Latest news with #PensionsPolicyInstitute
Telegraph
19-07-2025
- Business
- Telegraph
Forget Britain's savings crisis, give young people their pensions to buy property
Before MPs go on their summer holidays, the Government is set to make an announcement which could have major implications for millions of people whose financial plans for retirement need emergency surgery. On Monday, the Department for Work and Pensions will establish a major review which will aim to tackle the inadequacy of pension saving in Britain. Even the Government acknowledges that more than 12 million people of working age are likely to see a sharp drop in their standard of living when they stop work unless something urgent is done. But if the review looks only at pensions, it will miss a once-in-a-generation opportunity. Although pensions are incredibly important, we also all need other forms of saving. This includes short-term cash buffers to deal with unexpected outgoings and help with saving for a deposit on a house. A particular priority is to do more for the large numbers of young people who simply cannot afford to get on the housing ladder. On present trends, the Pensions Policy Institute has estimated that over the coming two decades, we will see a million more retirees having to pay rent to a private landlord. Quite aside from the housing insecurity this brings, it also means that an already-meagre pension pot has to cover a rent as well – which for many people will simply be unaffordable. There are, of course, many reasons why young people struggle to afford the deposit on a first home, and policies to increase the number of affordable starter homes should be part of the mix. But we can also do more to help younger people build a deposit via their pension. In a survey of the approach taken in other countries, the Lifetime Savings Initiative, a collaboration between the Pensions Management Institute and Schroders, described the different ways in which countries such as Australia, New Zealand and the US have flexible pension products which allow people to tap into their pension to help build a deposit. One option would be to allow first-time buyers to access up to 25pc of their pot up to a maximum cash limit, provided it was used for a house deposit. Given that most people take 25pc of their final pot as a tax-free lump sum, this is unlikely to do major damage to their retirement income, especially if the money is paid back at a later stage. Some in the pensions world are understandably wary of people taking money out of already inadequate pension pots, for fear that this will lead to poverty in retirement. But moving from renting to buying and not having to pay rent in retirement is an extremely effective way to avoid an impoverished old age. There would, of course, have to be limits as to what could be taken out and mechanisms to get the money replaced when the saver was in a position to do so. But if other countries can make it work, why not the UK? The next review is a rare opportunity to think about savings in a joined up way, and to prevent millions of people from facing housing insecurity and income poverty in old age. It is vital that the Government is willing to tackle an issue which has been neglected for far too long.
The Sun
17-07-2025
- Business
- The Sun
How to merge your pension pots and boost your retirement fund by THOUSANDS of pounds
MERGING your pension pots can boost your savings by thousands of pounds - but there are seven things you need to consider before you do it. The Sun's money team explain how you can find your lost pension cash and the best place to get advice when it comes to your retirement fund. You'll probably have an average of between six to 12 jobs in your lifetime, which could mean lots of different pension pots and with each one, you're paying an admin fee. By combining your pots, you could cut down these fees and boost your retirement fund by tens of thousands of pounds - giving you an opportunity to spend more on things like your family, home or travel. For example, a worker with three pension pots with £25,000 each from previous jobs who combined them and found a lower fee could add £20,000 to their retirement fund over 20 years. The savings are not to be sniffed at! But it's a complex process, which is why we've spoken to experts to help you track down lost posts and what you need to consider when you merge pensions. Tracking down lost pots - are you missing out on cash? Millions of people have "lost" pension pots from previous employers. Recent estimates show 3.3million lost pots worth a combined £31billion - up from 2.8million worth £26 billion two years ago, says the Pensions Policy Institute. Each lost pot is worth a whopping £9,393 on average. You may have lost track of your pot if you've changed jobs because of auto-enrolment, which is when you are automatically placed into a workplace pension scheme. By law, firms with a certain number of employees must open pension schemes for anyone over the age of 22 earning more than £10,000 a year. The pension provider may also lose track of your contact details if you forget to update them. Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: "There's always a chance there that if you've forgotten about this pension, there could be a pot worth £10,000 or even more washing around in the system that you've got no idea about." How to protect your pension and Inheritance from the new Budget In April, the government announced plans from 2030 to bring small pension pots together automatically, increasing pots for workers by an average of £1,000. There are now 13 million small pots holding less than £1,000, and it costs £225million a year in unnecessary admin costs. First, you should check any old paperwork from previous employers, such as your pension details, statements and payslips. You will need details such as the name of the pension provider and the policy provider. If you have lost your paperwork, you can still trace your pension pot by contacting your previous employers. They should be able to tell you which pension scheme you are enrolled on. Or, you can use the Government's free Pension Tracing Service that can help you track down lost pension pots - You will need to have the name of your employer or pension provider to use the service. It