How much do I need for a good retirement?

Hi, I'm Sarah Pennells and I'm the Consumer Finance Specialist here at Royal London.

Hi, I'm Claire Moffat and I'm Royal London's Pensions Expert.

In today's webinar, we're going to be talking about how much you need to save in order to have a good retirement.

We're going to be talking about how much you may be saving now, why it may not be enough, the tax benefits of your pension and how to work out what you'll need in retirement.

And because we know it's on a lot of people's minds, we'll also talk about inheritance tax and the changes announced in last autumn's budget.

Now, we've already had a lot of questions.

In fact, we've had over 1 ,400 questions so far.

Now, I was going to suggest a lock-in so we could go through them all, but I was outvoted.

But we are going to answer some of the more popular ones in the next 35 minutes or so.

But if you'd like to ask a question as we go through, we have, as always, left time to answer your questions.

And we'd love to hear from you.

And I know some of you already are asking questions.

But we can't answer questions about your specific circumstances because we can't give advice.

And we also can't answer any questions about a Royal London policy.

If you'd like to comment or leave a question, then you can do so via the Slido link.

Before we go any further, I'd just like to remind you that we're recording this webinar.

And we will share a link to the recording afterwards with everyone who registered for it, all 8 ,200 of you.

So Sita, where will we start?

Well, let's start with what you may be saving now.

Then we'll look at what people tell us they want to retire on, and we'll talk about how your pension can help you plug any gaps between what you're saving and what you want to retire on.

Now, most people who are employed or on a contract will have been put into their workplace pension without them having to fill in any forms.

And that's thanks to automatic enrolment.

and we've had several questions asking how much goes into a pension.

Well the rules around automatic enrolment say that as a minimum around 8% of your salary will automatically go into your pension every month.

Now some of that is taken from your salary, some of it is paid into your pension by your employer and some comes from the government.

The way it breaks down is that 4% of your is your contribution as an employee.

Then your employer pays in three percent and that's a payment that your employer makes from their own money and one percent comes from the government in the form of tax relief.

Now we'll explain tax relief in more detail later on but it's basically a top-up from the government. It is important to say that these are minimum amounts.

Your employer may pay more which we'll also talk about later.

So that's what's going into your But is it enough to give you the kind of retirement you want?

Claire, what is the answer to this one?

Well, it depends on what type of retirement you want.

And we had lots of questions, too many for me to name right now, but all of them are about how much should I retire on.

So let's have our first poll.

We want to know how much money a year you'd like to retire on.

So please vote in our poll.

Okay, just watch. Okay, so that's moving a bit. A lot of people over £45 ,000.

Gosh, yeah, this is really interesting actually, because it's not kind of quite what our research is showing.

We'll wait for the numbers to settle down, but at the moment it's about a third of people are saying over 45.

Well, as I'm speaking it's changing, so now a third is saying 25 to 35. So rather than running commentary, what's our research showing us?

Well yes, and it is really interesting to see the poll right there because we did some research last year with almost 3 ,500 employees with a pension and we found that on average employees wanted to retire with an income of between £35 ,000 and £45 ,000 a year.

So there could be a gap, possibly a big gap, between the amount you're saving for your retirement and what that's likely to generate and the amount you want to retire on a year.

But there are steps you can take, whether you're just starting out in your working life or you've been working for a few decades, and indeed, even if you're not working at all.

But before we do that, let's have another poll.

We'd like to find out how you feel about saving for your retirement and the amount you're saving.

So, next poll.

Okay, so this is interesting.

I mean, this is quite different to the first poll because it's a real leader in terms of the answers.

So, over half of people at the moment, and it is changing as I'm speaking, say they're kind of OK, a bit worried.

One in 10 say, I try not to think about it.

About a third nearly say, they're happy or comfortable, which is great to see.

So yeah, it's definitely people are saying that they're kind of a bit worried.

And I think, I mean, being honest, it's not unusual to feel worried.

But by the end of the webinar, we hope you'll feel clearer about what you can do and less anxious about your retirement.

so we're going to start right at the beginning. Why do you have a pension?

The purpose of a pension is to provide money when you've retired.

It's that simple, in theory at least, but because your pension is designed to provide an income in retirement you can't take money from it when you're in your 20s, 30s or 40s.

Now in fact you must be aged 55 or over to be able to take money out of your pension.

Now we had a question from Mary who wants to know about you know how old you have to be before you can take money out of your pension and it depends on your age Mary because that minimum age is rising to 57 in April 2028 so that means if you were born on or after the 6th of April 1973 you'll have to wait until you're 57 rather than 55 to take money out of your pension unless you have the right to take it earlier perhaps because of the kind of job you do.

