Pensions and tax - Clare explains all

On Wednesday 2 November 2022 our pensions and legal expert Clare Moffat joined the Pension Awareness team for a live session about pensions and tax. Tax might not seem like the most exciting topic, but it pays to make the most of it when it comes to your pension. Clare covers how tax relief works, the limits you need to know about, what happens when you retire, and more.

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How much should you be saving for the future?

Our Consumer Finance Specialist, Sarah Pennells, talks through how much you could look to save in your 20s, 30s, 40s, 50s and beyond to help you have a comfortable retirement.

James Biggs, Pension Geeks: Good afternoon to you, how are you? It's day one of Pensions Awareness week live. It's Monday, the 13th of September, and my name is James Biggs, and I am one of the Pension Geeks. Now, this doesn't just fall into place. There's a lot of time and effort that’s been put into preparing this. And there's a great team behind the cameras. Let's hear from the behind-the-camera crew.

[Crew cheers]

Yeah, that was good. Okay, so there's over a thousand people on this call, or on this broadcast, this morning. 1300. That is a new record take a bow everybody out there. Okay so, because there's 1300 of you, who's going to be first to name this song and this band.

[Music plays]

There we go, there we go. I'm going to put that down to there being something in the ether that made people a bit slow responding there, or for us to see the responses. That was Money by Pink Floyd.

And this week is all about you and your money. Quite a lot of people forget that your pension pot is just your money. It almost can be defined as deferred pay, extra money that you are earning on a daily basis that's been put away for you to have an income when you retire, whenever that might be.

So we are really thrilled as the Pension Geeks to bring a pensions “rah rah” session this week to you, so that you can get on board with your pension. So you can love it, hug it, squeeze it.

And your involvement could get you a pair of these glasses. Now, I wore these earlier and someone said I did look a bit like Prue Leith, which is frankly rude. But if you ask some brilliant questions or get involved a lot this week, and people have been asking for the t-shirts, the stickers and the mugs, you could win - oh, just dropped a pair on the floor there - you could win these.

Okay, so this session, the one that's broken all the records in terms of attendance, is ‘How much should I be saving for retirement?’ ‘How much should I be saving for the future?’ Okay. Pensions is a very, very important part of that. I’ve got a general response to that, which is ‘as much as you can afford’. But let's go into a bit more detail on that.

And what I can also tell you, because when I meet people in the workplace, which I've been doing the last 20 years, I don't see many people demonstrating much pension contribution remorse. So people aren't really upset that they put too much money in. They're normally a bit concerned that they wish they put a bit more in earlier.

So we thought this session would be helpful for you to get your head around the kind of things that would be worthy of your time, worthy of your consideration and worthy of you getting your head on board with how much you should be saving for your future and your retirement.

Okay. So I'm really, really pleased to say that we've got some great sponsors and the great sponsors are - need to read them on the list because there's a few - our partner this week is NOW Pensions. But the ambassadors helping with the sponsorship to make this week come to life for you all are Aegon and Royal London.

And Royal London today have joined us. So I've got Sarah Pennells, who is the Consumer Finance Specialist, and she's going to help me, working with you, get our heads around ‘how much should I be saving for the future’.

Now, you might see a bit of a side view of me here because I'm going to turn towards the screen. When I turn towards the screen, I'm going to engage directly with Sarah because she's an expert on this subject. Then we're going to go to a live Q and A. So I'm just going to pull up the questions, make it look professional and turn to Sarah. Sarah, how are you doing?

Sarah Pennells, Consumer Finance Specialist, Royal London: I'm doing really well. How are you?

James: Yeah, very good. Thank you. That was all a bit chaotic, wasn't it?

Sarah: That was so smooth. I was like, you know, watch and learn.

James: Well, I don't know about that. I drop the very glasses in the middle of that as well. So Sarah, thank you so much for joining us this morning. Could you tell me and the thousands of people that are on this broadcast, what you actually do?

Sarah: So my job title, as you said, its Consumer Finance Specialist, and it's a ‘does what it says on the tin’ kind of job title. So I really look at kind of areas of consumer finance. So it's not just things like pensions and protection products, but we know that people's lives aren't associated with a particular product. They have mortgages, we have debt, we bank accounts. So looking at the broader areas as well, and particularly, I guess, given a nod to what's happened in the last 18 months, looking at things like life shocks and life events, how those can really derail your financial plans and the impact that those can have.

And also I do some campaigning work as well to highlight issues that can leave you worse off if you're not aware of them and campaign for some changes.

James: Fantastic. Well, I love a bit of that Sarah. Thank you again for being on this morning’s show. Big wide question to start with. What are the common questions people ask about pension? When we meet them, they often say, should I consolidate our pension pots and how much should I pay in? So what's the answer? How much should people be paying into their pension funds?

Sarah: It is a really great question. As you say, it's one that people ask all the time. And I think it will be a very short webinar, but it would be great if I could say ‘200 quid a month’ or even better, maybe £50 a month. But it's not that simple, as you know. And I think the key really is to why it isn't that simple is it depends so much on the kind of retirement that you want, the kind of things that you want to do in your retirement.

And crucially, when you want to start doing them. And that's something that I think it's actually really hard to think about. And it is hard to think about the further away from retirement that you are. So I mean, you said there's like, 1400 people on this webinar which is fantastic. Many of them will probably be in workplace pensions. And in that case, there will be an amount that's going into your pension every month because your employer is paying and in you’re paying in and the government pays in a bit as well.

And that's going be a minimum of around 8% of your salary. But as I think we'll be showing over the next 20 minutes or so, that may not be enough to give you the kind of retirement that you want. And it is one of those things that I think you mentioned earlier on that you very rarely meet people who say, ‘oh, I wish I wasn't paying so much into my pension’. And likewise, I meet quite few people who've already retired, and I very rarely meet people who say, ‘I've got so much money. I'm retired now, I've got so much money. I have not got a clue what to do with it.’

Sadly, I do meet people. And I certainly did as a financial journalist for 20-something years before I joined Royal London. I certainly then met a lot of people who said, ‘I really wish I’d started saving earlier’. So I think it's actually about trying to picture that life that you want when you stop work, trying to work out what that's going to cost. And, crucially, when you want to stop working.

And you might be thinking, oh, that just sounds like a huge amount of work. Where do I start working that out? And there are two options. And at Royal London, we're big fans of financial advice. We think it's the gold standard. And this is really where a financial adviser can come into their own, because this is - they’re really skilled at helping you plan your retirement. And they can translate those ideas you have about how you want to spend your time, where you want to live, what you want to spend your money on, into what it means, how much you pay into your pension.

