How many pensions will you have at retirement?

How many pensions will you have at retirement?

When we reach retirement age, we use a pension to create an income. But changes to working habits could make it far more complicated for today’s workers. As a result, actively managing pensions now is important.

Employees today are likely to swap jobs frequently, to suit their lifestyle and career goals. It’s a trend that can help workers balance work and personal life, and further their career prospects. However, each position is likely to come with a pension and it can make managing retirement savings a headache.

Two-thirds of workers in the UK think that a job for life is a thing of the past, according to a survey conducted by Aegon. Younger generations expect to switch jobs frequently. As a result, 73% of today’s workers agree they’ll have far more jobs than previous generations.

Just one in twenty workers aged 18-34 expects to spend more than 20 years with a single employer. This compares to 48% of workers 55 or over who either already worked for a single employer, or expect to work for a single employer, for more than two decades.

Auto-enrolment means new pensions as you switch jobs

Auto-enrolment has been successful in getting more people saving. But it means each time you start at a new company you’re likely to be enrolled in a new pension scheme.

To be automatically enrolled you need to meet the following criteria:

  • Aged between 22 and State Pension age
  • Earn at least £10,000 per year
  • Usually work in the UK

Under auto-enrolment, you will contribute 5% of your pensionable earnings each month, and you can increase this if you wish. Your employer must also contribute 3% of your earnings, though some employers may offer higher contributions. Your contributions will also benefit from tax relief.

If you don’t fit the criteria above, you still have the option to join and your employer may also still contribute on your behalf.

As a result, most workers will benefit from a Workplace Pension with each employer. This is great news for retirement savings. But it means you could retire with multiple pensions to juggle.

The challenges of juggling different pensions

If you don’t actively manage your pensions while working, it’s challenging to understand how much you’re saving. To get a snapshot of whether you’re on the right track, you’ll need to find the information for multiple pensions. It can make it difficult to know if you’re saving enough.

When you come to retirement and are deciding how to access your pension, having it in multiple pots can cause a headache too. Once again, you’d need to bring together the values of different pensions to understand the income and lifestyle your retirement savings can deliver.

On top of the challenges multiple pensions can cause when trying to understand your retirement, it can mean your investments don’t go as far. For example, charges on a smaller pension can effectively wipe out investment gains. In some cases, consolidating your pension can improve returns and make retirement plans easier to manage.

Consolidating pensions could provide a solution

Consolidating allows you to transfer pensions into another existing pension. This way you’re able to reduce how many pensions you have to manage. It can make it easier to keep track of investments.

For many, consolidating pensions, especially if you have multiple small pots, will make sense. It can help you reduce the impact of charges on investment performance. At the point of retirement, it can also make it easier to access your pension to create an income.

However, sometimes consolidation isn’t the most appropriate choice. For example, some pensions will come with additional benefits that you’d lose if you were to transfer out. This may include the ability to access the investments earlier than usual which may be beneficial to your retirement plans. So, it’s important to fully understand your pension before you decide to consolidate them.

You also need to consider where your pension is invested too. There are many areas to consider, including long-term investment performance, charges and your current Workplace Pension scheme.

Please contact us if you’re juggling several pensions and want to make them easier to manage. We’ll work with you to create a long-term plan that not only factors in ease of managing pensions now but consider your retirement too.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.

New year’s resolutions to improve your finances

New year’s resolutions to improve your finances

The start of a new year is the perfect time to get your finances in order.

A few simple changes could improve your finances in 2021 and beyond, setting you up for a healthier financial future.

So, whether your finances are in a muddle or you just want to ‘do better’, here are five new year’s resolutions worth sticking to.

1. Create a spending budget

If your bank balance has been getting worryingly low, it’s probably time to take a thorough look at your spending habits.

Creating a budget is a useful exercise whatever stage you’re at in life. And you may be surprised at how easily you’re able to save extra money each month.

The following simple steps can help you create a successful budget:

  • Work out how much money you take home each month
  • Add up your monthly outgoings
  • Calculate the difference

If your expenses are greater than your income, check if there’s anything you could cut back on. We’re not suggesting you scrap all of your little luxuries. However, there may be lots of things you’re spending money on that you don’t actually need, such as unused magazine subscriptions or gym memberships.

If your income is higher than your outgoings, consider adopting the ’50-30-20’ budgeting philosophy. This is where essential expenses comprise half your budget, other expenses make up 30%, and the remaining 20% goes towards savings or paying off debt.

2. Pay off expensive debt

If you’ve racked up a lot of debt, the new year could be a great time to start tackling it.

The higher the interest rate, the more the debt will cost you, so it’s usually a good idea to pay off expensive debts first. These could include credit card and store card debts, unauthorised overdrafts, and payday loans.