Now apologies because there's a bit of jargon there but this is a pensions webinar and there may be some terms you're not familiar with but we will explain them as we go along and if there's anything you don't understand or if you have a question please just ask via the Slido link.

Now Claire and I we love pensions not a sentence I thought I'd say out loud when I was growing up But there you go.

The reason we love them is because of what a pension lets you do.

It's like a bank account when you stop working.

Money you can spend on whatever you want when you've retired.

But if you don't understand how your pension works or the terminology, you're probably not going to love yours.

So in this webinar, we're going to be focusing on defined contribution pensions.

It's the type of pension that most people are paying into now.

In fact, our research on workplace pensions show that over half of people of working age are paying into a defined contribution pension compared to just one in five who are paying into a defined benefit pension.

Now, defined benefit is a term you may or may not have heard of, but you may have an old final salary pension or a career average one.

It's the type of pension you'd really only get in the public sector now.

So, back to defined contribution pensions, which we'll be focusing on.

You may have taken one out directly with a pension provider through a financial advisor or through your job and with a defined contribution pension you build up a pot of money and then you use that money to give you an income to live on when you retire.

Now we mentioned a few moments ago that as a minimum approximately 8% of your salary will be paid into your pension of which 3% comes from your employer.

But some employers pay in more and a number contribute a lot more to your pension on your behalf.

Our research showed that almost two-thirds of employees were satisfied with the amount that their employer was paying into their pension.

It also showed that the average amount that was going into an employee's pension from their own contribution, their employers and that government tax relief was standing at £274.50 a month for men and £149.50 for women.

You may be paying more or less into your own workplace pension but if it is less or you don't feel you're saving enough maybe you could look at paying in more.

Now obviously you might think that a pension company is going to say that paying more into your pension is a good idea but this isn't about what we think.

That's right we've had a question from Betty who asks should I be making extra contributions every year?

Well it might feel like there are always competing pressures on your hard-earned money but being blunt you could spend 20 or more years in retirement and I don't think any of us would want to spend our retirement struggling if we can avoid it.

So if you are in a position to be more into your pension how much should you contribute and what difference could it make?

Well I think it always helps to at some numbers.

So here we've got Marty, he started saving into a pension when he was 22, he's now 40, he's earning 32 and a half thousand pounds and he's thinking about the difference that paying extra would make.

So currently there's a total of eight percent of salary going into his pension.

At age 67, so that's Marty's state pension age, if his total contribution stayed at eight he could have £253 ,819 in his pension pot.

Now we're basing these calculations on the money in his pension fund growing by 3% every year after charges have been taken into account.

Now while returns aren't guaranteed hopefully over that time period there would be more growth than that.

But if Marty paid an extra 0.5% so that's £10.83 a month his pension could be worth £262 ,948, again age 67.

And if he paid an extra 2%, so that's £32.49 a month extra, his pension could be worth £290 ,335.

So it's not a huge amount of extra money while Marty's still working, but that could make all the difference in retirement, potentially over £36 ,000 of a difference.

Now we've mentioned tax relief a few times, but now we're going to explain how it works as, well it's a common question that we get asked and our research shows that many people are confused about their pensions tax benefits.

Well it's not surprising because pension rules can be complicated.

Last year we surveyed 4 ,000 adults in the UK and found that over a third of those who have a pension, so 36%, didn't know that they get tax relief on their pension contributions.

So let's think about how tax relief works you're an employee or you're a sole trader and you pay income tax.

The easiest way to explain it, I think Claire, is with another example. That's right. So let's look at another slide.

So in this example, if you pay 80 pounds into your pension and you're a basic rate tax payer, then the government will top that up by 20 pounds, so that 100 pounds goes into your pension.

If you're a higher or additional rate tax payer, then you'll get extra tax relief at the higher rate of tax.

So that would bring the total tax leave to £40 or if you're an additional rate taxpayer £45.

But, and it is a big but, you may either get that extra tax leave automatically or you may have to claim it back from HMRC and if that's the case instead of going into your pension it will reduce your tax bill. That's how individual pensions and some types of workplace pension work.

Now if you don't know how tax leave is applied to your workplace pension then your employer.

So you will get the same 20% tax relief but you might have to claim that extra 20 or 25% back from HMRC.

Now you can either do this in your tax return if you fill one out or by phoning out but don't miss out on money by not doing this.

It's worth mentioning that in Scotland the amount you get in tax relief is different and that's because higher earners pay more tax.

So just to be clear if you're a higher rate or additional rate taxpayer it's to check if you have to do something to get all your tax relief because otherwise frankly you could be missing out. That's right Siena.

Now moving on Kate has a question. What is salary sacrifice and what are the benefits?

