sessions.

6. 5. Don’t worry about leaving it too late

According to investment platform Hargreaves Lansdown (HL), people often worry that they’ve left retirement planning too late, although, with a bit of help, they can usually build up their pot even if they start late.

HL’s research has found that nearly a quarter of workers wished they had started investing sooner. Admittedly, it is best to start putting money way as early as possible as the longer you leave your money in an investment the better it will grow. However, even making small increases to your contributions in your 50s or 60s can make a big difference to what you end up with. If your employer offers to match your contribution increase, that can give you an even bigger pot.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown says “it’s never too late to make a difference. Calculations using HL’s pension calculator shows that someone aged 45 earning £34,000 per year with a pension worth £60,000 could have amassed as much as £160,000 by the age of 68 if they continue contributing at auto-enrolment minimum levels. However, if they boosted their contribution by around £50 per month, they would see that grow to £180,000. Boosting it by £100 per month could see it climb even further up to around £198,000.

So if you’re kicking yourself for leaving it all so late, don’t be hard on yourself. Millions of people wish they had put more into their retirement funds and done more about it earlier. But it’s never too late so get some advice and take it from there. If you’re considering equity release, find out more about it here.

6. Watch out for pensions scams

Pension scams are cruel and sadly happen all the time. The Pensions Regulator estimates that £2.5 trillion-worth of pension wealth in the UK is ‘accessible’ to fraudsters, which means we all have to be on our guard.

If you’re planning on moving your retirement savings to a different investment company, make sure it’s registered with the FCA (the Financial Conduct Authority) That will reduce the likelihood that you’re dealing with scammers. Also, if the worst happens and the fund collapses, it means that your money (or much of it) will be covered by the Financial Services Compensation Scheme (FSCS). The FSCS cover quite a lot of financial products and it’s useful to check their website to see when you could be compensated for.

7. Shop around

Many people are choosing to use income drawdown instead of an annuity in retirement.

However, it’s crucial that you shop around to make sure they are getting the best deal.

In 2022 , Which? found that the difference in growth between the cheapest and most expensive drawdown plans for a £260,000 pot was nearly £18,000 over a 20-year period.

Again, if you speak to an advisor you can find out the best value way to draw your money in retirement.

6. 8. Remember the tax (ugh)

Some people don’t realise that income tax is due on their pensions once the 25% tax-free lump sum has been taken. This means that someone who has never been a higher rate tax-payer, suddenly could find themselves in that bracket, especially if they are still working.

It’s so annoying as you pay tax all your working life and then find that you have to do it again when you’re retired. If you do well with your money you might even pay more than before!

Wealth at Work gives an example: if someone aged over 55 is earning £40,000 a year and has £30,000 in pension savings, decides to withdraw all their pension, 25% of this (£7,500) would be tax- free, but the remaining £22,500 would be eligible for tax. Their taxable income for that year would be £62,500 (£40,000 salary and £22,500 pension), meaning that they would become a higher rate taxpayer. This means they would be taxed 40% on the £12,230 income that exceeds the £50,270 higher tax threshold.

It’s possible that other savings and investments may be a better source of short-term cash than pensions, especially while you’re still working, as it can help to avoid unnecessary tax being paid and allows the pension to grow in a tax-free environment.

If you don’t know a good financial advisor, take a look at Vouchedfor.com which has a list of advisors near you that have good reviews from other customers. Try it out here.

The post Coming up to retirement? Don’t make these mistakes! appeared first on MoneyMagpie.

Earlier this year, it announced a delay to July 31, 2023, when a surge in calls put too much pressure on HMRC administration. This delay pushes the deadline beyond the general election, so by paying additional NI contributions, taxpayers approaching retirement can possibly increase their state pension, but it could also be helpful to younger people struggling.

Tom Selby, AJ Bell head of retirement policy, said: “Delaying the state pension top-up deadline will offer people valuable breathing room, but this is now the second time the deadline has been pushed back. While the original postponement until July this year offered a short extension, the deadline has now been put back until April 2025, a full two years after the original cut-off. Crucially, it also shifts the problem beyond the general election – potentially creating a ticking time bomb for the next government to deal with.

“The original extension was only ever going to be effective if DWP then staffed its helplines sufficiently to clear the existing backlog and deal with the extra claims that were inevitably going to result.

“Unfortunately, the phone lines are once again jammed, which suggests this hasn’t happened and people are unable to get through to enquire about topping up their NI record. Government should have known that a large volume of calls would be coming in and prepared accordingly.

“For those trying to get through to top-up their state pension, today’s announcement at least gives them extra time, although that still doesn’t tell them when they’ll actually be able to get through on the helpline.”

A quick guide to voluntary NI contributions

A £275 annual income boost for just £824…

“While some of the jargon and complexity involved might be off-putting, boosting your state pension entitlement can deliver significant financial benefits.

“You usually need to pay voluntary ‘Class 3’ NI contributions to top up your state pension entitlement. It costs £15.85 to buy one week’s worth of Class 3 NI, or £824.20 per year.

