Latest news with #ScottishWidows
Times
a day ago
- Business
- Times
Pension pots worth less than £1,000 to be automatically merged
The government has promised to help pension savers by automatically merging smaller retirement pots of £1,000 or less accumulated over their working life, but it could be years before the changes are made. In its Pension Schemes Bill, published on Thursday, the government detailed plans to tackle pension schemes that were delivering poor returns for savers and create 'bigger and better' funds. But some of these measures are not expected to take effect before 2030. Concerns have also been raised that the bill does little to address the issue of millions of people not saving enough for retirement. It is hoped that merging smaller pensions will reduce costs and complexity for savers who have built up numerous pots. Scottish Widows, a pensions firm, estimates that the average worker has 11 pension pots at retirement, but those who have changed jobs more frequently can have far more, especially since auto-enrolment was introduced in 2012.
Telegraph
a day ago
- Business
- Telegraph
‘I've saved £1m – how do I invest to get the highest retirement income?'
Would you like Kyle to rate your portfolio? Email money@ with the subject line: 'Rate my portfolio'. Please include a breakdown of your portfolio, your age and what your investing goals are. Full names will not be published. Dear Kyle, I'm 52 and have been saving hard for some time. I've used salary sacrifice to fund my pension, so my taxable pay is around £35,000 per year. The pension is with Scottish Widows, and I have £305,000 in 'Portfolio 2' and £236,000 in 'Portfolio 3' as of April 11. I have several Isas. One is worth £18,000 (stocks held: BAE Systems, GSK, Rexl, Shell and Unilever), another is worth £10,000 in a Vanguard LifeStrategy 60pc portfolio, and I have £142,000 in an Isa with Fidelity. Around £90,000 is in physical gold (coins and bars). I also have around £198,000 in cash across four high-interest accounts (paying between 4pc and 43pc). In total, I have around £990,000 in savings, investments and gold. My home is mortgage-free and valued at £700,000. I have too much in cash and I'm tempted to move more into bonds – gilts and corporate – for a predictable return. I think I'm close to being able to retire, but would appreciate your thoughts. I should be able to access the Scottish Widows pension at 55, before the April 2028 change to 57. I'm undecided about the tax-free withdrawal. How do I adjust the portfolio to generate the best cash flow to support a (hopefully) prolonged retirement? Thanks, – Jim Dear Jim, Your diligence has clearly paid off and you've built up a substantial nest egg, which amounts to around £1m. With that amount, especially with the mortgage paid off and assuming you qualify for the full state pension, you are comfortably ahead of Pension and Lifetime Savings Association calculations that say a single person retiring today needs a pot of at least £540,000 to £800,000 to live comfortably. Bear in mind that this is only an illustration, makes a host of assumptions, and is based on the single person buying an annuity. While keeping your money invested in retirement offers no guarantees in terms of how the investments will perform, a £1m pot earning 4pc a year would generate £40,000, which is higher than your current take-home pay of £35,000. As a rule of thumb, withdrawing 4pc a year is potentially considered a 'safe' withdrawal rate. The theory is that by taking this percentage as an income, adjusted annually to account for inflation, retirement pots will potentially last 30 years or more. However, this rule by no means offers cast-iron certainty. Chief among the problems with this strategy is that, in the absence of a crystal ball, investment performance is impossible to predict. If your portfolio gets off to a bad start, continuing to draw 4pc could mean your pot drains quicker than planned. That said, 4pc a year isn't an overly aggressive withdrawal rate. It can certainly be a good starting point, as long as you review where you are annually to make sure any withdrawals are sustainable. Also keep in mind that choosing to remain invested at retirement or opting to take out an annuity is not a binary decision – you can do both. You could look to secure a guaranteed income through an annuity to cover a certain amount of expenditure, and then keep the rest invested to take flexibly. The path, or paths you choose to go down, will help dictate whether you maintain the current risk levels with your two pension funds. If you are looking to buy an annuity in the next couple of years, it makes sense to be in a pension fund that reduces risk ahead of that happening. Turning my attention to the investments you have in your biggest Isa account, you are clearly a fan of index funds that provide the return of a particular market. Legal & General's funds dominate, and they are one of the cheapest providers of index funds. However, it's always worth seeing if you could pay less in fees by comparing fund charges for index funds or exchange-traded funds (ETFs) against other providers that are offering the same exposure to a particular region, part of a market, or investment type. You have a nice spread of investments, proving plenty of diversification. You've conscientiously gained exposure to different areas, with Legal & General UK Index Trust and Legal & General US Index Trust having broader remits than other trackers held following the fortunes of America's S&P 500 index and our FTSE 100 index. Your biggest