But if you don't have a financial adviser or even if you just want to do a bit of research before you go and see your financial adviser, there are loads of pension calculators that will help you input money in, you can put in what you're paying now, maybe old pensions that you have, and then work out what that will give you. So we've got one on our site, you'd expect me to say that, but there's also one on the MoneyHelper website, which is the government-backed impartial money information and guidance website. So those are really good starting places to think about how much to pay in.

James: That was perfect. What you just did there, Sarah, I've just got to applaud that because I should have said earlier that if you go onto our website, which is hang on a minute. I written it up there. I quite often add an extra s in there, which doesn't help. So, people can sign up for a one-to-one chat, which isn't advice. It's guidance, and they are being delivered and supported in this journey this week by MoneyHelper team So thank you for that link. Is it's almost like we rehearsed it.

So the 8% that people are paying in. I've got two concerns with this one is that it's not enough, but another also is that people aren't paying in 8% of their total earnings, sometimes people are paying 8% of their banded earnings. And I think a lot of people in the UK don't know that their entire salary isn't used for pension purposes. That aside, though, is 8% enough? And is there a rule of thumb you can use to get people closer to the right number?

Sarah: Yeah. Again, it's a really good question. And as you say, this 8%, that's the minimum amount that should be going in. But as you rightly say, it's not a whole of people's earnings. I think for most people, it's probably not going to be enough is probably the simple answer. But it does depend on the kind of retirement you want. So I will go back to this idea of thinking about retirement, and I'll come back to kind of rule of thumb figure if that's okay. I said I think it's quite hard to pick the kind of retirement that you want.

I find it quite a hard thing. Well, actually, how do I want to spend my time? And crucially, what does that, what's that going to cost me?

So there's a really useful, there’s another website that's really useful. It's called, and that's been put together by one of the pensions organisations.

But they've got some independent research that actually looks at what you might spend in retirement and what that will come back to in terms of an annual figure. So they've got three different versions of retirement if you want.

So it depends on basically how comfortable you want your retirement to be. So at a minimum and moderate, and then there’s a comfortable. And just to put some figures on that in terms of how much you might need as an income. If you live on your own and you want the minimum level of retirement, which kind of maybe doesn't sound that attractive, but we'll start with the minimum. You need an income of around £10,200 a year, and for that, that would pay for things like, you wouldn't be able to have a car, but you'd be able to spend around £40 a week on food and about £40 a month on clothes and shoes and have holidays in the UK. We all know what those have been like because we've been having over the last 18 months!

At the other end, if you want a really comfortable retirement, which means, you know, three weeks of holidays in Europe and changing your car every two or three years, having a new kitchen or bathroom every ten to 15 years, and more on food and that kind of stuff. Then you need £33,000 a year.

And then obviously the one in between, the moderate one where you get a bit in between in terms of your lifestyle. So one holiday abroad, one in the UK, that kind of thing. there you'd need about £20,200 a year in income. So that sort of maybe helps you to start in terms of at the other end.

Now, obviously, if you live with somebody or you're married, then the figures don't double because we all know that two people living together can live more cheaply than two people living in their own homes, in individual homes. So on that moderate example, instead of having to have an income of £20,200, it's actually about 29,000.

So that's that sort of how to pitch your retirement. But to actually answer your question, I think I sound a bit like a politician at this point, in terms of a rule of thumb. I mean, there's a rule of thumb that's been around. Well, I said I was a personal finance journalist for well over two decades, and it was around when I started, but it's quite a good one to remember, I think.

Which is you take the age at which you start paying into a pension and then you halve that and that's the percentage of your salary that should be going into your pension. So you start at the age of 20, then you halve it so that’s ten. The 10% of your salary should be going in. If you leave it to 30, then it's 15%. And if you leave it to 40, that's where it all starts to get a little bit kind of like ‘eek’ then it's 20% of your salary.

And it's not, for the reasons I've said about thinking about the kind of retirement you want, that's not going to work for everybody. But I think it is quite a good starting point to then look at okay, well, this is what's going in now and this is what I should be - this is when I started, maybe there's a bit of a gap between the two.

James: Thank you for that, Sarah. So I've seen those numbers. They're really helpful. I saw them also broken down so that it showed what you need your personal pension scheme to do in addition to the State Pension. So the State Pension is how much at the moment?

Sarah: It's about £9,300 a year, and that's for people, because the State Pension system changed for people who reach state pension age after April 2016, and that's the £9,300 a year is kind of like the maximum you can get if you've got a full National Insurance record. And that breaks down into about £179 a week or £26 a day. And the reason I broke it down into those figures is £9,300, you might either think that's not bad, or that's nothing at all, but the £26 a day, I don't know if you think about maybe how we lived our lives before the pandemic and what many of us will be spending our money on, this £26, that's not just spending money for kind of takeaways and coffees and whatever. That's everything, that's to pay your bills.
And I think for me that really sort of comes back to you when people are kind of thinking of pensions are a bit dull and, you know, do I really need one? Okay. Well, think the other way. If you haven't started saving for your retirement either through a workplace pension or a personal pension, what are you going to live on?

And if it's the State Pension, is that enough to give you the kind of retirement, that you may be spending 20, 25, even 30 years in retirement. That's a long time if it's not actually the kind of retirement that you want, whatever that looks like for you.

James: So if we go to the - let's aim for the middle figure, the moderate figure for couples. I think when I saw it, it showed that it would show 9,000 each. So they're targeting 29, but they're getting 9,000 in each. So that gets to 18. So in that instance, the couple needs another 11,000. So did it give an indication of how much someone's pension pot might need to be to bridge that gap? Because we get asked that question all the time. How big should my pot be?

Sarah: Yes. We have done some figures on if you want to get a pension of around that much, it's actually the figures we've got of someone who wanted a pension of twelve and a half thousand pounds. But what you might need to say depending on when you started, so I mentioned the difference it could make using that rule of thumb kind of calculation that you and I both heard of in terms of delaying paying into your pension. So as with all these figures, we've made some assumptions about charges and investment returns and inflation, all that kind of stuff. So it's just a guide, really.

But if we take somebody who started saving at the age of 25 and who wants to retire at 65, for example, with this pension of around twelve and a half thousand pounds. If they do that, then they’d have to save around £202 and months to get this sort of twelve-ish thousand pension. Now, if they delay until they're 35, the figure jumps to about £349 a month that they'd have to save. And if they delay until they're 45, and this is where it gets really scary, the figure is about £709 a month.