“Based on someone increasing their entitlement to the ‘new’ state pension (worth £185.15 per week in 2022/23), that could result in an income boost of £5.29 per week or £275.08 per year.

“What’s more, that income will be protected by the ‘triple-lock’, meaning it rises every year by the highest of average earnings, inflation or 2.5%. In April this year, the state pension increased by a whopping 10.1%, in line with inflation in September 2022.

“Broadly speaking, anyone who increases their state pension on these terms will need to live three to four years in order to be in ‘profit’ from the deal.

“Given average life expectancy at state pension age is around nine years for men and 11 years for women – with a decent chance of living into your 90s – those in good health who can boost their state pension could benefit handsomely by doing so.

“However, in some circumstances paying voluntary NI contributions will NOT boost your state pension” (see examples below).

Considerations for those thinking of paying voluntary NI

“Most obviously, the younger you are, the more likely you are to naturally build up the 35-year NI record needed to entitle you to the full state pension. In these circumstances, buying extra NI risks being a complete waste of money.

“If you have had gaps in employment due to caring for children or elderly relatives, you might be entitled to NI ‘credits’. These credits give you exactly the same entitlement to the state pension as voluntary NI contributions – but at zero cost.

“In addition, anyone who previously ‘contracted-out’ of the state pension under the old system (which existed before April 6, 2016) might also be entitled to less than the full state pension – even if they have a 35-year NI record.

“Contracting out (which no longer exists) just meant you paid lower NI and, in return, didn’t receive entitlement to the state second pension (the state pension used to be made up of two parts – the basic part and the state second pension, which was previously called ‘SERPS’).

“If you have previously contracted out, a deduction will be made to your state pension entitlement. If you aren’t entitled to the full state pension as a result of being contracted out, you can buy extra NI years to make up the gap.

“However, not everyone who was contracted-out will benefit from buying extra NI years. This is quite complicated and will depend on what you’d have been entitled to under the old system.”

Income tax considerations

“It’s also important to remember that your state pension will count towards your income tax bill. That means that by increasing the value of your state pension, you could also push yourself into a higher income tax bracket.

“Where this is the case, the benefit of buying extra state pension years will effectively be lower and so it will take a bit longer to ‘break even’.

“In many cases it will still be worthwhile to buy extra NI years, but you should take the time to fully think through the financial implications, ideally with the help of a regulated financial adviser.”

Useful resources

Full details of the Future Pension Centre are available here: Contact the Future Pension Centre – GOV.UK (www.gov.uk)

You can check your state pension forecast here: Check your State Pension forecast – GOV.UK (www.gov.uk)

If, after consulting the Future Pension Centre, you decide you want to pay voluntary NI, details for contacting HMRC are here: National Insurance: general enquiries – GOV.UK (www.gov.uk)

Our guide on all you need to know about pensions here.

The post State pension deadline extension means thousands are set to earn more appeared first on MoneyMagpie.

Welcome to Ask Jasmine, the column where I round up some of the questions I have received from readers. In this edition, I answer questions about pensions, dealing with letting agencies, and Lifetime ISAs.

I hope these answers can help you with any questions you may have. Don’t forget to leave any questions you have in the comments below or email me on askjasmine@moneymagpie.com.

• What is happening with my pension?
• I need advice regarding a letting agency
• How does interest on Lifetime ISAs work?

What is happening with my pension?

Good morning, Jasmine, I am so grateful to know that there is someone – you – to offer me help on pensions. 

I really do not know how much pension money I am due, weekly or monthly. I cannot get through to any of the following people: AgeUK, Wimbledon Guild and more. Nearly every day I pick up the phone and dial one of these institutions. Immediately, their phone states that “due to a backlog we are unable to help: please try again.”. I sit for at least half an hour waiting for someone to pick up their phone, all to no avail. 

All I want to know is: What is happening about my pension? I was given a pamphlet when I went to AgeUK in Mitcham nearly two months ago. Then, I was that told that due to staff working from home they could not help because of the long queue “so please phone later”. 

I look at my bank statement every month and wonder why my pay is lower than advertised. I’m 80 years old and my weekly pension is sometimes only £100.  Can you help me please?  I would be very grateful. 

Jasmine says:

I’m so sorry to hear that you have had such a difficult time in trying to speak to various organisations. Unfortunately, you are not alone in this. 

It would definitely be worth contacting the Pension Service directly. They should be able to quickly confirm exactly what you are entitled to.  

You can contact them on 0800 731 0469. They, too, may have call-waiting times, I’m afraid. 

Here is a link to the government’s website on pensions where you may also find some useful information. Click here. 

I do hope you get the answers you need and that this will be rectified soon. 

Please do let me know how you get on. 

I need advice regarding a letting agency

Hello Jasmine  

I need advice regarding the matter of a letting agency who didn’t investigate or check on the tenants in a property belonging to my daughter and her partner. The property was trashed and the rent is sometimes not paid. Is there a time limit on such matters? It has left my daughter very stressed.  

Jasmine says:

Unfortunately, I am not an expert in this field, however there are steps your daughter can take. 

