Bristol Financial Resilience Action Group Webinar Recordings

Hi and thank you for tuning in to the first of 12 financial wellbeing webinars running over the course of the next year. Just briefly introduce myself: I'm Clare and I'm a Financial Wellbeing Analyst at HL. HL's mission is to help people save and invest with confidence and over the last couple of years we've really invested into resources that can help people do exactly that. Our five to thrive framework has been designed with the intention to help people understand the road to financial resilience, there are five pillars; control your debt, protect you and your family, save a penny for a rainy day, plan for later life and finally invest to make more of your money. And importantly this framework can be referred to regardless of age, occupation, or income level and this is what the course has been designed around.

We're providing this financial education course because we think we have a duty to share our expertise, particularly given the tough economic climate that we're living through, where life is more expensive. Knowledge really is power - it is key to people managing their money well and we hope that the information delivered over the next 12 months gives you the tools you need to feel confident with your finances, as well as the know how to build, or perhaps build back up your financial wall of defence following the pandemic and rising cost of living. In today's session we're kicking off with all things debt. It's inevitable that we will all be in debt at some point in our lives, how we manage that debt will have a huge impact on our financial wellbeing and therefore ultimately our general wellbeing. Before I do get started just a bit of housekeeping, so this recording will last for around 25 to 30 minutes. Given that this is a recording if you do have any questions then you will be able to raise those via email, and the email address will be visible at the end of the session. I do need to stress that everything discussed is purely information and not financial advice, and given the time constraints it's not fully exhaustive. But I do hope that what I talk through will enable you to go away and make decisions from a more informed position.

A quick look at today's agenda, we'll be looking at the national picture in light of the cost-of-living crisis before moving on to looking at different types of debt, debt management strategies that can help reduce the cost of debt, as well as the importance of our credit scores. Before drawing to a close with sources of information for further guidance.

So let's start by looking at the nationwide picture. Debt can affect all ages and can be a cause of anxiety if not under control, particularly in the current climate, with increasing interest rates debt could be becoming more costly. Borrowing was a lot cheaper this time last year. Forced saving for many during the pandemic and during lockdowns meant that the UK personal debt bubble shrank for the first time since 2013. But we're actually witnessing a u-turn on that, in the last 12 months the debt held by UK consumers has increased by a staggering £66.4 billion. Now these are astronomical figures, to give you the scale of 1 billion it's unlikely that we'd be able to count to 1 billion during our lifetimes even if we started at birth. Now debt was a cause for concern for some pre-cost of living but in this tough economic climate money anxieties are growing, with over 8 and 10 people somewhat, or very worried about the rising cost of living and that's up from 74% last May. The reality is that as life is getting more expensive, as a result debt in the UK is growing.

Research by the ONS found that 9 in 10 adults report their cost of living has increased, the most common reasons reported for increased costs were price of food shopping, energy bills, as well as increased fuel costs. One in five - so that's around 18% - reported using savings to cover the cost of living and 12% - that's nearly one in eight people - are having to take on debt to cover their essentials. So for many the savings that they had were drawn on to sustain their lifestyle during the pandemic and for those fortunate to still have savings at this current time, these are vanishing. Our money simply isn't going as far, it just isn't buying us as much and as a result shoppers are changing their behaviour. I've noticed over the last year or so that when doing my weekly food shop more and more families going up and down the aisles with their phone calculator out, some even telling the assistant at the checkout to stop at a certain monetary amount because they have a specific budget that they need to stick to. So although inflation has come down from the double figures and is now just below eight percent, that doesn't show the true reality. Actually many food essentials have risen exponentially higher, if you take whole milk that's up 26% in the last 12 months, eggs are up a staggering 37% and olive oil is 46% more expensive than it was 12 months ago. So it's unsurprising that we're all feeling the pinch. If food essentials continue to rise then our budgets are going to shrink and buy us less.

Now the cost of living is leading to unsustainable levels of spending. Our Nationwide barometer research in collaboration with Oxford Economics projected a significant number of households will continue to have unsustainable levels of spending to the end of the year, so you can see that by the end of this year we predicted around 24% of households will still have unsustainable levels of spending and because of that we're going to see an increased credit and debt reliance. What we're seeing is increased credit and debt being fuelled by the cost-of-living crisis, so people are borrowing to fund the daily essentials. Now for lower income households those essentials do make up a larger percentage of their take-home pay. We're also seeing that it's exacerbating parental pressures with households where they have dependent children, children do have an impact on household financial resilience because income is perhaps spread across childcare, utilities, food, mortgage or rent. Households broadly face three options if they have levels of unsustainable spending, that's cutting back on spending, drawing on assets/savings, or taking on new debt - so we do expect debt concerns to mount as we move through the year.

An increased use of credit is happening at a time when borrowing is becoming more costly. Borrowing was a lot cheaper this time last year and in the last 17 months or so the Bank of England has increased the base rate from 0.1% to 4.5% - that's the fastest pace for 27 years. And at 4.5% it is the highest rate since the financial crisis in 2008. We are racking up that interest at a time when we can least afford it. Now the effects felt will differ depending on whether you're a saver, or a spender. Average interest rates on credit cards is at a record high of around 30% and that's an average, and that's the highest since 1998. Do shop around, some credit cards will offer introductory interest-free credit for a time period. Do also consider the affordability and the time period in which you'll have to pay that off. For cash savers it's good news - you should receive a boost to your interest rate if that increase is passed on from the banks, this can be slower in terms of that increase being passed on than the interest rates rising. This won't include those however who have opted for a fixed term rate for cash savings, so if you are opting for a fixed term savings product do consider that if interest rates continue to rise then you could miss out on more interest down the line.

So how does the Bank of England rising the base rate impact your existing debt? Generally interest rates on credit cards are variable so they do go up and down, although they're not explicitly linked to the base rate. Credit card deals have progressively been worsening as interest rates have increased, so this latest hike to 4.5% could mean another increase as it's likely to be passed on from lenders to consumers. But ultimately the cost of borrowing is increasing, you could end up paying more if the interest on your card goes up. The ideal way to use a credit card is to clear the balance in full every month because this way you don't start paying interest, but this isn't always possible. Do bear in mind that rising rates do mean that you'll pay more for carrying a balance, and as we just saw the average credit card rate is now just over 30%.

Those I've spoken to, their primary concern has been the impact on mortgage rates - this is unsurprising because homes are the most expensive thing we typically buy and we borrow for. Those on a variable rate mortgage are vulnerable to increases so that's around 2 million homeowners here in the UK, so as that base rate has been climbing they've faced almost an immediate hit to their income because those products move in line with the increasing interest rate. However those on a fixed deal, which is the majority of mortgage owners, they are shielded for now but when it comes to remortgaging they could be in for a shock as they may have to pay significantly more. The majority of mortgages are fixed but it is worth thinking about when your mortgage is up for renewal, typically you can renew up to six months prior to your expiry date. The average UK house price is around £288,000. If you were lucky enough to remortgage last year at an average interest rate of 2.65% for a two-year fixed deal then your monthly repayments would have been just over £1,300 a month. However, if you have to remortgage this year, just one year later, then your monthly repayments could have jumped by over £400 pounds and remember this is simply the interest, you're not paying off any more of that mortgage debt. Because these are really big sums even an uplift of 0.25%, a fraction of a percentage can have a big impact on that monthly repayment cost. The consensus is that mortgage rates will gradually decline over the course of 2023, but it is going to be slower than first expected as high inflation is being persistent. Some predictions are suggesting that rates might be around 4% by 2024 but this is a forecast and in no way guaranteed.

Moving away now from the cost-of-living update to more general information around borrowing. So let's start by looking at the cost of borrowing and explaining the terminology that's often used. The interest rate is the cost of borrowing and that's typically stated and advertised. As an example if you borrowed £1,000 and the annual interest rate was 10% you'd pay back £1,100. This may differ if you pay it back over a shorter or longer period. APR is the additional percentage rate that differs because it includes the interest rate plus any other costs associated with borrowing. Lenders have to tell you the APR prior to signing the credit agreement and it's always expressed as a percentage of the amount that you borrow. A lower APR means that you'll pay less over the term of the loan, and the APR is used so that you can compare financial products and work out which product is most suitable for you.

Debt is a fact of life, it's important to remember that not all debt is bad, sometimes it can be viewed as an investment into our futures. For example if we want to attend University, or a necessity for most of us if we'd like to get on the property ladder. Good debt is typically planned and budgeted for, however if debt is not managed carefully, or perhaps if you borrow too much and can't pay it off - this could be considered bad debt which could have a negative impact on your day-to-day finances, your well-being and your credit score. Debt can come in different forms such as a credit card, mortgage, or a car loan and it can be useful for various purposes. Everything from an emergency purchase to helping you pursue perhaps a business venture, and if you make repayments on time, debt can work as evidence of good financial planning and responsible borrowing. So what kind of interest rates can you expect with different types of debt? We've just talked about mortgages and the average rate, at present is around 5%, when it comes to overdrafts I was particularly surprised at the rate of interest – the average on overdrafts is around 35%. The average credit card rate we've also looked at, this is around 30%. Personal loans, the interest rate offered varies dependent on the size of the loan but it's around 10% average if you're borrowing £5,000 and the average is around 5.9% for double that amount of money at £10,000. What about payday loans, well payday loans previously had interest rates as high as 1500% but thankfully the FCA brought in a ruling in 2015 to protect the financially vulnerable, and an overall cap now means that people will never pay more than twice what they initially borrowed. The gap between credit card, overdrafts and other interest rates has widened substantially in recent years, and I was most surprised by the overdraft average rate. It's exponentially higher than loans and credit cards, so dependent on the mechanism that you use to borrow the amount of interest charged can vary hugely which understandably will impact your present and future finances.

Let's take a look at a working example. In this scenario the individual is borrowing £5,000 at 10.1%, that's the current average for personal loans. If the individual chooses to repay over a three-year term the monthly repayment is around £160 meaning a total excess cost of around £780, meaning the total repayable for the £5,000 is about £5,780. However if the individual opts to pay back over a longer term of five years, then the monthly repayment is lower at around £105 a month, but the total cost of borrowing that sum of money increases to £1,324 - that's over £500 more to extend the term of the loan by two years. So although the interest rate is the same, in general the longer your loan term the more interest you'll pay, because that interest accumulates over time. The right choice for you will depend on your circumstances and crucially your affordability - a longer term does mean lower monthly payments so you can free up cash for other things.

Another form of short-term borrowing taking the retail industry by storm, that’s particularly capturing the hearts and wallets of many younger generations is by now pay later. It's temptation and it feeds into our need for instant gratification. It's often advertised as a payment method when shopping online, and you can now even use it to pay for takeaway food on popular apps. It encourages impulse buys, feeding our wants typically rather than our needs. Companies loaning the money don't tend to carry out detailed affordability assessments on you, and falling behind on payments will lead to late fees and could result in negative marks on your credit score. Late fees are on the rise. It is much more rewarding if you earn something, if you've saved up for something and you know you've worked hard for it, you appreciate it more. Instant gratification is easy come, easy go. The most important question to ask yourself is you may be able to afford the payments, but can you really afford what you're buying? Remember using buy now pay later to purchase something does mean that your future income will be impacted. If you choose instalments over a period of say three months, that means that for those next three months your income will be impacted, you'll have less money to spend on each of those months. The best course of action here is to implement a time delay, do wait 24 hours and see if you still feel the same before ordering.

Little overspends do add up to big debts - it can be a slippery slope. Hopefully by following a budget and sticking largely to the plan, you'll be able to identify areas where you could avoid wasteful spending, which in turn will encourage good spending habits and help you not live outside one's means. Next month's webinar explores how to be a smart spender and will look at budgeting. If you haven't already please do register, there will be a QR code at the end of this recording.

Should you always pay debt first? What's the priority? Is it long-term debts or long-term savings? Long-term debt is generally defined as outstanding debt of 12 months or longer, and associated with an investment into your future. It’s not always clear-cut, but long-term debts for example mortgages and student loans tend to have much lower APRs than short-term loans. So long-term debt does tend to be cheaper. The decompounding of debt can mean that the value of that debt reduces overtime as inflation rises. It's fundamental that you compare the interest rate on the loan to the realistic potential return on savings. Compound investment growth can make your money grow faster each year, but will it really grow at a faster rate than the cost of the interest? Let's take a look at a working example.

Short-term debt is usually the most expensive. Prioritise the costliest debt prior to savings, short-term debt is usually anything payable in less than a year such as credit card debt or unsecured loans. Now scenarios will differ but let's take an individual paying £1,000 into savings, perhaps putting some money away for emergencies. If they achieve 3% interest in a year that will earn them £30 bringing the grand total to £1,030 in savings. If they instead had used that £1,000 to pay off a loan that had 16% annual interest they would have saved themselves £160. It's a no-brainer. Controlling debt is pillar one on the road to financial resilience as outlined in our 5 to Thrive blueprint.

If you find yourself in a position of short-term debt there are a few debt reduction strategies that you can try. Firstly a personal loan could be used to consolidate existing debt - that's using a bigger loan with a lower interest rate to pay off higher interest debt. Make sure you check the rate of interest. Typically this would be used for unsecured credit card debt which is likely to have a much higher APR. Balance transfer credit cards help pay off outstanding debt by moving the balance from one card to another, some cards may offer an introductory 0% interest for a set period of time and that means that you can help to reduce the monthly payments and clear the debt quicker if you're just paying off the sum borrowed and not having to pay any interest. Credit unions are an alternative and they will offer lower rates to those with a poorer credit history. And it goes without saying that with any of these strategies, it's fundamental that you budget properly, assess your incomings and outgoings, and identify what's an affordable monthly repayment and don't over stretch yourself.

Debt has a ripple effect across your financial life, including your credit score. Now your credit score is an assessment of how good you are at managing debts and it's what lenders use to assess the risk of lending to you. The information held on your credit file and your credit application form might be used to decide whether to lend to you, how much to let you borrow, and how much interest to charge you. It's a way of lenders calculating the risk of lending you money and a higher score means a better chance of acceptance and more favorable interest rates, because they see you as less of a risk in terms of repaying that money. For those of you who may not know your score, you can check it for free with one of three agencies – Equifax, Experian, or TransUnion. Every money contract that you enter into includes a critical search, that also can include when you open a bank account with an overdraft facility.

The last six years’ worth of financial decisions will be held on your credit file. That will include financial associations such as a partner’s spending habits, shared utility bills can also sometimes create a financial link. So it's important to check that you're not associated with any previous partners, or perhaps old housemates. If you are then do let the credit reference agencies know and they will break that association. If you need to improve your score there are a couple of things that you can do. Firstly check all of your personal information on the file is correct, including checking for any fraudulent activity. Make sure you're registered on the electoral roll as this can help with identity checks. Do get your name on some bills, so if you're living at home with your parents, perhaps because you've recently graduated, then paying your phone bill monthly via direct debit can be proof that you're a good candidate for credit. Ensure your bills are paid on time because this is fundamentally what lenders are trying to assess, and not doing so will lower your score. And then the final thing to be aware of is your credit utilisation - do try and keep this below 25%. That's how much of your credit limit that you use, as an example if you have a credit card with a limit of £2,000 don’t spend more than 25% so £500 pounds before paying it off.