position – Legal & General Global 100 Index Trust – is not for the faint-hearted, with the top four holdings, Apple, Microsoft, Nvidia and Amazon, accounting for 37.5pc of the fund. However, a 15pc weighting is a sensible position size to keep a lid on risk. Another high-risk holding, Invesco EQQQ Nasdaq 100 ETF, also doesn't dominate your main Isa portfolio, accounting for around 9pc. When examining performance over the past five years, there is one holding that stands out like a sore thumb, Legal & General All Stocks Gilt Index Trust, which is down -27.8pc. This is due to it investing in bonds with long lifespans, which were hammered as interest rates rose from rock-bottom levels at the end of 2021. If you are looking for lower-risk options, turn your attention to researching 'money market' funds or consider owning gilts directly. Money market fund yields are normally just above the Bank of England interest rate, which can be really competitive compared with what a savings account might pay. While you have a well put-together portfolio, my main observation as you enter your golden years is to consider whether to add some income-producing options to better balance your growth-heavy portfolio. For the UK, one option is Vanguard FTSE UK Equity Income, which consists of UK companies 'that are expected to pay dividends that are generally higher than average'. Therefore, performance and income generation are heavily influenced by the largest companies in the FTSE 100 index that pay a high income. While you seem to prefer index funds and ETFs, by considering active funds you may find smoother income returns, particularly when it comes to investment trusts, which have the ability to hold back up to 15pc of the income they receive each year in a revenue reserve, giving them an advantage in delivering income to investors. Two UK options, with 58 years and 42 years of consistent dividends growth, are City of London and Merchants. Both target large UK companies. For global exposure, Vanguard FTSE All World High Dividend Yield ETF follows the ups and downs of the FTSE All-World High Yield Index, which comprises more than 2,000 large and mid-cap stocks with higher-than-average dividend yields. It has exposure to stocks listed in developed and emerging markets. Or you could look at Murray International, a global dividend investment trust, with a decent yield of 4.3pc and a 20-year track record of increasing income payouts. Kyle Caldwell is funds and investment education editor at interactive investor. His columns should not be taken as advice or as a personal recommendation, but as a starting point for readers to undertake their own further research.
Scottish Sun
6 days ago
- Business
- Scottish Sun
How to protect your pension after divorce – everything you need to know
SPLITTING UP How to protect your pension after divorce – everything you need to know DIVORCE is one of the most stressful experiences you can go through in life, not least because of the debate over how to split your finances. While the family home is often given careful consideration, pensions are a vital factor often overlooked. Advertisement But this can have severe consequences later down the line. Pension savings can be worth hundreds of thousands of pounds, yet, all too often these cash pots get ignored when it comes to divorce, and it's usually women who miss out. Their pension pots are often smaller than men's due to taking career breaks to look after children or working part-time. The oversight costs women more than £77,000 on average when it comes to retirement, according to research by provider Scottish Widows. Advertisement Yet, more than more than 60% of divorced women didn't go through pension assets during a divorce. Susan Hope from Scottish Widows, says: 'The main reason women still lose out is because they simply are not aware of the potential value and that pensions should be included in the family assets. 'Divorce can be an extremely stressful and intense time. It can be easy for pensions to sink down to the bottom of the priorities, especially if it's a DIY divorce. She added: "Some may prioritise keeping the family home or taking more cash from a sale, but without seeing the full picture.. Advertisement "This could be at the expense of a fair pension share, so it's important to have the right conversations.' Could you be eligible for Pension Credit? HOW TO DIVIDE A PENSION There are a few different ways to split a pension. It is important to note the value of the pension may be offset against other assets. For example, one person could agree to take a bigger share of the home instead of any of the other person's retirement pot. Advertisement Or the pension could be shared with an agreed percentage transferred to the former spouse. In this case, it's a clean break, according to Dean Butler of pension firm Standard Life. He adds: 'On the downside, it can be quite complicated to set up and needs an order from the court.' Another alternative is called a 'pension attachment order', which is where one person agrees to pay a portion of their pension income to the other, but only when it starts being paid. Advertisement Dean says: 'This also requires a court order and the first person retains quite a lot of control of when and how the pension is used, and payments will stop when they die.' WHAT TO DO WITH CASH After a divorce, you should always take stock of how much you'll need for retirement and whether you have enough. Rachel Vahey, head of public policy at AJ Bell, said:'You may find the income you expected to get at retirement has taken a hit. 