Has your daughter already made a written complaint via the letting agent’s complaints procedure – or directly to the manager/owner? 

If not, she should write to them ensuring her letter includes:  

• What the complaint is about.
• What she wants them to do about the problem.
• Dates and times the problem took place.
• Details of any conversations with her letting agent and what they agreed to do.
• Copies of any letters or emails between you and your letting agent. 
• Photographs of damage or disrepair. 

If she has already taken this step and has not received a response or satisfactory answer, she can take this further and complain to an independent complaints body.  

The letting agent should be a member of either the Property Ombudsman or the Property Redress Scheme. 

Both of these bodies allow you to make a complaint. Each site also has a search facility where you can enter the letting agent’s name to see which body they belong to. Again, do include any correspondence with the agents to date. 

If your daughter would prefer to speak to them first, the contact numbers are:

• The Property Ombudsman – 01722 335 458
• Property Redress Scheme – 0333 321 9418 

I do hope this will be able to help and I wish your daughter every success in being able to resolve this in her favour. 

How does interest on Lifetime ISAs work?

If I open a Lifetime ISA in March 2023, putting £4,000 in the bank, will I get given £1,000 in April as the tax year ends then? 

Do I get £1,000 as it is 25% of what I put in, but with only one month’s interest on top? 

Also, I understand can only withdraw the bonus money after it [has been] in the Lifetime ISA for a year, but after a year, can I put another £4,000 in there, meaning a total of £9,000 plus 25% from the government on top? If so, by April 2024, will my initial £8,000 become £11,250 due to the 25% bonus from the government, plus interest? 

Jasmine says:

That’s nearly right, but the £1,000 (25%) you get from the government isn’t actual interest, so it doesn’t quite work like that. 

Certainly, at the end of March 2023, if you put £4,000 in you will get an extra £1,000. 

Then at the end of March 2024, if you have put another £4,000 in you will get an extra £1,000 added in. So, you will definitely have £10,000. 

However, the interest you get on the ISA overall will depend on what you have put the money into. If you put it in a Cash ISA that gives you 2% then you will get 2% on the money you have had in the ISA over those months (amount will vary as the actual cash you and the government will have put in will change over those months). If you put it into a Stocks and Shares ISA that gives you a 7% return then, again, you will make 7% on whatever money is in the ISA. 

The 25% extra that the government puts in isn’t actually interest – it’s just a bonus really. 

Hope that helps. 

The post Ask Jasmine: What is happening with my pension? appeared first on MoneyMagpie.

Millions of people are at risk of missing out on a more secure retirement because of this. Needless to say, there are multiple benefits to tracing lost and forgotten pensions.

This Sunday, 30th October is Pension Tracing Day. Why not take the time to track down any missing pension pots and investigate your personal finances?

Leading online pension provider PensionBee offer a range of tips surrounding how to trace your lost pensions. They have a list of actions to take if you want control of any lost or miscellaneous pension pots.

• Why should you trace your pensions?
• How to trace old pensions
• How to contact your pension provider
• Consolidating and combining your pension pots
• What the experts are saying

Why should you trace your pensions?

The benefits of tracing your pensions include potential financial gain. Similarly, it makes access in the future and during retirement much easier.  You could be missing out on thousands of pounds. This is both through a loss of compound interest, or from high fees you didn’t know you were paying.

It can be harder to trace pensions if you have switched employers or moved home multiple times. Make sure to notify your pension provider each time!

How to trace old pensions

There are a number of ways in which you can begin to trace your old pensions. According to PensionBee, if you don’t have a recent pension statement, the best way to start your research is to contact your pension provider, if you know who they are. This will enable you to find out your current pension value and any additional benefits you may be entitled to.

If you cannot remember who your pension provider is, contact your former employers to find out about your old workplace pensions. They should be able to inform you of who your provider is.

If you can’t reach your previous employer for any reason, you can try the Pension Tracing Service. The Pension Tracing Service is a database of pension providers. It allows you to search your employer’s name and see if there’s a record of your pension provider. This is a free service provided by the UK Government.

Another place to start, is by following the paper trails you have access to. Look through any paperwork you have filed away, as well as any old emails you may have access to. You may find communications from your pension providers which will help you trace any pension pots you may have forgotten about.

Similarly, going over your employment history may offer insight into your previous pension schemes and providers. Old employment contracts, payslips and documents could give reference to pension deductions and scheme providers.

How to contact your pension provider

When you have gathered information about your current or previous pension providers, you can begin to contact them. Make sure you have as much information as possible to hand. For example, your date of birth and national insurance number.

Having an estimate of when your previous plans were set up and any policy numbers is also extremely helpful. You are entitled to ask any questions you wish, provided you have passed the security checks. Asking about the current value of your pension pot is a good question to start with.

You may also wish to discuss what your current scheme offers in terms of benefits, whether there are any deductions or charges as the result of management fees and who the nominated beneficiary is in the instance of death. If you are interested in moving your pension, it’s a good idea to ask if there are any exit fees associated with doing this.