The three next steps are food for thought. Firstly, do create a budget, details of your incomings and outgoings - writing them down in black and white really does help you identify where you could reduce spending. Perhaps you don't have any debt but with the rising cost-of-living, you're finding that your income isn't spreading as far as it used to. Are there ways that you could perhaps free up some money - it might be selling unwanted goods, clothes or unused mobile phones that are sat in a drawer, that could be used to pay down debt. And if you do have debt, do prioritise the most costly.

Problematic debt will vary on an individual basis and debts will need to be broken into priority rank based on consequences if they're not met. Specialist help is available for problematic debt. If you are concerned there are multiple national debt charity associations with a host of resources online, as well as offering free impartial guidance so do reach out to Citizens advice, or Step Change who offer a wide range of debt solutions to help everyone no matter what they're dealing with, including debt management plans. Do act as quickly as possible and don't ignore a potential problem - do reach out if in doubt.

Thank you very much for taking the time out of your day to listen to this video. Everything discussed was information and is not to be construed as financial advice. Please do take a couple of minutes to read through the important investment notes on screen.

Thank you again for listening, if you do have any questions please do reach out via the email address on screen. As mentioned earlier on in the session, next month's session will be on how to be a smart spender. If you haven't yet booked your place, do scan the QR code with your mobile phone and register for the webinar taking place in July. Thank you for listening and enjoy the rest of your day.

So once again thank you for everyone that has joined in today, I can still see a couple more people joining in, but we'll go ahead and get started into today's session.

In terms of today's session, my name is John and I'm a financial well-being specialist at HL and this is the second of this 12-part series of well-being webinars.

The first session looked into the topic of controlling debt which is the first part of HL’s five to thrive framework which looks into building financial resilience. The other stages of this framework covers protection, potentially for you and your family, building an emergency fund also known as a rainy day fund to help with those unexpected costs, also planning for later life thinking about for example retirement, and then the final five to thrive framework is investing to make more of your money.

Today we'll be building on what's already been covered and the topic of focus for today is how to be a smart spender. The framework itself of the five to thrive is what we'll be building upon throughout the 12-month series.

Today the session itself is purely on information only basis and therefore it's not to be considered as financial advice. The session itself will last approximately 30 minutes, therefore providing time at the end to help and answer any questions that you may have so please just use the Q and A function on your screen to ask any questions. The session will be recorded and also circulated once taken place, so do feel free to listen back along with the option to listen back to our first session and then also future sessions as well - any should be available on the website that you have access to.

So, with today, what we'll be looking at in today's session is covering first of all understanding our pay packet and a few key areas surrounding what our pay slips may mean and also the tax brackets that we may be subject to. Secondly, we'll be looking into a few areas on money management, some tips that we can go ahead and think about potentially bringing in on a day-to-day basis and then also some cost saving tips that we can also think about as well. The final aspect and the final concept we'll be looking into is money mindset and what this then may mean for us.

So, first of all, understanding our pay and what this actually means on a monthly basis can help to then build those foundations in terms of what we then may have for spending and then potentially for saving as well. What we're going to look at first of all is the various tax rates and thresholds that are currently in place and there have been some key changes over the past 12 months. Not only to tax brackets but also to thresholds, and the November 2022 budget introducing important changes which to most may not seem like a big deal but the subtlety of freezing allowances and thresholds will actually lead to millions of people being pulled into the income tax and higher rates of income tax brackets. Over the coming years this will help to raise billions of pounds of additional tax revenues, however the pain for taxpayers will intensify so long as inflation remains high and wages climb to keep pace with prices. This means that more people will potentially be paying tax even though their standard of living may have actually gone down.

We can start to see using this graph the various taxation bands which apply to income for this tax year and what we can see first of all is on the left hand side the first £12,570, known as the personal allowance, doesn't actually attract any income tax and then the earnings over this, known as the basic rate of income tax thresholds, from 12,570 up to 50,270 is at that basic rate of income tax with National Insurance of 12%. Once income has exceeded the basic rate income tax threshold - essentially over £50,270 - then you start to begin paying a higher rate of income tax - currently at 40% and up to £100,000 this essentially applies.

What we can then see is actually a 60% income tax threshold, and we'll touch upon this in a moment, and then from there £125,140 and upwards then this begins to be the additional rate of income tax threshold. This 60% threshold may be puzzling to see with this eye watering amount of 60% income tax, however it requires a bit of explanation due to the quirk. Essentially, if income breaches the £100,00 threshold the tax-free personal allowance, what we touched upon at the start, starts to taper down at a loss of £1 for every £2 that the income may be over £100,000. And, as a result, this would then be subject to the higher rate of income tax at 40%.

Now, we'll just have an example to try and help explain how this works. So, let's say we've got an individual earning £100,000, they have a bonus payment of £1,000 this means this amount is taxed at 40% initially so that £1,000 taxed at 40% means a £400 tax bill with regards to that. But what will also happen is that the individual would also lose £500 of their tax-free personal allowance. Now, this £500 would then be taxed at their higher rate, I.E 40%, so therefore an additional £200 income tax due to the 40% income tax on the £500, on top of the £400 being the 40% of the £1,000 on that bonus. So, what this then means in practice is that £600 tax is essentially having to be paid on that extra income of £1,000. Therefore, the effective rate being 60%. And as we know the personal allowance is £12,570 based on these rules, the tax-free income entitlement therefore becomes obsolete when earnings are above £125,140 and it's at this point the additional rate of income tax threshold applies.

And what we can start to understand is that as a consequence of people's earnings increasing to keep up with inflation, but with thresholds remaining static this will result in a higher tax bill for many individuals. And what we can start to see is how these tax freezes and squeezes may result for many individuals. That frozen cash value of income tax means that more people are being dragged into higher rates of income tax and currently 1 in 10 people are paying a higher rate of income tax. However, this is estimated to be in 2027/ 2028 in fact, doubling to 2 in 10 people as they're being dragged in with wage inflation with the threshold staying the same.

There has been also that reduction to the starting point of the additional rate of income tax threshold decreasing from previously last tax year £150,000 down to that 125,140 as we saw in the previous table. Also, that freezing of the personal allowance, that tax-free amount, the freezing of that threshold means that many are paying tax on a bigger proportion of our income and that personal allowance has not moved with inflation for the past two years. So, what that starts to mean is that, unfortunately, the reality is that our income is diminishing because people can be impacted by these higher taxes. And this is actually at a time where standard of living is potentially dropping.

There's also capital gains tax and dividend allowances that have been slashed this year and will be halved again next tax year. With that in mind, the tax year of 2023/2024 is essentially one of the most important in a generation with these decreasing tax allowances and the freezing of thresholds meaning ISAs, individual savings accounts, and potentially pensions can be more valuable as tax-free rappers; helping potentially your money to work as hard as you do.

Now what we've looked at is the changes to these allowances and had a bit of an understanding of the tax thresholds but what we can also see is what this may look like on a monthly basis from our pay packet. So, having an understanding of the pay slip is potentially key.

This is a simplified payslip, many payslips looking fairly similar to the above but we can start to pull out a few key figures. Initially, gross pay this is the amount you can see on the top left-hand side- this is the amount of money an employee earns for the time that they have worked, and it could include salary over time or bonus. Employee taxes, the current employee taxes are essentially total amount of taxes for that period. And then deductions, what are the deductions, and the value is essentially a total of other deductions that an individual may have. Now this could be, for example, a share save scheme, and these will be detailed in a separate section on the payslip. The net pay, that top right-hand side - this is perhaps the most important figure, as this is what goes into your bank account. It's essentially what's left after your gross pay once taxes and deductions have taken place; essentially that disposable income.

The second section that's highlighted is looking at the earnings section, reference salary or ref salary is looking at salary pre-reductions. These reductions could include, for example, pension salary sacrifice or any taxable benefits in kind, all taxable benefits in kind have essentially been subject to PAYE tax via payroll, and we can see these shown as a negative in order to essentially reduce your gross pay as you receive the benefit instead of having it as a pay paid out to you. Once these figures are taken into account, we can then see them bring out the gross pay - that green highlighted figure - of what we looked at initially as well. We can then see the next section giving a breakdown of employee taxes, potentially income tax and National Insurance.

And then the final area showing the tax code and the basis that it's then calculated from. And it can detail how much tax-free income you may have applicable to yourself and the letter revealing that you may well be entitled to the standard tax-free allowance. If you have different letters or different figures you can always check on the HMRC website what these may then stand for. But also, the payslips do differ from employer to employer so do be mindful that they may well be laid out differently to how you can see it on the screen, but hopefully they'll show the main figures that we've looked at as well. If you do have any queries on your payslips, do consider speaking to your payroll team to try and gain that creative clarity on what they could be representing there.

So, that concludes our first section. We're just going to look into now this topic of managing money. We can think about different ways we can do this to help us become more of a smart spender.

Firstly, budgeting. It is potentially the cornerstone of Financial Health and the phrase ‘a budget is telling your money where to go not wondering where it went’ really resonates. Planning ahead combined with consistency enables us to choose how we spend our money to ensure we can do what we love today and tomorrow. And with budgeting there are negative connotations because people associate budgeting with having to restrict oneself. In fact, creating a plan enables you to spend more on what you love, prioritizing spending on what you enjoy.

The QR code in the central area of the screen helps you to go to a link towards the household planner budgeting tool from HL. And this cool tool can be really useful in putting a plan in place to understand what are your outgoings and incomings on a monthly basis, helping you to achieve your goals once you've worked out potential shortfalls or ways that you can then pick within that budget. So, it can be really useful - if you wanted to use that QR code do just use that via scanning on screen.

If, for example, we may well be in a budget deficit after going through, for example, a budget calculator there could be some easy aspects to try and move us in the right direction and potentially cut back on our spending. Thinking about things like additional purchases that we may be able to go ahead and switch from everyday habits to more infrequent purchases. Such as switching from purchasing a flat white from every day, or perhaps twice a day, to potentially once per week as a treat or alternatively taking in a flask of coffee to work as an alternative. Another area is understanding what are the costs of food and necessities, something where inflation has hit considerably and having that understanding of potentially looking at different supermarkets to purchase for example your everyday goods could also help save money on that ongoing basis. Is there potential for reductions that you could potentially have access to, so having that understanding as well.

Also, with mobile phones, potentially a contract has just finished or is potentially going to finish or you're already on a SIM only contract but there could be the option to change to a cheaper SIM option available helping to, once again, reduce monthly outgoings. And then also thinking about the potential loans that you may have already or credit card facilities or overdrafts, is there potentially a cheaper alternative which could help you save money in the longer term. Some of these aspects can be time consuming, such as shopping around to find the best deals, however, that time could potentially help us save over the longer term and potentially switch that budget deficit around and for example turn it into a budget surplus.

So, what we can start to understand is if we have, for example, a budget surplus, we can start to think about setting goals and think about where this surplus could be best used. Firstly, a goal that could be set could be either setting an objective or two that we may be looking to achieve. But we need to make sure that these goals are realistic and within our grasp. One could be thinking about an emergency fund, so the third section of HL's five to thrive and we'll be touching upon this in the later sessions. But with regards to that it could help us to then build a pot for unexpected costs rather than having to rely on additional loan facilities.

We can then also think about the type of way we may be saving to achieve those goals and what our time frames are and our needs versus wants. Then also thinking about the type of accounts that we may be saving in, so trying to be as smart with regards to that. Potentially as we mentioned at the start now more than ever it could be useful to look into different accounts such as an ISA, an individual savings account and also a pension for the longer term because they're able to go ahead and provide a tax efficient wrapper.

That allows us to have an understanding of potentially budget deficits and surplus, but we can also think about where our spending is coming from and how this is broken up on a monthly basis. And one example is via a smart spending system. Now, this isn't the status quo in terms of figures but it's an example of how to carve up your income to encourage a good balance between current needs, wants, and also your future self.

Firstly, you may well have income going into your main current account which you then have the option to split up. Now, this could for example be going into an essential expenditure, in terms of the percentage of your income, and this could include things like rental mortgage costs, utilities, food perhaps, and then also you could if you wanted to include things like gym memberships if you've felt that that was an essential priority. But of course, this would differ from person to person. Your future self, this could be thinking about trying to pay off any debt that you may have, also contributing for example into your pension, or also thinking about building that pot for a rainy day, and also saving and investing for the future. And then the fun you, thinking about a spending account that you may put a percentage of your income in each month for your wants, I.E for a holiday or potential hobbies that you have or for example eating and drinking out. Then this could be the most popular way for us to spend our disposable income.

With that in mind we can also start to think about some top tips for being a smart spender. And six quick tips to think about, the first one is understanding that you can build saving into your budget. And if this is done at the outset of that money being paid in it can help us to maintain these contributions into a savings account, rather than leaving it for example to the end of the month.

Also, the second area of making it potentially difficult to actually go ahead and spend, for myself it's actually thinking about out of sight out of mind. Therefore, having a separate savings account to my current account creates a time delay if I'm attempting to use my savings for example impulse purchases. And therefore, that actual transactional occurrence of transferring from my savings account into a current account means that I actually have time to think and understand is that purchase actually a need or a want.

The third area is this topic of rounding up, and some of you may be fully aware of this service, many spending accounts and current accounts that you may have, may have this feature with their mobile banking app. And this is where, for example, if you were to spend 70 pence what will happen is the account will round it up to a pound and therefore that 30 pence will go into a savings pot for you. And it's actually quite surprising at how quickly this could build up and actually the notice in terms of the little difference that you may then have on your day-to-day spending as well.

The fourth is looking at automating your spending, so thinking about having a direct debit for example set up on your payday going into a separate account. Or actually even better does your employer offer salary linked saving where it can be deducted prior to that money actually going into your spending account. Something that some employers do offer so do you have that understanding of the benefits within that?

And then also sometimes actually spending in cash, if you were to go out for the day or evening setting a budget and taking that cash with you therefore making sure potentially you don't spend any more. I'm sure many of us have potentially been in that situation where potentially using contactless or tapping away with our debit card, is an easy way to go ahead and spend more than you realize.

And then finally reviewing that budget on a regular basis, of course the budget should be flexible and do review it if your income changes or if there's personal circumstances that may change. But if you're able to review it on a regular basis it allows you to keep on track of what's going on that monthly aspect.

We can then start to understand of potentially being a bit more savvy with that cash that you may have. And firstly, when spending understanding the possibility of the use of cashback sites on expenditure each month, or even rewards that are available due to loyalty. That could then help you to build up another small savings pot via the rewards that's on offer there. Also, thinking about your direct debits, do you have potential subscription services that you may be paying for and aren't needed. And then also understanding, once again, those impulse buys: is it a need versus a want on an ongoing basis with regards to that spending. If you then got cash savings, thinking about that separate account versus a current and savings account. But then also the interest with regards to the cash that may be within those accounts. Trying to earn potentially the best interest that you may be able to achieve and when we're trying to mitigate the impact of inflation, could that money be trying to work actually a bit harder than it is at the moment. And there are different interest rates potentially available, and you could potentially look outside of your current account in order to try and achieve those as well.