Paying off your debts could enable you to save more money for your future, improve your credit score, and reduce any anxieties you’re feeling about your finances.

Some loans come with high early repayment penalties, so make sure you read the terms and conditions before paying them off.

3. Increase your pension contributions

If you’ve got extra money sitting around or recently received a pay rise, it could be worth increasing your pension contributions.

Each time you pay into a pension the government tops it up with 20% tax relief, making it a great way to save for your future.

The chart below shows how quickly monthly pension contributions can add up over time. It shows two £20,000 pensions growing by 5% a year over 30 years. One has £100 paid into it each month, and the other has £300.

Source: Bestinvest

It’s never too late to start preparing for your future. However, the earlier you start investing, the better your chances are of living the retirement you desire.

Research by Which? suggests couples need £27,000 a year to live a comfortable retirement, or £42,000 a year to live a luxury retirement that includes a holiday every year and a new car every five years.

Couples would need a pension pot of around £215,450 to produce enough income for a comfortable retirement via income drawdown, or £298,000 through a joint-life annuity. For a luxury retirement, these figures rise to £502,775 and £695,000, respectively.

4. Invest in a Stocks and Shares ISA

Investing in a Stocks and Shares ISA has several benefits. Your money grows free of Income Tax and Capital Gains Tax, and you can withdraw money whenever you like without paying tax.

This makes ISAs a useful vehicle for holding money that you might need to withdraw before retirement. Money inside a pension can’t be accessed until you’re at least 55-years-old, rising to 57 in 2028.

Additionally, because ISA withdrawals are tax-free, they can be a tax-efficient way of taking income in retirement. With a pension, you can withdraw up to 25% tax-free and the rest is taxed at your marginal Income Tax rate.

You can pay up to £20,000 into ISAs in the 2020/21 tax year. Keep in mind that when investing, your capital is at risk. You should invest with a minimum five-year timeframe in mind.

5. Make a will

Making a will is an essential financial exercise, yet research by Royal London suggests 57% of UK adults don’t have a will in place.

If you die without a will, it could cause immense stress and financial hardship for your family. In a worst-case scenario, your loved ones could inherit nothing and become embroiled in bitter disputes.

By making a will, you can ensure:

  • Your money and assets end up in the right hands
  • Your children are cared for by people you know and trust
  • Your unmarried partner and stepchildren are provided for
  • Your family can continue living in their home
  • Your estate doesn’t attract unnecessary Inheritance Tax

Writing a will can give you the peace of mind that your loved ones will be protected long after you’ve gone.

Get in touch

If you want advice on getting your finances in order, we can help. From helping you create a financial plan to organising your pensions and other assets, we’ll ensure your new year is off to a flying start. Please contact us to arrange a meeting.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.

The Financial Conduct Authority does not regulate will writing or estate and tax planning.

Investment market update: October 2020

Investment market update: October 2020

In October, there were signs of economic recovery from the impact of Covid-19. However, during the month, many countries have reimposed restrictions and, in some cases, full lockdown, to stem the spread of the virus. As a result, it’s expected that volatility and uncertainty will continue into the winter.

The International Monetary Fund’s (IMF) Managing Director Kristalina Georgieva warned that the Covid-19 crisis is far from over despite the world economy looking better. The IMF also added that it’s too early for governments around the world to end support schemes.


The latest economic growth figures for August show the economy is slowing, despite the Eat Out to Help Out scheme designed to boost spending. The economy grew by 2.1% but failed to meet expectations.

On Halloween, Prime Minister Boris Johnson announced the country would be entering lockdown for four weeks. It’s a move that is set to have a severe impact on the economy and businesses. The UK borrowed £36.1 billion in September 2020, a record and far more than economists were expecting. With a new lockdown to support, this figure is likely to climb even further.

One of the areas of concern is the unemployment rate. The jobless rate hit 4.5% in the three months to August, a three-year high. There are warnings this will increase much further too. The Centre for Economics and Business Research (CEBR) warns that at least 1.25 million people are at risk of losing their job before Christmas. This would take the number of unemployed to almost three million and the rate to 8% for the first time in a decade.

The findings over the last few months point to a tough winter with economic uncertainty at the centre.

The entertainment industry has been particularly affected by the lockdown restrictions. One of the big names to speak out this month was Cineworld, which has closed all UK venues. The firm said it can’t stay open without major new films as studios push back release dates. The company’s shares halved in value following the announcement. Odeon followed this by saying it also planned to close a quarter of its cinemas.

According to a CBI report, UK retail sales fell sharply, as did orders placed on suppliers, as restrictions increased.

Some firms have benefitted from the social distancing restrictions though. Asos has seen its profits quadruple by adding three million customers as demand for online shopping soared. However, the firm has remained cautious, citing Brexit as a risk area.