won't tell you whether you have a pension or what its value is, but it will give you contact details for the provider or your former employer. Another free service for tracking your pensions is Gretel. This works differently from the Government's Pension Tracing Service, so it might be able to help you track employers you've forgotten about. You'll just need to create an account using your email address and a password, and then provide your name, date of birth, phone number and postcode. Gretel will then run a soft search on your credit report (which won't impact your score) to try to track down missing pensions. If you do find a lost pension, you can get guidance for free on what to do next. Over-50s can speak to Pension Wise, while everyone else can go to MoneyHelper. WHEN Carole Railton tried to track down a lost pension she found the adviser had shut up shop. But three years ago the 73-year-old, who lives in Wapping, London, tracked down the lost cash and is now £2,500 a month richer. In the late 1980s, Carole had been working for Xerox when a financial adviser persuaded her to switch from a company pension. She, like thousands of others, had become a victim of pension mis-selling, where savers were lured into leaving gold-plated company pension schemes in favour of inferior self-funded personal pensions. Carole, a body language expert, tried to track down her pension numerous times after leaving Xerox in the 1990s. Eventually she got in touch with a financial adviser who managed to track down her lost pension. Her lost fund was worth just over £200,000, which she used to buy an enhanced annuity which pays her £2,500 a month. Seven things to check before you merge pots For many people, merging their pension pots can have plenty of benefits. But you should check you're not going to lose out if you do so, because it's not the best option for everyone. Here's everything you should check first... How much are the fees? Pension providers usually charge fees for investing and managing your pot if you have a defined-contribution pension. This is where what you get in retirement depends on how much you have saved and how well your investments have performed. Switching to a scheme that charges lower fees could save you thousands. There are often lots of different charges you may have to pay, including monthly charges, platform charges, contribution charges and set-up charges. These may be higher if you're on an older plan, which is if you reached state pension age before 2016. If you had £100,000 saved in your pot and paid 0.75% in charges while getting 5% investment growth, you could expect to have £233,000 saved after 20 years. But if your fees were higher at 1.5%, you could have £201,000 after 20 years. You should check the small print of your pension plan, as some fees might only appear there. Where your pensions are invested Consolidating could boost your investment return by giving you access to better-performing funds. Lisa Picardo, chief business officer at PensionBee, says: "Bringing your pensions together into a single plan can allow you to make a much more informed investment choice to get a better long-term outcome, so it really enables your money to work harder for you." Although past investment returns can't predict the future, it's still worth doing your research into how well they've performed. How much can you take out tax-free The earliest you can take money out of your pot is age 55. Then, you can take 25% out of your pot tax-free, and whatever is left over will be subject to your usual rate of income tax. However, some plans let you take more, often older company pensions. If you have one of these and want to withdraw a lump sum at retirement, then you might want to stick with your current provider. Whether your workplace scheme is better than a private provider Pension consolidation schemes can often work out to be cheaper and more convenient. But it's still worth checking what you get with your current workplace scheme. For example, it might have negotiated lower fees. Large exit penalties Some pension funds have costly exit penalties if you want to leave, so it's worth checking what the fee is first. Most default work pension funds have cheap charges now. But if you have an older pension, there might be more costly exit fees. Exit fees are capped at 1% after you reach 55 so it's worth bearing this in mind. Ongoing employer contributions If you're currently employed, you'll be getting free employer contributions into your work scheme. Therefore, you won't want to lose that cash coming into your pot by transferring out. Protected pension ages You should find out the age rules for your work and other personal pensions. The minimum age you can start accessing your private pensions will rise from 55 to 57 overnight on April 6, 2028. But some people will continue to be able to access their funds at the age of 55 if their pension scheme allows it. If you transfer out then you could miss out on this benefit. I found £60k in lost pension cash HOSPITALITY worker James Wells couldn't believe his luck when he stumbled upon a small fortune in forgotten pension pots. The 47-year-old figured he must have retirement savings somewhere he had forgotten about. But he could never have anticipated unearthing four different pots of cash each worth tens of thousands. James, from near Swindon, had hopped between hospitality jobs for his whole career, meaning he often switched pensions and had lost track of some along the way. After deciding to get his retirement savings in order, he stumbled across the app Penny. James soon discovered four different pension pots dating back to 2003, including three with Aviva and one with a firm called Nest. They all varied by amounts, ranging from £2,000 to a whopping £48,000. James said the whole process was surprisingly straightforward. "I put in my personal details, past addresses, and the companies I'd worked for and Penny did the groundwork," he said. Within weeks, the app had tracked down all his pensions from past jobs, and James couldn't believe it. How to merge pots You've tracked down your pots and reviewed the terms and conditions, now it's time to find a pension you can consolidate into. A Self-Invested Personal Pension (SIPP) gives you more control over your investing