Latest news with #HelenMorrissey
Yahoo
16 hours ago
- Business
- Yahoo
Are you saving smartly? Top pension advice experts want you to hear
With the cost of living rising in recent years, many Brits are struggling to put money aside for retirement. At the same time, life expectancies are rising, meaning that the need to save is becoming ever more pressing. According to a survey from YouGov, 38% of UK respondents aren't currently saving towards retirement. Around 28% are saving up to 10% of their annual income for old age, while 22% don't know how much they're currently putting aside. While many Brits are wrapped up in immediate financial pressures, experts say it's important to engage with pension planning as soon as possible. Saving even a little, and knowing how to manage that money, can make a big difference further down the line. Here are some top tips to build your pension, collected from conversations with financial advisors. While our focus is on UK pensions, international readers can read more about other European schemes here. This one may seem obvious, but it's worth reiterating. The more money you put into your pension pot, the more likely you are to have a stellar retirement income. If you contribute when you are young, it also means that your investments — in the case of a personal or workplace pension — have time to grow. 'One key way of boosting your pension is to try and increase your contributions wherever possible,' Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, told Euronews. One way to do this, she explained, is by boosting contributions every time you get a payrise. 'You aren't used to having the extra money in your pocket so it's easier to portion some of it to go into your pension,' Morrissey explained. In the UK, most employees are automatically enrolled in a pension scheme. Generally, you will pay 5% of your wages into your pension pot, and your employer must make a contribution worth at least 3% if you earn over £6,240 a year. 'Auto-enrolment minimum contributions are set at 8% - this is a good start but ideally you need to be contributing more to get a good retirement income,' said Morrissey. She explained that some employers will offer more generous rates than 3%, sometimes matching your contribution level. Related Boom or bust? Economic impact of ageing populations and lower birth rates Can't wait to give up work? Why some people are not the retiring type Another option on the table is a salary sacrifice scheme. Your employer may let you reduce your wages or bonuses and instead allow you to funnel this money into a pension, topped up by employer contributions. As well as paying less income tax on this money, this also means that you and your employer will pay lower National Insurance contributions. Staying on top of your pension plan is an important part of building a nest egg, said Claire Trott, divisional director of retirement & holistic planning at SJP. 'Once a year — as a bare minimum — work out what you've got, what you're likely to get, and whether it will be enough for retirement,' she explained. When it comes to private and workplace investments, one way to engage is by carefully choosing where your contributions are invested. Workplace contributions will be placed in an average fund designed to suit all employees, which may not necessarily be your best option. 'The default fund might suit what you want to do. But for the majority of people, it's just okay. And you might be able to do something more with your money,' said Trott. Saving for retirement doesn't have to simply revolve around a pension fund, as there are lots of different products on offer. 'Pension savers can also utilise their tax-free ISA allowance to run alongside their pension,' Lucie Spencer, partner in financial planning at Evelyn Partners, told Euronews. 'Money invested … can grow free of tax on income or gains, which is ideal for retirement saving. Take note, however, pension saving effectively increases your basic rate tax band to reduce income tax whereas savings into an ISA are withdrawn from net income.' In other words, withdrawals from ISAs are tax free but the money put in is taxed. The age when you can access your state pension — which is separate from the workplace pension and built up through National Insurance contributions — is currently 66. For those born after 6 April 1978, it will be 68 years old. On the other hand, you can currently take a private pension, including some workplace pensions, from age 55. This will increase to age 57 from April 2028. Unless you need to, many advisors warn against taking your pension until you need it, as leaving it untouched allows the investments to grow. On top of this, taking your pension while earning can push you into a higher tax band — and you also don't want to risk running out of money. It's now very uncommon for people to stay with one company for their whole career, although job hopping has consequences for retirement planning. When you start a new job, your workplace pension doesn't automatically follow you. This means you can choose to keep your old pot separate from your new one, or you can consolidate it. 