Following falling high street footfall and spending, online shopping is providing opportunities for retailers. One business keen to take advantage of this is John Lewis, which has committed £1 billion to an online push.

While Covid-19 continues to dominate headlines, the UK’s economy will also be affected by Brexit. When Boris Johnson signalled a no-deal Brexit could be on the horizon, the pound fell as a result. However, both the UK and the EU have since said that a deal is still possible. The outcome of the negotiations remains to be seen as the deadline draws nearer.


The Eurozone posted record growth of 12.7% between July and September but the figure is marred by further statistics that suggest hardship ahead.

After factory figures suggested the eurozone was recovering, the pace is now slowing. In August, production across the area increased by 0.7%. However, this still leaves production 7.2% lower than a year ago, highlighting the impact Covid-19 has had on economies.

The private sector is also shrinking again. In October, a PMI of 49.4 was recorded, where a reading below 50 signals contraction. Germany was described as the only bright spot.

This is linked to rising unemployment. The economic area saw unemployment rise for the fifth month in a row in August to 8.1%. The has disproportionately affected some countries, with Spain recording an unemployment level of 16%.

The European Central Bank (ECB) left its policy unchanged in October but has hinted it will act if needed. The next ECB meeting will take place in December.

While challenging, the current climate has presented an opportunity for investors too. The European Union launched the first of its new coronavirus related bonds, which will fund Europe’s recovery efforts. There’s been high interest from investors, with reports that the bonds are 14-times oversubscribed.


At the beginning of the month, President Donald Trump tested positive for Covid-19, impacting markets around the world. However, as he went on to make a full recovery, they did stabilise.

One of the headline figures from the US is its GDP as the country returned to growth. In the third quarter, the US posted an annualised rate of 33.1%, the strongest quarterly growth on record. The figure indicates the economy is taking steps towards recovery, but other statistics show this may not be the full picture.

The US trade deficit, for example, reached a 14-year high. The gap between imports and exports rose by $67.1 billion, a jump of almost 6%.

Of course, the key thing that will affect markets and the US economy in the coming months is the upcoming election. As Trump has said there will be no stimulus package until after the election is concluded, so many businesses could be left struggling.

Remember, while your investment portfolio may experience volatility, it is important to focus on the long term. Carefully think about your wider financial plan before you make changes to your investment strategy. If you’d like to discuss what recent changes mean for your investments, please get in touch.

Keep an eye on our blog to discover the latest markets and financial news.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Half of workers planning a career change in the coming months due to Covid-19

Half of workers planning a career change in the coming months due to Covid-19

Covid-19 has prompted many discussions about working environments and the future of employment, such as working from home, from a business perspective. But for millions of workers, the pandemic has led them to think carefully about their employment and the changes they’re able to make.

According to a survey by Aviva, 53% of UK workers plan to make changes to their careers in the next 12 months as a direct impact of the Covid-19 pandemic. Given the changes that some workers have had to incorporate into their day-to-day role and the economic uncertainty, it’s not surprising that workers are weighing up their options.

Research highlights the different ways workers are seeking to change their current employment status. If you’ve been feeling like you’re stuck in a rut, need more of a challenge or need to strike a better work-life balance, reassessing your current situation could help you feel more fulfilled.

Searching for work from home options

For many office roles, the shift to working from home has been one of the biggest trends encouraged through lockdown. With many workers finding they’re saving money by not commuting and having more time, it’s not surprising that this is the most popular option.

In fact, 10% (3.4 million) of people plan to actively search for a role that will allow them to work from home permanently. The desire to work from home was particularly strong in London. While many businesses did manage the move to home working successfully, and some have announced it will stay in place once the pandemic passes, it remains to be seen whether there will be sufficient remote working opportunities to meet demand.

Retraining and learning new skills

With economic uncertainty and unemployment expected to rise, workers are also looking at ways to develop their skills.

Some 9% said they plan to retrain or learn new skills, with a further 8% aiming to gain more academic qualifications over the coming year. Some 7% hoping to follow a completely different career path supports this too. It’s a step that could help you reach goals, increase earning potential and feel more satisfied at work. This is something the government has been backing. It announced an expansion of post-18 education and training in a bid to increase productivity, including flexible loans to pay for courses.

Moving retirement plans forward

For some, a change to their working life means giving it up completely. 1.4 million (4%) people intend to speed up retirement plans and stop working in the next year. There’s a range of reasons why Covid-19 may lead to an employee retiring earlier than expected, from job insecurity to lockdown measures meaning they’ve reassessed priorities.

If this is something you’re considering, it’s important you understand your long-term financial position and how you’ll create an income throughout retirement. Please get in touch with us to arrange a meeting to go through your retirement plan.