It's a really good question so thanks for that Kate.

So let's explain what salary sacrifice is.

It can also be known as salary exchange and I'm going to be using those terms interchangeably.

With salary exchange you exchange some of your salary in return for your employer paying all of the pension contributions into your pension.

So this might sound a bit confusing so we'll look at an example with our pension policy holder Louise.

There are a lot of numbers on this slide but the main point I want us to think about is Louise's position before and after she does salary exchange.

Before salary exchange or salary sacrifice she earns 35 ,000 pounds.

She pays tax and national insurance and pays an annual pension contribution of £1 ,400.

Her employer pays £1 ,050 into her pension and she has a take-home salary of £27 ,320.

If she chooses salary exchange it means her salary is lower at just over £33 ,000 and that's because she's exchanged £2 ,000 of her salary for pension contributions made by her employer.

So Louise makes no pension contribution because her employer makes it all on her behalf.

And Don asked a question about why this is the case and it is because you will receive less pay but instead your employer technically pays all of the pension contribution and it's that exchange that saves you tax and national insurance and it means more goes into your pension.

But back to Louise, her take-home salary is still £27 ,320. So why would Louise do this?

It's because of the tax and national insurance saving.

It means that for the same take-home pay more money goes into a pension.

After using salary sacrifice there's £3 ,251 going into a pension instead of £2 ,450.

Now employers will sometimes pay in some or all of their national insurance saving to your pension as well but even if they don't it's still a saving for you.

Now in this example Louise opted for the same take-home pay which meant that more went into her pension but she could have had the same going into her pension as before and that would mean more take-home pay.

If you receive a bonus through your work your employer may offer bonus exchange as well now that in the same way and our research shows that one in four people who received a bonus in the previous 12 months had paid some or all of it into their pension.

It's important to say that salary sacrifice does involve a change to your contract though and the change has to apply for 12 months.

For the majority of people salary exchange is a good thing and if your employer offers this they'll let you know about the circumstances where it might not be a good idea.

For example you can't salary exchange if it will take you below the minimum wage.

Not employers offer salary exchange but there are some tax advantages for employers to offer this so if yours doesn't it's definitely worth asking about.

If you'd like to know more about salary sacrifice or salary exchange we've written an article about it that's on the Royal London website and there's a link to it from the webinar page.

One final point about salary exchange you don't get the tax relief added on to your pension contribution so it may not feel like you get that tax benefit of saving into a pension but you do.

That's your pension contributions are taken off your income before income tax is deducted.

This means that as well as the extra money going into your pension if you are a higher rate or additional rate taxpayer then you don't have to claim that extra money back from HM Revenue and Customs.

But you might be able to get even more into your pension and many people have asked about something called employer matching.

Now employer matching it's a bit of a does what it says in the ten pensions arrangement.

Put simply it means that your employer will match your pension contributions pound for pound up to a certain limit.

Again, let's have a look at a couple of slides.

So we've talked about the fact that the minimum amount that currently goes into your workplace pension through automatic enrolment is 8% of your salary.

You pay in 4% of your salary, you get 1% in tax relief and your employer pays 3% of your salary into your pension every month.

Now this assumes you're a basic rate taxpayer.

But with employer matching, your employer might match your up to a limit, so say 6% of your salary.

Now in that case if you paid an extra 2% of your salary into your pension that would give you a total of 6% that you're contributing to your pension.

But in fact you wouldn't be paying in the whole 6% because some of that would come from the government as tax relief.

Your employer would also pay 6% of your salary into your pension and so a total of 12% would go into your pension.

So that means that instead of 8% going into your pension, 12% of your salary would go into your pension every month. Now that sounds expensive but it isn't as much as you think.

So for example on a monthly basis, in this example the employee pays 80 pounds, the government tops that up to 100 pounds, the employer pays in 100 pounds and so a total of 200 pounds goes into the employee's pension.

But if the employee agrees to do matching then the maximum that they pay and to the maximum sorry then that's 120 pounds that goes in the government adds 30 pound and then the employer pays 150 pounds so that's now a total of 300 pounds that's going into the pension but it's only costing the employee an extra 40 pounds for that extra 100 pounds. Now pensions also have another superpower too.

The more you pay into your pension, the less tax that you pay, because pension contributions reduce your tax income.

That's the theory, but how can you actually pay more money into your pension, Sarah?

Well, it's such a good question.

So if you can afford to pay more into your pension, there are two ways you can do this.

The first is to increase the amount that goes into your pension every month.

If you're an employee, check your employee benefits website or ask your HR department.

The second way is to pay in a lump sum.

So we've just covered the first from the regular payments, but what if you want to pay a lump sum into your pension?