Of course, asking the age at which you will have access to your pension is a key piece of information you should be aware of. Unless you meet strict criteria, most people can’t access their pensions until the age of 55, rising to 57 from 2028.

Consolidating and combining your pension pots

In most cases PensionBee can help savers combine their pensions into one plan with a few personal details. They’ll ask for some basic information from you to begin with. For example, your address, NI number and date of birth. They may ask the name of your old pension provider and your policy number, if you have it.

The more information you are able to provide, the faster they will be able to find and combine your pensions.

Consolidating your pensions into one pot can be beneficial. It enables you to see all of your retirement savings in one place, so you can work out if you’re on the right track, or if you’ll need to increase your contributions to reach your retirement goals. It also gives you the opportunity to do your research and move all your pension pots to one provider with lower fees, or one that better fits your values or investment needs.

However, before you move or combine your pension pots, it is essential that you check you will not lose any special benefits you may be entitled to if you transfer. Such benefits include guaranteed annuity rate.

What the experts are saying

James Andrews, personal finance expert at money.co.uk, says:

“When planning for the future, it is important to stay on top of your savings, including where your pensions are being held. Taking time to track down old pots can be invaluable to your future retirement prospects. 

“That’s because there might be changes since you last looked at them in where the money is being held as well as differences in management fees. Considering you can transfer money between registered pension schemes and keep all your tax benefits, it makes little sense to have some savings being charged higher fees than others.

“It’s also good to know what your money is invested in – so having all your savings in one place will make life far simpler to both check up on funds as well as move your cash where you want it to be.

“The government’s Pension Tracing Service is a great tool to use if you have exhausted all other avenues and it is entirely free to use. By using this tool and undergoing research of your own, you should be in the best position to track down your idle pension pots and in turn, provide more options for your future retirement.” 

Overall, the imperative thing is to know where your retirement savings are located. It’s beneficial to keep an eye on your accounts. When you have a handle on your pension pots, whether in a consolidated pot or multiple accounts, remember to monitor the performance of your investments. Also, check how much you’re paying in fees regularly.

Make sure you tell your provider about any new jobs or changes to your address. Most importantly, continue your ongoing contributions in order to set yourself up for retirement!

Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. Capital at risk. 

The post How to trace a lost pension appeared first on MoneyMagpie.

Welcome to Ask Jasmine, the column where I round up some of the questions I have received from readers each week. This week, I answer questions about the council’s duty of care, Queen memorabilia and more!

I hope these answers can help you with any questions you may have. Don’t forget to leave any questions you have in the comments below or email me on help@moneymagpie.com.

• Can I get grants to decorate my home?
• Does the council have a duty of care?
• Where can I sell my Queen memorabilia?
• Is there any financial help available for me?

Can I get grants to decorate my home?

I am living in a council flat in London and want to find best value for money for a home makeover (new flooring and wall painting). The indoor looks shabby (no flooring and wall paper is very old). The council do not provide any help with this. Could you please advise me where to get help or grant for this work? 

Thank you for your kind reply. 

– 

Unfortunately, councils no longer offer home repair/improvement grants, due to budget cuts. However, there are some other options you could investigate. 

Home Improvement Agencies in your area may be able to offer some help towards costs: https://www.findmyhia.org.uk/  

Alternatively, you could try Turn2Us which allows you to search for grants by geographical area and need: https://grants-search.turn2us.org.uk/  

You could also contact Citizen’s Advice and ask to speak to someone who deals with housing. They may be able to offer more help and guidance. https://www.citizensadvice.org.uk/housing/  

I wish all the best with this. 

Does the council have a duty of care?

I’m terminally ill and need carers. I thought the local council had a duty of care to help care for us or help us find private carers to do it. My local council carers got rid of everyone bar me in my area from their books. They are trying to get rid of us too. 

We can’t afford to go private. The local council does assessments to determine what care we need and how much it costs. We pay a lot in care considering I live off benefits. They want to get rid of us and want us to go private, which we can’t afford. Can they force us like that? Do they have a duty of care to us? 

I’m guessing its different in each country. I’m in Scotland. 

– 

Thank you for getting in contact. I am sorry to hear of your situation with the carers and the council.  

In answer to your question, unfortunately the level of care councils are duty bound to provide is open to interpretation. They should provide you with a certain level of care, depending on your needs, or help you find that provision. 

I spoke to someone at Marie Curie Scotland on your behalf, but she was unable to provide much information without knowing more about your situation. She did say you could contact them directly for more advice and guidance about your rights. The number is 0800 090 2309. 

There is also Care Information Scotland: 0800 011 3200 (open Monday to Friday 9am-5pm). They have lots of information on their website and an online chat portal:  https://www.careinfoscotland.scot/  

Do you have anyone close by who can advocate for you? This would be ideal as they could contact organisations on your behalf. If not, you could contact the Scottish Independent Advocacy Alliance 0131 510 9410 for help. 

I wish you all the very best with finding the care that you need. 

Where can I sell queen memorabilia?

I have a newspaper issue with the late Queen Elizabeth on it from her jubilee in 2002. I don’t know if anyone would want it or where I could sell it? I’d be grateful for advice. 