So again, I think it's quite helpful to think about it in terms of the monthly amount that you need to put into your pension, or that needs to go into your pension, because I'm talking about a figure here, but if you're employed, then your employer will be paying it as well. And then there's a tax relief from the government, which again, it's one of those things that people often don't understand and, quite rightly, understandable reasons, but again, it's really useful to know how that works.

James: And because we were looking a couple there, it's probably more tax efficient if they build a pot each rather than one person builds one pot to fill the gap, because then we can use personal allowances in retirement as well. Is that what you kind of advocate?

Sarah: Well, I mean, I'm not here to give you advice, but in terms of how I look at it, I think it's actually much better if people do have their own pension pots for a whole range of reasons. I mean, we don't know what life is going to throw around the corner. And if you are part of a couple, then obviously we hope that couples are going to stay together until they're doted. But we know that sadly, 40% of marriages break down. Although pensions go into the pot when you get divorced, you know, I think it's actually better you have your own pension.

You may have different ideas about how to invest it as well. You may have very different ideas about where you want your money to be invested, and that's probably a whole other webinar. But I think it is a good idea. If you actually think about your own retirement, definitely discuss it as part of a couple because you could find that you've got different ideas about the kind of lifestyle you want and when you want to retire. But it is, for most people I think, it's a really good idea not to have one person who's building up that pension, but to have your own individual pension pots.

James: Yeah, it makes sense. I was talking to someone about this the other day and he said he'd read a statistic that is 80% of couples don't know each other's pension position, which is shocking, right?

Sarah: I think it's one of those areas, isn't it? But money for couples can be so hard to talk about, and in some ways it can be one of the last taboos. So a lot of couples, they may talk about the kind of the bills and saving money on the monthly outgoings, but not necessarily talk about actually the kind of retirement that they want and how they're going to pay for it.

So I think it's a really good idea that you have a conversation about this and not when you're just a year away from retirement, but actually kind of check in with each other and make sure that you're thinking about how you want to spend your time.

Just on that point about having one pension or two pensions. I guess there is a counter argument which I've heard, and I'm sure you have as well, which is if one person in the couple is a much higher earner and is paying tax at higher rate, then obviously they're going to get tax relief at a high rate as well. So there is a tax efficiency argument, which is why I said I'm not here to give advice, but I think that it is still for a lot of people, and for the reasons that we said that couples often don't talk about money, actually having a pot that you know about, and you talked about with your partner or your husband or wife. I think that's a really important thing to do, to at least have that conversation and agree between you what you're going to do.

James: Yeah, I couldn't agree more. So I was fascinated by the numbers you gave earlier that you shared with us all, which was if you're in your twenties compared to your thirties compared to your forties, how much more you’d need to pay in.  That's quite a sobering thing, really, isn't it? We talk about the 8th wonder of the world a lot, which is compound growth. That's right, isn't it? Because if you start early, your pot gets bigger and it's got longer to compound grow.

So for youngsters, I know that they're feeling a bit under pressure because they're paying graduate tax, which is effectively 9% on their earnings to pay back their student loans. They can't get on the property ladder. They've got student debt. They're now paying National Insurance and going to have to pay more for a whole group of people who are already retired that don't pay National Insurance.

But this is a good message for them, isn't it? If you join your workplace scheme and get what your employer is paying in and can get your contributions from all sources, your employer, the taxman, and you, 200 quid a month. You stand a chance.

Sarah: Yeah, and I do understand because I come across this and I talk to people who are the twenties and even early 30 sometimes saying, look, I've got other things to pay. I want to save for a house, I want to do this, and I get that. I think we all get that, that it's not that pensions are the only decision that you have to make in retirement is the only thing you have to think about. And certainly I mean, I remember when I was in my early twenties and I wasn't thinking about retirement.

But I do think it comes back to this fundamental question, which is that if you don't save into a pension, whether that's a workplace one or a private one, then what will you live on when you retire? And those figures that I shared, I mean, they're not designed to scare the horses, although I understand that they may be a bit frightening, but there is that thing that it does become more expensive as you get older. And as you say, you're talking about compound interest and how if you give something more time then it'll mean you have a bigger pot.

I mean, as we also know, investments do go up and down and returns aren't guaranteed. And so we have to understand that a pension is invested, and investing does come with risks. But having said that, if you look at the maths, then certainly the longer that you leave it, the more money you may have to set aside. And for some people, you know, finding £700 a month say when you're 45 for your pension, I mean, a lot of people will be kind of thinking, don't be ridiculous. There's no way I can afford that.

I think it's just about having that check of if I'm not saving into a pension now or if it feels too early, what will I live on?

James: One last question Sarah and then I'm going to open up the airwaves for Q and A from everybody is, we've talked about 8% in the workplace. Can people pay in more?

Sarah: Yeah. So there's a couple of things. Firstly, your employer may pay in more for a start, in terms of the minimum amount that they have to pay in, which is 3%, so that's worth finding out. And they may pay more either if you do, or they may just pay in more for everybody. And you can certainly pay in more. So again, if you've got a workplace scheme, then find out the workplace scheme will normally have an Internet site. If not, you can ask the HR Department.

But there are different ways you can do this. For example, if you get a bonus, then you can basically exchange some of that bonus for a pension contribution. So it's not the case that the bonus hits your pay packet and then you pay some of it in your pension. You essentially give up part of your bonus before it's paid, and you save tax and National Insurance on the part you give up as a pension contribution. And then there's some tax efficiency or National Insurance gain for your employer as well.

And the same with salary sacrifice or salary exchange, you can give up a percentage of your salary in exchange for higher pension contributions. Now there are pros and cons. It's not right for everybody. For example, with salary exchange, some salary related benefits such as furlough or statutory sick pay may be affected. So you know, have a think about it. But these are ways it's certainly worth exploring and they may be right for some people.

James: Brilliant Sarah. Thank you so much. Sarah, everybody, Consumer Finance Specialist at Royal London, one of our ambassador sponsors for this amazing week that we've put on for everybody. So Sarah, would you mind staying there? We're going to put a little graphic up for everyone that just says back in a few minutes for Q and A, I'm going to stare at this camera here, and Johnny is going to join me on stage or not? Okay. Thank you so much. So bear with me, everybody. We'll be back in 30 seconds. You might lose a bit of audio. It's just because we're not talking. 

[Fades out]

How is my pension invested?

Our investment expert, Lewis Daley, talked to the Pension Awareness Live team about where your pension money goes, how it’s invested and everything you need to know about responsible investment.

James Biggs, Pension Geeks: Good afternoon, how are you? It's Wednesday, it is the third day of Pensions Awareness Live and today is Pensions Awareness Day. Let's hear it from behind the cameras!