Another area to think about is something called salary sacrifice, some of you may have come across the term, but it's a savvy way to take up some alternative benefits while actually being liable for potentially less tax. The main one is actually generally offered via an employer, and this is the opportunity to put money into a workplace pension scheme for example. Allowing you to save for retirement in a tax efficient way. With that in mind, the way that salary sacrifice works is that you give up a portion of your earnings in return for a non-cash benefit, for example from your employer, and a deduction reduces your salary and because your income is lower, the amount of income tax and National Insurance you may be subject to could also be lower. With regards to a pension, an example of this for example is a basic rate income taxpayer, could be having a hundred pounds by a salary sacrifice going into your pension. Now on that you'd have a saving of 20% income tax and 12% National Insurance and therefore the actual cost to you could actually be £68. Rather than looking at a traditional method of contributions into the pension which could actually to have a hundred pounds going into the pension cost £80. Due to the fact that with salary sacrifice you also get the National Insurance saving, it also may mean as well for child voucher schemes, unfortunately they are closed to new members, but if you still have these in place if you're a parent who joined the scheme and still has it in place and you're still with that employer then they can also have that potential tax efficiency for those vouchers.

Other benefits that could be within included in salary sacrifice could be things like cycle to work schemes, potentially car allowances, and gym memberships. But do have an understanding if they are offered via your employer as it does differ on an individual basis and also the company basis as well. There are a few benefits, for example of salary sacrifice as we've looked at, therefore being able to potentially pay less income tax and National Insurance and also have access to these benefits. Potentially making things a bit more affordable on an ongoing basis, do however be aware of the potential cons. And it could reduce your taxable salary which could then have an impact on your borrowing purposes. It also could have an impact on things like insurance, if it's based on that salary or actually is it based on your reference salary, so do check directly with your employer if you've got any questions there.

It’s also worth understanding that, for example, by contributing into your pension, especially a topic since the changes to tax thresholds for example, perhaps even avoid having to pay that higher rate of income tax you could potentially have the income and the contribution levels be chained via salary sacrifice as well. The key thing if you are thinking about contributing into the pension, it is important to know that money in the pension cannot be accessed until from the age of 55 at present increasing to 57 from 2028.

So, hopefully that's given an insight in terms of tips and areas to be set upon with regards to your cash savings and spending that you may have, and we can then start to think about this final topic of your money mindset. And when we're thinking about being a smart spender a key area is how we purchase and the impact that it may have. And this comes from our mindset.

Imagine being first of all in a relationship with money, what would happen if you were to ignore it. And what you've got is you've got that opportunity to invest time into it to nurture it and to make it work for you and get the best out of it. One area is via awareness and having that awareness that our decisions around money can be emotional and therefore it's not always a place of logic. If you're able to have that awareness it can then have that also impact going forwards for yourself of just being aware of where those decisions come from.

It may be that you're subject to impulse spending and therefore by having that dopamine hit from spending, it may mean that you potentially are subject to impulse spending on a more regular basis because that's something that you get from it. But that impulse spending habit could potentially be more short-lived, and therefore one way to try and counteract that is via implementing a time delay, to try and create those better habits. And one is asking yourself if you would still want that product or what you're looking to purchase in 24 hours time for example. So having that self and questioning when you're coming to make that purchase. Once you have that understanding of money mindset and how it may go ahead and impact your behaviour with money, that awareness can help you break down the habits that you've potentially built up over the longer term. And it may take time but it's worth understanding that understanding your habits and building your own money mindset and potentially changing that, could help yourself now and also in the future.

We can then also start to think about savings goals to try and build financial resilience and time frames to potentially look at. And when thinking about time frames, potentially more shorter-term goals, could be anything from zero to five years, which could include things like a rainy-day fund for those unexpected costs and potentially more cash savings that are available there.

More medium-term goals, which is anywhere from five to fifteen years and with HL when we are thinking about potentially looking at our goals and potentially investing, a house view is investing for at least five years. And then the longer term, the longer-term goals that you may have, for example either as on an individual basis or on a family basis, which could be, for example, saving for retirement and planning for later life. Which once again is another key pillar of HL’s 5 to thrive which will be also covered in later sessions.

This quote from a top investor Warren Buffett, is regarding do not save what is left after spending but spend what is left after saving. And hopefully by following a budget and largely sticking to the plan, you'll be able to put aside some money for savings goals. Remembering the best way is to build saving into your budget. Now different savings pots are required for different needs, and therefore do think about time scale and the requirements in terms of values for each as well. But having those goals set out and then have that budgeting aspect in place and also looking at your own money mindset can help you to potentially achieve those.

And just to conclude we've got a few key steps to think about going forwards. First one regarding that money mindset, this is your emotional triggers but holding yourself accountable to your goals and sticking to your budget can potentially help going forwards. By making that smart spending potential plan creating a budget and writing it all down in black and white, which you can then revisit regularly, is also another key area.

Then also thinking about potentially managing any debt, prioritize any high cost debt that you may have first, something that we looked at in last month's session with my colleague Claire. So do refer back to this session if you haven't watched it or if you'd like to have an understanding of how to go ahead and prioritize debts. Typically prioritizing shorter term high-cost debt for example credit cards or overdraft facilities, which typically are the most expensive, can have that impact of trying to go ahead and pay off the costliest debt that you may have. There are consolidation strategies potentially having that all combined into one to pay off, and then thinking about going forwards making sure that there are potentially goals that you've gone ahead and set out and making sure that they're realistic. But building that plan in place can then hopefully allow you to achieve your savings goals, both for the potential shorter term and longer term.

In addition to these key points to take away, just wanted to bring a couple of resources that are available to you if you do feel that potentially there are some problems with regards to that and you wanted just some additional help. For example, if you were in a period of difficulty. And these are a couple of resources, one of which is Step change which is a free charity that can help to provide debt advice and support, so if you do potentially feel like speaking to someone, they'd be able to help potentially think about consolidating debt into potentially one payment; making it a bit easier on an ongoing basis. Also, money helper, which is actually a government-backed service can also help. Not only on potential issues of debt but also other money matters as well.

I hope this session has been useful, this does go ahead and conclude the second part of the 12-month series on building financial resilience.

If I just ask you to take a moment to read through the important notes on your screen. I do hope it has been useful and helped to provide some information to help you go ahead and make better informed decisions.

If there are any questions, we will take a look into these shortly so please use the Q and A function on your screen if you have any there. But I hope it's been of use, and I'll also be popping up a QR code which will allow you to register for next month's session which is regarding navigating the cost-of-living crisis.

So, thank you very much I hope it's been of use if there are any other questions please get in contact with us but I hope it's been of use for everyone today thank you very much and have a great rest of your week.

Hi and thank you for tuning in to the third webinar of this 12 webinar Financial wellbeing course. A gentle reminder that the webinars will take place on the first Thursday of every month and you do need to register for each one individually. To briefly introduce myself I'm Clare and I'm a Financial Wellbeing Analyst at HL, I’ve spent the last seven years speaking to both individuals and employers about the rollercoaster that is personal finances, delivering financial education up and down the country. HL’s mission is to help people save and invest with confidence and over the last couple of years we've really invested into resources that can help people do exactly that. Our five to thrive framework has been designed with the intent to help people understand the road to financial resilience. There are five pillars; control your debt, protect you and your family, save a penny for a rainy day, plan for later life and finally invest to make more of your money. And importantly this framework can be referred to regardless of age, occupation, or income level and this is what the course has been designed around. We're providing this financial education course because we think we have a duty to share our expertise, particularly given the tough economic climate that we're living through. Knowledge really is power and it is key to people managing their money well and we hope the information delivered over the course of the next few months gives you the tools you need to feel confident with your finances, as well as the know-how to build or build back up your financial wall of defence. Following the pandemic with the rising cost of living. In today's session we're looking at how we can best navigate the rising cost-of-living but do bear in mind it's a really fluid situation, the landscape is constantly changing - just today there has been another interest rate rise announced by the Bank of England. The one thing that does appear to be consistent is people's concerns around life getting more expensive. We're all feeling the pinch though the pressure and pain points will differ on an individual basis, because very much like the pandemic the distribution of the cost-of-living crisis across society is unequal. Before I do start just a bit of housekeeping, this video will last for around 30 minutes and I do need to stress that everything discussed is purely information and not financial advice. Given the time constraints it's not fully exhaustive but I do hope that what I talk through will enable you to go away and make decisions from a more informed position.

A quick look at today's agenda. So starting with an economy update we'll begin with the bigger picture so exploring the causes behind the cost-of-living crisis and the stark reality that many nationwide now face. From here we'll hone in on why the Bank of England is increasing interest rates and what this means for savers, spenders and borrowers. Could there be light at the end of the tunnel? Inflation is falling, it's dropped below double figures and that's in large part due to decreasing energy costs so we'll look at what that means for the Ofgem energy price cap and your bills. The rising cost-of-living means our income isn't stretching as far, we'll also spend some time identifying different ways to cut costs. I want to be upfront, I'm afraid there isn't a miracle hack, it is going to be a case of collective power when making various lifestyle tweaks so it will require a little bit of what I call ‘life admin.’

For context I think it's important that we explore how we find ourselves in the dismal depths of a cost-of-living crisis. Ultimately it's the result of multiple factors, high inflation combined with low wage growth which have been exacerbated by short-term factors such as the Ukraine war. Altogether it's resulted in a perfect storm so we'll talk through each factor briefly and just how they've played a role. A major contributor is inflation, in July last year it breached double digits and it's stubbornly remained there until April this year when it dropped to 8.7% and it dropped again in the year to June to 7.9%. This is the biggest drop since the cost of living crisis began but we can't breathe a sigh of relief just yet. Unfortunately falling inflation doesn't necessarily mean falling prices. This drop in inflation was largely informed by decreasing wholesale energy costs and falling petrol prices, many other costs are still rising - it's just that they're rising perhaps at a slower pace than they were before. At 7.9% it's still four times what the Bank of England targets which is 2%. A bit of inflation is generally considered to be a good thing because it encourages purchases, which in turn boosts businesses and economic growth. If prices were constantly falling then we would all put off buying items, delaying that purchase in hope of getting it for a lower price and that would reduce the amount of money in circulation within the economy. In the current climate though record high inflation means that we can buy less, which means less money is being pumped into the economy and it also has consequences for our standard of living. Another major factor that led to the cost-of-living crisis was the increased demand for oil and gas last year which led to increased wholesale prices which had a knock-on impact for transport and household energy bills. As I alluded to in the introduction wholesale gas prices fell sharply at the beginning of this year which will be passed on to the consumer in the coming months so I'll expand on the Ofgem energy price cap and what it means for our utilities over the coming slides. Energy and food prices further escalated due to Russia's invasion of Ukraine in February. Add to that that our wages aren't keeping pace with inflation, our purchasing power is declining because essentials are becoming more and more costly, which translates to less money being pumped into the economy as we all individually adapt to our shrinking income. You'll also remember that back in September last year tax rises were announced, including a 1.25% national insurance increase - that all fed into inflation at that point in time, even though just two months later some of those changes were reversed including that NI uplift. Brexit amplified the inflationary impact, heightening supply chain issues that we experienced during the pandemic, which at the time were simultaneously worsened by recruitment struggles caused by the ending of free movement for EU workers which we saw come together in a labour shortage - particularly with a shortage of HGV drivers. Interest rates are rising for borrowers which means higher cost of debt, particularly those unlucky enough to have refinanced their mortgage recently or be looking to do that in the next 12 months and we'll look at that in more detail shortly.

There's a fair bit of economist terminology being banded around in the headlines and on the news as to where the economy is headed. Hugely talked about at the moment, is gross domestic product commonly referred to as GDP and that measures the size of a country's economy and can therefore be used to measure the different sizes of global economies. The most common way to measure it is by looking at output so that's what's produced by a country and what everyone in the country has spent and that would include household spending, investments such as businesses buying equipment, government spending - and GDP is measured each month so if the figure is higher than the previous month the economy is said to be growing. If the GDP figure drops the economy is getting smaller, so it's regarded as a pretty good indicator of the health of the economy. A recession is generally accepted as when an economy experiences negative GDP for two consecutive quarters - which typically leads to rising levels of unemployment and typical drivers are inflation and economic shock caused by sudden events, for example the coronavirus pandemic which shut down global economies. The UK is not said to currently be in a recession, we did narrowly avoid one at the end of last year. It is worth bearing in mind that recessions are considered an unavoidable part of the business cycle so a contraction can often occur before or after growth cycles, and people will commonly experience a few recessions in their lifetime so they're not a one-off event. The most recent recession was actually during the beginning half of 2020, during the peak of the Covid-19 pandemic. Before that there was one around the credit crunch in 2008/2009, as well as one under Margaret Thatcher's administration. Another word that you may have heard banded around is ‘stagflation’ and that's a combination of the words stagnation and inflation - and that means that the economy is stagnant, it's not growing and the prices of goods and services are inflated. Now when both happen at the same time and persist we have stagflation. As to whether the UK is heading for a recession, or in stagflation the answer depends and differs on which economist you ask, but there are headlines suggesting that if we continue to see increased interest rates that a recession could be looming down the track.

Now we know what's caused the cost-of-living crisis let's move to the impact that it's having on personal finances. Nationwide the cost-of-living is leading to unsustainable levels of spending - our nationwide research shows 26% of us, so that's one in four households are spending more than we're earning so we're at risk of running up debt. It's inevitable that we will all be in debt at some point in our lives, not all debt is bad - it's a necessity for the majority of us when we're looking to buy a property or to attend University but what we're seeing is an increased credit and debt reliance fuelled by the cost-of-living crisis. So people are borrowing to fund the daily essentials. Now the application across society has been incredibly unequal, there is real concern for low-income families who are faring the worst because essentials make up a much bigger proportion of their take-home pay. There's also concern for single-person households and those larger families with dependent children because there's less wiggle room in their take-home pay to absorb these higher costs - though nobody is escaping unscathed. Research by the ONS found that 9 in 10 adults report their cost-of-living has increased. The most common reasons reported for those increased costs were the price of the food shop, energy bills and increased fuel costs. 1 in 5 reported using savings to cover the cost-of-living and 12% - so that's nearly 1 in 8 people - are having to take on debt to cover those essentials. For many the savings they had were drawn on to sustain their lifestyle during the pandemic and for those fortunate to still have savings, those are vanishing because our money is simply not buying us as much.