choices, and they are offered by the likes of AJ Bell, Fidelity, Hargreaves Lansdown and Interactive Investor. Check fees and terms and conditions before you open one. You could use a service like Pensions Bee, which helps track down and consolidate pensions and then invests them for you, for a small fee. You need to check if your current scheme allows you to transfer it and whether the scheme you want to open will accept it. Don't forget to get free advice before you start, from Pension Wise (if you're over 50 and have a UK-based defined contribution pot) or MoneyHelper if you want help. Another option is to speak to a financial adviser, although these can be charged on a flat fee or an hourly basis. You can use to find one. The process usually takes a few weeks to complete. Avoid these merging mistakes If you have a defined benefit pension, it's usually best to leave it alone. Also known as "final salary" pensions, these schemes guarantee you an income for life in retirement that rises with inflation. This makes them super generous and is now rarely offered by private companies to workers. Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, says it "very rarely makes sense" to transfer out of a defined benefit pension scheme because they are "really, really valuable". Check whether you will lose any valuable benefits by merging. For example, some plans offer guaranteed annuity rates, which set how much you'll get per year, every year. Your pension provider may offer a higher rate that beats the market, especially if your pension pot was set up back in the 1980s and 1990s. Lisa says it's "crucial" to check if you have this because it's not worth giving up even if you want the convenience of consolidation. Your pension provider should make you aware, as you approach retirement, if you have a guaranteed annuity rate. But you can also check the terms and conditions of when you first joined the pension, or contact your provider directly.
Scotsman
13-06-2025
- General
- Scotsman
Who cares for the carers? Shocking pension gap leaves millions behind
As Scotland marks Carers Week, a stark new report reveals just how much unpaid carers are being left behind when it comes to saving for retirement — raising urgent calls for reform to close the growing pension gap. Sign up to our daily newsletter – Regular news stories and round-ups from around Scotland direct to your inbox Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... According to the 2025 Underpensioned Report, published by workplace pension provider now:pensions in collaboration with the Pensions Policy Institute (PPI), carers are retiring with less than half the private pension income of the average UK worker. The report highlights that the average private pension income for carers is now just 49% of the national average — down from 55% in 2020. This widening gap paints a bleak picture for the financial future of millions providing unpaid care. Advertisement Hide Ad Advertisement Hide Ad Carers More Likely to Miss Out The 2021 Census recorded 5.8 million unpaid carers in the UK One of the core issues is employment. Carers are significantly less likely to be in paid work — just 61% are employed, compared to 76% of the general workforce. For female carers, the disparity is even more pronounced: 38% work part-time, compared to just 29% of working women overall. Lower earnings and part-time roles mean many carers miss the threshold for automatic enrolment into a workplace pension. While 10.8% of the general workforce fall below the £10,000 earnings trigger for auto-enrolment, 13% of carers — and nearly 15% of women carers — are excluded. The figures are even starker for those in receipt of Carer's Allowance. According to Labour Force Survey data, only a quarter of these carers are eligible for auto-enrolment, leaving three in four with no access to workplace pension savings at all. Pay Gap Adds to Inequality The average income for carers stands at £35,248, below the national average of £38,740. But when broken down by gender, the gap widens: male carers earn £46,681 on average, while female carers take home just £28,176. Advertisement Hide Ad Advertisement Hide Ad Samantha Gould, Head of PR and Campaigns at now:pensions and author of the report, said the numbers are a wake-up call: 'Carers provide essential support that many depend on every day, yet they remain systemically disadvantaged in their ability to save for later life. We urgently need pension reform that acknowledges and supports the vital unpaid work that carers do to help provide greater financial security in retirement.' A Call for Reform To tackle the disparity, now:pensions is calling for a series of policy reforms, including: A family carer's top-up, ensuring pension contributions continue during periods of unpaid care. Removal of the £10,000 earnings threshold for automatic pension enrolment. Scrapping the lower earnings limit, so that every pound earned counts towards pension savings. Carers UK: 'Time to Act' Helen Walker, Chief Executive of Carers UK, described the findings as deeply concerning: "we know from our work with unpaid carers that they often work below their potential, take less senior roles or move into lower-paid jobs. Working part-time or leaving work completely can be catastrophic for their finances in the short term — and even worse for their pensions in the long run." Walker urged employers to adopt carer-friendly policies, such as flexible working, paid carer's leave, and better support systems to help carers remain in the workforce: 'with longer working lives and an ageing population, supporting unpaid carers in the workplace is becoming ever more important. Carers Week is the perfect moment to show that we care about equality.' Advertisement Hide Ad Advertisement Hide Ad Millions at Risk The 2021 Census recorded 5.8 million unpaid carers in the UK, with 1.7 million providing more than 50 hours of care each week. While some progress has been made in employment rates since 2022, the pensions gap continues to grow — threatening the future financial security of a vital but too often invisible workforce. As calls grow louder for pension reform, one message is clear: carers need more than gratitude — they need policy changes that value their unpaid work and safeguard their futures.