– 

Thank you for getting in contact regarding your newspaper featuring the Queen from 2002. 

I recommend that you list your item on eBay. You can either set a price or offer it up for auction. There are currently a large number of similar items for sale as there is understandably increased interest at the moment. 

It’s worth checking to see what other newspapers are selling for and also check what they are charging for postage. 

Good luck! 

Is there any financial help available for me?

I am in my mid-60s, live alone, and Iam on an income of approx. £600 per month. I am not yet eligible for the state pension and I am not eligible for universal credit. There doesn’t seem to be the same help available for the likes of me, as those on benefits or state pension. 

I have received some money from my local authority and have been recently awarded a grant towards heating from the Home Heating Support Fund. I am glad of these amounts, but they are not on a par with the amounts of money available to those I have just mentioned. 

Any advice appreciated. 

– 

From what I have read in your message, you are doing everything that I would have suggested. You have contacted the council for extra help and you have applied for grants.  

I think the best advice we can give is for you to contact an organisation like the Joseph Rowntree Foundation, which specialises in help for people on lower incomes. They are experts in this field and may be able to offer advice and guidance. The phone number is 01904 629241. 

We do get other queries like yours – from people who fall in the gaps between low income and benefits. If I find out anything more, I will get back in contact with you. I would also be very interested to hear how you get on. It is an area that needs attention and addressing. 

–

Do you have a question for me? Leave it in the comments below, or email me your question on help@moneymagpie.com. I may just answer it in next week’s Ask Jasmine column.

Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. 

The post ASK JASMINE 6: Does the council have a duty of care? appeared first on MoneyMagpie.

Welcome to Ask Jasmine, the column where I round up some of the questions I have received from readers each week. This week, I answer questions about passive income, breaches in a contract and credit allowance.

I hope these answers can help you with any questions you may have. Don’t forget to leave any questions you have in the comments below or email me on help@moneymagpie.com.

• How can I utilise passive income?
• Can I claim a breach of contract?
• Do savings affect credit allowance?

how can i utilise passive income?

question:

Hello Jasmine, 

Just been reading your fab column again. Yesterday, I learnt the term ‘passive income’ from a friend. Unsure if you are aware of this term?

I am currently in a fortunate position to save money every week; (I work as an agency social worker and get paid weekly). The money goes into my Nationwide savings account. Can you recommend a small investment I can utilise please or another way of saving?

Thanks

answer

Thank you,

Yes, I am aware of the term ‘passive income’. In fact, we have a lot of articles on how you can get a passive income (make money without much effort) on my website MoneyMagpie.com. Take a look at the ‘make money’ section to see what we write about.

Good idea to get into some investing with your money.

Legally I’m not allowed to give you advice over this, but I do suggest you read up about it a bit yourself. Have a look at the ‘Manage your money’ section on Moneymagpie.com and you’ll see that we have lots of articles on how to invest, how to put more money into your pension, how to open an ISA (ideally a stocks and shares one) and lots more.

It’s always a good idea to put your money into different things, so now that you have a savings account it’s worth thinking about putting more money into your pension and also about setting up a stocks and shares ISA.

You could go and visit a few independent financial advisors and get their thoughts. The first session with a financial advisor is free so you could get some handy thoughts just by visiting them. Find some good ones at VouchedFor here https://offers.vouchedfor.co.uk/free-financial-health-check/money-magpie

Hope that helps. All best, Jasmine.

can i claim a breach of contract?

question:

Dear Jasmine,

I took out a Sky broadband package almost a year ago, part of the deal I was to receive a £100 gift card, either a physical or online use card to be used after three months. Eventually I was notified that my gift card was now available to use!

But it was not supplied by Sky themselves, rather a USA based company, this seemed to be straightforward until I followed the information given. After trying unsuccessfully and emailing the company, who told me to try again, eventually my email was returned as undeliverable.

A few months ago, I called Sky and eventually managed to speak to a very hostile young man who I eventually asked, “Who do think you’re talking to? “, because of his condescending attitude

I was told that Sky did not have any free gift card offers running at the present, and if they did then they would be managed by a promotions agency and have nothing to do with Sky, when I reminded him that the card offer was part of the contract, I was basically told I had to deal with an agency that was uncontactable.

Can I claim breach of contract? I feel that I’m being taken for a ride by Sky and they could be doing this to thousands. If you can help/advise. Thanking you.

answer:

Hello,

Thanks for your email. This does sound very annoying!

I suggest that your next step would be to take your complaint to Recover.com. They have direct access to complaints departments in many companies including Sky and I think you would have a decent chance of getting this sorted out if you do it through them. Give it a go anyway. If it doesn’t work, then come back to me.

All the best, Jasmine

do savings affect credit allowance?

question:

Dear Jasmine, 

[My wife and I] do not have private pensions or employment and live on the Governments state pension handout. I have not applied for credit allowance because of the means test and I have savings that we are living on. We have our own house which was the only one I could find after two years of searching with a granny flat downstairs because my wife cannot walk. It had to be close to a hospital and I was informed that Addenbrookes was the best. So, we upped sticks and boy have we suffered.