'Whether your ex-partner kept the bigger proportion of the pension or you shared some of your retirement savings with them, now is the time to think about how to boost your pot.' Advertisement You can go through a three-step online pension check on the government's website to check if you are on the right track for a comfortable retirement. If you are falling short, look at what your employer can offer. It could be worth upping contributions through a workplace scheme, especially if your employer will match the contribution. Even increasing savings by a small amount can make a big difference in the long term. If you do receive a share of a pension pot, you'll need to think about whether it's in the right place. Advertisement You could save fees by combining it with any other pensions. Having your cash in a single and bigger pot also makes it easier to manage. CHANGE YOUR EXPRESSION OF WISHES Many people don't realise that pension assets are not usually covered by your will. And if you die before taking a private pension, your provider will then decide where the cash goes. This is usually done based on an 'expression of wishes'. This is a form you'll usually fill out when setting up the savings pot. Advertisement Crucially, if you gave your spouse's name when you set up the account, you need to remember to change this when you divorce – assuming you no longer want them to receive the benefits. Ed Monk, associate director at savings provider Fidelity International said: 'If your life circumstances change and you're seriously considering ending your marriage or civil partnership.. "It's important to change your expression of wish to reflect any change in who you want to receive your pension payments in the event of your death.' 3 We explain the best tips so you don't loose out when you go through a divorce Advertisement 'I would definitely be worse off' By Lana Clements TRACEY Ford, 51, was married for 14 years and initially didn't consider her ex-husband's pensions as part of joint assets. The celebrant from Johnstone, Renfrewshire was mainly focussed on how to take over ownership of the house, when she decided to consult a solicitor on the situation. It was only then that she was made aware that she would be due a portion of his civil service final salary pension. She says: 'I had been self-employed for 25 years so didn't have a workplace pension. 'My ex-husband's pension was a sizable asset that I had completely overlooked until the solicitor pointed it out. 'We then went through a process to set up the appropriate paperwork so I'll receive a portion in the future. 'I would definitely be worse off in retirement had I not taken the pension into account.' Nationwide £100 payout MILLIONS of Nationwide customers are to receive a £100 cash sum over the coming weeks. Around four million will receive a share of £410million as part of Nationwide's Fairer Share programme, which rewards its banking customers. 3 Millions of Nationwide customers are to receive a £100 cash sum over the coming weeks Credit: Getty You will need to have opened a current account with Nationwide before March 31. Advertisement Those with £100 in savings at that time will also see the boon if the account was used within the first three months of this year. And Nationwide mortgage borrowers with more than £100 outstanding qualify, too. The cash will be paid into Nationwide current accounts between June 18 and July 4. Chief executive Debbie Crosbie said: 'Nationwide has had an outstanding 12 months. Advertisement "We returned a record £2.8billion in value to our members and recorded our highest ever year for growth in mortgage lending and retail deposit balances, and we remain first for customer service.' It comes after Nationwide paid £50 to customers in April and May as part of its 'Big Nationwide Thank You' following the building society's Virgin Money takeover. Those who have been Nationwide members since March 31 can currently get a £200 bonus by switching to Nationwide's FlexPlus, FlexDirect or FlexAccount. An existing member is someone who has held a mortgage, savings account or current account with the company. Advertisement Cash boost for retired CHANCELLOR Rachel Reeves has announced plans to overhaul the UK pension system, aiming to increase average retiree savings by £6,000. The reforms, part of the forthcoming Pension Schemes Bill, involve consolidating smaller defined-contribution pension schemes into larger 'megafunds'. 3 Labour chancellor Rachel Reeves is set to overhaul the UK pension system Credit: Getty Assets will be pooled from the 86 separate Local Government Pension Scheme authorities into eight funds by 2030. Advertisement The Government draws inspiration from successful models in Canada and Australia, where large-scale pension funds have achieved higher returns through diversified investments. By pooling assets, the UK aims to enhance investment opportunities and stimulate economic growth. Each megafund will set specific targets for local investment, potentially securing £20billion for community development. While the reforms promise increased returns and economic benefits, experts warn that the consolidation could overlook the advantages of smaller, well-managed schemes. Advertisement The Government plans to introduce the Pension Schemes Bill next year, with further consultations to make sure the reforms meet the needs of savers and the economy. The Government says this is a significant shift in the UK's pension landscape, aiming to balance individual retirement savings with broader economic objectives.