Claire, how do you go about that?

Well, our pensions and tax research showed us that over one in five people with a pension didn't know that they could pay in a lump sum.

So that's also known as a one-off contribution into their pension to reduce tax.

And having said that, more than one in seven of those who have a pension have paid in a lump sum to reduce tax 21% plan on doing this in the future.

Now in broad terms there are two options if you want to pay a lump sum into your workplace pension.

So the first, well that's for you to directly pay a lump sum to your workplace pension provider.

That money will go into your pension with basic rate tax relief.

So if say you pay an £800, £1 ,000 will actually go into your pension.

If you're a higher rate or additional rate taxpayer then you can claim back that extra tax by filling the self-assessment tax return unless you're doing salary exchange and then you'll automatically get the tax relief.

And if your employer offers bonus exchange, as we mentioned earlier, you could pay a lump sum into your pension using that instead.

So we've mentioned the benefits of paying a lump sum into your pension, it reduces your tax earnings and it puts money into your pension pot.

But if you're over the age where you can access pensions, so that's currently 55, increasing to 57 in 2028, then there is another advantage, because you could take out your tax-free cash quite soon afterwards.

So if I was 50 and I wanted £5 ,000 to go into my pension, I'd just need to pay in £4 ,000.

If I was a higher rate taxpayer, it would only cost me £3 ,000.

And straight away I could ask for my 25% tax-free cash of £1 ,250 back out.

So we've talked in some detail about the different ways that you and your employer can pay extra into your pension, the benefits of tax relief, but how much should you be aiming for?

How much is enough?

Now, that's something that Yasmin and Lisa want you to know about.

And Claire, I mean, it really is the key question when it comes to pension savings.

And your own answer will depend on things like when you want to retire and how much you think you'll need or you'd like to live on when you stop working.

We mentioned at the start of the webinar that our research shows that people want to retire on between 35 ,000 and 45 ,000 pounds a year.

But what could that get you?

If you've joined us for webinars in the past, you may have heard us talk about the retirement living standards.

Now, these were developed as a result of independent research by Loughborough University.

If you go to the website that's called retirementlivingstandards.org.uk, you will see different amounts that the researchers reckon you will need to have retirement depending on the kind of lifestyle you want.

It is important to say that the numbers I'm going to talk about presume you don't have any rent or mortgage to pay. They also presume that tax has been paid on any pension income.

I think it's also worth pointing out though that these figures I'm going to share with you can look quite scary, especially bearing in mind that they don't include any money for rent and mortgage.

So you can retire on less and you may have voted to do that in our poll and many people do but the cost of living crisis has shown us that how much we need just to pay the bills.

There's a lot of research that shows people want to be able to afford some treats and luxuries when they retire or to be able to travel or do things like spend time on a hobby or interests.

So that's a theory behind the retirement loving standards but Sarah let's look at the income amounts in more detail and let's assume that you'll get the full new state pension.

Now that's the state pension you get if you reach state pension age on or after April the 6th, 2016.

If you are entitled to the full amount, you'll get just over £12 ,000 a year using the rates that come in from this April.

According to the retirement living standards, if you want what they call a minimum lifestyle in retirement and you live on your own, you'll need £14 ,400 a year.

So as long as you get the full new state pension, that would cover a lot of the cost.

If you have this lifestyle, you will be able to pay your bills and feed yourself and have a holiday in the UK every year.

But for example, holidays abroad would be out as would things like weekly meals out at restaurants.

If you have £31 ,300 a year, including your state pension, you'd be able to afford a moderate lifestyle.

Here you can take a two-week holiday abroad as well as a weekend in the UK.

You'll be able to spend a bit more on food and bills run a three-year-old car which you could replace every seven years.

And finally, if you've saved enough to get an income of £43 ,100 a year, well you'd be able to push the boat out, have a more expensive 14-night holiday abroad, replace a car every five years, as well as having a weekly meal out.

If you're part of a couple, those figures are £22 ,400 a year for a minimum income.

For a moderate lifestyle, instead of £31 ,300 a year, you'd need an income of £43 ,100 for a couple, and for a comfortable lifestyle it's £59 ,000 a year.

Now, that is a lot of money, but if you're both entitled to the full new state pension, that would make up around £24 ,000 of that figure, although it would be a bit less after tax.

So you have an idea of what you'd like in retirement and let's assume that you do get the full state pension.

But with your workplace pension at standard minimum total contribution of 8%, will that be enough?

Well we ran some numbers on this and we looked at someone starting work at age 22 on £24 ,000 a year.

We assumed that the pension grew at 5% a year after charges and they had annual pay rises of 2.5%.