And let’s have a bit of music. We have this in every single session. Let's start off with a bit of Abba. Everybody loves a bit of Abba, right?

[Music plays]

OK, name this song. Who knows what this song it? Who got it right? Loads of people, Jerome, Tina, Felicity, you all got it right. That was ‘Money Money Money’ by Abba. And why would I start off a session like this talking about money, money, money - going to this camera now - because this is all about you and your money.

But before we get into the depths of this session, which I'm really looking forward to, I just wanted to - what, what this, you mean this? I think we won an award last night! Did we win an award last night? Is there a graphic for that, let's have a ‘woohoo’ for that as well. So Pensions Communication Initiative of the Year on the Professional Pensions - on the Professional Pensions award ceremony last night was won by this event last year.

And this year is even better than last year because there’s even more of you joining in. So thank you so much for your involvement. We love you being involved and if you get involved in an energetic way, or in a way that impresses the judges behind the camera there – ‘the judges’ - then you could win these. These are golden geek glasses. Let’s hear a ‘woo’ from the crew. Woo! Yeah, love it and there’s a graphic to go with that as well. I'm going to take them off because apparently I look like Prue Leith. So, we -  Lembit Opik, Timmy Mallet, OK, all right. Elton John. Cheeseburger Elton John!

So, yes, we are going to talk this afternoon, it's a session number three on day three.

Very excited about this, because this is about, exactly, about your money, and when we ran a session on the first morning at 9.30 in the morning, one of the first things I said was your pension pot is your money.

Even as late as this morning, they said, which is session number eight first thing this morning, somebody did ask the question, is all of my pension fund available to me, or if I leave my company to have to get my some of my employer contributions back? Let me be really clear.

Every single penny that goes into your pension pot is yours, from the minute it lands. Brackets can't touch it till  age 55 closed brackets, because those are the rules.

But your pension will be a success generally because of three things, How much you pay in - very, very important, and I'd nudge everyone as close as possible to around a mid-teens number of about 15%.

So, that's your contribution plus your employer’s plus some tax relief. Get yourself to that figure over time if it needs to be done gradually and in a stepped, kind of managed way. That should help.

how long you do it for - obviously, don't opt out, stay in a scheme, stay in a scheme every time you’re in the workplace. Anyone entering the workforce now will be joining age 22 won’t be retiring ‘til they’re 68 or later, they've got 43 years or 45 years’ worth of, or 46 years of contributions and compound growth is the eighth wonder of the world, so that all helps.

And then, the last thing is how well it grows. So, this session, now, is ‘how is my pension invested’ and we're going to have a bit of a delve also into responsible investment.

So I'm really, really thrilled to be joined in this session today by Lewis. Lewis Daley is the Investment Proposition Manager at Royal London, and we should just give a shout out to Royal London and all the other sponsors here. So could we put up the sponsor graphic as well?

These events aren't thrown together. There's a lot of planning goes into them, you can see one of the ambassadors here is Royal London, and lots of energy has gone into the planning.

It's not an inexpensive thing to do to broadcast live today to the entire planet for five consecutive days, and so we couldn't have done it without our sponsors, and we'd like to salute you, and thank you warmly.

So, yeah. There's my thinking, right. So, you want to pay as much as you can in, within your budget. You need to do it for as long as you possibly can, and you need it to grow.

And the majority of us, now some of you may be self-employed, and some of you may be not working for other reasons, but the majority of you, on this call may well be in the workplace.

Now we need to applaud, also, the HR Managers across the world for joining in. And encouraging you as employees to see what's available during this week for all this free content. And you can see it all on, where you can sign up for any session you like. Every one you attend you'll be sent a link to afterwards.

And of course, if you want to see them the day after they were delivered, you can do on catch up in the library.

And we've had some amazing companies join in. We've got Pentland Brands joining in. We've got Harbour Energy joining in. We've had Bentley joining in. We've had Fisher Scientific joining in, and many, many more employers, Tysers, by the way, and also Safran and Gap as well. So thank you to those employers.

If I've not named your employer, but you heard about it through your employer, give us a shout out, and we'll give you your company a shout out later on as well.

But without any further ado, I've got an earpiece in so I can hear as well as see him. I'm going to slightly turn the angle of my camera here, and have a conversation with Lewis, and ask him to introduce himself, and then talk about where your money is invested. So how you doing Lewis? Nice to see you.

Lewis Daley: Nice to see you too, I’m very well, how are you?

James: Yeah, very good. So Lewis, first of all, what does an Investment Proposition Manager do?

Lewis: What don’t we do? So our focus really within the team, is to understand, firstly, how our members' money is invested. Secondly, review that, make sure we're happy with how all the underlying funds are performing. And my role has had a specific focus on understanding how responsible investment is actually practiced throughout our investment solutions. So a wide range of tasks but a really, really rewarding role.

James: Fantastic, thanks for that, Lewis. Um, so, could you briefly explain where does people's pension contributions from themselves and their employers, where does their money go? And how are they typically invested?

Lewis: Yeah, so you touched on that to start there. I think the vast majority of people and we can respond to this from a workplace pension perspective. So you and your employers contributions will go into what we call the default investment strategy.

Now, now that default investment strategy will consist of a wide range of investments, usually. Whether that be equities, so shares in companies all over the world, bonds, so that's loans to governments or companies and properties - you can own buildings all over the UK.

And when we think about that default investment strategy, the goal is to deliver you money when you reach retirement, that's ultimately the object of pension savings.

So, the split and the blend of those investments of equities, bonds, and properties, is carefully considered, making sure you don't have too much exposure to high risk, high reward, and you don't have too much exposure to the low risk, low reward. Making sure you've got that optimum split between the growth assets, what we call, and defensive assets.

James: Brilliant, thank you, Lewis. There's a tiny bit of time delay my ear, thank you so much for that. So can people choose their own investments and if so, how do they do this? Can you give any tips on where to start with it as well?

Lewis: So firstly, yes, people can change their investments. Now providers, different providers, will have different ways that members make those changes. Often that’ll be through some form of online portal.

But before we go into what we can change to, it's really important to remember what we're talking about here.  A pension is a really important investment.

Pension savings in terms of household wealth is actually now greater than property wealth, so it's not a decision that should be taken lightly when just making knee jerk reactions to change investments.

If you are considering changing, there's a couple of things I would point out.

Firstly, in the first instance, we would always recommend where possible, trying to obtain financial advice or support. If that's not possible, there's some areas that I would look to address.

Risk - how much risk are you willing to take? And that can often relate to what are you using that pension for? Is that going to be pretty much your sole income stream when you retire? Or do you have lots of other pension pots?