Anyway, if one has savings does that effect asking for the credit allowance? There does not seem to be any gas or electric concessions. Will the fact that we cannot use the upstairs have any balance on requests for council leniency?

We have been locked in for the last seven years and married for fifty. We are managing but can’t get out and about. I am aware of the council and the local guest homes that want £7,500 a month it’s ridiculous, and most of the council helpers that volunteer for home assistance/help, are older than me.

Best Regards.

answer:

Hi there,

Great to hear from you and I’m so sorry that you are having such problems at the moment. Now, I contacted Age UK https://www.ageuk.org.uk/ because they’re very good on this sort of thing. In fact, I suggest that you give them a call on 0800 055 6112. They are open 8am to 7pm every day of the year.

They also emailed me about your situation and said:

• They can check entitlement to Pension Credit using the Age UK benefit calculator
• There is information about government support on the Cost of living payments on the Age UK website
• We have information on Finding and arranging social care on the Age UK website

I hope that helps. All the very best to you and your lovely wife. Keep caring for each other. You’re doing a great job! All the best, Jasmine

–

Do you have a question for me? Leave it in the comments below, or email me your question on help@moneymagpie.com. I may just answer it in next week’s Ask Jasmine column.

Speak next week!

Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. 

The post Ask Jasmine 4: “Should I claim a breach of contract?” appeared first on MoneyMagpie.

We collaborated with leading pension provider PensionBee to bring you six podcasts all about pensions. These podcasts cover the basics as well as looking in depth into different types of pensions.

In this episode of the How To Be A Money Magpie podcast, founder Jasmine Birtles is joined by Romi Savova, the founder and CEO of PensionBee, the kind sponsor of this episode and Jessica Beard, a financial journalist at The Telegraph. They discuss how women can make the most of their pensions and make sure that they don’t lose out.

Listen to the podcast below, or read the written summary!

• Was PensionBee set up with women in mind?
• What are the main issues that come up for women and their pensions?
• What are the tricks?
• Have things improved in the last 20 years?
• What can you tell us about the pension gap?
• What can women do?
• Should you find out what your pension is invested in?
• How can women find a balance?
• What about divorce?
• What about widowhood?
• Is it important to talk about pensions with your partner?
• What’s the biggest piece of advice you have for women?
• What’s your advice for women approaching retirement age?

Was PensionBee set up with women in mind?

Romi says:

“I didn’t set up PensionBee with women particularly in mind, as pensions are a minefield that impact basically every consumer in the UK.

But of course, I am a woman, so I hope I do bring a female angle into the business with our approach to simplicity and product development in general. Increasingly, on a personal level, how women can do more with their pensions is on my mind.”

What are the main issues that come up for women and their pensions?

Jessica says:

“There’s a lot of different issues and challenges women face more than men. With state pensions, you’d expect there not to be too much of a divide, but in reality, there is.

That comes down to women having to take time out of work, they’ve got caring responsibilities and they may miss out on really valuable years of paying in their national insurance credits. They might get to retirement age and find they don’t get the full state pension.

This year, the DWP and the government acknowledged the fact they’ve been underpaying a lot of women their state pensions. There’s about £1 billion owed. Retired women have been needlessly living on less.

Going on to private pensions, you get a motherhood penalty with women taking time out of work. You get a ‘good daughter’ penalty, where women have cared for their elderly relatives. Women miss out on crucial years of saving.

There are certain tricks people can do to make sure they aren’t missing out on that money.”

What are the tricks?

Jessica says:

“For example, if you’re about to go on maternity leave, you’re likely to stop paying into your pension for that period of time. What you can do is get your partner to split their pension contributions for that period of time.

This means you’re not missing out. It’s hard to quantify, but a small amount in your pension early on can mean years worth of extra pension down the line.”

Have things improved in the last 20 years?

Jessica says:

“Things have been improving, but the pandemic has pushed everything back again. These issues were exacerbated by the pandemic, really amplified. They meant the gap actually got wider the past 18 months. So we are going backwards in that respect.

The gap widened by £27,000 on average. Women’s pension pots are £180,000 smaller on average than men’s. There is a real issue there and a gap that still exists.”

What can you tell us about the pension gap?

 Romi says:

“[PensionBee] has looked into this several times. A lot of the prevailing wisdom will tell you how women can do more. But really, women are already doing a lot, such as taking on additional care taking responsibilities. Asking women to do more needs to be put into the context of everything they are already doing.

With that in mind, we approached the problem with a fresh pair of eyes, and really dug into why it is that women’s pensions are smaller. On the surface, one of the main drivers is that women simply earn less than men for every hour worked.

It’s a well-known phenomenon across the UK – there have been protests about it. The gap is starting to narrow, but it’s very much prevalent. If you earn 10 or 15 per cent less than your male colleagues, then you are going to have less in your pension.

If you take time out to have children, then you are going to have less in your pension because you may not be contributing for your full maternity leave. Also, when you return, you are often penalised because you take on a lot of care taking responsibilities.