South Wales Argus
05-06-2025
- Business
- South Wales Argus
New pension changes for 20m people in Pension Schemes Bill
The Government's new Pension Schemes Bill is designed to support working people plan for their retirement by making pensions simpler to understand, easier to manage, and drive better value over the long term. Keeping track of pensions is notoriously challenging, with the average worker accumulating 11 different pension pots over their lifetime. This has resulted in £26.6 billion in lost pensions across the UK, according to the Pensions Policy Institute and the Association of British Insurers. One of its biggest benefits is the merging of small pension pots. The bill also introduces a new system to show how well pension schemes are performing, this will help savers understand whether their scheme is giving them good value and protect them from getting stuck in underperforming schemes for years on end, to help working people feel more secure about their retirement savings. For those approaching retirement, the changes will mean clear default options for turning savings into a retirement income. This means people will have clearer, more secure routes to decide how they use their pension money over time. The full changes are listed in detail here. Work and Pensions Secretary Liz Kendall says: "Hardworking people across the UK deserve their pensions to work as hard for them as they have worked to save, and our reforms will deliver a huge boost to future generations of pensioners." Chancellor of the Exchequer Rachel Reeves describes the bill as "a game changer", giving "bigger pension pots for savers and driving £50 billion of investment directly into the UK economy– putting more money into people's pockets." Government launches plans to automatically combine small pension pots, here's what it's likely to mean for you... — Martin Lewis (@MartinSLewis) April 24, 2025 What do these pension changes mean for workers? The bill will transform the £2 trillion pensions landscape to ensure savers get good returns for each pound they save, and drive investment into the economy, through a suite of measures, including: Requiring DC schemes to prove they are value for money, to protect savers from getting stuck in underperforming schemes. Simplifying retirement choices, with all pension schemes offering default routes to an income in retirement. Bringing together small pension pots worth £1,000 or less into one pension scheme that is certified as delivering good value to savers, making pension saving less hassle and more rewarding. New rules creating multi-employer DC scheme 'megafunds' of at least £25 billion, so that bigger and better pension schemes can drive down costs and invest in a wider range of assets. Consolidating and professionalising the Local Government Pension Scheme (LGPS), with assets held in six pools that can invest in local areas infrastructure, housing and clean energy. Increased flexibility for Defined Benefit (DB) pension schemes to safely release surplus worth collectively £160 billion, to support employers' investment plans and to benefit scheme members. What is the difference between a Defined Benefit (DB) scheme and a Defined Contribution (DC) pension? There are two different ways pension schemes work. With a Defined Benefit (DB) pension scheme, also referred to as final salary pension schemes, the amount you get is usually based on your salary and how long you've been part of the pension scheme. For a Defined Contribution (DC) pension, the figure you get is based on how much you and your employer invest in the pension and how your investments perform. Recommended reading: What's the expert view on the new pension changes? Nausicaa Delfas, chief executive of The Pensions Regulator (TPR) says: "The Pension Schemes Bill is a once in a generation opportunity to address unfinished business in the UK pension system. "Making sure all schemes are focused on delivering value for money, helping to stop small, and often forgotten pension pots forming, and guiding savers towards the right retirement products for them, will mean savers benefit from a system fit for the future. "We have long advocated for fewer, larger well-run schemes with the size and skill to deliver better outcomes for savers. As such we are also pleased to see the proposed legislative framework for DB superfunds, providing options and choice in defined benefit consolidation." Andy Briggs, CEO, Phoenix Group says: "The bill sets a clear direction for the future of pensions with the emphasis on building scale and ensuring savers receive value for money. "People across the country will feel the impact of these changes with plans to consolidate small pots, ensure the dashboard delivers and provide default retirement income options at the point of retirement. Patrick Heath-Lay, Chief Executive, People's Partnership adds: "This is a pivotal moment in pension reform. The bill contains many measures that will require providers to deliver better outcomes for savers and improve the workplace pension system."