How much would they have at their state pension age of 67 with their workplace pension and state pension? Well we found it was around £36 ,600 a year in total.

So that might be enough for many people as we saw in the poll but not enough for others.

But remember the state pension age may increase further and actually many people want to stop working before state pension age.

So that would mean less to live on every year.

And those numbers are based on someone working full-time for all of those years between 22 and 67.

But for many people, especially women who might take time out to have children or care for others.

That won't be the case and that's because the amount of money that goes into your workplace pension is based on a percentage of your salary and less pay means less pension contributions.

If someone isn't working at all then you might think that they won't be able to pay into a pension but that's not actually true.

Anyone can have a pension including a child.

If you don't have any earnings though you or someone else on your behalf can pay in a maximum of £2 ,880 a year which would then receive tax relief of £720 which means a maximum of £3 ,600 a year can go into your pension.

It is something that's worth considering if you aren't working.

I think the next step though is to check exactly how much you have in your pension pot and what you're on track to get when you retire and there are a couple of different ways of doing this.

Your pension provider might have an app or calculator which you can and depending on who your provider is the app may show you how much you have in your pension fund now, how much you could have when you retire and what that might work out as a yearly income.

If you have several pensions with different pension providers then that may involve checking several different websites or apps.

Now in this webinar we are not offering advice but whenever we do these webinars we get more questions on whether or not you should transfer your pension than just about anything else.

And in advance of this webinar, Mohammed, Kimberly, and Jason were just a few of the people asking about the pros and cons of transferring pensions.

So if you have several pensions and you're finding it hard to stay on top of them, it may make sense to bring them together.

However, there are lots of factors to consider before you do this, such as whether you'll pay more or less in charges if you move.

Now, we've done a whole webinar on this topic, and there'll be a link to that on the webinar page.

So Claire, it's easy, I guess, to see how much your pension is worth at the moment if you have access to online or an app.

But what about what your pension or pensions could be worth?

What goes into that figure?

Well, we don't know how much your pension fund will grow by or if it will grow between now and when you retire.

No one does.

But in order to give you an idea of what you may get at retirement, the pension company will need to use different growth rates.

They'll give examples assuming what are called low, medium and high growth rates.

But it is important to understand that the figures are not a prediction and they're certainly not a guarantee.

These figures also normally assume that you'll carry on paying into your workplace pension at the same rate you currently are until you reach 65 or possibly state pension age.

So you could pay in more or less throughout your working life which then will affect how much you get.

And might change jobs and your future employer could pay more into your workplace pension.

But even having said all that, this figure can be a really useful starting point.

There are online tools designed to help you work out what you may have to live on when you retire too.

The government backed website Money Helper, it's got one of these and it's useful.

But Sarah, it's important to remember about your state pension isn't it?

Yes it really is and a good starting point is to make sure you're on track to get the full state pension.

The state pension is a foundation of most people's income in retirement and Department for Work and Pensions data which we've crunched the numbers on show that only half of pensioners receiving the new state pension in 2023 got the full amount.

If you haven't paid National Insurance for 35 years or received National Insurance credits which you can get if for example you were out of work claiming benefits or claiming child benefit while bringing up your children, you won't be able to get the full new state pension.
The way you find out if you're on track to get the full new state pension is to check your state pension forecast.

You can do this online on the gov.uk website or by using the HMRC app.

If you are not on track to get the full state pension when you reach pension age the next step is to get your national insurance record.

Now this shows you the years where you've been paid or you've paid or been credited with national insurance and where you have gaps.

If you have gaps in your national insurance it may and I emphasize the word may make sense to fill in those gaps by paying for voluntary national insurance contributions.

Normally you can only go back over the last six years and plug any gaps but between now and April the fifth this year you can go back as far as 2006.

Paying for voluntary national insurance isn't right for everyone and it will cost you up to around 900 pounds for a year's national insurance but for every year you buy you'll get an extra approximately 330 pounds in state pension every year for as long as you live.

So if you live for three years after you can claim your pension, you'll get your money back.

You also shouldn't buy voluntary National Insurance contributions if you're going to carry on working for long enough to plug those gaps and that's because you're likely to be paying National Insurance as you work and you may be able to get National Insurance credits for free, for example, if you're a carer and you meet certain criteria.

Now we have lots of information on our website on how to get your state pension forecast and how to top up your state pension and what to think about before you do.

But now Claire I think it's time for another poll and the poll is have you seen your state pension forecast so let's see what people are telling us.

This will be an interesting one Sarah because you know we did some research last year and we found that only 47% of people had seen their state pension forecast but what a smart bunch we've got on the webinar today so about seven in ten say, you know, falling as I speak, but about two-thirds are saying they've seen their state pension forecast, which is, I say, fantastic because it was fewer than half had told us they'd seen it, and it is really important to get hold of this, so definitely fair to say the majority, so cake all round, frankly.