'Consolidation does mean admin is a lot easier when you want to start taking your pension, as it's all in one place,' said Claire Trott. Related Why are Gen X workers in the UK so pessimistic about retirement? Swiss officials admit to three billion-franc pension blunder Even so, she explained that grouping pension pots means you may lose out on scheme-specific perks. 'One particular scheme may be better than another one. So if you've got an old scheme, anything pre-2006, they can have really great benefits that you wouldn't have in one started today because of legislation changes,' she said. Evelyn Partner's Lucie Spencer also advised people to look into 'carry forward' rules, which allow savers to access unused tax relief from the last three tax years. You're only allowed to pay a certain amount into your pension each year before normal income tax rates kick in. The standard annual allowance for the 2025/26 tax year is £60,000, but 'carry forward' rules mean that this can be topped up in some cases. 'A large bonus, for example, can be put to work in a pension, with a saver potentially able to make a gross pension contribution of up to £220,000 before the end of this tax year on April 5, 2026, if they have not used any of their pension allowances from the previous three years,' Spencer told Euronews. Finally, experts said it's important not to forget about your state pension — although you won't be managing investments in this case. The amount of money paid out by a state pension is determined by a saver's level of National Insurance contributions, which depends on how many 'qualifying' years you've worked. To get the full amount, you need to have accumulated 35 qualifying years, and you need to have at least 10 years to get anything at all. 'Checking your state pension entitlement on the HMRC app for any gaps in your record is important,' explained Lucie Spencer. 'While the deadline to plug gaps all the way back to 2006 has now passed, there is still an option to pay for missing years over the past six years. Buying back missed years can be a great way for people to bolster retirement income as the state pension provides a guaranteed monthly income for the duration of your retirement,' she said. While the state pension typically requires less management than workplace and private pensions, it's still a key part of retirement planning. 'A reminder, the information in this article does not constitute financial advice, always do your own research on top to ensure it's right for your specific circumstances. Also remember, we are a journalistic website and aim to provide the best guides, tips and advice from experts. If you rely on the information on this page then you do so entirely at your own risk.' Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
16 hours ago
- Business
- Yahoo
Are you saving smartly? Top pension advice experts want you to hear
With the cost of living rising in recent years, many Brits are struggling to put money aside for retirement. At the same time, life expectancies are rising, meaning that the need to save is becoming ever more pressing. According to a survey from YouGov, 38% of UK respondents aren't currently saving towards retirement. Around 28% are saving up to 10% of their annual income for old age, while 22% don't know how much they're currently putting aside. While many Brits are wrapped up in immediate financial pressures, experts say it's important to engage with pension planning as soon as possible. Saving even a little, and knowing how to manage that money, can make a big difference further down the line. Here are some top tips to build your pension, collected from conversations with financial advisors. While our focus is on UK pensions, international readers can read more about other European schemes here. This one may seem obvious, but it's worth reiterating. The more money you put into your pension pot, the more likely you are to have a stellar retirement income. If you contribute when you are young, it also means that your investments — in the case of a personal or workplace pension — have time to grow. 'One key way of boosting your pension is to try and increase your contributions wherever possible,' Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, told Euronews. One way to do this, she explained, is by boosting contributions every time you get a payrise. 'You aren't used to having the extra money in your pocket so it's easier to portion some of it to go into your pension,' Morrissey explained. In the UK, most employees are automatically enrolled in a pension scheme. Generally, you will pay 5% of your wages into your pension pot, and your employer must make a contribution worth at least 3% if you earn over £6,240 a year. 'Auto-enrolment minimum contributions are set at 8% - this is a good start but ideally you need to be contributing more to get a good retirement income,' said Morrissey. She explained that some employers will offer more generous rates than 3%, sometimes matching your contribution level. Related Boom or bust? Economic impact of ageing populations and lower birth rates Can't wait to give up work? Why some people are not the retiring type Another option on the table is a salary sacrifice scheme. Your employer may let you reduce your wages or bonuses and instead allow you to funnel this money into a pension, topped up by employer contributions. As well as paying less income tax on this money, this also means that you and your employer will pay lower National Insurance contributions. Staying on top of your pension plan is an important part of building a nest egg, said Claire Trott, divisional director of retirement & holistic planning at SJP. 