What's your timeframe? Do you have any specific objectives for it?

And when you consider all these various components, then, don't be afraid to ask questions of the providers. What options do you have available? What information can I have access to?

But in short, I would just say when you're deciding whether or not to make a change, do not make a knee jerk reaction as it is a really important decision.

James: Thanks, Lewis. So if I was in a Royal London plan, and I was sitting in the default fund, or the default investment strategy, will this generate me decent returns, or should I really be thinking about moving out of the default fund?

Lewis: So, it's a good question, because I think that the belief that default strategies are dusty, old products that no one thinks about it, that doesn't really hold much water anymore.

Now, that the work that goes into designing defaults, maintaining defaults, taking them through various governance routes, is extensive. So, the default strategies are not just sub optimal solutions.

So, yes, in short, you do generate returns when you're in that default investment strategy, and what's also important when you're in that default investment strategy, as there's more than just you making those investment decisions, the investment decisions are made by the experts. Those people, that their job is to manage risk. Consider this wide range range of factors, compiling your investment split.

So, absolutely, your default investment strategy will generate returns for you.

James: And I can echo that, by the way, because professionally, I also run governance committee meetings for large corporates across the UK, where we do review and consider how well the default investment has done.

And some of those are with Royal London, and we've been impressed how Royal London have coped especially since the drop in the markets last year.

So you know, I echo what you were saying. You definitely can expect to make money by being in the default fund.

OK, so, Lewis, there's a lot going on in the press on responsible and ethical investments. Tell us what this actually means, and what's the difference between green and a phrase being used a lot in our industry, which is E, S and G. So, what's your thinking there?

Lewis: Yes, absolutely. There's, there's lots of lots of different phrases being used, and if we're being honest, there's not a lot standardisation. So one article will quote one word, and another article will quote the same word, but mean a very different thing.

So I think for the purpose of this, in just consistency, there's three key investment approaches that will be adopted: ethical, sustainable, and responsible.

Now, all of these approaches will use E, S and G insights, which is environmental, social, and corporate governance insights, but it's what they do with those insights that differentiates them.

So if we just start with ethical. Ethical is probably the one that's been around the longest, an ethical is driven, really, by what you won't invest in, investment approaches that look to avoid certain sectors. That's ethical in a very short explanation.

Sustainable. Sustainable differs because what that’s trying to do, is look at companies to deliver a net benefit to society. You're trying to find a reason to invest in these companies. That's a lot more, it's become a lot more popular over the last few years.

And responsible. So, responsible is probably the broadest approach, and responsible investment is about integrating, so embedding, environmental, social, and corporate governance factors in the investment decision making process.

But it's really important that active ownership comes through here, so, as a pension, when you save into a pension, to become owners of these companies all over the world. What are you doing as an owner of those companies? And that's things like voting, that's things like engaging.

But there are three distinct approaches and they're the key areas that across the industry as we go forward, they will emerge as the three key investment approaches.

James: Good stuff, and if I'm a member of a pension scheme, how do I check whether the investments in my strategy are ethical and responsible?

Lewis: OK, so there's a couple of places you can check. Firstly I would always try and get any details you have with your pension, whether that be an old letter, plan number, any form of reference, so you can actually get access to what is your investment.

Secondly, there should be information online and associated with that investment strategy which provides more detail of what that investment is trying to do.

Now, you'll often find that ethical or sustainable investments will have a specific objective of we will avoid XYZ or for sustainable, we will only invest in companies that do XYZ.

But the labelling aspect, as I said at the start, there's still a bit of work to do to create standardisation. So, first thing I would do is get as much information as you can about your policy to find out what’s the name of your investment.

Secondly, check any data that's available online about that particular strategy. And thirdly, if you're struggling or if there is gaps, do not be afraid to ask a question of the provider. That's what we're here for. We need to be able to answer those questions, so that's the three key areas I would work with.

James: Excellent. Thanks, Lewis. And there will be time for questions in a moment, so, that's good. So, can we, as pension investors, members of the default investment fund, and the wider proposition, generally, can we make money? Can we get investment returns by investing either ethically and/or responsibly?

Lewis: Yep, in short, yes. Now if we think about this in a broader sense, making money or making investment returns, you know, generally the basis is the higher risk you take the potential higher returns are on offer.

When it comes to ethical, sustainable investing, i.e. approaches that have quite specific mandates in what they're trying to achieve, yeah, you run the risk of potentially increasing the level of risks, because what you're doing is you're looking at less companies that you can invest in.

But what we've seen over the last few years is a lot of the strategies have performed extremely well. And taking it back to the broader sense, when we think about this in very simple terms, if you're looking at a company and that company has environmental risks, because its practices are extremely controversial and damaging the environment and communities they operate in, the board that are running the company are paying themselves too highly, and there's not really a direction. From a sound business sense, that company, you wouldn't think is going to deliver you long term returns. So just purely considering these ESG factors, we believe can actually enhance returns.

And that's why we believe in embedding this as standard across our government range, our flagship workplace default of Royal London.

But, yeah, as you start to change those approaches by that, the ethical and sustainable, of course, it does change that potential risk. But by no means, does it mean you cannot offer any returns.

James: Great stuff, Lewis. Thanks for that. So, tell us about Royal London’s 4 or 5 key themes around green and responsible investment strategy.

Lewis: Yeah, absolutely. So, when it comes to Royal London as the organisation, we believe, responsible investment, we want to strive for that become the new normal.

The way of thinking about just delivering financial returns for our members is not really sufficient. You need to think about delivering the best possible standard of living for our customers.

So, at Royal London, the responsible investment approach is based off a few key pillars.

We've got the governance and voting. So, responsible investment means, if you own a company, are you voting at that company, the AGMGM? How are you actually shaping the direction of the company?

Secondly, engagement. What are you doing with that company on an ongoing basis? What are you asking them to do? What's your end goal? What relationships are you building?

Thirdly, how are you actually thinking about environmental, social, and governance factors, and how are you embedded them in the decision-making process?

So to make sure that it's actually authentic you need to be able to tell that story.

So for Royal London, what we're trying to do, and what we are doing, is having this information available online for our customers.

So if you want to find out more about what, what these, each of these approaches actually look like, and some examples of how that practiced in our workplace default, that's all available on the Royal London website for customers.

James: In terms of ethical investments, is it a relatively new thing, or if they've been around for a while?

Lewis: So no, Ethical investments is probably the longest running approach that we've touched on today. Originally back in the 19th century, it was very much driven by what you wouldn't invest in, not wanting to invest in certain sectors. And it has maintained its presence across the industry through peaks and troughs. But what we are seeing now is sustainable and responsible becoming those approaches that are gaining the most attention and the largest amount of scale.