So moving on from state pension, Sarah, it's coming up to tax year end and that's an important deadline, isn't it? It really is.

it might be important to know about the tax year end and deadlines and tax year end, April the 5th, well this year is on a Saturday so it may come around a bit faster than you think but it can be really important to make sure that any money you pay into your pension is in the correct tax year.

It's especially true if you're about to retire or you've been made redundant and that's because the following tax year you might not have the earnings to pay a larger contribution if you won't be working or perhaps you're a higher rate taxpayer now but know that you're going to be a basic rate taxpayer next year and then it matters because you may want to be able to get the most tax relief you can on your pension contributions.

Most pension providers will accept pension contributions until April the 5th for the current tax year but it's definitely worth checking out on your pension provider's website.

If you have an advisor then they'll keep you right about that.

And lastly in a bit of a change of direction we want to talk about inheritance tax and pensions.

Now one of the top questions that we've been asked recently is in relation to the autumn budget and the change in 2027 which means pensions are going to be subject to inheritance tax.

And one question often asked is is it worth paying into our pension because of this change?

And Peter and Rebecca, well they've also asked is there any way to pass a pension or part of it to children tax-free if this change happens.

So we've been talking about the benefits of paying into a pension but does this mean that pensions aren't as attractive?

Well pensions are still the most tax-efficient savings vehicle for retirement and that's because of the benefit of tax relief and employer contributions if you're an employee.

But people are concerned about this change just as many people are often worried about inheritance tax in general.

It's worth saying that we haven't had the draft legislation for this change, so we don't know a lot about the detail.

But currently around 4% of estates are subject to inheritance tax.

Now your estate is made up of property, savings, investments and any other assets you might have when you die.

It's estimated that this 4% number will increase to around 8% or 10% of estates from 2027 when pensions are added.

But that means the majority of people won't need to worry about this.

You might still be able to pass on your pension inheritance tax free.

But if you're age 75 or over when you die, then your children might still need to pay income tax if they inherit your pensions and take money out of them.

Now that's not a new rule.

There is a lot more information in our articles on passing on your pension and changes to inheritance tax and both of these are on the Royal London website and on the webinar page.

But it's worth saying again that most people will need their pension savings in retirement and if they die with any pensions left and they're married or in a civil partnership then their husband or wife will probably use the money before they die.

Now another question we received was from Mark who asked about whether he take money out of his pension and give it to his daughter now.

Well if you have a lot of money in property, savings and investments then taking financial advice about your options is a really good idea.

So your advisor might suggest things like giving money away during your lifetime or perhaps buying a policy to cover any additional inheritance tax bill but there are a lot of things to watch out for when you are thinking about giving money as you need to make sure that you'll have enough to live on in your retirement.

A financial advice is great but it's especially important if you aren't married and don't have children because of the weight in which inheritance tax is calculated.

Now it's important not to stop paying into your pension though especially if you haven't taken financial advice.

We will be keeping you updated as and when we get more information about these changes.

So we've covered a lot in the last 30 minutes or so but now it's time for some of your questions.

Okay so we've got a question from Helen now she is interested to know how does it work if I choose to still work part-time and take some of my private pension at the same time to top up my income so kind of semi-retire at the age of 60 I have a good substantial private pension so good to hear that thank you for your question.

So Claire what's what's the answer to that to Helen's question?

So this is looking at kind of taking money out of pensions and you know on this webinar we've really been focusing about kind of paying money and this is something we have spoken about in the past now.

This is something that's actually more and more common now.

We're seeing people who want to kind of slow down a little bit but they don't want to stop working so actually you know they might work part-time and they can access some of their pensions so that's great and you might end up with around about the same income as you had before.

One thing to watch out though is you can be limited to the amount that then you can pay into pensions if you're taking anything more than your tax-free cash and it's one of these find contribution pensions that we've been talking about.

So if you're say you were earning £2 ,000 a month before and now you're earning a £1 ,000 from your salary and you're taking a £1 ,000 out of your pension, then you know you're actively taking money out of your pension and you're going to be limited to paying in a maximum from you and your employer of £10 ,000 in pension contributions a year. So it's definitely one to watch out for.

So but it's becoming more and more common.

People don't quite want to stop work, but they don't want to be working full time.

It's sometimes called flexible retirement, isn't it?

Or phased retirement.

It's a really good question.

We've got a question from Ali, who says, I would like to know about old pensions from previous workplaces, and if it's possible or even beneficial to combine them.