'Once a year — as a bare minimum — work out what you've got, what you're likely to get, and whether it will be enough for retirement,' she explained. When it comes to private and workplace investments, one way to engage is by carefully choosing where your contributions are invested. Workplace contributions will be placed in an average fund designed to suit all employees, which may not necessarily be your best option. 'The default fund might suit what you want to do. But for the majority of people, it's just okay. And you might be able to do something more with your money,' said Trott. Saving for retirement doesn't have to simply revolve around a pension fund, as there are lots of different products on offer. 'Pension savers can also utilise their tax-free ISA allowance to run alongside their pension,' Lucie Spencer, partner in financial planning at Evelyn Partners, told Euronews. 'Money invested … can grow free of tax on income or gains, which is ideal for retirement saving. Take note, however, pension saving effectively increases your basic rate tax band to reduce income tax whereas savings into an ISA are withdrawn from net income.' In other words, withdrawals from ISAs are tax free but the money put in is taxed. The age when you can access your state pension — which is separate from the workplace pension and built up through National Insurance contributions — is currently 66. For those born after 6 April 1978, it will be 68 years old. On the other hand, you can currently take a private pension, including some workplace pensions, from age 55. This will increase to age 57 from April 2028. Unless you need to, many advisors warn against taking your pension until you need it, as leaving it untouched allows the investments to grow. On top of this, taking your pension while earning can push you into a higher tax band — and you also don't want to risk running out of money. It's now very uncommon for people to stay with one company for their whole career, although job hopping has consequences for retirement planning. When you start a new job, your workplace pension doesn't automatically follow you. This means you can choose to keep your old pot separate from your new one, or you can consolidate it. 'Consolidation does mean admin is a lot easier when you want to start taking your pension, as it's all in one place,' said Claire Trott. Related Why are Gen X workers in the UK so pessimistic about retirement? Swiss officials admit to three billion-franc pension blunder Even so, she explained that grouping pension pots means you may lose out on scheme-specific perks. 'One particular scheme may be better than another one. So if you've got an old scheme, anything pre-2006, they can have really great benefits that you wouldn't have in one started today because of legislation changes,' she said. Evelyn Partner's Lucie Spencer also advised people to look into 'carry forward' rules, which allow savers to access unused tax relief from the last three tax years. You're only allowed to pay a certain amount into your pension each year before normal income tax rates kick in. The standard annual allowance for the 2025/26 tax year is £60,000, but 'carry forward' rules mean that this can be topped up in some cases. 'A large bonus, for example, can be put to work in a pension, with a saver potentially able to make a gross pension contribution of up to £220,000 before the end of this tax year on April 5, 2026, if they have not used any of their pension allowances from the previous three years,' Spencer told Euronews. Finally, experts said it's important not to forget about your state pension — although you won't be managing investments in this case. The amount of money paid out by a state pension is determined by a saver's level of National Insurance contributions, which depends on how many 'qualifying' years you've worked. To get the full amount, you need to have accumulated 35 qualifying years, and you need to have at least 10 years to get anything at all. 'Checking your state pension entitlement on the HMRC app for any gaps in your record is important,' explained Lucie Spencer. 'While the deadline to plug gaps all the way back to 2006 has now passed, there is still an option to pay for missing years over the past six years. Buying back missed years can be a great way for people to bolster retirement income as the state pension provides a guaranteed monthly income for the duration of your retirement,' she said. While the state pension typically requires less management than workplace and private pensions, it's still a key part of retirement planning. 'A reminder, the information in this article does not constitute financial advice, always do your own research on top to ensure it's right for your specific circumstances. Also remember, we are a journalistic website and aim to provide the best guides, tips and advice from experts. If you rely on the information on this page then you do so entirely at your own risk.' Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
a day ago
- Business
- Yahoo
Will Labour's pension changes actually save you an extra £6,000?