The Sun
6 days ago
- Business
- The Sun
How to protect your pension after divorce – everything you need to know
DIVORCE is one of the most stressful experiences you can go through in life, not least because of the debate over how to split your finances. While the family home is often given careful consideration, pensions are a vital factor often overlooked. But this can have severe consequences later down the line. Pension savings can be worth hundreds of thousands of pounds, yet, all too often these cash pots get ignored when it comes to divorce, and it's usually women who miss out. Their pension pots are often smaller than men's due to taking career breaks to look after children or working part-time. The oversight costs women more than £77,000 on average when it comes to retirement, according to research by provider Scottish Widows. Yet, more than more than 60% of divorced women didn't go through pension assets during a divorce. Susan Hope from Scottish Widows, says: ' The main reason women still lose out is because they simply are not aware of the potential value and that pensions should be included in the family assets. 'Divorce can be an extremely stressful and intense time. It can be easy for pensions to sink down to the bottom of the priorities, especially if it's a DIY divorce. She added: "Some may prioritise keeping the family home or taking more cash from a sale, but without seeing the full picture.. "This could be at the expense of a fair pension share, so it's important to have the right conversations.' Could you be eligible for Pension Credit? HOW TO DIVIDE A PENSION There are a few different ways to split a pension. It is important to note the value of the pension may be offset against other assets. For example, one person could agree to take a bigger share of the home instead of any of the other person's retirement pot. Or the pension could be shared with an agreed percentage transferred to the former spouse. In this case, it's a clean break, according to Dean Butler of pension firm Standard Life. He adds: 'On the downside, it can be quite complicated to set up and needs an order from the court.' Another alternative is called a 'pension attachment order', which is where one person agrees to pay a portion of their pension income to the other, but only when it starts being paid. Dean says: 'This also requires a court order and the first person retains quite a lot of control of when and how the pension is used, and payments will stop when they die.' WHAT TO DO WITH CASH After a divorce, you should always take stock of how much you'll need for retirement and whether you have enough. Rachel Vahey, head of public policy at AJ Bell, said:'You may find the income you expected to get at retirement has taken a hit. 'Whether your ex-partner kept the bigger proportion of the pension or you shared some of your retirement savings with them, now is the time to think about how to boost your pot.' You can go through a three-step online pension check on the government's website to check if you are on the right track for a comfortable retirement. If you are falling short, look at what your employer can offer. It could be worth upping contributions through a workplace scheme, especially if your employer will match the contribution. Even increasing savings by a small amount can make a big difference in the long term. If you do receive a share of a pension pot, you'll need to think about whether it's in the right place. You could save fees by combining it with any other pensions. Having your cash in a single and bigger pot also makes it easier to manage. CHANGE YOUR EXPRESSION OF WISHES Many people don't realise that pension assets are not usually covered by your will. And if you die before taking a private pension, your provider will then decide where the cash goes. This is usually done based on an 'expression of wishes'. This is a form you'll usually fill out when setting up the savings pot. Crucially, if you gave your spouse's name when you set up the account, you need to remember to change this when you divorce – assuming you no longer want them to receive the benefits. Ed Monk, associate director at savings provider Fidelity International said: 'If your life circumstances change and you're seriously considering ending your marriage or civil partnership.. "It's important to change your expression of wish to reflect any change in who you want to receive your pension payments in the event of your death.' 3 'I would definitely be worse off' By Lana Clements TRACEY Ford, 51, was married for 14 years and initially didn't consider her ex-husband's pensions as part of joint assets. The celebrant from Johnstone, Renfrewshire was mainly focussed on how to take over ownership of the house, when she decided to consult a solicitor on the situation. It was only then that she was made aware that she would be due a portion of his civil service final salary pension. She says: 'I had been self-employed for 25 years so didn't have a workplace pension. 'My ex-husband's pension was a sizable asset that I had completely overlooked until the solicitor pointed it out. 'We then went through a process to set up the appropriate paperwork so I'll receive a portion in the future. 