A recent report published by Interactive Investor reveals that household costs are at their highest level for 30 years. This slide is pretty busy so bear with me as I talk you through it. So here we're comparing the proportion of income being spent on three main costs; housing, food and energy and we're looking at 1993, 2008 and today 2023. So today an average of two-thirds of our income is spent on those essentials, leaving just 34% spare cash to spend on everything including hobbies, socialising, going on holiday, commuting to work, saving for your future. A similar amount of spare cash to the days of 1993, although housing costs are now higher than food costs, which is a reverse of what we saw in the 90s. House prices are at a historic high compared to wages. The eagle-eyed of you will notice that 30 years ago the average house price was just 4.3 multiples of salary, today it's closer to 8 times salary. Rising house prices mean it's harder for first-time buyers to get on the property ladder due to affordability. It's unsurprising we're feeling the pinch, if we rewind to 2008 households had an average of nearly 48% spare cash after paying energy, housing and food costs.

The Bank of England confirmed another interest rate rise today up to 5.25% so a 0.25% uplift. That is the 14th rise in 20 months, and rates are at their highest level for 15 years. Why is the bank raising interest rates and making debt more costly at a time when people's income is being attacked on all fronts? Because rising interest rates is the main tool that the bank has at their disposal to dampen persistently high inflation. The theory is that by raising interest rates it becomes more expensive to borrow money so people are less likely to spend, if people and businesses spend less then demand will decrease and prices will fall, which will result in lower inflation. Now the impact of rising interest rates, the effects felt will differ depending on whether you are a saver or a spender. Average interest rates on credit cards are at a record high - around 30% so do shop around, some credit cards will offer introductory interest free credit for a time period. Do also consider your affordability and the time period in which you'll have to pay that off. For cash savers it's good news, you should receive a boost to your interest rate if that increase is passed on from banks. It's really important that you shop around for the best interest rate for your cash savings, you're unlikely to find the most competitive rates at high street banks along with your current account. When I had a look earlier this week we're seeing easy access rates of around 4.63% and one year fixes at just over 6%. It's always tempting to wait in hope of another hike but with so many rate rises priced into the fixed rate market, it may be worth considering taking advantage of a deal while they're offering the kinds of rates we haven't seen for a decade. Just be mindful that if you opt for a fixed rate you're locking your money away until the end of that term - so only lock away what you can definitely afford to lock away and you won't need access to. At the moment we're not seeing much difference in rates between a one-year fix and a five-year fix, those interest rates are pretty similar so do your research and don't unnecessarily lock your money away for a longer period than you need to.

Generally interest rates on credit cards are variable they go up and down although they're not explicitly linked to the base rate. Credit card deals have progressively been worsening as interest rates have increased and this latest hike to 5.25% could mean another increase and it will likely be passed on from lenders to consumers. The cost of borrowing is going up and it means you could end up paying more if the interest on your card goes up. The ideal way to use a credit card is to clear your balance in full every month and that way you don't pay any interest - you can set up a direct debit. Now that isn't always possible, just be mindful that rising rates means you may pay more for carrying a balance. Clients and friends that I've spoken to, their primary concern has been the impact of rising rates on mortgage rates, unsurprisingly because houses are the most expensive thing that we buy and we typically borrow for. Those on a variable rate mortgage are really vulnerable to increases that's around 2.4 million homeowners, as the base rate has been climbing they've faced almost an immediate hit to their income because those products move in line with the base rate. So unfortunately the announcement today does spell more misery for them. Those on a fixed deal are shielded for now, however when it ends they could be in for a shock because they'll be paying significantly more. The majority of mortgages are fixed but it is worth thinking about when your mortgage is up for renewal. Typically you can renew up to six months prior to your expiry date. The average UK house price is around £288,000. So if you were lucky enough to remortgage last year at an average interest rate of 2.65% for a two-year fixed deal your monthly repayments would have been just over £1,300. If you're refinancing just one year later your monthly repayments have jumped over £400 and remember this is simply interest, you're not paying off any more of the mortgage debt. Even a fractional uplift of 0.25% like we've seen today can have a significant impact due to the big sums of money typically involved.

The big question everyone is asking is whether there are more rises on the horizon. With inflation remaining well above the Bank's 2% target it's likely, and economists are split, some are predicting that the base rate could peak at 5.75% others are predicting 6%. When will they come down is usually the second question and unfortunately there's no real way of knowing this for certain. But until inflation lowers it's unlikely that we will see the base rate decrease, as we heard earlier this is because higher interest rates discourage spending which should lead to lower prices and lower inflation. The consensus is that mortgage rates may gradually decline over the course of 2024, but it will be slower than first expected because high inflation is sticking around. Some predictions are suggesting that rates could be around 4% but that will be towards the end of next year and that is a forecast so it's in no way guaranteed. So what can you do if your remortgage is looming? If you're already on top of expensive short-term borrowing and have an emergency savings safety net, you could consider overpaying your mortgage. You can usually overpay by up to 10% a year within the terms of the deal but check the small print to make sure that you won't face any additional charges. It may be tough to find extra cash right now but if you get a pay rise or perhaps receive any lump sums you could choose to put that into repaying the mortgage. Another possibility is considering extending your loan term, lenders have agreed with the government that borrowers will be able to extend their term for six months without going through the approvals process and without impacting their credit record. It's worth bearing in mind that you will be repaying for longer so although monthly payments will be lower each month you'll pay more overall. If you end up extending the mortgage term permanently, you'll need to think about the potential implications so for instance on your future savings. Switching to interest only for a period is another option that would decrease your monthly payments because you'll only be paying the interest and you won't be paying off any of the loan. The government has arranged to make this easier to do on a temporary basis so you can do this for up to six months without affecting your credit score, however this will either mean you need to extend your term when you switch back or you make higher monthly payments so it is one for careful consideration. Do speak to a mortgage advisor if you have any queries with regards to that. Looking at it from another perspective, are there ways for you to generate more cash to help meet the rising cost of the mortgage? For example do you have a spare room and could you rent it out? In some cases selling up and downsizing could be an option to reduce monthly outgoings. And if you have no other options left you can ask your lender for help - they may be prepared to change your payments or arrange a payment deferral. It is in their best interest to work with you to find a way to help you make the payments, they may be more flexible than you would think, just be mindful that this will affect your credit score and will raise your costs at a later date but it will certainly do less damage than missing payments without notice.

Let's now look at how you can cut costs. I think it's really important to set the scene here, so when it comes to cutting costs there are no miracle hacks - it is going to be a case of trimming the fat. Going back to your budget and looking at all the areas and ways to reduce costs because every little will help. Small tweaks together will have that big impact. Now last month's session was hosted by my colleague John where he explored budgeting which is the cornerstone of financial health, including how you can spend smartly to enable you to prioritise the things that you enjoy with examples of popular budgeting methods so do go back and review that video if you haven't already.

Starting with food costs - so the headline inflation statistic of 7.9% doesn't show the true reality. The cost of many essentials is higher, there's a difference depending on what we choose to have for breakfast if you like low-fat milk on your morning cereal it's up an eye watering 28.5% on last year compared to just a 15.3% percent hike felt by toast eaters. Now the most well-known indicator of inflation is the CPI - that stands for ‘Consumer Price Index’ and it measures the percentage change in the price of everyday household items each month to the 12 months prior and it includes food, clothing, cars. In fact that basket is constantly updated to reflect shopping trends, so in 2021 gold chains were out and hand sanitizer went in. The most recent change is adding frozen berries and removing alcohol pops because apparently we're no longer drinking those. If you go on to the Bank of England's website there's actually an inflation tool that enables you to find out how the price of something has changed, and you can go back hundreds of years. So for instance you can find out what goods and services that cost £10 back when King Henry VIII was on the throne in 1530, what they would cost today and the cost today is around £7,160. Shoppers are changing their behaviors, I've certainly noticed when during my weekly food shop more and more families are going up and down the aisles with their phone calculator out, some even telling the assistant that the checkout to stop at a certain monetary amount because they have a specific budget that they need to stick to.

There are ways to reduce your food bill and it doesn't have to involve eating less. Now maybe not all of these tips are suitable for you, it is a case of picking and choosing where you can make a tweak and what works for you and your family. First up is yellow sticker shopping - time your trips to the supermarket to benefit from discounted items nearing their sell by date. Typically supermarkets will reduce these items at the same time every week. Often many of those products can be frozen so you can actually stock up your freezer and eat those over the coming weeks. Try going meat or fish free once or twice a week, that will shave a few pounds off your total bill. A really key tip is planning your weekly meals and only hitting the shops once a week, write a list and stick to it, avoid dipping into convenience stores because those top-up shops are expensive. And just be mindful that if you live within a city centre and you are having to shop at those express stores, the costs at those stores prior to the cost of living items typically run at a much higher price point because the overheads of those stores because of their location are much higher - so if you can get out of the city centre to a lower cost supermarket perhaps once a week that is going to be -a way to certainly save some money. There's an app called trolley.co.uk launched back in 2021 and it's the largest online supermarket app which compares the cost of items at over 16 stores. The stores include Asda, Tesco, Aldi, Waitrose, Sainsbury's, Morrisons, even Amazon - the idea is to help shoppers save money. Perhaps particularly helpful if you're fortunate to have a selection of supermarkets on your doorstep and you've got the luxury of picking where you go, and also helpful if you're looking to purchase branded items such as toiletries which typically run at a higher cost - you can actually check where those may be on offer. Swap takeaways for fakeaways. Over lockdown a lot of popular restaurants released the recipes to their cult classic dishes - I actually recreated the pollo pesto pasta from a well-known speedy pizza chain and can confirm it tasted near enough exactly the same. Another option is to swap supermarkets, so if you've previously shopped at Waitrose or M&S, then do try swapping to Lidl or Aldi - and make sure that you join loyalty clubs for extra savings. I'm sure many of you have noticed that actually Tesco in particular and Sainsbury's, if you're not one of their loyalty members you can often pay twice the amount of money for one product and so it is worth signing up. If you fancy a night out or you want to avoid cooking then check online for restaurant vouchers. There are also apps like First Table. First Table enables you to book the first table at a restaurant and it means you get 50% off the food bill for up to four people. You eat the exact same menu, you just get it for less because you're eating at an earlier time.

Some other ways to trim the fat - so do consider these additional tips. Millions of Brits are overpaying for their mobile phones - we are continuing to pay our contracts long after we've paid off the handset. I actually changed phone contracts last year and found that my provider bettered a deal because I had found one online which saved me £21 a month on what they had automatically offered. So they did meet that price but I had to do the research myself. When it comes to mobile phone contracts check your usage for data and only get what you need, because we're also guilty of overbuying gigabytes of data. Also consider whether you could save yourself money by swapping from contract to sim only if you're happy with your current handset. For any necessary purchases use cashback sites, you'll earn money on your spending, everything from food shopping, to insurance, or hotels, electronic items - you find the website through the cashback site, make the purchase and it will do the rest. Do review your direct debits, perhaps you could share a TV subscription service with additional family members to share the cost. Swap telecoms or broadband providers, these tend to be competitive markets and many will offer loyalty perks or price matches. Cut out needless travel, try and walk or car share where possible. Have a clear out - so sell any unwanted clothes, or unused gadgets lying around - I sent off an old mobile phone handset at the beginning of the year which was lying in a drawer doing absolutely nothing and I got a small cash sum paid directly into my bank account.

There may be some light at the end of the tunnel, so households should see a significant fall in energy bills from the 1st of July - last month. By now you'll all have heard of the Ofgem energy price cap, its name is slightly misleading, it's not a cap on total cost but instead a cap on the rates providers can charge per kilowatt of energy. So the figures that you can see, if we take August 2021 - that cap of £1,277 a year is for typical household usage so your bills could be less or more dependent on the amount of energy used. The 54% increase to the Ofgem price cap in April 2022 drove UK inflation up by a massive two percentage points - driving and influencing that cost-of-living crisis that we're currently experiencing. Now I mentioned at the outset that we've seen decreasing wholesale energy costs from the start of this year - they've been falling quite sharply and that means that actually in July the cap decreased meaning the average household will now pay around £2,074 a year for their gas and electricity. However it is important to point out that the government support has come to an end so we may not feel that as much as we think when it comes to our purse strings. You'll remember that there was a £400 payment paid to everyone, it was broken down into £66 instalments which were automatically deducted from our utility bills, now that came to an end in April this year - so although the price cap has decreased we may not notice it as much as we expect to because the government support has been withdrawn. There may be further welcome news down the track with experts forecasting that energy bills could drop again in October this year to around £1,860. That's likely to generate mixed feelings among consumers because although it's moving in the right direction, those costs are still far higher than they were pre-pandemic. So with that being said, there are a few tweaks that you can do at home to reduce your bills. Now firstly I'm sure we've all heard this before but do turn any appliances off standby - I was surprised to learn that leaving a fully charged phone plugged in still uses power. Consider getting an energy consumption meter that can help you keep track of your usage identifying the small changes that can have the biggest impact, and you can also set a daily amount and be notified when you're approaching it. A really great tip is turning down the water flow temperature on your boiler - this can save you 6%-8% on your bills. It controls the temperature that the water is heated to, before it comes out of the tap and typically the pre-setting is far higher than it needs to be and we all end up cooling it down with cold water. So why pay extra to heat it up in the first place? There's also everyday things that you can do only boiling the kettle with the water that you need - not overfilling it, and using the microwave for cooking things like vegetables instead of the hob, because it's quicker, it's more energy efficient.

Here's some further tips to keep your finances on track. Ultimately we want to make sure your money works as hard as you do. With our money not stretching as far it's best to get ahead of any potential overspends, which means reviewing your incomings and outgoings. Do get into the habit of reviewing your budget regularly, it does need to flex with income changes or big life events. Do set short-term achievable goals and if you're in a fortunate position where you can still afford to put money away then pay your savings first. That means building saving into your budget. Set up a standing order to move the money on payday, or even better, does your employer offer salary link savings where the money is deducted prior to it hitting your bank account? Then make it difficult to spend those savings, so if you're likely to dip into your savings for impulse purchases then keep the money in an account which is hard to access, or with an alternative provider to your current account if you think you might dip into it without noticing. Think out of sight out of mind - that very much works for me. To avoid impulse purchases which for me may happen if I'm scrolling on my phone during the evening - create a time delay, hold off 24 hours and ask yourself if you still need it and 9 in 10 times you won't. Do shop around, use comparison sites and do your research - could you buy those big items such as electronic items online and save yourself money? Also be clear about your needs versus your wants to help avoid those impulse purchases. Do you understand your own money mindset? John will have touched on this topic last month - that's your emotional relationship with money that influences how you make daily financial decisions, so whether you may treat yourself when you're happy, or perhaps spend when you're bored. Once you've got consciousness of those behaviours, actually it can help ingrain healthier money habits helping you to build your financial resilience. And then when it comes to budgeting don'ts - do not ignore a budget deficit because those little overspends can add up to big debts.

If you'd like further information there is a whole host of sources and impartial guidance available. Where to look is going to depend on your individual circumstances and priorities. If debt is a concern please do reach out to one of the organisations on screen – Step Change or Moneyhelper. Debts will need to be broken into priority rank based on consequences if they're not met, but specialist help is available for problematic debt so if you're concerned do reach out to Step Change or a national debt charity association because they will have a whole host of resources and offer free and impartial guidance. Moneyhelper is a government-backed organisation and there is a huge array of information online, everything from starting out investing, to what you need to know about compound interest, to what you need to know about pensions - so do reach out if you're in doubt.