The government says millions of workers could get a £6,000 boost to their retirement fund as a result of wide-ranging pensions reforms. On Thursday, Rachel Reeves revealed more details of the Pension Schemes Bill, which will pave the way for the creation of more so-called "megafunds" managing at least £25 billion in assets within the next five years. Earlier this month, 17 major workplace pension providers signed a voluntary agreement called the Mansion House Accord, with a view to boosting pension returns. Aviva and Legal & General are among the providers who have committed to invest at least 10% of their workplace pension portfolios in assets like UK infrastructure, property and private equity by 2030. The government says the agreement will be good news for those who have defined contribution (DC) pensions - the most common type of private pension in the UK. Here's what the reform means in real terms — and how likely it is that savers will gain a £6,000 pension boost. A defined contribution (DC) pension is a type of pension scheme where you (and if it's a workplace pension, your employer) contribute money into a personal pension pot. The money you and your employer contribute is invested by your pension provider. The value of your pension at retirement depends on how much has been paid in and how well the investments perform. Pension providers typically invest in a mix of assets, including stocks and shares (also known as equities), government and corporate bonds, property, and commodities, like gold and cash. This mix is chosen to balance risk and reward, meaning that your pension will benefit from long-term growth while also managing potential losses. Labour says the changes will benefit defined contribution (DC) pension savers by harnessing higher potential net returns available in private markets. According to the government, the signatories to the accord have said that £252 billion of assets are subject to the pledge. Helen Morrissey, the head of retirement analysis at financial services company Hargreaves Lansdown, said that while "there needs to be an element of flexibility" around the £6,000 uplift, the "increased efficiency" of the reforms looks like a positive step to boost defined contribution members' pots. She told Yahoo News: 'Markets can go up and down and this can have an impact on a member's pot. "However, these reforms look to enable schemes to invest in asset classes that were previously closed to them and there is potential for increased returns as a result. "The key to this will be access to a stream of high-quality opportunities and the government has committed to helping schemes deal with barriers that have previously stood in their way. "Increased efficiency will also help boost member pots. One of the key benefits of scale is that it enables schemes to drive down costs and the impact assessment shows this can have a material impact on the size of pension," she added. It is a combination of these increased efficiencies that will reduce pension fees, as well as the higher returns that the government has used to calculate the £6,000 figure. However, Sir Steve Webb, a former pensions minister, cautioned that the sum was "marginal at best", telling the inews that savers would need to start paying into their pensions from the age of 22 and never miss a year until retirement to potentially secure the maximum amount. When factored into the total size of the average retirement pot and how long they are used for Sir Steve said it is probably worth under £10 a week on your final pension. He added: "None of this factors in the costs of some of the other measures which they are proposing, which include creating a new process for the consolidation of micro pots, which will cost a lot of money to administer, and which will presumably increase pension costs." "They're clearly aiming to provide a 'retail' message to go alongside all this talk of multi-billion-pound pension schemes, but to be honest, this £6,000 figure is marginal at best.' The reforms enable pension funds to invest in major infrastructure projects and private businesses, which historically have delivered higher returns. The plan covers retirement savings for the majority of UK workers in two ways. Firstly, there are the 86 different local authority pension schemes, which provide for more than six million people in their retirement, the majority low-paid women. The £392bn in these schemes will be merged from eight pools to six asset pools by next March, reducing overheads and maximising returns. Local investment targets will also be agreed for local authority pension schemes for the first time, the Treasury said. Secondly, defined contribution schemes currently worth £800bn, covering millions of other private and public sector workers across the country, will also be consolidated. This will reduce management fees and operational costs, and boost savings for savers. Because of this, by 2030, the government says there should be more than 20 pension funds worth more than £25bn, in contrast to the current 10 available. While the move was agreed earlier this month, the government has now introduced a legislative back-stop, which will allow it to push through the new rules if insufficient progress is made by the end of the decade, according to the BBC. The 17 providers who have signed up are: Aegon UK, Aon, Aviva, Legal & General, LifeSight, M&G, Mercer, NatWest Cushon, Nest, now:pensions, Phoenix Group, Royal London, Smart Pension, the People's Pension, SEI, TPT Retirement Solutions and the Universities Superannuation Scheme (USS). The Pension Schemes Bill is due to be heard during this term of Parliament.