Fabulous. So I think we've shared quite a lot with everybody about Royal London’s approach to this, it's been really great talking to you, Lewis. Do you know what, my highlight of this was we chatted before we went live. And I know you've got a motion sensor set of lights behind your office there, and they suddenly came on and I said to you…

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Highlights from Pension Awareness 2021

Sarah gives us a roundup of all the highlights at the end of the week, which took place from 13 to 17 September 2021.

James Biggs, Pension Geeks: So I'm really, really thrilled that, once again, in the studio today, we have been joined by Sarah Pennells, and Sarah is the Consumer Finance Specialist at Royal London. And Royal London is one of our key ambassadors. So if we would, if you see you've got this graphic for we bring Sarah, I just wanted to share with everyone a little fact, this is a brilliant social endeavour that we're putting together this week. The graphic I'd like to put up is about who our sponsors are, and the, we can't do this without our sponsors, this isn't a commercial enterprise at all.

You may get a free pair of glasses at the end of it, if you're brilliant, loads of people who've not been after the mugs and the t-shirts and the stickers. And well, if you really want those, what you should be doing is telling your employer get the geeks in to our building and do stuff to engage on pensions.

So thank you to all of the pension industry that laid down their company colours to put some full welly into supporting this social endeavour which is to get everybody in the country properly revved up about their pensions. And so this is us love bombing you with even more information this afternoon.

So, for the next 45 minutes or so, we're gonna talk about everything you need to know about pensions, including the State Pension. Now, I'm going to put some headphones on so I can hear Sarah properly on the termites do ever so slightly towards the TV. And you'll be seeing it slightly better, hopefully with Sarah on the main screen, but Sarah, can you hear me?

Sarah Pennells, Consumer Finance Specialist, Royal London: OK, James,

James: Brilliant, nice to see you again. We saw you on Monday. Very lovely to have you back. So, Sarah, could you just quickly introduce yourself? I've done it already but tell us what a Consumer Finance Specialist does. What's that job title all about?

Sarah: Well, these are two aspects to my job. one is, I spend quite a lot of time talking to the media. So basically explaining about pensions and retirement, and why it is that it's something that you sort of shouldn't put off thinking about.

And the other side is thinking about campaigns, areas where we feel that not just our own customers, but we know what is exciting, maybe people are losing out, aren’t aware of certain things.

And also focus quite a lot on how people can help cope with things like life shocks that could be, you know, divorce, bereavement, what kind of supports there is that's available. And that's not necessarily anything to do with our products, that could be support that's available more widely that people just aren't aware of.

James: Fabulous. Thanks for that, Sarah. And so, welcome to the final show of the week. So, I've got a few questions to pose to you so that we can maybe extract from you some of your expertise and industry know-how. So, first of all Sarah, could you tell us and the amazingly huge broadcast audience that we've got here for our popup TV channel this week? How much should we all be saving for the future?

Sarah: Yeah, well, it's one of the things that I think if I came up with one figure and said, you know, £100 a month, £200 a month, it'll be quite a short webinar. So, you know, as with many things to do with pensions and retirement, it's a bit more complicated than that.

And I think the starting point really is thinking about the kind of retirement that you want. And I've been listening to some of the other webinars, watching some of the other webinars that you've run in the week, and I know that one of the threads that's come through this is that actually, we find it really hard to think about retirement. Especially if, you know, if we're a bit younger, it's not something that gets us kind of out of bed in the morning and really excited.

But actually, if you talk to people as they get a bit older and by older, I mean kind of mid-forties onwards. And certainly, retirement and specifically how they're going to pay for it, becomes increasingly important. So, it does depend on things like your age, how much you earn, where your money is invested, and crucially, what you want out of your retirement.

But I guess to most people, certainly if you're in a workplace pension scheme, then there should be around 8% of your salary. I say around 8% because it's not actually all your salary, but it's about 8% of your salary that will be going into your pension as a minimum. And that will be money that you pay in money that you employ pays in, and money that the government pays in by way of tax relief. So, that's what a lot of people already have going into their pension.

But I think as will be finding out, over the next, well, so 10, 15 minutes or so, that may well not be enough, depending on the kind of lifestyle you really want and what would make retirement, you know, really enjoyable for you. Bearing in mind, we could be spending 20, 25, even 30 years in retirement, after we stop work.

James: Fabulous, sorry about that background noise and that was my glitch on my phone, just there which I put on silent. So one of the most common questions people ask about pensions is how much to save. So how much should we be saving for the future? How much should we put away? What's your thoughts on that?

Sarah: When I said that, you know, I can't come up with a one size fits all figure. But having said that, there is a formula that, I mean it's been around for decades, really, but I think it's quite a useful rule of thumb to kind of think about, and that is linked to the age at which you start saving into a pension.

And quite simply, you check the age at which you start saving into a pension, and then you halve that and then that's the percentage of your salary that should go into your pension.

So, if you're 20, when you start saving into your pension, and it's half that, that's 10, so it's 10% of your salary, that should go into your pension, If you're 30, when you start, it's 15. And then this is where it starts to get a bit more scary, if you're 40 when you start saving into a pension, and it's 20%.

And just a couple of things on that, because we had a few questions on this, I think, on Monday, first of all, this, 10, 15, or 20% figure. That's the whole amount of money. So, again, if you're employed, and you're in a workplace pension scheme, which the vast majority of people who are employed are, then your employer will pay into that on your behalf, and the government will be paying in with tax relief.

And then the other thing to say is that that figure stays the same. So if you start saving, say, when you're 25, for example, so then 12.5% should be going into your pension, it doesn't mean that once you reach 30, it should be 15. And once you reach 40, you should increase it. The whole point is, the earlier you start, the easy it is in terms of a monthly amount to set aside to get the kind of pension that, maybe one that gives you the kind of retirement that you'd like.

James: Fabulous, and when we talk about contributions into pensions, tax relief is often talked about and people often ask us about it. So if we break that down, could we - could you explain a bit more about pension contributions and also explain about tax relief?

Sarah: Yeah, absolutely. And it's really important, I think, you know, we kind of bandy around figures like, or words rather, like contributions. And, actually, they can be quite confusing unless you know exactly what goes into them. So with workplace pensions when we talk about pension contributions, we, and I say we in the industry, people like me from a pension company, we’re talking about the money that's going in.

So it's not just your own money, it'll be money that your employer pays in. So, if we take this example of this 8%, which is the minimum that generally will be going into a workplace pension, and a number of employers pay quite a lot more.