So Ali, we mentioned it earlier on in the webinar that we get a lot of questions about this.

This is something that we get asked all the time in all our webinars.

And there isn't really a simple answer, because there are a lot of factors that go into whether it's a good idea to transfer.

So I mentioned charges, so whether by transferring or combining your pensions, you'll pay more or less in charges.

I think the best thing is maybe to kind of refer to our webinar for the full answer.

But is there anything else that you would suggest that Ali, that he or she takes into account when thinking about transferring any of the pros and cons?

So it's important to have a think about, do you have some old pensions from the past?

So particularly maybe from the 1980s, sometimes these came with really valuable guarantees and you would lose them if you transferred.

So it's important to understand the type of pensions you have.

So I think that's probably one of the key considerations.

You don't want to lose out by combining all of your pensions together.

Okay, so just looking at, we've had one from Louis and he says, how will the ups and downs of the stock market affect my pension?

I think it's a really good question.

I think it's something that's pretty on a number of people's minds and you know there have been ups and downs in the stock market early on this year and that does affect the value of your investments and of course your pension is an investment and when stock markets react to uncertainty they can move quite sharply and that can be unnerving especially for people who have you know pensions or investments but I think it's important to say it's important you know it's it is important to stay calm and not to have any knee-jerk reactions because those could have a long-term impact on your finances so don't do things like taking money out of your pension in a hurry because being blunt if you sell when a stock market is lower then that's when you're going to be locking in your losses and it's also worth remembering I think that you know pensions are long-term investments so stock markets do tend to recover over time many pension funds are well diversified so that means they don't just invest in things like stocks and shares but they'll invest in bonds those IOUs for either government or company loans and that means that they are designed to help you ride out those ups and downs.

So when stock markets fall investments that your pension fund holds, when it comes to buying they're actually cheaper, it sounds almost counterintuitive but when stock markets fall of course it costs less for your pension funds to buy those investments so that means that your pension contributions go further.

If it's though something that you're worried about and I think especially if you're getting close to retirement, then it's a really good idea to take financial advice.

I think the key message though is don't do something in a hurry that could have a long-term impact on your pension or retirement. That's right.

So a question here from Stephen, apart from there being less to invest, would taking some of my 25% tax-free cash affect any aspect of my future contributions such as tax relief? What's the downside to drawing down some of that tax-free lump sum?

I Again, it's a really good question, Stephen, so thank you for that.

And this is almost linked to that first question we had, where I said that if someone started to actually take money out of their pension apart from their tax-free cash, then they'd be limited to the amount that they were able to pay into pensions.

Now, if you only take out some of your tax-free cash, that limit doesn't apply.

So you could take out some of your tax-free cash, you could maybe spend it on a holiday, whatever you'd like to do with it, and you wouldn't be limited to the amount that you and an employer could pay in.

So that's often a really good idea if you're still working full time, if you still want to be paying the maximum in pension contributions.

And what we find is when people are in their 50s, for example, then that's when they're perhaps earning the most and want to pay the most into their pensions, so don't want to be limited.

But in terms of tax relief, then you'll still get tax relief on making pension contributions.

So, yeah, as long as you keep within just taking that tax-free cash out.

Okay, so we've had a few. So this is one. This is from someone who doesn't want to share their name, which is absolutely fine.

But, my friend is self-employed mid-50s with no pension. What's the best advice you can give her?

Now, obviously, we're not allowed to give advice, but in terms of things to think about.

And I think it's a really good question because before I joined Royal London, I spent most of my life being self-employed.

and it is very different because we mentioned right at the start of the webinar if you're employed then these days you know if you meet the criteria age 22 or over then you're generally put into your employers workplace pension and that's great because A you don't have to think about it the money just goes straight for your salary if you're self-employed you don't have that luxury really do you but what should her friend think about?

So you're not automatically enrolled into a pension if you're self-employed I think it depends how they are self-employed because sometimes if someone's a sole trader, then they'll pay income tax.

But they might be set up as a corporation and they'll pay corporation tax.

So paying into pensions is still a really good thing because you'll either get income tax relief, and we spoke about that type of tax relief worked out later.

But if you're set up as a company, then you're a business owner, you're technically an employer, and you will get corporation tax relief on that.

So paying into pensions is still a really good thing.

Now, sometimes in the past, you know, when I spoke to business owners or spoke to accountants dealing with a lot of business owners, they would say that clients often said, well, my business is my pension.

And I think that's fine if you've got something tangible, if you've got maybe a shop to sell.

But I think over the last few years, what sometimes people thought was a good solid business, they're maybe not as solid businesses now.

So still having something else is a really good idea because just having all of your investments that, you know, it's putting all your eggs in one basket, really, if all of your focus is on just the business.