That brings this session to a close. A final slide from our Compliance Team please do take a couple of minutes to read through the important investment notes - they reiterate that this session was purely information and not to be construed as financial advice.

Thank you for taking the time out of your day to listen to this session. I do hope you found it informative. September’s session will focus on financial insurance and the important role it plays in providing a plan B and protecting your loved ones. If you haven't registered already, you can do so by scanning the QR code on your phone and registering your details. Thank you for listening and take care.

Okay, we’ll make a start there. Hi, everyone and thanks for coming along to this session for the Bristol Financial Resilience Action Group, in which, this time we’ll be focusing on financial protection. By this, we might, typically, refer to insurance policies that protect us in certain circumstances. However, there’s lots of different actions we can take which, ultimately, help boost our resilience in case of shocks or specific events.

My name’s Alex, and I’m part of the Workplace Financial Wellbeing Team at Hargreaves Lansdown or HL, so me and my colleagues spend most of our time speaking to HL’s clients mainly about their workplace pensions as well as other opportunities they might have to save and invest.

So, protection through insurance policies, it can take a bit of a back seat in discussions surrounding personal finances but, before we think about investing our money, we really need to ensure that we have solid foundations to build from, and that’s where insurance policies can really come in.

So, just a bit of housekeeping before we get started. The presentation, it should last about 30/35 minutes in length and that means, hopefully, we should have some time at the end, if anyone has any questions. You might see that there’s a Q and A function available within Zoom, so do feel free to use that if you’ve got any queries, and I’ll do my best to answer those for you at the end.

This session will also be recorded, and it will be circulated, so there will be a chance to listen back to it after, if you’d like to, or if you have any colleagues, for example, who weren’t free to attend today.

Finally, I’ll also just mention that I’m not a financial adviser, and that this session is intended as information as opposed to financial advice. If you are, ultimately, unsure about making financial decisions, whether that’s on things like financial protection or otherwise, then you should ask for financial advice.

In terms of what we’ll cover in the session today, we’ll start off with considering when you might need financial protection and its purposes. We’ll then look at, not all, but some of the key forms of financial insurance that’s available and how they operate and, after this, we’ll just review some of the important considerations alongside insurance which will help us stay resilient. And, towards the end of the session, we’ll focus on the importance of having a will in place as well as protecting ourselves against financial scams.

The main trigger for looking at protecting yourself is often down to the number of people that are dependent on us. Our dependents normally refer to a partner or a spouse or our children, however, there could also be others who might depend on us, including financially.

Equally, you need to look out to support you have available, should you be unable to work. So, people with no or limited numbers of dependents and strong support networks might feel that there’s actually less need for protection. So, whether we have any liabilities or debts, such as mortgages, loans, credit card debts might also influence our need for protection as well as any potential state benefits in the event we’re able to work, for instance, too.

In addition, working for a company where your employer is offering benefits such as insurances, means that there is less emphasis on you, as an individual, having to provide these yourself. Even if you do receive financial insurance through work. In lots of cases, this isn’t necessarily sufficient to meet all of your protection needs, so you may need to account for any potential shortfall there too.

So, predicting the future is pretty impossible, but it helps to be financially prepared when the unexpected happens. The sad reality is that 50% of people born after 1960 will be diagnosed with cancer at some point in their lives. If this happens at an age where you’re still working, maybe still paying off a mortgage, or still funding your children’s education, for example and you need a substantial period of time off work, ‘How are you going to continue to meet those costs?’ So, these are the sort of questions we should all consider.

Cancer represents 60% of all critical illness claims, a type of financial insurance we’ll go into more detail on a bit later on. It isn’t just illnesses, but also injuries. So insurance helps you prepare for those future unknowns.

So, next section, we’ll look at the different types of protection available, and a bit more about how they work.

So, financial protection comes in four main forms of insurance; critical illness, private medical insurance, life assurance and income protection and I’ll summarise each one, briefly.

Life insurance or assurance is a monthly premium in exchange for a lump sum payout on death. It can support loved ones, it can pay off debt, or inheritance tax bills. The most commonly cited reason people buy life assurance is to cover the mortgage or their dependents should they pass away, to retain the family home.

Income protection does exactly what it says on the tin, it pays out if you’re unable to work due to injury or illness. Critical illness cover is a long-term insurance policy which covers serious illnesses listed under that particular policy. It differs from income protection, as it pays out a one-off, tax-free lump sum. This could help pay off your mortgage, or perhaps make alterations to your home, if necessary.

Private medical insurance; this can supplement what’s available on the NHS. It allows more choice and flexibility over your care. So, depending on the cover level, you may be able to skip NHS waiting times, or get access to treatments unavailable and through the NHS as well.

So, the common misconception is that, if you have one, then you don’t need the others, when, actually, they all provide a different purpose.

Before we go about purchasing these financial protection policies, we should be having a look at what we have in place already, first. This could include any benefits offered by our employers. So your employers may offer some of these as an additional benefit in the form of financial insurance that help you build your financial security net.

Employers, typically, offer more than just a salary, and they do this to benefit the wellbeing of their staff and, in doing so, it makes them a more attractive employer.

So, if comparing employers in the future, from a financial point of view at least, do look at more than just the salary, but your total compensation for the package, including any of these financial protection policies in place.

There may also be that state support as well available, for instance, when it comes to the death of a spouse or the cost of caring for children. Although we shouldn’t necessarily be reliant on state benefits alone. One reason being that they can change over time, it’s useful to know what support you might be entitled to in various circumstances and where this might leave any gaps in your particular situation too.

‘What will any payments from these financial protection policies be used towards?’ So, this is a key question, as, without understanding this, we don’t really know what the point of covering ourselves is. So, commonly, any protections might help to cover income we’d otherwise have from employment or maybe self-employment whilst we’re sick or for our dependents if we pass away.

In the UK, lots of us have mortgages and, if not now, we may do in the future. Servicing the cost of mortgages and, therefore, securing our homes tend to be our largest ongoing cost. Taking out a mortgage loan can often act as a trigger for viewing protection policies. If you’ve ever taken out a mortgage for a broker, it’s likely that they’ve tried to offer you some kind of financial protection, such as critical illness or life assurance.

So, after these more essential needs, payments from these policies could be used to cover education costs for children, perhaps including university fees as well. We may also want to gift money to our loved ones or maybe charities that we support as well. So, payments could also be used to cover any funeral costs or to clear debt as well. So, lots of different reasons why we might use these financial protection policies.

So, going into each of these policies in a little bit more detail and, firstly, we’ll start off with taking a look at income protection. For income protection, we’ll pay out a regular income in the event we experience injury or illness which prevents us from being able to work.

The policy will usually pay until either we get better and return to work, reach retirement age or at the end of the policy term, if sooner. There’s also, usually, a deferral period as well – so this is the time between you making a claim and the policy coming into payment. Normally, the longer the deferral period, the lower the premiums on income protection policies.

So, where you do have a longer deferral period, it’s important to make sure that you have a bit of a cash buffer to help make up the difference or, if it’s a policy through work, make sure you understand what your company’s sick pay policy is as well.

So, the amount paid out is also linked to your earnings. There’s normally a cap of 75%, and it’s very unlikely that income protection policies will pay out more than this. Typically, however, income protection policies tend to pay out somewhere between 50 to 60% of your earnings and that reduction is there, ultimately, to act as an incentive for us to return to work, if we are able to.

So, you can also customise income protection policies as well to meet your needs. For instance, you could amend the deferral period, select the length of the policy’s term and also have things like indexation on the sum assured to ensure it keeps pace with inflation too.

Where you receive income protection payments through a personal policy, these are free of income tax. If you have one organised through your employer, then they will be considered a taxable income, if it’s done through work.

So, life insurance is probably a form of financial protection that many of us will be familiar with, however, roughly, only one in three of us actually have a life insurance policy. This is despite approximately six in 10 of us agreeing it would be a worthwhile thing to have, according to research done by Direct Line.

The Coronavirus pandemic, however, it did prompt many of us to consider life insurance who maybe previously hadn’t. There is also a considerable gap between the number of men and women who considered life insurance. So, far fewer women have considered taking out a life insurance policy.

There’s two real kind of types of life insurance. The first is what’s known as ‘Term Assurance.’ So, the policy covers you for a fixed amount of time, for example, 20 years. If you survive for the full period, the policy won’t pay out upon death. There may also be a surrender value for some term policies as well, if you do cancel the policy half-way through, for example.

The other type is known as a ‘Whole of Life’ policy, which will pay out upon death, providing all of the premiums have been paid up to date.

So, it is possible to have a life insurance policy written into trust. So a trust is, essentially, a legal arrangement, where a person holds property on behalf of another person or beneficiaries. So, this can be really useful in relation to a life assurance policy, as a lump sum paid out isn’t subject to inheritance tax. It can also be paid out much quicker, without the need to wait for Probate, which could be quite a lengthy process in some cases.

This might be particularly important if the lump sum is being used for an immediate need – such as a mortgage repayment, for example.

It’s important to note that, once in a trust, the money is no longer under your direct control.

If you have existing life cover, it’s worth checking whether you believe this is sufficient for your needs, and also whether you’ve provided details of who you’d like to receive the lump sum upon your death. If you’re married, for instance, your spouse won’t automatically receive the benefit unless you’ve nominated them.

If you’ve not done so already, you should complete an ‘Expression of wish’ or a nomination form to avoid any unnecessary delay in your life insurance claim being processed. You can normally change this directly with your life insurance provider at any time as well and, if you do have any policy set up through work, there might be a form that you’re able to get from your HR or your benefits team too.

What we’ll look at next is critical illness cover. This tends to be less commonly offered by employers as standard. One reason that it should be a real consideration, though, is that we’re much more likely to experience a critical illness whilst we’re working than we are to pass away.

It does differ slightly to income protection. So, rather than a regular income, critical illness offers a one-off, tax-free lump sum upon the diagnosis of a specified serious illness, which is listed under the policy details. These types of policies, they can be quite individualistic, so it’s important to check any policy exclusions. Policies will also state how serious an illness needs to be in order to qualify for the lump sum payment and not disclosing underlying health conditions may also lead to an unsuccessful claim as well.

Premiums for critical illnesses don’t always remain fixed. These are often classed as ‘Reviewable,’ meaning the cost of the cover could increase on the policy’s renewal after a period of five years, tends to be a typical amount of time, in which case, the policy will renew, and the premiums will then be reviewed.

So, the lump sum benefit can be used to cover ongoing costs, such as a mortgage but, commonly, it may also be used to help fund any alterations we might need to make to our homes, as a result of an ongoing illness or disability.

The final protection we’ll explore in detail in this section is private medical insurance. This is potentially something we can look to supplement treatments available through the NHS. With private medical insurance, you’ll often find you receive more choice and flexibility and avoid, potentially, longer waiting times.

You may also get access to some treatments which, otherwise, wouldn’t be available, so some specialists can be exclusive to private patients, for instance.

Not all conditions are covered, so it’s important to check the policy notes. You can normally take out quite basic medical insurance, ranging to far more comprehensive levels of cover.

Like with home or travel insurance, for example, there’s likely to be an excess which would need to be paid before the cover kicks in. If private medical insurance is taken out for an employer, this will also be considered a taxable benefit too. So just worth being aware.

Now that we’ve looked over the four or the main types of financial protection, we’ll next review some of the other factors to think about that could help us either secure us, financially, or support our wellbeing a bit more generally.

One of the main reasons we might become under pressure, financially, in the first place, is that we lose control of our monthly outgoings and, where this happens excessively, we could begin to get into deeper and deeper debt. So, creating a budget and being more efficient with our spending, can be really beneficial in the long-term and helps us to clamp down on our unnecessary spending.

So, shopping around for regular spending like our weekly food shop, utility or phone bills, means we can often receive the same goods and services but at a reduced cost.

It might also seem obvious, but many people also forget to cancel things like subscription services they’re no longer using too. If you haven’t reviewed your budget in a while, it’s worth putting some time aside just to review what you’re spending and whether anything can potentially be cut there.

If you have a partner, you might also want to consider, ‘Do they have financial protection through their employer on top of any personal protection policies as well?’

You might consider factors such as you and your partner’s job security and both of your relative health as well and that will help you establish whether either of you are likely to have periods of unemployment or, potentially, time off work.

Do you have any dependents that rely on you, not just financially, but, for example, if you have children, how might they be affected if you were to pass away? Would there be an increased cost in providing care for them, for example?

I’ll speak about this a bit more on the next slide but having an emergency fund should be a priority for shorter-term, unexpected financial shocks. So, a little nest egg that we can put aside, if there is that unexpected cost that pops up.

As I mentioned, in some of the previous sections, where you have financial protection policies, either through work or independently, do check what is and what isn’t included in that cover and that will help you identify if you, potentially, have any additional protection needs that you, then, do need to cover.

In some cases, there may be those state benefits you could become eligible for, in cases of things like bereavement, disability or caring for children. Though there’s a common misconception that the state will look after us in the case that things go wrong and that’s why it’s vital we ensure we have our own provisions in place to fill any potential gaps that state benefits, potentially, won’t do.

Finally, not every benefit available through your employer will be financial protection-related. For example, you may get access to various benefits, such as a health screening or employee assistance programmes which offer support on a range of matters including mental health and wellbeing.

There could also be access to discounts within the local community or support with glasses, if they’re needed for work. Do speak to your employer, and make sure you’re aware of what is available through them.

The recent global pandemic has really highlighted the importance of what we, in the industry, term as ‘An emergency fund.’ An emergency fund is, essentially, rainy-day money for unforeseen circumstances. So, it’s money you put aside for unexpected costs, for example, if you need to repair your car to ensure you can continue getting to work or it can buy you more time by providing a buffer should you lose your job, or potentially become ill and, even if you have something like income protection, there could be that deferral period as well.

If you don’t have an emergency fund, make building one your priority. It’s generally suggested that individuals should save between three to six months’ worth of expenditure, and that’s the bare necessities they need rather than the once in terms of that emergency fund. In most instances, this would be held as cash in an easy access savings account so it can be accessed quickly and without penalty, if it’s needed.

If you manage your finances jointly with a partner, make sure any emergency savings aren’t just held in one person’s name. So, either of you can access the emergency cash at short notice, if required.

So, to find best interest rates for your rainy-day money, you’ll need to look further than your high street bank, necessarily, so do shop around to get the best return on your hard-earned money. The best rates available at the moment on easy-access accounts tend to be around the 5 to 6% mark.

Both your emergency fund and your spending plan should be reviewed at regular intervals to ensure that they still meet your essential requirements. This has been particularly important over the last couple of years with prices of essentials rising, people need to ensure that money they’re saving is still being able to buy them three to six months’ worth of those essentials. If prices have climbed, the chances are your acquired emergency fund might also need to be increased to help reflect the changes in prices too.