That will be money that you pay in, and that's 4% of your salary. Money that your employer pays in, and that's 3% of your salary, and that's not money that’s coming, you know, from your own monthly pay packet. that's money they're paying in on your behalf.

And then the other 1% is tax relief. And as you said, again, it's one of those phrases or terms that people don't always understand and frankly, why should they, they’ve got better things to do than work out what tax relief means.

But it is one of those pieces of jargon that I think, once people understand it, it's kind of like, all right, OK, now I get why it's a good idea. So, tax relief basically means, in a nutshell, some of the money that you would have been paying in tax goes into your pension instead, and it's paid by the government.

So I think the easiest way to explain it is with an example. So if you were to pay £100 into your pension, actually, because of tax relief, you’d only need to pay in £80 because when you earnt that £100, assuming you were basic rate taxpayer, you'd have paid £20 of that in income. So to put the money into your pension, you just pay in £80, the government pays in the other £20 as tax relief.

And if you're a higher rate taxpayer, so in England, Wales and Northern Ireland that will mean you're paying tax at 40%, then you get that higher rate of tax relief. So, in that case, you get £40 of tax relief for £100. In Scotland, the higher rate is 41% so you obviously get slightly different rate.

And, just one thing, depending on the kind of workplace pension scheme you're in, how it's been set up or, indeed, of course, if you work for yourself. You might have to claim back that extra tax relief through your self-assessment tax return. With some schemes it’ll all effectively go into your pension because of how the contributions come out of your wages.

James: Fabulous. And is it ever too early to pay into a pension, or in fact to look at the other end of the scale, too late?

Sarah: Again I think, I think it's a really interesting question, because, you know frankly I think when I think about, you know, myself in my twenties, you know, I wasn't fascinated by pensions, it's not something that I was born to be really, thinking pensions - that's what I want to think about all the time.

And I think it was – I’ve been a financial journalist for years, so I joined Royal London in January 2020 but I was a personal finance journalist before. And my first job in personal finance journalism, I worked for a program on BBC Radio Four called Moneybox. And as you can imagine, pensions with quite a topic in Moneybox. And it was kind of, you know, people were always talking about how much that they were thinking of getting, how much they wanted to retire on.

And although you know, I could have joined the BBC scheme the first day I joined, but I didn't, you know, it was only because of the conversations I had then that I realised this is something I really need to do. And, in fact I paid in extra, because I kind of realised that the earlier I started, the easier it would be. But I do get that if I hadn't been in that environment where we were talking about personal finance and talking about retirement every day, I may have made very different decisions.

I do understand as well that, you know, I've seen this that there comes an age where suddenly you think ‘eek’ I haven't actually got that long at all, I've only got, sort of 15, 20 years.

So I would say, you know, if you're thinking actually pensions, that’s something I can put off until tomorrow, I'm too young to think about retirement, retirement’s for ‘inverted commas’ old people. There is a real cost to delaying and I don't want to bombard everyone with figures, because it might be, you know, ‘cold towel round the head’ moment. But I will try a couple.

So we've got an example where we worked up some figures of somebody who was 25, we'll call him James, who wants to retire on £12,500 a year when he's 65. So, at that age, he won't get the state pension. So if he starts saving at 25, he has to pay in about £202 a month into his pension. And, again, that will be money from his employer as well as from himself, if he’s employed and in the workplace scheme, plus the tax relief.

If he delays it until he's 35, that figure goes up to around £350. And if he delays it until he’s 45, and I hope people are sitting down as they’re watching this, the figure goes up to about £710 a month.

So you can see, and I know you talked about this James throughout the week, but it's not just, you know, kind of me saying ‘Oh you know, think about pensions early’ but there's actually the maths behind it, because it means your money has longer to grow, because it's invested for longer.

James: Brilliant. I was about to say to the crew here, you get the advantages if you start early of compound interest, which is also known as - the eighth wonder of the world. Exactly. Johnny asked me, what was the seventh wonder of the world earlier and I said, I don't know, maybe the Taj Mahal - can't quite remember. So OK, so we've been talking about personal pension schemes, possibly workplace pension schemes, there's a lot of workplace pension chat going on this week, but what about the State Pension, Sarah?

Sarah: Yeah for most people the State Pension is gonna really be the kind of bedrock of their retirement income. So, it's really important I think, to understand a bit about how it works and what you might get, and also to find out what you personally will get and when you personally will get your State Pension.

So, to get the full State Pension you need to have paid 35 years of National Insurance contributions. Or if you're maybe caring for your child, or you’re caring for someone who's ill or you're unemployed and on certain benefits, then that National Insurance is being paid on your behalf effectively. Now the system changed in 2016, but I think, you know, try and keep things relatively simple.

So, for people who are not yet retired, not yet reached State Pension age, the maximum amount they'll get is around 9,300 a year. For people who want to be very precise, I think it's £9,339 a year, but that works out around £179 a week. Now, that's, you know, OK, that's great, that's a really good foundation to build your retirement income on.

But, if you think about how you picture your retirement, and obviously different people will picture their retirement in really different ways, you know, £9,300 a year may not be enough for you to do the things you want.

It's not necessarily about going for cruises every year, it might be just about taking up a hobby that you want, knowing you don't have to worry about paying the bills, going to see friends and family, maybe go on a couple of holidays abroad, which obviously we’ve not been doing very recently. So, the State Pension as I said, it's a good thing to build your retirement income on but for a lot of people it's not going to be enough.

And I think the second thing that's really important, and it's much more relevant now than it was, say, you know, 5, 10 years ago, is you may not get the State Pension when you want to retire. So currently, the State Pension age, which is the earliest age that you can claim the State Pension, is 66, and it's rising to 67 and it's due to rise in a few more years to 68 and even beyond.

So, you know, I don’t know about you, but, I mean, I love my job. I don't know whether I want to be doing it when I'm 66, 67 or even older. And I think that's something that maybe a lot of people don't think about at the moment. If you ask them when they think they’ll get their State Pension, often people think it's either around 65 or even before then, and that's not the case.

James: No, absolutely and I do have some sympathy for a cohort of women that were expecting it at 60 and now it looks like it will be at the earliest 66. So, Sarah, we talked earlier about the percentages that employers could pay in, and we talked about the 8%, but does some employers pay more than 3%?

Sarah: Absolutely. So, there are two different ways that employers approach this. Some of them will pay more than 3% of your salary for everybody who is automatically enrolled into their workplace pension and others will pay maybe 3%, but then they'll pay more if you pay more, they will pay more.