Daily Mirror
4 days ago
- Business
- Daily Mirror
Millions of Brits urged to check for £9,400 in lost savings - steps to take now
The PPI defines a pension as "lost" when the provider is unable to contact the saver who owns it. The recent spike in the number of lost pots has been blamed on workplace pension auto-enrolment Millions of Brits could be in with a chance of a £9,400 boost if they have one of the millions of "lost" savings pots in the UK. According to a study by the Pensions Policy Institute (PPI) charity, there are around 3.3million pension pots in the UK which are considered "lost". Collectively, these pots are believed to be worth around £31billion. This is up from £26.6billion in 2022 across 2.8 million accounts and is an increase of 60%, or nearly £12billion, since 2018. These lost pensions are now worth an average of £9,470, rising to £13,620 among those ages between 55 and 75. The PPI defines a pension as "lost" when the provider is unable to contact the saver who owns it. The recent spike in the number of lost pots has been blamed on workplace pension auto-enrolment. As workplaces enrol all workers over the age of 22 into a workplace pension, those who move jobs frequently could end up with multiple pots they may not fully be aware of. Although this has been an issue for the last few decades, now that every employer needs to offer one, it is expected to push up these figures even higher. PensionBee warns that a "national crisis" could be ahead as the total number of UK pension pots is expected to rise 130% from 106million to 243 million by 2050. Chris Blackwood, spokesperson for the Pension Attention campaign, said: 'If you can do one thing today, use the pension tracing tools to find any lost pension pots. It only takes a few clicks, and you could substantially add to your pot.' You can track down lost pension pots yourself for free by contacting ex-employers and digging out old paperwork. The Government also has a free Pension Tracing Service tool. This service allows you to enter an employer's name to find the contact details of the pension provider they use. The helpline will then provide contact details so you can get in touch. Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, highlighted the urgency of tracking down a lost pot sooner rather than later, as the money could have a 'major impact' on your retirement planning. Join Money Saving Club's specialist topics For all you savvy savers and bargain hunters out there, there's a golden opportunity to stretch your pounds further. The Money Saving Club newsletter, a favourite among thousands who thrive on catching the best deals, is stepping up its game. Simply follow the link and select one or more of the following topics to get all the latest deals and advice on: Travel; Property; Pets, family and home; Personal finance; Shopping and discounts; Utilities. She noted that even the smallest pensions can grow over time, and that the pension you paid into a decade or more ago could well have grown a 'decent amount.' For example, a £10,000 pension pot would be worth more than £16,400 after 10 years if it grew at 5% per year. She said: 'This could play an important role in your retirement income. With 21% of people admitting to having lost track of a pension and a further 18% being unsure if they have, it's a major issue. The good news is that you can do something about it.'
Daily Record
23-05-2025
- Business
- Daily Record
Older people urged to check for historical State Pension payment error worth over £8,300
The Department for Work and Pensions (DWP) has said that between January 8, 2024 and March 31, 2025, a joint State Pensions corrections exercise with HM Revenue and Customs (HMRC), identified 12,379 State Pension underpayments to women whose National Insurance (NI) records are incorrect. In 2022, the DWP became aware of a number of State Pension cases where it appeared that historic periods of Home Responsibilities Protection (HRP) were missing, leading to inaccurate State Pension payments. So far, around £104 million in arrears have been paid out, with an average payment of £8,377. Retirement expert Helen Morrissey is urging older people to complete the online form or contact the Pension Service if they think they have been affected after new research from the DWP shows the main reasons why those who have received a letter from HMRC asking them to check their State Pension as it could be wrong - have failed to do so. HMRC has sent out more than 370,000 letters - mostly to women - urging them to check their State Pension payments as they may be lower than they are entitled to. However, the DWP research indicates that the majority of people contacted by letter did not go on to apply for HRP. Barriers included: Not understanding the letter Thinking the communication was a scam Reliance on digital methods to put in a claim HRP was a scheme designed to help protect parents' and carers' entitlement to the State Pension and was replaced by NI credits from April 6, 2010. HMRC is using NI records to identify as many people as possible who might have been entitled to HRP between 1978 and 2010 and have no HRP on their NI record. After May 2000, it became mandatory to include a NI number on claims so people claiming after this point will not have been affected. The head of retirement analysis at Hargreaves Lansdown, said: 'This research lays bare the complexities the government faces in resolving the long running issue of underpaid State Pensions. The State Pension system has become so confusing that even when the UK Government has communicated with those who may have a claim, the complexity and jargon has put many of them off. This means many thousands are getting less than they are entitled to. 