So, although financial protection is important, we mustn’t ignore some of the other assets that we have available and maybe, most notably, are pension pots.

If we pass away with pensions held in our name, these can be passed, often, onto beneficiaries, just like with life insurance. We’re able to nominate beneficiaries for our pensions, and these could range from family, could be friends or even charities and you can choose more than just one beneficiary as well.

So, payments from pensions are usually free of inheritance tax, as they tend to be held in trust, outside of your estate. However, if you die before the age of 75, the benefits will also normally be paid free of income tax as well.

If you die aged 75 or after, your beneficiaries will have to pay income tax on any lump sums – or any income that they receive from your pension and that’s at their rate of income tax.

So, an ‘Expression of wish’. It’s not a legally binding document, however, it means your pension providers are aware of your wishes. Through your pension provider’s online portal or, alternatively, by requesting a paper form, you can make that nomination. So, do get in touch with them, if it’s not immediately clear or if you’re unsure if you’ve already nominated any beneficiaries for your pension.

It’s not normally possible to access your own pension until you reach at least the age of 55 and this is actually due to rise to age 57 from the year 2028 onwards. However, in instances of ill health where you’ll be unlikely to work in the same capacity in the future, you may be able to access your pension earlier. It’s worth thinking about the tax implications and how long you might need the pension to last in this case, though and, for anyone who’s diagnosed with a terminal illness and has been diagnosed with less than one year to live and who’s under the age of 75, it can also be possible to take the full pension out as a tax-free lump sum as well. In some cases, it may be possible to access a pension before the minimum access age, but this is usually for instances of ill health.

Outside of either protection policies or our pensions, it’s also important to think about who you’re due to leave your existing assets to upon death. So, this could include your home, if applicable, which, for many people, will be their largest asset but also any personal possessions as well.

So, half of UK adults do not have a will, according to research by Canada Life and about one in three people over 55 don’t have a will in place either. So, those who don’t have a will set up may compromise how their assets and possessions are treated upon their death and this may not fall in line, necessarily, with their wishes.

So, ‘What happens if you pass away without a valid will?’ Essentially, the rules of intestacy would come into play.

If you pass away, what we call ‘Interstate’, only married or civil partners and some other close-blood relatives can inherit from the estate. The rules of intestacy do vary by whereabouts in the UK you reside, but, broadly, however, where your estate is valued over a certain value and you have both a qualifying partner and children, then the partner would normally inherit all of the personal property and belongings of the deceased, as well as the value of the estate up to a certain threshold too. The remaining estate would then normally be split between the partner and the children.

It’s also possible for grandchildren, parents, siblings, nieces and nephews to benefit under intestacy and that’s where there isn’t a qualifying partner or any children.

Importantly, though, any unmarried partners, relations by marriage, close friends, carers or charities cannot inherit automatically through those intestacy rules. In this sense, the rules of intestacy – they’re quite outdated for a lot of modern families and households.

It may be possible for those who don’t automatically qualify to apply to Court for provision from the estate, but this can often be quite a long and drawn-out process, so ‘Making sure your affairs are in order’ is really gonna be the priority there.

It is worth noting that, when you marry, typically, any existing will would become void at that point and, unless a further will is made, the rules of intestacy would, again, come into play from that point.

It is possible to make wills in contemplation of marriage, that means the existing will remains valid, although specific details of the person you’re marrying would need to be provided in that case. This may be a good option, for instance, if you’re engaged, and you don’t want an existing will to become void once you’ve tied the knot.

For some employers, they may, on occasion, provide access to discounted will writing services but, in any case, it could be worth checking whether a will could be a benefit in your particular situation.

For the final section of the presentation, we’ll just briefly touch upon how you can protect yourself and your savings, particularly from scammers, which is a growing concern, of course, in the digital age.

More than £1.2bn was lost to fraudsters in 2022 and that’s equivalent to £2,300 every minute.

So, anyone can be a victim of a scam but nice people are 10% more likely to be a victim of fraud and this became apparent in a study performed recently by HSBC.

‘What do we mean by ‘Nice?’’ Well, this could mean you’re friendly, kind, cooperative and willing to please, which are all amazing qualities, but qualities that fraudsters also love, especially on the phone.

Scammers may sound like authority figures and, often, it’ll sound so urgent and the findings show that nice people, in these cases, are maybe more likely to oblige.

Looking at some of the common scams, then. A popular scam going around at the moment is someone calling from an unknown number – which is an automated voice, saying that they’re from HMRC, that ‘Legal action will be taken against you’ with the option, then, to press a number on the dial pad to speak with an officer or, in this case, a fraudster.

Another common scam is to receive a text message or email from someone claiming they are from your bank stating that there has been suspicious activity, asking you to click on a link to view it. Clicking on the link sometimes means that they can get your details that way, so worth being very vigilant about clicking on any particular links.

A more recent scam that’s been prevalent is scammers using WhatsApp to send messages to people, claiming to be their child, maybe in a distressing situation and in the need of immediate cash. Although that won’t work on everyone, as not everyone has children, of course, the scam is designed to seem plausible to those who fit the profile and maybe have children who may be travelling or in certain situations like that.

Often, parcel delivery scams include someone pretending to be from your courier saying that they were sorry to have missed you, and to click on a link to organise a re-delivery slot. Unfortunately, the timing of these texts can coincide when we are actually expecting a parcel to be delivered and so we can be more likely to believe it in those cases.

With the cost of living crisis, energy prices being so high, scammers have identified that is a very sensitive area for many people and, therefore, are offering to sell people energy with a cap, maybe much lower than the price that they’re currently paying for their energy. So stay vigilant and make sure that, when we’re looking at anything energy price-related that we’re looking at it at a reputable source.

To help protect yourself from fraudsters, there are lots of things we can do. Firstly, we should be ignoring contact out of the blue. We should be alert, sceptical, and questioning, even if the person on the other end of the phone sounds like an important figure, or the matter sounds really pressing.

So, don’t click on links you don’t recognise as well. Often, if you hover over links on a website, you can see a preview of where you’re being taken – and, if it seems strange or suspicious, it’s best not to touch it. If it’s asking, for instance, to log into an account, make sure that you access the log-in area through a trusted method.

Do use the Financial Conduct Authority’s list to become familiar with common scams. You can also check which firms are regulated by the FCA through the register on the website as well as viewing a warning list as well, so firms to look out for, or potential scammers.

There are some other resources available to help you become more vigilant when it comes to scams. So the FCA ‘ScamSmart’ website can help you spot a scam, highlights and also what else to look out for. You can select the type of contact that you’ve had, and it will tell you what to consider, and could indicate if a perceived opportunity is a scam. It also has an interesting quiz to see if you could spot a pension scam as well.

‘Action Fraud’ is the UK’s national reporting centre for fraud and cybercrime, their website and telephone number are here too and Citizen’s Advice offer a range of assistance from reporting scams, checking for scams and emotional support, if you’ve been affected by scams too. ‘Age UK’ also has lots more information on what to look out for as well as further support.

To help protect yourselves and others, when it comes to websites, emails, phone numbers, calls, or maybe text messages, the Government also has a reporting service. If you, for instance, receive emails which ask you to click on suspicious looking links or complete unsolicited actions, you can forward them to that email address report@phishing.gov.uk.

Finally, we at HL, we have our own security page which looks at various scam threats, how you can protect yourself including online and, if you do invest your money with us either now or in the future, the measures that we take as well as a company to help keep your money safe.

I did talk a bit about the emergency fund or rainy-day fund earlier. However, if you are interested in finding out more about rainy-day savings, this is actually what the next month’s webinar is going to focus on. So, you can book your place now by scanning the QR code on-screen here. If you haven’t tried this before, perhaps and you have a Smartphone, it can normally be done by opening your camera, just focusing on the image there, it will then take you to a Zoom page where you can sign up for next month’s webinar.

Don’t worry if you don’t have your phone to hand, your employer should be circulating the details closer to the time too.

Thank you very much for listening to this webinar. In just a second, I’ll be happy to take any questions anyone might have but, if you are heading off at this stage, though, if you could, please, just have a quick read through the important notes on-screen before you do head off.

Thank you very much.

Hi, and thank you for tuning into the fifth webinar of this 12 Webinar Financial Wellbeing Course.

A gentle reminder that the webinars will always take place live on the first Thursday of every month. You do need to register for each one individually, so there will be a QR code at the end of this for you to register for next month’s session.

I’ve posted a few of these now – but, for those of you who may just be joining us, I’m Clare – I’m a Financial Wellbeing Analyst at HL. I’ve spent the last 7 years or so speaking to both individuals and employers about the rollercoaster that is ‘Personal Finances’ – delivering financial education up and down the country.

In today’s session, we’re focusing on emergency funds – everything you need to know about them.

The pandemic – now, cost of living crisis has really shone a spotlight on the need to be able to withstand income shocks both in the short and long term.

Emergency funds are essential for short-term resilience and, hopefully, by the end of this session, it will be really clear why that is.

Before I do get started, just a bit of housekeeping. So, this video today will last for around 20 to 25 minutes. It is important to remember that anything discussed is purely information, and not to be taken as financial advice.

Given the time constraints, it won’t be fully exhaustive, but I do hope that what I talk through will enable you to go away and make decisions from a more informed position.

A quick run-through of today’s agenda. So, ‘Why is it important to have an emergency safety net?’ We’ll look at how much people tend to hold in comparison to how much people typically need – and then we’ll look at the sensible homes for it, and how you might be able to shrink that essential savings target, if needed.

Given that we’re about halfway through the course, I did think it would be useful to take another look back at the ‘5 to thrive’ framework. These are the 5 pillars that the course and all of the modules are based on – and its 5 pillars to achieving financial resilience.

We’ve already covered pillars 1 – ‘Control your debt’ – and pillar 2 – ‘Protect you and your family.’ So, we’re now looking at starting to build the savings element – and so today’s focus will be on ‘Saving a penny for a rainy day’ – pillar 3 – and, coming up in the next few months, we will be looking in depth at ‘Pension and Retirement Planning,’ before finally looking at ‘Investing.’

Investing plays a really pivotal role in growing our wealth, and we want to make investing more accessible – but, prior to investing, there are some building blocks that people need to secure for their financial resilience – and, actually, these 5 building blocks, we can split into 2 categories.

So, firstly, we’ve got ‘Protect you and your family,’ and ‘Save a penny for a rainy day.’ Those 2 are all about reducing risk. Now, that’s both everyday risk as well as the disastrous sort of risks that we’d all very much like to avoid – and then, the remaining 3 pillars – ‘Control your debt,’ ‘Plan for later life,’ and ‘Invest to make more of your money’ – are all about building a better financial future.

For the rest of today’s session, we will be focusing on pillar 3.

If you haven’t had chance to watch the live videos on pillars 1 and 2, then you can go back and have a look at the video hub where all of the webinars and the recordings are held.

So, let’s start with looking at some figures related to people who’ve had a surprise cost in the last 12 months. This data comes from a bi-annual survey that we run – specifically, it goes out to non-HL clients, and it’s weighted so that it is representative of the nation.

Some quite scary statistics – we found that 4 in 10 had an unexpected cost last year and, actually, that rises to 1 in 2 people if they’re aged between 18 and 34. One of the typical, unexpected expenses – it’s a pretty big range of things – everything from car trouble to house repairs – unexpected bills – and the most frequent costs came in at between 500 to £1,000 – but, actually, 24% of people have had an unexpected expense costing more than £3,000. So, there is a need for some people to have to find £3,000 or more – and that’s a pretty significant sum of money to have to find out of the blue.

For context, households have been in the trenches now for around 2-and-a-half years – first, the pandemic, now cost of living crisis – and, for some, that has meant drawing on savings – so emergency funds may have been depleted. For the less fortunate, worryingly, around 1 in 8 are now taking on debt to fund essentials. So, the likelihood of having a spare £3,000 is pretty slim – but having an emergency fund provides an alternative source of money when you’re hit with a curveball – and, importantly, will enable people to avoid debt.

Once you get into debt, the problem is obviously that you have to start paying the money back – and the interest payment as well – and that can mean that, as budgets are stretched as they are, finding that money – including the interest – can be pretty difficult – meaning people could spiral further into debt. It makes it much harder to make ends meet – so the idea is to build this cash buffer to protect yourself.

It's worth saying that this shouldn’t be your only savings pot – and, by that, I mean that this pot of emergency savings should be held separate to any other savings for things that you might be saving for in the next 5 years or so. So, for instance, if you’re saving for a new car – or a holiday – or perhaps a new kitchen – that all needs to be held in a separate pot. So, at the point in which you’re spending that money – on the new car or on the new kitchen – you don’t eat into your emergency fund savings. If you did that – and then got hit with an unexpected expense – you will have then eroded the pot.

So, how much do people actually hold?

Before we start, I think it’s useful to know that most people don’t hold enough money – and some households will be rebuilding their emergency savings pot if they’ve drawn on it in the last few years.

Our nationwide research shows that an average of 6 in 10 households have 3 months’ rainy-day money – so it’s at the lower end of the recommendation of 3 to 6 months. Of course, this varies hugely from income level – and a household or family make-up – so I’ve separated that data into 4 household types.

Now, there are more household types – of course – but it may be that you can relate to one of these make-ups. So, an average of 5 in 10 – or 1 in 2 single people living alone – will have sufficient cash for 3 months essential expenses. This drops to 2.5 of 10 households, where there’s a single parent and dependent children.

Unsurprisingly, children are expensive and can, therefore, negatively impact financial resilience. Greater short-term resilience among couples – ‘Why do we think that is?’ – well, the likely hypothesis is because there may be 2 salaries instead of 1 to support that household and build savings. We know that there is a price to being single – there is no-one to share the cost with – there’s just one bill-payer.

8 in 10 couples living alone have 3 months emergency cash stashed away – that drops to around 6.5 in 10 households for couples living with children – again, ‘cause of those higher costs.

A lot of us will be building savings throughout our lives, so don’t worry if you need to start from the beginning, if you’re starting from scratch. The first stepping stone is the consciousness – the need to build short-term savings, and then taking that first step.

So, the next question will likely be, ‘How much should you hold – what should you be working towards?’ and it’s generally suggested that individuals save between 3 to 6 months’ worth of essential expenses.

Now, I want to stress that this is the ‘Needs’ – not the ‘Wants’ – it’s the ‘Necessities’ – so it’s easier to achieve than you first may think. Your emergency fund is your safety net – and do remember that this figure won’t be static. You’ll need to review it from time to time to ensure that the amount you calculated still buys you 3 to 6 months’ worth of the essentials.

For example, if you’ve calculated this sum, pre-pandemic – then, given the rise we’ve seen in prices of food and the cost of energy – the likelihood is that sum that you saved – and calculated in 2019 – isn’t going to buy you as much in 2023.

Try and get into the habit of reviewing it in line with any life events, such as moving house – because, if you move house, the likelihood is that your rent or mortgage payments will differ – or, perhaps, if you add to your family, then there’s another mouth to feed.