'I would definitely be worse off in retirement had I not taken the pension into account.' Nationwide £100 payout MILLIONS of Nationwide customers are to receive a £100 cash sum over the coming weeks. Around four million will receive a share of £410million as part of Nationwide's Fairer Share programme, which rewards its banking customers. 3 You will need to have opened a current account with Nationwide before March 31. Those with £100 in savings at that time will also see the boon if the account was used within the first three months of this year. And Nationwide mortgage borrowers with more than £100 outstanding qualify, too. The cash will be paid into Nationwide current accounts between June 18 and July 4. Chief executive Debbie Crosbie said: 'Nationwide has had an outstanding 12 months. "We returned a record £2.8billion in value to our members and recorded our highest ever year for growth in mortgage lending and retail deposit balances, and we remain first for customer service.' It comes after Nationwide paid £50 to customers in April and May as part of its 'Big Nationwide Thank You' following the building society's Virgin Money takeover. Those who have been Nationwide members since March 31 can currently get a £200 bonus by switching to Nationwide's FlexPlus, FlexDirect or FlexAccount. An existing member is someone who has held a mortgage, savings account or current account with the company. Cash boost for retired CHANCELLOR Rachel Reeves has announced plans to overhaul the UK pension system, aiming to increase average retiree savings by £6,000. The reforms, part of the forthcoming Pension Schemes Bill, involve consolidating smaller defined-contribution pension schemes into larger 'megafunds'. Assets will be pooled from the 86 separate Local Government Pension Scheme authorities into eight funds by 2030. The Government draws inspiration from successful models in Canada and Australia, where large-scale pension funds have achieved higher returns through diversified investments. By pooling assets, the UK aims to enhance investment opportunities and stimulate economic growth. Each megafund will set specific targets for local investment, potentially securing £20billion for community development. While the reforms promise increased returns and economic benefits, experts warn that the consolidation could overlook the advantages of smaller, well-managed schemes. The Government plans to introduce the Pension Schemes Bill next year, with further consultations to make sure the reforms meet the needs of savers and the economy. The Government says this is a significant shift in the UK's pension landscape, aiming to balance individual retirement savings with broader economic objectives.
The Guardian
26-05-2025
- Business
- The Guardian
‘Think big': ex-pensions minister calls for UK contributions minimum to go up
A former minister says the UK government needs to 'think big' about retirement saving amid growing calls for minimum pension contributions to be increased. Under the auto-enrolment regime, an employee and their employer must pay into a pension and the government has set mandatory minimum contribution levels. But experts argue that for most people, the current figures are not enough to fund a decent retirement income. The minimum contribution stands at the equivalent of 8% of earnings, with employers obliged to pay the equivalent of 3% and the rest usually made up of 4% from the employee and 1% from the government in tax relief. The rules usually apply to anything earned between £6,240 and £50,270 (known as qualifying earnings). However, Steve Webb, a former pensions minister who is now a partner at the consultancy firm LCP, tells the Guardian: 'It is widely accepted that for a lot of people, paying in the minimum rate is simply not going to be enough for a decent retirement.' In a report issued this month, the pension provider Scottish Widows said that, of those in 'defined contribution' pension schemes saving about 8% of qualifying earnings, it estimated that more than a third (35%) were at risk of not being able to cover their basic needs in retirement. Webb says that 'in a benign economic environment, you would ask employers to pay more' – but with businesses hit with a £25bn increase in national insurance contributions (NICs), that has all become a lot more difficult. Meanwhile, employees have been hit hard by the cost of living crisis. 'So where's this money going to come from?' asks Webb, adding: 'There's a lot to be said for a long-term plan for all of this.' The retirement specialist firm PensionBee is among those calling for the total minimum contribution to be upped to 12% of earnings. It says the government 'must set out a clear plan to gradually increase minimum employer contributions, giving businesses time to adapt while boosting long-term retirement outcomes'. It adds: 'At the same time, higher contributions should go hand in hand with policies that get savers engaged with their pensions earlier in their careers.' Webbs says the government could take a decision to gradually increase minimum employer contributions in future. 'I have a feeling something like that is going to have to happen,' says Webb, adding that it is time to 'think big' about the size of minimum contributions and whether workplace pensions could be reformed to help meet short-term cash needs or put towards house deposits.