'Issues identified by the government include the use of jargon. Many simply didn't understand what was being asked of them -that mistakes made decades ago had been identified and could be rectified. 'Terms such as Home Responsibilities Protection haven't been used for many years - it's understandable that people may have little recollection as to whether they claimed it or not. 'The reliance on online forms to claim refunds was also a significant barrier, with many not feeling internet savvy enough to navigate the system without help.' Ms Morrissey continued: 'Notably many people decided not to take action because they feared doing so might actually reduce their state pension or they were scared that they had been targeted by scammers. It's clear the government faces an uphill battle if it is to successfully reunite those affected with their extra pension payments. 'The introduction of the New State Pension system in 2016 was meant to simplify things - and it should, but again challenges remain for these younger groups. Those who opted out of Child Benefit because of the High-Income Child Benefit Charge will not have known that by doing so they risk missing out on National Insurance credits towards their State Pension.' The UK Government has put measures in place to deal with this, but Ms Morrissey warns it remains something that can 'trip people up and so awareness needs to be raised on an ongoing basis'. The retirement expert added: 'Encouraging people to check their State Pension record to see if there are any gaps is vital - if there are mistakes, then they have time to correct them. 'If the gap has occurred during a period of time when they qualified for a benefit, such as Child Benefit, then they can backdate a claim and get the gaps filled for free. There's also the option of paying for voluntary contributions to make sure you get the most from your state pension.' How to use the online HRP tool You may still be able to apply for HRP, for full tax years (6 April to 5 April) between 1978 and 2010, if any of the following were true: you were claiming Child Benefit for a child under 16 you were caring for a child with your partner who claimed Child Benefit instead of you you were getting Income Support because you were caring for someone who was sick or disabled you were caring for a sick or disabled person who was claiming certain benefits You can also apply if, for a full tax year between 2003 and 2010, you were either: Who qualified automatically for HRP The guidance on explains that most people got HRP automatically if they were: getting Child Benefit in their name for a child under the age of 16 and they had given the Child Benefit Office their National Insurance number getting Income Support and they did not need to register for work because they were caring for someone who was sick or disabled If your partner claimed Child Benefit instead of you If you reached State Pension age before April 6, 2008, you cannot transfer HRP. However, you may be able to transfer HRP from a partner you lived with if they claimed Child Benefit while you both cared for a child under 16 and they do not need the HRP. They can transfer the HRP to you for any 'qualifying years' they have on their National Insurance record between April 1978 and April 2010. This will be converted into National Insurance credits. Married women or widows You cannot get HRP for any complete tax year if you were a married woman or a widow and: you had chosen to pay reduced rate Class 1 National Insurance contributions as an employee (commonly known as the small stamp) you had chosen not to pay Class 2 National Insurance contributions when self-employed If you were caring for a sick or disabled person You can only claim HRP for the years you spent caring for someone with a long-term illness or disability between April 6, 1978 and April 5, 2002. You must have spent at least 35 hours a week caring for them and they must have been getting one of the following benefits: Attendance Allowance Disability Living Allowance at the middle or highest rate for personal care Constant Attendance Allowance The benefit must have been paid for 48 weeks of each tax year on or after April 6, 1988 or every week of each tax year before April 6, 1988. You can still apply if you are over State Pension age. You will not usually be paid any increase in State Pension that may have been due for previous years. If you were getting Carer's Allowance You do not need to apply for HRP if you were getting Carer's Allowance. You'll automatically get National Insurance credits and would not usually have needed HRP. If you were a foster carer or caring for a friend or family member's child You have to apply for HRP if, for a full tax year between 2003 and 2010, you were either: a foster carer caring for a friend or family member's child ('kinship carer') in Scotland All of the following must also be true: you were not getting Child Benefit you were not in paid work you did not earn enough in a tax year for it to count towards the State Pension If you reached State Pension age on or after 6 April 2010 Any HRP you had for full tax years before April 6, 2010 was automatically converted into National Insurance credits, if you needed them, up to a maximum of 22 qualifying years. A full overview of HRP can be found on here.