Powys County Times
05-06-2025
- Business
- Powys County Times
New pension changes for 20m people in Pension Schemes Bill
Pension changes introduced today could make managing accounts easier for millions of workers planning their retirement across the UK. The Government's new Pension Schemes Bill is designed to support working people plan for their retirement by making pensions simpler to understand, easier to manage, and drive better value over the long term. Keeping track of pensions is notoriously challenging, with the average worker accumulating 11 different pension pots over their lifetime. This has resulted in £26.6 billion in lost pensions across the UK, according to the Pensions Policy Institute and the Association of British Insurers. One of its biggest benefits is the merging of small pension pots. The bill also introduces a new system to show how well pension schemes are performing, this will help savers understand whether their scheme is giving them good value and protect them from getting stuck in underperforming schemes for years on end, to help working people feel more secure about their retirement savings. For those approaching retirement, the changes will mean clear default options for turning savings into a retirement income. This means people will have clearer, more secure routes to decide how they use their pension money over time. The full changes are listed in detail here. Work and Pensions Secretary Liz Kendall says: "Hardworking people across the UK deserve their pensions to work as hard for them as they have worked to save, and our reforms will deliver a huge boost to future generations of pensioners." Chancellor of the Exchequer Rachel Reeves describes the bill as "a game changer", giving "bigger pension pots for savers and driving £50 billion of investment directly into the UK economy– putting more money into people's pockets." Government launches plans to automatically combine small pension pots, here's what it's likely to mean for you... — Martin Lewis (@MartinSLewis) April 24, 2025 What do these pension changes mean for workers? The bill will transform the £2 trillion pensions landscape to ensure savers get good returns for each pound they save, and drive investment into the economy, through a suite of measures, including: Requiring DC schemes to prove they are value for money, to protect savers from getting stuck in underperforming schemes. Simplifying retirement choices, with all pension schemes offering default routes to an income in retirement. Bringing together small pension pots worth £1,000 or less into one pension scheme that is certified as delivering good value to savers, making pension saving less hassle and more rewarding. New rules creating multi-employer DC scheme 'megafunds' of at least £25 billion, so that bigger and better pension schemes can drive down costs and invest in a wider range of assets. Consolidating and professionalising the Local Government Pension Scheme (LGPS), with assets held in six pools that can invest in local areas infrastructure, housing and clean energy. Increased flexibility for Defined Benefit (DB) pension schemes to safely release surplus worth collectively £160 billion, to support employers' investment plans and to benefit scheme members. What is the difference between a Defined Benefit (DB) scheme and a Defined Contribution (DC) pension? There are two different ways pension schemes work. With a Defined Benefit (DB) pension scheme, also referred to as final salary pension schemes, the amount you get is usually based on your salary and how long you've been part of the pension scheme. For a Defined Contribution (DC) pension, the figure you get is based on how much you and your employer invest in the pension and how your investments perform. Recommended reading: What's the expert view on the new pension changes? Nausicaa Delfas, chief executive of The Pensions Regulator (TPR) says: "The Pension Schemes Bill is a once in a generation opportunity to address unfinished business in the UK pension system. "Making sure all schemes are focused on delivering value for money, helping to stop small, and often forgotten pension pots forming, and guiding savers towards the right retirement products for them, will mean savers benefit from a system fit for the future. "We have long advocated for fewer, larger well-run schemes with the size and skill to deliver better outcomes for savers. As such we are also pleased to see the proposed legislative framework for DB superfunds, providing options and choice in defined benefit consolidation." Andy Briggs, CEO, Phoenix Group says: "The bill sets a clear direction for the future of pensions with the emphasis on building scale and ensuring savers receive value for money. "People across the country will feel the impact of these changes with plans to consolidate small pots, ensure the dashboard delivers and provide default retirement income options at the point of retirement. Patrick Heath-Lay, Chief Executive, People's Partnership adds: "This is a pivotal moment in pension reform. The bill contains many measures that will require providers to deliver better outcomes for savers and improve the workplace pension system."