We often get asked to put a monetary figure on it. Unfortunately, there’s no magic number when it comes to an emergency fund. I can’t give you an exact sum of how much you need to save – and that’s ‘cause the amount you hold as cash will vary, and it will depend on your own circumstances and the lifestyle that you lead.

The figure will likely differ for everyone who tunes into this video – or listen to the webinar – and that’s because we’ll all have different incomes – different overheads – so you’ll need to work through a bit of a process to understand what you need – but also because we’ll all place priority on different things.

So, one person – for instance – might have a child at private school. Continuing to fund their education, they’ll likely regard as essential expenditure – because taking the child out of school and putting them in another one would be really disruptive. For someone else – they might not have children, but being able to go to the gym on a regular basis might be essential for their general wellbeing. So, you can start to see how different those sums and calculations may be just on that one lifestyle difference.

To start calculating your emergency fund figure, you need to look at your household expenses. So, the first steps in this planning process is to work out the costs that are essential – those costs that you cannot back away from, and the things that you need to cover, no matter what.

For example, this is likely to be your rent – your mortgage – food, of course, is essential – utility bills – but something like the Internet might not be essential for everyone. If you need it to work from home – like me – to host webinars – to have a good bandwidth – then it’s likely to make the essential list – but, for someone who has a job away from a computer – who, perhaps, is not based at a desk and doesn’t require the Internet – then it might be categorised as ‘Non-essential.’

There’s no right or wrong – so where you fall on this bracket of 3 to 6 months depends on a whole variety of things. It’s a rule of thumb because it gives you enough money – that, if you get a few unexpected expenses in a row, you should be able to cover those – but, also, if you were to lose your income, then it should provide enough of a buffer while you get back on your feet – it will buy you a bit of time.

Using our nationwide research, we’ve dug into what some could look like for people in terms of what that emergency fund could be.

Now, some of these figures that people need to save – or look to save as a target – may be really off-putting. They may seem really big – and perhaps unobtainable with rising prices. Remember, these are the goal figures – they’re the end target – and it’s unlikely that anyone will have a perfect emergency fund – most people will be working towards one.

Here, you can see we’ve split it into some family make-up examples – to give you a broad outline of what people like you might need across 3 months and 6 months – and we’ve broken it down into ‘Essential’ and ‘Total spend.’

For example, a single adult with children – their essential spend for 3 months is £4,284 – but total spend – so, including the non-essentials – in an ideal world – it’s about £5,643 for 3 months.

To me, what’s immediately clear from these figures is that, for a single-person household, the essentials make up a higher proportion of their total monthly expenditure than for households where there is a couple. This is likely to be because of the two income streams in comparison to one.

There is a price – or some would say ‘Penalty’ – to being single – and that’s because there’s nobody to share the utility bills – Council Tax – food costs – these are all essentials.

If you do have a partner, it’s worth thinking about how much you need to save together – where it makes sense for you to sit on that 3 to 6 months’ spectrum. Please do remember, these are just examples, but they can give you a bit of a ballpark figure to consider saving towards.

Remember, your emergency fund will be very individual to you – and, if you’re starting out, starting small is better than not starting at all on it – so small, consistent habits can have a really big impact, especially over time.

When you are deciding where you might sit on that 3 to 6 months’ spectrum, there are lots of different things that can feed into that. It’s worth considering the sorts of things that could affect you.

So, first consideration is probably the most obvious one – job security. For instance, ‘Does one of your family members work for themselves – are they self-employed – or does one of them have a job that’s perhaps less secure because they – for instance – might have a temporary role covering someone’s maternity leave?’ If so, then they may feel comfortable having more than 3 months’ expenses in the pot.

Likewise, if you have family members who need looking after – and you’re responsible for them, financially – perhaps children – or perhaps, at the other end of the scale, you’re caring for elderly parents – which may mean you need to take time away from work – then, again, it might be a rationale for having a bit more money in the pot.

Your health is also a factor – so, if you know you have health issues which mean that you might have lumpy income – then it’s worth putting a bit more aside.

Life-stage – this is similar to the family considerations – so, thinking about, ‘Where are you right now, and what is essential for you – and for those who are relying upon you?’

Other support – so this is one of those things where – perhaps people that are younger – they have lots of competing pressures on their incomes. They might be paying off student debts – or experience rent for the first time – whilst also trying to save for a property – and this can make saving much harder because, at the same time, they’re also likely to have a lower income – but it could be that there are other forms of support available – for example, parents who could help, if push came to shove. So, they might not want to save 3 months’ essential expenses – including rent – because it might be that moving home is an option that’s still available to them.

Now, we’re going to explore where you may wish to keep your emergency fund. So, your emergency fund should, ideally, be held as cash, and within easy access – so immediately accessible without penalty. Make sure you’re getting the best interest rate possible on your hard-earned money.

So, when comparing saving accounts, there are a couple of terms that you’ll often see – gross interest and AER. So, AER stands for ‘Annual Equivalent Rate.’

Now, the gross interest is the flat rate of interest that you’ll receive. It’s called ‘Gross’ because it’s prior to any taxes being deducted.

AER – or ‘Annual Equivalent Rate’ – is the official rate for savings accounts, and it’s designed to make comparison easier for consumers. It shows what the interest rate – or expected profit rate – would be if it was paid and then compounded once a year.

The really important thing here – to remember – is to always compare like with like – so, if you’re looking at an account with interest displayed as ‘AER,’ compare it with one that’s also using an AER figure – and compare gross with gross.

Ideally, your emergency savings would be held as cash in an easy-access account, so you can access it immediately and without penalty, if it’s needed.

It’s recommended that you hold it under your own name. This is so that you can access it – or, if you’re building one with a partner, it’s worth talking around whether you use a joint account with both names, or whether you split that between individual accounts – so you’ve got some held in one name, and some held in the other partner’s name – and the rationale for doing this is so that you can both access it in times of emergency, if needed.

Overwhelmingly, people tend to keep this money in the high street – with the same bank account that they have their current account with – but this is unlikely to provide the best interest rate for your money.

High-street current accounts may, typically, offer somewhere between 0 to 2% interest, whereas some easy-access savings accounts are offering a little over 5%. Do shop around for the best interest rate. If you get a higher interest rate, it’ll help your money grow – and chances are your emergency fund requirements will grow year-on-year – so getting a higher interest will help do some of the hard work for you in growing that pot.

Newer online banks may feel a little less familiar, but they are still subject to the same rules as the high-street banks that we’re familiar with – they still have to have the same protections in place. You’ll still get the protection from the Financial Services Compensation Scheme – so, provided you don’t have more than £85,000 with any institution, you’d be protected if something were to go wrong.

At HL, we do more than just investments – we do have a cash saving service – Active Savings – so you get access to a range of banks and lenders through one account. So, you upload your money into an interim account – and then, at a click of a button, you can mix and match those products to ensure that you are getting the best rate for your money. There’s no paperwork – it’s simple – it’s hassle-free. I looked last week, and the best easy-access rate was a little over 5%.

This chart just further demonstrates the impact of different interest rates on cash savings.

So, here, we’re talking about the essential expenditure targets we looked at a little earlier on – we’ve taken one adult and then we’ve taken the couple with children.

So, the original sum of money is in ‘Dark blue,’ and then we’re comparing it to 1% interest – that’s in ‘Green’ – and 5% interest is in ‘Blue.’

For the couple with 2 children – who’ve saved 3 months essential expenses, totalling around £6,800 – 1% interest over a 5-year period would enable them to achieve £346 growth.

If they had got that money into an easy-access savings account giving them 5% interest, then it would have grown £1,878. It’s a huge difference – the difference is around £1,500. So, it really does pay to shop around and get the best interest rate that you can – and the longer the timescale that that money is tucked away for, the greater the impact of that compounding interest – which is where you’ll start to earn returns on that past interest.

So, now we’ve looked at ‘What is an emergency fund?’ – ‘How much people might hold’ – ‘How much you might need to hold,’ and ‘How you could go about calculating that.’ Now, we’re gonna look at how you might be able to shrink that savings target further.

Life has got more expensive – our income is being stretched – and, if you looked at those broad figures earlier and thought, ‘Crikey, £3,000 – or perhaps even £15,000 – that’s a lot’ – then go back to your savings target and think about how you can shrink it.

Be ruthless about your needs – so ‘What could you cut down on in an emergency?’ So, an example – using myself – might be that, in an ideal world, I would have a car – but it is actually possible for me to walk to work – or, worst case scenario, I could use public transport. So, it’s those sort of lifestyle changes that you need to consider.

Shop around for absolutely everything – use comparison sites and do your research. So, ‘Could you trade down on food items – could you get cheaper Broadband or a cheaper media package – or could you go without home Broadband, and use the 4G on your mobile phone?’ These are the sorts of questions to ask.

When it comes to your mobile phone, could you perhaps save money by swapping from ‘Pay monthly’ to ‘SIM-only?’ Do check the small print and make sure that you’re not trying to get out of a contract early, which could cause a fee.

Unfortunately, all these sorts of things do require a bit of life admin – but it’s these small tweaks together that are gonna have that big impact.

Consider alternative sources of cash – so, if you need money to fall back on, could you perhaps borrow off friends or family? – which means you wouldn’t need to build quite such a large savings target.

We looked at budgeting a little earlier on in the year, but a budget – or ‘Smart Spending Plan,’ as we’ve renamed it – will identify how you can tighten your belt. Writing everything down in black and white really does help you identify those areas where you can cut back.

It’s a virtuous cycle – budgeting avoids excess spending by highlighting areas of waste – which, in turn, encourages good spending habits to not live outside one’s means – thus avoiding short-term debt – and this, in turn, lowers your monthly outgoings because it creates a margin to live within – again, revealing those areas where spending could be reduced – and, by controlling your spending, you’re increasing your capacity to save and aligning your priorities. This helps you achieve your goals sooner – which, in this case, is building an emergency pot of cash for when life throws you a curveball.

Now, that QR code on-screen – that’s gonna direct you directly through to our household planners – it’s a budgeting tool. Now, this tool is an interactive calculator, which enables you to plug in your outgoings and your incomings, and it will break it down into different categories, helping you plan with your essential spend. Bear in mind that it works with the figures that you enter – it will help with the math, but it will only look at a snapshot in time. So, do get into the habit of revisiting this if your income or outgoings change.

So, that draws this session to a close – thank you for taking the time out of your day to listen to this. There are just a few notes on-screen from our Compliance Department.

Please take a couple of minutes to read through the important investment notes. They reiterate that everything discussed was informational and not to be construed as financial advice.

Thank you again for listening and enjoy the rest of your day.

John Wrench: So, a very warm welcome to everyone today. I hope you’ve all had a good week. My name is John and I’m a Financial Wellbeing Specialist at Hargreaves Lansdown.

I just wanted to welcome you in terms of the half-way mark of this 12-part series of Wellbeing webinars – with the previous sessions having covered various different topics regarding HL’s ‘5 to Thrive’ framework – something that you would have seen on the previous slide and all of these are looking at building financial resilience.

We’ll be building on what’s already been covered in the first five sessions, and today’s topic of focus is on ‘Building a Deposit.’

I do just need to stress that the session itself is purely on an information-only basis and therefore it’s not to be considered as financial advice. And, as we’re touching upon building house deposits, it’s worth understanding HL are not mortgage advisers. If you did want some further information and some advice, please do speak with a specialist with regards to that.

The session itself will last around 20 to 30 minutes or so, so we will have some time that’s been allocated for some questions and there’s a Q and A function that you should have on-screen with regards to Zoom. So do just put any questions into that and I’ll go ahead and try and answer those at the end of the session.

If you’ve missed any of the previous sessions, recordings will be uploaded onto the website for you to go ahead and listen back to, so do just feel free to have a look there. I’ve just popped that link into the chat, so do click on that perhaps after the session as well.

The other sessions have also been recorded and added in. I think we are just awaiting for them to be fully uploaded, but they will be there alongside this one as well.

As mentioned, this is a recording so if you are listening to the recording itself, please just be aware that the information is correct for November 2023. With regards to the other recordings, they will be uploaded – they’re just going through some background checks that we need to do with regards to those.

So, without further ado, what we’ll be looking at within this webinar. Firstly, looking into the UK market for mortgages, looking at what this then means for going ahead and potentially purchasing a property and what’s it recently looked like. Then understanding some mortgage considerations, a few areas to consider when thinking about a potential mortgage that could be required. Then we’ll be building upon that in terms of understanding what a credit score may look like, and the options to try to go ahead and potentially improve this.

Then finally thinking about actually building that deposit and the options that you may have for saving and investing as well.

So, first of all, that first consideration with regards to purchasing house property. And it’s worth understanding that the housing market for first-time buyers has become increasingly more expensive since 2000, making it harder for renters to go ahead and get on the property ladder and by 2021 the average house price had tripled.

The prices do also vary regionally which can also have quite a huge impact as well, so do just be conscious when looking into house prices that you may be looking to purchase.

With regarding deposits, we can see with the figures on the screen that over that period from 2021 to 2022, the average deposit has increased within that period of time. And it’s therefore worth understanding how much of a deposit we may be looking at achieving and how we may be looking to reach this.

Because property prices can have a huge impact on the deposit, it’s also then worth thinking about the area of mortgages and the borrowing potential that we may be able to achieve.

So, with regards to our second area it’s understanding some mortgage considerations. And with regards to that, when we’re thinking about purchasing a property, it’s understanding how much one may be able to borrow. This can actually help to then plan your search for a property. To understand, ‘Is it potentially within budget?’ and therefore ‘What deposit is then required on top of the amount of borrowing capabilities that one may have?’.

When we think about mortgages, then the amount that someone may be able to borrow, a good starting point is roughly between four to five times of one’s salary. If, for example, purchasing with someone else this could therefore then be based on the total combined salary.

What you can do and what’s potentially worth doing is speaking with a mortgage adviser. Who can go ahead and help determine what exactly amount a mortgage that you could be accessible for as fundamentally, it does come down to affordability being that main determination.

And we can start to think about this as an example and understanding why actually potentially a bigger deposit could actually, potentially help us going forwards. And this example is looking at a £250,000 purchase price over a 30-year term and the period being for the repayment mortgage product being a two-year fixed and we’ll come onto what that potentially means as well.

We can start to understand that, with that purchase price of 250,000 and understanding the deposit that we may have the loan-to-value ratio. What the loan-to-value ratio essentially is, is an assessment of lending risk that financial institutions and other lenders examine before approving a mortgage. As a result, the greater deposit that you potentially could have versus the overall property price may allow you access and the ability to achieve lower rates of borrowing as lenders see you as potentially lower risk.

Another key area to consider is that the lower LTV, loan-to-value ratio i.e. on that left-hand side, the higher your equity within the property. And having a higher equity could potentially go ahead and protect you from you going into negative equity if, for example house prices were to potentially fall.

Mortgages themselves, do come in different products and we can start to understand the key differences in a moment. But it’s just worth focusing on how the potential much deposit we may have versus the purchasing price could affect the then monthly costs and that could then help us to achieve other objectives that we may have going forwards.