The solution to this is to make our lives equal to those of men. When we look at gender pay and pension gaps, we find in earlier years, men and women are earning similar amounts and making similar contributions into their pension.

It’s when we take time out to have children and raise children the discrepancies arise. The direct intervention for that is that men and women should be sharing parental leave.

If you talk to women about this, they are quite positive about sharing that responsibility. Men too are very much open to being a more active part of their children’s lives. It’s also important to pick employers that support that kind of decision making.

At PensionBee, we focus on parental leave rather than just maternity leave. If you can stop that trend in the early days and have men and women contributing equally to caring responsibilities, then everyone who returns to work will be returning on equal footing.

Pensions are investments, and that means if you have a small gap early on, that gap magnifies dramatically over time because of investment returns.”

What can women do?

Jessica says:

“If women raise the amount they put into their pensions by just 1%, it can increase their pension outcome by 25% or more by the time they reach their 60s. This can bring years of retirement income. It’s a little sacrifice today for more tomorrow.

Most employers will have a salary sacrifice scheme. This means you agree with your employer to put a percentage of your salary into your pension before it’s taxed. It’s a tax-efficient way to put more towards your retirement.

Familiarising yourself with what your money is invested in and having a look at how it works is beneficial. Seeing if it’s right for you, or whether you want to invest in something completely different. You may choose something slightly riskier, or even more defensive.

Try to understand it, do a bit of research and go from there.”

Should you find out what your pension is invested in?

Jessica says:

“Your pension will be invested in something that’s good for you, so you could leave it where it is, but there’s no harm in having a look at it. Go to your employer and find out a bit more.

When women invest, they invest into different funds which is really good.”

How can women find a balance?

Romi says:

“There does need to be a balance. Motherhood is a good time to take stock of your personal finances. In addition to figuring out where your current pension is, look into your previous pensions.

Most of us will have had jobs throughout our lives. The average person changes jobs 11 times. At PensionBee you can combine them into a new online plan. You can use your smartphone or the website to make additional contributions, if you can afford to do it.

It will give you peace of mind to have taken control of that aspect of your finances.

Another thing to point out is that motherhood does generally make you think about, ‘what if something does happen to me?’. Pensions do sit outside of your estate, so if you were to pass away before the age of 75, without access to your defined contribution pension, which is what most people have these days, then it would move to your beneficiaries.

Therefore, you need to be thinking about who your beneficiaries are, whether it be a partner or your children. It’s an important family decision that needs to be made.”

What about divorce?

Jessica says:

“After property, your pension is usually the largest asset to take into account. The amount of couples splitting their pensions in divorce is at a 10 year low.

There are 3 main ways you can split your pension in a divorce. One is pension sharing, where you split your pension immediately at the time of the divorce.

The second is pension offsetting, where you find two assets, for example your property and a pension that are roughly a similar value and you take one or the other.

The final is pension earmarking, which happens the least. This is where you won’t start to take your pension until your partner takes theirs. When they receive theirs, you’d then get a portion of that.”

What about widowhood?

Romi says:

“This is a decision you want to make together as a couple. It also depends slightly on the type of pension you have.

Defined benefit pensions will have specific rules as to how much a spouse will be paid upon the death of the individual who owns the pension. You should check your paperwork to understand exactly what that means for you in that scenario.

In a defined contribution pension, it’s very important to nominate your beneficiary. You can often do this online, with some pension providers you may have to fill out forms.

It’s worth letting your provider know what you want to do so they can take your expression of wish into account. Sorting this out is almost as important as sorting out your will.”

Is it important to talk about pensions with your partner?

Romi says:

“The most important thing for a woman to do is ask. Sometimes you might not know exactly what your partner’s pension situation is, or what their employers’ benefits have been like.

It may open up benefits even your partner didn’t know they had as part of thei package. There’s no reason women shouldn’t be the first to ask.”

What’s the biggest piece of advice you have for women?

Romi says:

“The single most important piece of advice is to start early with as much as you can. The biggest intervention that you can make for your future income is how much you put in today.

Because of investment returns, the longer your money has to grow, the more beneficial it is to you ultimately. It can be off-putting to thing about pensions and tax and complex paperwork, but you can do it in an easy way. I think future you will really thank you.”

What’s your advice for women approaching retirement age?

Jessica says:

“The first place to start is to get a grasp on it. Draw up a budget. When do you plan to retire? How much do you think you might need for every year of retirement? You can then get an idea of whether you’re on track with your pension.

You can decide whether you need to start putting more into it, or whether you’re saving enough to be comfortable.

Check your state pension. Will you get the full state pension? That’s the danger, many people think that they will, do all their budgeting, then find out they won’t get as much as they planned.

There’s still time to act. Just make sure ahead of time, you’re ready and know what’s coming.”

Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.

The post How women can make the most of their pensions! appeared first on MoneyMagpie.

To help you navigate these tricky waters , I’m going to explain some top tips for managing your pension before and after you retire. You’ll learn what drawdown payments involve, the pros and cons, and some alternative retirement options.

