Latest news with #LilyMegson
Yahoo
13-05-2025
- Business
- Yahoo
Britain's biggest pension funds to invest billions in major projects - what it means for you
Pension funds across the UK have committed to invest tens of billions in British infrastructure projects and businesses in a move welcomed by Rachel Reeves. Seventeen workplace pension providers that manage 90% of defined contribution pensions have signed a voluntary agreement called the Mansion House Accord, with a view to boosting pension returns as well as the UK economy. Aviva and Legal & General are among the providers who have committed on Tuesday to invest at least 10% of their workplace pension portfolios in assets like UK infrastructure, property and private equity by 2030. The Chancellor said she backed a "bold step" she said would "unlock billions" — apparently to the tune of £25bn — by 2030. The Conservatives, meanwhile, have said that 'pension savings should never be there to dig a chancellor out of the economic hole that she has made'. Here's what we know about the plan so far — and what it could mean for your pension pot. The agreement is said to be good news for those who have defined contribution pensions - the most common type of private pension in the UK. 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. From Labour's perspective, the agreement aims to help defined contribution (DC) pension savers by harnessing higher potential net returns available in private markets, as well as strengthening investment in the UK. The move is also designed to help pension funds achieve better long-term returns for savers and to make the UK pension system more resilient and beneficial for pensioners. According to the government, the signatories to the Accord have said that £252 billion of assets are subject to the pledge. Based on a growth rate of 17% per year, the government says these funds could be worth around £740 billion by 2030. Lily Megson, the policy director at My Pension Expert, an independent financial advice service, welcomed the move. "Any move to help savers to achieve the retirement that they want is a really positive move," she told Yahoo News. "It does demonstrate potential for higher returns for pension savers, which again, in theory, is a positive step forward." However, the full scale of the benefits will only be made clear when more detail about the Accord is released — both from the government and the pension providers. "What we would like to see providers do now is really to use this opportunity to enhance the way that they communicate with savers," Megson said. "Another key factor is using this as a real opportunity to encourage people to really engage with their pension so they understand exactly where their money is, and more importantly, what this drive in UK investment could mean for them in terms of how it could improve their overall financial outcomes. "As it stands, while it's positive moves for the government to invest in the UK industry, it's still less clear as the details are yet to be announced." The pensions regulator has also supported the move, saying: 'Savers rightly expect good performance from their pension investments. That's why we welcome this latest initiative, which could both boost returns for pension savers whilst also potentially unlock more capital for investment in the UK economy.' Those signing 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). Yvonne Braun, director of policy, long-term savings, health and protection at the Association of British Insurers, said: 'Investments under the accord will always be made in savers' best interests. 'It is now critical that Government supports the industry's ambition, by facilitating a pipeline of suitable investment opportunities, tackling barriers to investments, and delivering wider pension reforms effectively.' The pension investment review report will outline the plans in detail later this year.
The Independent
10-03-2025
- Business
- The Independent
A shocking number of over-40s think they'll have to work past pension age - for one clear reason
A huge number of over-40 workers in the UK fear they'll be unable to retire from the workforce until into their 70s - because they won't have the pension in place to do so. New research data shows more than a third of over-40s think they'll still be working far past the state pension age, currently 66, while over a quarter are concerned they don't know enough about their pension plans because their employers do not provide the necessary information. In the UK, the deadline is fast approaching for anybody to fill in gaps in their National Insurance record from the past two decades if they want to top up their state pension, but beyond that, even getting a full payout each year from the state pension is unlikely to fund a comfortable retirement for many people. At the current rate, a full state pension will yield around £11,500 a year per person, but estimations of retirement costs are far higher. The Pensions and Lifetime Savings Association suggests the average cost of a moderate retirement can be more than £30,000 annually - and that figure rises if you want more holidays, a better standard of living or have any other additional costs. Therefore, paying into pension schemes or having other long-term investments is crucial to helping the UK workforce be adequately prepared for later life - which many don't feel they are, according to the results of the My Pension Expert survey. Asking 2,000 UK adults in the workforce about their retirement plans and how they felt about the future, more than a third (35 per cent) of over 40s said they expect to still be working once past age 70. Around 52 per cent of the eventual respondents with a workplace pension fell into this age group category. And fewer than two-fifths (38 per cent) of those over 40s said they were confident their pensions would allow them to have a comfortable retirement, while almost four in ten (39 per cent) acknowledged that retirement planning made them feel anxious. Notably, a full quarter of respondents said their employer does not provide adequate information about their workplace pension - including basics like who the provider is, or levels of performance. My Pension Expert policy director Lily Megson said employees are right to demand more support from their places of work when it comes to the question of what is next. 'It's clear that UK employees, particularly those aged between 40 and 60, are crying out for more support when it comes to their pensions and retirement planning,' she said. 'And they are right to. Pensions are one of the biggest financial commitments a person will make, yet many feel they are left to figure it out alone. 'Naturally, people are looking to their employers for support. The workplace plays a huge role in our lives, so it makes sense that it should also be a source of financial confidence. But our research shows that, for many, this simply isn't happening. Too many employees are enrolled into workplace pensions and then hear nothing more, leaving them unaware of how their hard-earned savings are performing or what their options are for the future.' However, Ms Megson also pointed out that workers must take the initiative themselves to find out more about pensions, with their own futures at stake. She added: 'That said, the onus shouldn't lie solely on employers. The government has dedicated plenty of time to pension reforms aimed at boosting the economy and helping businesses. 'But let's not forget whose money is at the centre of all this – employees' pension funds. Their financial security in retirement must be the priority. Greater transparency, engagement, and access to financial education are all absolutely vital in ensuring workplace pensions are delivering what employees need.' Asked what policies would be most beneficial for employers to offer to support retirement planning, 30 per cent chose 'providing access to independent financial advice' as a key benefit, with only two other selections ranking higher. Increased employer contributions into workplace pensions was favoured by 45 per cent of respondents, with an option of phased retirement appealing to 36 per cent.