So I would say that actually investing into pensions, you do get that tax relief, and it is kind of giving you that income in retirement, and it's a part from your business as well.

So, you know, it's different, it doesn't automatically happen, but it's really worth taking financial advice because it really depends on how you are set up.

And I think, you know, the fundamental question to think about is when I stop work and that could be because you don't want to work or it could be being blunt because you can no longer work what will I live on and if you don't have an answer to that then however you do it you need to save you know whether you take out a torture financial advisor and take out a pen to get lots of advice from them which is a really good way to do it you need to think about what are you going to live on because most people want to still you know you want to do nice things when you retire you don't want to just exist you want to enjoy your retirement so really good question thank for that.

We've had a question which is another anonymous one saying I live and work in Scotland and I'm almost at the threshold between paying 42% tax and the lower 21% tax, so obviously tax rates different in Scotland compared to England and Wales.

When my salary reaches the higher threshold can I increase my pension contributions and keep my tax rate in the lower bracket?

So Claire what's the answer to that one?

So I would say first of all don't just look at your line salary figure now or when it's going to increase because if you're already paying pension contributions they will be reducing that so you know if you are close to a tax band or have just gone over then look at how much your pension contributions are but this is really good planning if you are just going into a new tax band then paying a pension contribution to get out of that position is great planning because it means that you'll get the tax on it, but you also won't be paying that kind of higher rate of tax as well.

So it's a good idea, we mentioned that pensions reduce your taxable income and this is one of those scenarios where it actually works well.

You'll get for the part that is just over that threshold into that higher rate band, then you will get, so it works differently in Scotland, but you'll get that percentage on the part that's over, so you'll get the higher amount of tax relief, so if you know you might have to clean that little bit back from HMRC but then it will take you back into paying the 21% so good planning and a really good question so we've had one from Joanne which is about salary sacrifice and salary exchange do you have to have the same salary sacrifice amount for 12 months or is it just that you have to be on the salary sacrifice scheme for 12 months and then you can change the amount that you pay into your pension if you want to say increase your contribution so again it's a really good question so what's the answer Claire?

And so salary exchange it's you know it's a change to your contract so it's all about the actual having salary exchange that's what needs to apply.

Now there are certain times when it can change the 12 months is sort of standard but if something happens maybe if you you know you take time out of work or there's different reasons why you get that can change but it's not to do with the amount it's just to do with the fact that going to be using kind of salary exchange as a mechanism.

Okay I think time for one more to sneak in which is from Sean and he says my employer contributes five percent to my pension is that five percent of my entire monthly salary I heard somewhere that it's five percent of a particular tax bracket is that right? So what's the answer?

We actually had a couple of questions one from John along very similar lines.

So this is what we were talking about kind of almost right beginning of the webinar when we were saying that actually you know when we look at automatic enrolment it's that eight percent figure and three percent will be paid by your employer and it looks like five percent is being paid by you but within that there's also tax relief so it's not going to cost you five percent of your salary you're going to be paying less than that so if you're a basic rate taxpayer you're going to be paying four percent and the tax relief will be one percent and it will be less if you're a higher additional rate So it does look like more, but it won't actually be that 5%.

But for some people it could also be on a band of their earnings.

It may not be on every single penny that they earn.

I don't want to throw around too much jargon and say qualifying earnings, but it may not actually be on your whole salary.

It could be on this band, and that's allowed within the rules, isn't it?

You're employed to pay it on your whole salary or on qualifying earnings.

That's right.

So for example, if you were earning £60 ,000 a year, then you might not, that 8% in total, it only applies up to just over £50 ,000 a year.

So your employer might only pay for that, kind of under that amount.

Many employers will pay for the full amount, but if you want to pay more into your pension, it's worth checking because especially maybe as you start to earn more, and you might think, well it seems like the same amount of pension is going in, well that will be the reason why.

So they don't have to do it, you'll see it only goes up to 50 ,270 pounds but so check if anything over that amount is going into your pension.

Thank you well I'm we've got loads more questions but I'm afraid that is all we have time for so thank you very much for submitting all the questions.

Before we go just time for our last poll so we would like you to vote on the webinar topics you'd like us to cover in the coming months so please vote now in our poll.

Second now while I try and find how people are voting in our polls.

Okay so at the moment and as ever things are changing as I speak but people want to know about tax on month taking money out of your pension and and I think it's not surprising Claire because it there's a lot to cover there's a lot we can talk about in this one but also about you know basically how pensions and other savings work so thank you so much for voting or our polls that's all we have time for we'll be sharing a link to the recording in the webinar in the next few days but in the meantime thank you very Thank you very much for joining us today.

Thank you.