So, it's really worth finding this out and most workplace pension schemes, you know, there'll be an app that you can use, there’ll be a workplace pension website that's specific to your own scheme, so that's a really good starting point. But also ask your HR Manager if you're not getting anywhere, because they should know, and they can certainly help you.

So don't assume that this 8% figure that we've both been talking about is necessarily what's going into your pension scheme. Because some employers are more generous and you could, you know, you could have a pleasant surprise, it may be a question that you've not asked.

And I would say that if your employer will pay, match you pound for pound, so if you pay in an extra £100, they'll pay in the same, I think that's really worth exploring if you can afford it because the sort of, the fact that it's matched will make such a difference to your pension scheme.

James: Yeah, totally, couldn't agree more. And we mentioned 8% earlier, but if I was an employee, can I pay in more?

Sarah: Yeah, now there are a couple of ways that you can do this. So firstly if you get a bonus. If you're in the kind of job where you get an annual bonus, then rather than that going into your bank account through your pay packet, you could actually give up some of that bonus.

And the way you do it, is you actually make the decision to give up some of that bonus in exchange for contributions being made to your pension, before you get paid it. And that way you save both tax and National Insurance on that part of the bonus that you give up, and your employer does as well.

The other thing that you can do is something called salary exchange or salary sacrifice. And that means that - it's sort of one of those ‘does what it says on the tin’ type things. So you give up a portion of your salary in exchange for it being paid into your pension. And as before, obviously, there's a tax and a National Insurance saving and there is one for your employer.

I have to say, it's not right for everybody. It's one of those things that it can affect salary related benefits such as statutory sick pay and furlough payments, so definitely have a think about it. But it is worth exploring and I know there's lots of information online about this. I actually wrote an article on both bonus and salary sacrifice for our own website. But I said there are plenty of other websites that if you type that into a search engine, you can find out information.

James: Brilliant. And, obviously, paying in more, I fully endorse that. But does it make a difference? Is there any examples you could think of where people pay in a bit more?

Sarah: Yeah, and I, again, on one of the webinars in the week where you were talking about this pizza example of paying money into your pension and it not necessarily being a choice between, you know, giving up a coffee or giving up a pizza.

I think the really interesting information about this is that it doesn't necessarily have to be a huge amount of money extra that you're paying. And it's not necessarily about, you know, taking a salary and just tipping the whole lot into your pension. Because that's not how people, that's not how most people live. You know, we want to be able to have a life at the same time.

But we looked at some figures, we took the example of someone earning the average wage, which is about £30,414 a year, and we looked at how much would be going into their pension if they were paying - if the 8% minimum was going into their pension, that kind of workplace pension, automatic enrolment amount. So, from their own salary it would be about £102 a month.

Now, if that person wanted to increase the amount so that 9% was going into their pension in all, obviously the employer would be paying the same, but the extra amount they'd have to find would be about £20 a month, so, fiver a week. And if they wanted to have 10% going into their salary then they'd have to find an extra £40. So, instead of paying £102 a month, they'd be paying about £141 a month.

So, it's not necessarily that, you know, you have to kind of live on cat food and not go out and have one bar electric heater to actually make a bit of difference.

And on that example and again, I have to sort of caveat this bit, because we've made some assumptions about inflation, and charges, and investment returns and all that kind of stuff. But to give you an idea, instead of having a 153,000, for example at the end of 30 years you could end up with about 193,000. So it could make quite a difference.

James: Good stuff, and we talked about the State Pension earlier rising from 65 to 66, and then in due course 67, how early can we all retire?

Sarah: Well, it really depends on what you can afford. And I think that there's a couple of, you know, a couple of ways of looking at it. First of all, in terms of your pension at the moment, the earliest that you can access, your pension is 55, and that's going up to 57.

If you're in something like a final salary scheme, then it may have its own scheme rules, obviously then you got to link in when you're gonna get your State Pension.

But then it's really down to when you can actually afford to retire. I would just like to just say, a couple of, sort of, one other website that’s really useful to look at because it gives you a good idea of the kind of income you want need in retirement, and that is the Retirement Living Standards website. The web addresses retirement living

And they've got some independent researchers to crunch some numbers on how much you might need for the kind of retirement you want. And it really helps you to kind of picture what you could actually buy, what you'd spend on clothes, on food, on a car, on your house.

So the minimum they come up with is about £10,200 a year for a single person for a kind of fairly basic retirement. And a comfortable one where you can go abroad on holiday a couple of times a year, and change your car every 2 or 3 years is £33,000 a year.

So, again, it's going to depend a bit on what the scheme rules say, what the rules say about when you can access your pension, but also, how much you've actually gotten the kind of lifestyle you want,

James: Brilliant. Sarah, just as you were finishing that sentence there - thank you, that was an excellent answer - we've actually shared the minimum, moderate and comfortable standards with some of the stuff that goes with it, from the retirement living standards dot com website. So, it's perfect timing here, thank you to the tech team behind the scenes.

So we can retire early if we wish to, most people have probably got that at the back of their minds somewhere. So summing up, we’ve been saying this all week in this studio. Love hug and squeeze your pension. Get on board with it early. Maximize your contributions. Take as much advantage of tax relief as you can. Take advantage of the powers of compound interest. Pay enough and do it for long enough. Watch it grow. And then live happily ever after, no longer wearing socks and shoes and bare feet in the sand is the way forward. That's my view as a quick sum up of that.

But one last question for you Sarah and thank you so much being on the show, can we look at pensions another way to stop them being boring? Obviously we've done everything we can this week to stop them being boring, but what would you do, how can we turn them on their head so that they are - so that out there, the consumer stops seeing them as being something quite boring?

Sarah: Well obviously I love pensions but that's. you know, because that's my job. But I think that most people, pensions and retirement, it feels like it's something that's, you know, pensions do sound quite boring to lots of people.

Retirement feels like it's years away. Well I think it's really about not thinking about the product but what it can do for you. And with retirement, it is one of those things that, you know, it's very tempting to think it's something you just kind of slip into once you're no longer, you know, once you stop work.

So I turn it on its head and think there’s two thoughts. One is, if I'm not saving into pension, what am I going to live on? And we said about the State Pension being £179 a week.

And the other is rather than thinking about it as retirement, which might feel, as you say, a bit dusty and boring and years away. It's more about financial independence. It's putting yourself in a position that you no longer have to work to pay the bills. Now, you might want to work, but it's the age at which you don't have to work to pay the bills. And I think that is something that's really worth getting excited about and really worth planning for.

James: Yeah, I couldn't agree more. Well, we're in tune on that. I'm absolutely loving those messages.

[Fades out]