Keep reading for all the finer details or click on a link below to head to a specific section…

• Living off your pension
• What is a drawdown pension?
• The different types of drawdown pensions
• How it works
• Advantages
• Drawbacks
• Alternatives

Living off your pension savings during high inflation

You might be reaching an age where you’re planning to live off your pension. And in today’s climate, it’s tough to figure out the best course of action.

Unless you’ve been living under a rock, you’ll have noticed rising prices and high inflation right on your doorstep.

What started out as a ‘transitory’ post-coronavirus squeeze has turned into a bursting dam which has become a regular part of your day-to-day life.

Tthe backlash from Covid-19 and the ensuing lockdowns are the main part of the problem leading to inflation, along with struggling global supply chains, and historic energy price increases at home, super high fuel costs, and to top it all off – a war in Ukraine.

However, the main cause of the inflation we are dealing with now (and will be for some time to come) is the insane amounts of money that was printed during the enforced lockdowns. As the economist Milton Friedman famously stated: “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output”

Alongside inflation, rising interest rates, and general anxiety, are causing downward pressure in stock markets around the world.

So, you may be wondering what you can do about your pension, if anything.

To help you get a clearer picture, I’m going to explain drawdown pensions in detail and what this could mean for your retirement.

What is a drawdown pension?

This is an increasingly popular way to access a defined contribution pension. It can be a more flexible way for you to use your retirement savings. But, with this flexibility comes added risks to think about.

In the past, it was very common for people to use their pension pot to purchase an annuity. This annuity would guarantee an income for life.

Annuities were a solid option for those who wanted to know exactly what their finances would look like during retirement.

But, because the average lifespan has been increasing, this has made annuity offers less and less enticing. You need an absolutely massive pension pot to get anywhere near a decent annuity deal.

A drawdown pension allows you to take out as little or as much as you’d like. But, this pot has to last you throughout retirement.

What are the different types of drawdown pensions?

The two main types are:

1. Flexi-access drawdown
2. Capped drawdown

However, the capped drawdown option is only available if you set it up before April 2015. So flexi-access is the norm and what most people are referring too when using the word ‘drawdown’.

How a drawdown pension works

Your pension pot is held in a fund. The fund will contain a specific set of investments, and you withdraw your money from here.

Depending on what your fund is invested in can impact whether your overall pot grows, remains stagnant, or shrinks.

Organising things in the right way for your retirement is best done by speaking with a financial adviser.

They can take a look at your whole finances and then give you guidance on the best arrangement of investments to use for your circumstances and goals.

Advantages of a drawdown pension

The flexibility of control means that you can adjust your income and how much money you use.

Some key advantages include:

• Access to more funds if you’ve got a big event or holiday planned.
• With rising prices, you may need more cash to maintain your current lifestyle.
• In the years when you don’t need as much income, you can leave your pension pot to grow.
• Retain ownership over your pot so your family can inherit an unspent pension pot free from tax if you die before 75, or income tax applies if you die at an older age.

Drawbacks to think about

Although accessing your retirement savings with a drawdown pension comes with lots of flexibility and control, there are some disadvantages to keep in mind:

• If you don’t manage your pension properly, you could run out of money.
• The pot can lose value depending on the performance of the investments in the fund.
• Taking money out during market downturns can harm your retirement in the long-term.
• Often requires ongoing management or advice from a professional.

Alternative options to drawdown pensions

There are some other ways you can access funds in retirement without drawing down from your pension pot.

Here are a few ideas worth considering:

1. Taking income from dividends and other assets

To minimise the impact of negative returns, you can take income from your underlying investments such as dividends and bonds.

This can help avoid selling fund units, giving your pension pot a better chance at recovery if the market improves at a later date.

Another option is to make use of any other assets you have, like a cash ISA.

With high inflation, your cash will be losing value. So, rather than sell pension investments at a loss, it could be a good time to smooth things out with some of your cash reserves.

2. Delay retirement

Deciding to postpone your retirement can give you some breathing room to ride out the current financial bumps.

There are no guarantees things will be better down the road. Yet, the situation we’re in right now couldn’t get much worse – I hope I didn’t jinx things by saying that.

Riding out the storm and trying to minimise the impact on your pension finances could be worth thinking about.

3. Use an annuity

Annuity rates aren’t what they used to be. But, if it gives you more peace of mind to have a guaranteed income throughout your retirement, it’s worth considering this option.

You’ll have less flexibility and control compared to a drawdown pension. But the benefit is, you’ll know where you stand with your finances today and tomorrow.

4. make some money on the side

More and more retirees are finding it handy to make some extra money to supplement their incomes. Not only are ‘side-hustles’ a good way to make extra cash to keep one going, they are also often really helpful in getting one out of the house, meeting new people and gaining new experiences.

Have a look at our article on how over-60s are making money right now (pretty amazing stuff!) for inspiration.

This is not financial or investment advice. Remember to do your own research and speak to a professional advisor before parting with any money.

The post Drawdown pension basics: everything you need to know appeared first on MoneyMagpie.