Finding a role that makes a difference

Interestingly, 6% of people are focusing on finding a new role because they want to help others or work in a sector that makes a difference to those in need. Perhaps inspired by the actions of NHS staff, charities or people simply lending a helping hand, Covid-19 has spurred some on to look for more meaning in the workplace. Knowing the tasks you do have a positive impact can make your role far more fulfilling.

Setting up a business

While lockdown restrictions on workplaces have meant some employees have had more freedom, others may worry about their current job security. Both are reasons why 6% of workers are now thinking about setting up their own business or working for themselves.

Taking control of your own working life can be liberating, but it comes with challenges too, including managing your finances and long-term security. If you’re ready to take the plunge but need some reassurances about how your finances will hold up, we’re here to offer guidance.

Understanding the financial impact of career decisions

Any career change will come with a financial impact. Perhaps learning new skills will mean your income temporarily falls or moving retirement plans forward means you’ll be accessing your pension sooner than expected. And, if you hope to launch a business, you may need to get to grips with tax and other financial aspects of running a company for the first time.

Financial planning can help you understand the impact a career change will have on your financial situation, allowing you to move plans forward with confidence.

6 reasons to use a mortgage broker

6 reasons to use a mortgage broker

When you’re moving home, it comes with a lot of expenses and you may be looking for ways to reduce costs. However, paying a mortgage broker to work on your behalf can add value and mean you save money over the term of your mortgage.

The mortgage market can seem complex at any time, but given the current situation, a mortgage broker is more important than ever. Following Covid-19 restrictions, UK mortgage applications reached a 12-year high and house prices are rising, according to Halifax.

A ban on sales at the height of the pandemic means demand has grown and economic uncertainty is a concern. Lenders have responded by taking some products, particularly low deposit mortgages, temporarily off the market. While interest rates are still low compared to long-term averages, they have increased in recent months. As a result, it’s more important than ever to approach the right lender for you.

Here are six ways a mortgage adviser can add value.

1. They can offer advice from the start

While many people approach a mortgage broker when they’re ready to apply for a mortgage, they can offer their expertise before this point.

You may have questions about affordability and the maximum amount a lender is likely to offer, allowing you to search the property market and make an offer with confidence. They can also advise on which lender to approach for a mortgage in principle and help you in this process.

Engaging the services of a mortgage broker early on in the process can mean you don’t waste time looking at properties that aren’t right for your circumstances.

2. They will help you search the market for lenders

There are hundreds of lenders offering mortgage products. Deciding which one to apply for a mortgage with is important.

Each lender has its own criteria, and you should ensure you match this before applying. Failing to match the criteria could mean the lender rejects your application. This will leave a mark on your credit report and can make it more difficult to secure a mortgage with another lender.

With so many lenders to review, it can be time-consuming and challenging to know where to start. As someone who works in the industry, a mortgage broker will know which lenders are most likely to approve your application. This can be especially useful if you don’t match the criteria of high street lenders, for instance, if you’re self-employed with a fluctuating income.

3. A broker can save you money in the long run

Securing a lower interest rate can save you a huge amount of money over the full term of your mortgage. But, again, with so many different lenders, it can be difficult to find the lowest interest rate while ensuring you meet the lender’s criteria. A mortgage broker will do all this work for you.

Even a small difference in interest rate can add up over the years. If you take out a £200,000 mortgage over 25 years at an interest rate of 2.5%, you’d pay £897 per month. Over the 25 years, you’d pay £69,204 in interest. If the interest rate were to increase by just 1% to 3.5%, monthly payments would increase to £1,002 and you’d pay £100,477 in interest.

Working with a mortgage broker can reduce regular outgoings and save you huge sums when you add this up.

4. They can offer advice on other features of a mortgage too

While interest rates are important, they’re not the only important feature to consider when taking out a mortgage.

If you hope to overpay, or would like the option to port a mortgage to another property, for example, a broker will be able to offer advice and consider these when selecting products for you. By considering these factors, you may save money by avoiding fees in the future, as well as having a mortgage product that gives you the flexibility you want.

5. A broker can save you time

A mortgage application can take weeks. If there are mistakes on the application or the lender needs to request further documentation it can really slow down the process. A mortgage broker will understand what’s needed and will be able to review your application before it’s submitted, reducing the likelihood of the lender requesting additional information. This is a step that can speed up the whole mortgage and homebuying process.

6. They can reassure you throughout the process

Even if you aren’t buying your first home, the process of purchasing a property or taking out a mortgage can be complex. A mortgage broker will understand the process and be able to offer reassurance throughout. You may have questions about timeframes, what you can do to make the process smooth, or concerns you want to discuss with them. Having someone on your side can make applying for a mortgage easier.

Please contact us if you’d ready to take out a mortgage, whether you’re moving home or not. We’re here to offer advice right from the beginning of the process.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.