With regards to mortgages, I mentioned different products. This example is looking at a two-year fixed repayment product but ‘What does that actually mean?’. With mortgages, generally they come in two ways one being repayment i.e. you’re repaying all of the debt that you’ve borrowed as well as the interest that the institution is charging over that time for the term of the mortgage. So, as a result you then pay off not only the capital lump sum, but also the interest itself over that period of time.

An interest-only mortgage however, is where you’re only repaying the interest with regards to the loan that you’ve taken out and at the end of that term, the original debt is still owed. Now, this could be something like a buy-to-let mortgage or potentially even with regards to residential property as well that you may be purchasing. It is therefore worth doing research to make sure that the mortgage is correct for your needs and your objectives and this is where as well a mortgage adviser can help.

The rates being charged is also something to consider with regards to how these could potentially fluctuate or potentially not. And we looked at within the example a fixed repayment mortgage. So therefore, for that two-year period there’s a fixed rate of interest and it’s worth therefore understanding, is the mortgage that you’re potentially looking into either a fixed-rate i.e. fixed for a period of time generally two to five years but that can change or a variable rate of mortgage? And a variable rate generally falls into four categories, the first one being a tracker mortgage whereby a type of variable rate mortgage that tracks the Bank of England base rate. Therefore, if that does change something that we have seen in the past 18 months or so therefore, the rate on the mortgage could change as well.

Another being the standard variable rate or SVR and this is for example if a fixed-term product is finished, you may be moved onto an SVR or potentially if the tracker term has finished as well and this can also change and it’s set by the lender.

Discount rate is another type of variable mortgage whereby it’s a set amount below the standard variable-rate. It’s still variable as the standard variable rate changes but it’s a discount below that and that does vary from lender to lender as well.

Capped and collared mortgages is also something to consider potentially, whereby there’s a cap or capped an upper limit essentially as to which the interest cannot increase by and up to that threshold or a collared mortgage as well, which is a lower figure. So, essentially, how high an interest rate can be or potentially where it can’t fall below as well.

With each of the mortgages do be conscious as well there could be early repayment charges. So, if you’re looking to actually repay that mortgage in a very short timeframe for example, you may well be subject to charges so do just be conscious of that as well.

In addition to the deposit itself and the mortgage costs to consider, there are also additional purchasing costs which we may not be associated or aware of. These costs include for example, stamp duty dependent on the property price if you’re a first-time purchaser and other considerations and we’ll look at this in a moment.

Also, mortgage arrangement fees sometimes of which can be waivered by the lenders, but they can be costly.

Legal fees, for example you would need to appoint a solicitor or conveyancer. These costs do vary and they range from a few hundred pounds to more than £1,000. A potential valuation fee which the lender requires you to have or a property survey.

Generally, with property surveys there are three key types and they do have their capabilities for different types of properties that you may be looking to purchase. It does potentially help provide that peace of mind potentially paying up that fee to start with and having someone to go ahead and survey that for you.

Land Registry fees are another fee to consider they do depend on the value could range from a few hundred pounds and up to, potentially, £1,000 or so.

Then, going on to actually furnishing the property. If you were going ahead to purchase it, the considerations of costs associated with that and ‘Do you have additional budget?’ within there to actually once you’ve moved in, do any additional maintenance that may be required or actually furnish the property as well.

It’s therefore key to go ahead and research these different types of costs that may be associated with the property that you’re purchasing prior to going ahead and potentially committing to that property purchase and that’ll then help to limit any unexpected costs that you may encounter.

We’re just going to focus on stamp duty for a moment – just to understand the rates that may be applicable. Of course, these could change, but we can start to understand – for residential buyers – 0% stamp duty rate up to £250,000 within England and Northern Ireland and, as the property prices increase. We can see that stamp duty rate increasing as well and it’s a tiered structure, so it’s dependent on the proportion that falls within each of those brackets.

If, however, you’re potential first-time house purchaser there could be some relief available – and we can start to understand that – potentially, no stamp duty is paid if the property price is up to £425,000. If the property price is greater than up to £625,000, then it could just be 5% on that portion.

There are some requirements for first-time relief, and you’re eligible if you and anyone else you’re buying with are first-time house purchasers. Do be conscious – if you’re purchasing with someone who’s purchasing a second house – it could be that actually that relief’s not available – and, as you can see, if the property price is greater than £625,000 for that first-time property purchase, no relief actually could be applicable.

So, it’s worth understanding the associated costs as mentioned but also – when we’re thinking about the potential borrowing capabilities – understanding the area of a credit score. This plays a key role in determining what type of financial products that you may have access to – because it essentially reflects how reliable you are when it comes to repaying money. And your credit score is based on how you’ve handled money within the past and, the higher your credit score, the better your chances of being accepted for credit at potentially the best rates.

So, with that in mind it’s worth understanding what it is – created from information essentially that you have on your credit file. As mentioned, the way that lenders go ahead and calculate the risk of lending to you. It could potentially, vary in terms of your score by different lenders – so do take a look into that – and then, finally being information that’s held within the last six years on your file.

Now there are different ways that you can go ahead and improve your credit score, and here are just a few of them:

1. Potentially registering on the electoral roll, for example.
2. Seeing if there are any mistakes on your file.
3. Consistently paying bills on time.
4. Seeing if you’re actually financially linked to someone. If you’re in a household – a shared household – you actually may be affected by them potentially having a bad credit score, so do take a look into that as well.
5. If there’s any existing debt that you may have – of course, it’s quite a tough time with regards to the cost of living – but the potential to go ahead and clear that to try and improve your credit score as well.

So, credit score being one way – understanding the capabilities in terms of the lending – and then from there, that ties in with regards to mortgages. But then also, once we’ve had that understanding of the potential lending requirements that we may be able to access, it’s then thinking about the house deposit. And the options that you potentially have, will go ahead and save for the house property that you may be after.

This is dependent on time horizon – and thinking about when you are looking to go ahead and purchase that – and that then determines whether you should potentially go ahead and save that money, or think about investing that money to have a potential greater level of returns.

With regards to saving – generally, that’s a shorter term that’s less than five years – in terms of a house view with HL – which generally means that capital is secure – however, do be conscious of the potential rate that you’re getting and also being aware of inflation. With cash and the level of inflation that we’ve seen in the past 18 months – has been relatively high – do be conscious of that within the longer term – if you are looking to have that cash within there.

In terms of the investments – we can see, potentially, a longer-term – thinking about five years or more – the ability to have a greater potential return – potentially higher than the rates that you may be accessible to. However, of course, you could get back less than you invest – so you’re taking on that investment risk and, therefore, understanding where you would like to go ahead and put that money while you’re looking to build that deposit.

In terms of cash savings options, we can start to understand these, and we can see – from the money-saving expert – different rates. Thinking about easy-access – the ability to access that money at any point, and then also different time periods – looking at fixed-term products. That could be six months – varying in timeframe – and the different rates that could be associated with those.

Instant Access – or easy-access – gives you that accessibility – so at any point.

Fixed-term – do be conscious, if you do put that money away into a fixed-term product, you will be tied for a period of time. It could be that you may be subject to potential taxes – so think about, ‘Is that product within a wrapper, for example? – potentially within an individual savings account known as an ISA? – and you have access to, potentially, Cash ISAs – or a Cash Lifetime ISA?’ – and we’ll come onto what that means in a moment.

So, think about where that potential money is being saved, for example. With HL, you’ve got access to something known as ‘Active Savings.’ So, the ability within your account with HL – if you’ve got one already – you can understand what’s available with regards to those. Active Savings could be potentially taxable, so do understand the tax implications – depending on if that’s within an ISA outside of the Active Savings account – but the ability to have access to different products. So, essentially, different rates that we’ve partnered with different institutions, and you can go ahead and manage that money within your online account there.

So, Active Savings being one way – but then also thinking about, if you are potentially struggling to save, ‘What else is available in terms of different accounts?’.

Now, there are a couple that you can see are actually closed to new applicants, but it could be that you’ve already got those set up – and that could be a Help to Buy ISA. For example – so the ability whereby you can go ahead and put that money away, and then have, essentially, an interest on that and also a government bonus of 25% when you go ahead and buy that first-time property up to a £12,000 limit.

Help to Buy Equity Loan – once again, closed to new applicants – providing a deposit of 5%, for example, and the Government could potentially lend you a percentage as well.

Those two are closed to new applicants, but then, for example, shared ownership – whereby you can buy a share of the property that you’re looking to purchase. It could be in the region of 25% or potentially 75%, and then you actually pay rent on the rest. With the potential that, over time, you could actually go ahead and purchase the greater share of the property in the future.

Then also, thinking about buying a house with friends or family members – it does potentially not come without its risks, but it can work really well for some – allowing you to potentially borrow more and also have a potential greater deposit to access a lower loan-to-value ratio, for example.

So, understanding what’s available in your own personal situation – getting help from family or parents, for example – doesn’t have to necessarily gift you the cash towards the deposit. It could be, potentially, a personal loan that could be available there – to help you to get onto the property ladder.

Lifetime ISA – I mentioned the term ‘Lifetime Cash ISA.’ Essentially, it’s another account that offers a 25% government bonus – although, in order to access the account, you do need to be under the age of 40, and you can’t go ahead and access your savings until you’ve gone ahead and had the account for at least a year to purchase a first-time property. So, do just be conscious of that – and we’re gonna look into that in a moment.

In terms of Lifetime ISAs – and Cash Lifetime ISAs – it’s not something that’s available with HL, but you do have the ability to have a Lifetime ISA Stocks and Shares Account. So, do always take a look into the services that are available there.

In terms of the Lifetime ISA – how it works is you can put in up to £4,000 per tax year, receiving up to a 25% government bonus – and then, from there, that money can either be invested or it can be held as cash. So, depending on the account that you have – or if you just wanted to have a Stocks and Shares Lifetime ISA – and just have that money held as cash – you can do so – and then, from there, in terms of the accessing, there is the ability to withdraw for purchasing a first-time eligible home. There are some restrictions – you must be a first-time buyer with regards to that tax-free withdrawal. The house must cost £450,000 or less, and it must be open for at least a year before that bonus – and that can be used.

As mentioned, the opportunity to invest within a Lifetime Stocks and Shares ISA and, with HL, you’ve got access to almost 4,000 funds with regards to that type of account. Just to be clear, the Stocks and Shares Lifetime ISA’s the only one that’s available with HL – but, if you are looking at potentially having it within a Cash Lifetime ISA, do just be conscious that you can potentially look, of course, elsewhere.

So, that hopefully, gives you some idea in terms of building that deposit – and the options that are available – and it’s then worth thinking about the next steps. Firstly, reviewing your finances and your credit score. ‘Could you, potentially, be doing something to save more? – potentially budgeting better to then free up some monthly income which can then be saved to help purchase a property?’ And then, ‘Could you think about improving your own credit score in some way which could then help in the future in terms of the financial lending that you could potentially have?’ So, do check your current position with regards to that as well.

The second area, then – thinking about building that savings and/or investment plan – ‘What is your time horizon, and when are you aiming to go ahead and purchase that property?’ ‘Are your savings working hard enough for you?’ Thinking about the interest rate that you may be receiving – or where they’re being invested. Interest rates have changed over the past 18 months to two years – so do just be conscious of what’s available with regards to those – and understanding that the ability to do your research and get to know your options.

Potentially, the earlier that this can be done may allow you to plan for those additional costs that may be associated with that purchase. Also, understanding the potential borrowing capabilities that you may have – for example, based on your current salary – in order to achieve the property that you may be after – in terms of understanding the affordability aspect.

So, hopefully those three areas give you some ideas in terms of going forwards.

That does conclude the webinar itself, but I just wanted to bring up some important investment notes – if you’re able to just go ahead and read through – then I’ll be looking into the Q and A function on the screen for any questions that you may have – and then also I’ll be putting up the links to the next webinars that are available to you as well.

So, please just take a moment and then we’ll look at any questions.

Wonderful – thank you for looking into the important investment notes. As we just come onto some questions – and, just before some people do leave, I’m just going to pop up on the screen the different links for the next sessions that you’ve got available with regards to the webinar series.

Clare Stinton: Hi and thank you for tuning in to seventh webinar of this 12-month Financial Wellbeing course. We are now past the halfway point.

A gentle reminder that the webinars will always take place on the first Thursday of every month and you do need to register for each one individually. There will be a QR code at the end of these slides to register for January’s session.

I’ve posted a few of these now but, for those of you who may just be joining us, I’m Clare – and I’m a Financial Wellbeing Analyst at HL. I’ve spent roughly the last seven years speaking to both individuals and employers about the rollercoaster that is Personal Finance – shedding light on how people can make their money work as hard as they do.

In today’s video – catchily titled ‘Pensions Basics,’ it is the first of three webinars all about pensions and retirement. As always, a bit of housekeeping before we crack on. I do need to stress that everything discussed is purely information and not financial advice. This video will last for around 30 minutes and – given those time constraints – it’s not fully exhaustive, but I do hope that what I talk through will enable you to go away and make decisions from a more informed position. The principles discussed might not equally apply to everyone so, if you are unsure, please do seek advice.

A quick look at today’s agenda. We’ll begin with looking at why we think pensions matter, why there is an increasing focus on them in today’s society – and the reasons behind that. Next-up, we’ll do a deep-dive on the State Pension – everything you need to know from how much you can expect annually to how to plug any gaps in your National Insurance record – as well as how to best navigate the system. We’ll then explore what current retirees are spending and what that gets them – to give you a steer on what income you might need to target – and finally we’ll hone in on private pensions – or workplace pensions. All of the ‘Needs-to-knows,’ including how that will interact with your State Pension.

If you take one thing away from today, it should be that you are in control of your financial future. We’re going to show how you can maximise your pension savings – because, when it comes to pensions, bigger is nearly always better.

Hopefully, those of you who’ve tuned into a previous webinar will be familiar with our 5 to Thrive framework. The course is structured around these five building blocks which pave the way to financial resilience. Up until now, we have predominantly focused on short-term resilience but, for the next three webinars, we are spotlighting Pillar 4 – Planning for Later Life. We’re exploring the very important role of pensions in securing your long-term financial resilience.

Pension savings will often be our bread and butter when we stop working, but many of us are guilty of not paying our pension enough attention and, for the majority, pensions will be the most tax-friendly way of saving for retirement – and that should become really clear over the coming slides.

Pensions are incredibly important – maybe more now than ever before – and that’s because, as you can see from the statistics on-screen, people are living longer and longer. However, whilst we are living longer, retirement ages haven’t really changed, and that means that people are spending more years in retirement and longer living off their pension.

An aging population means that there’s increasing pressure on the State to provide a State Pension for a larger proportion of the population and for a longer period of time, but it will also mean increasing pressure for your own personal finances – because they may have to sustain your lifestyle for longer than you’d anticipated and research suggests that, once you reach age 50, we do typically tend to underestimate our life expectancy by around 20 per cent.

The reality is that, as a nation, we already are not saving enough into pensions. Many of us will dream of travelling the world – or relocating to the seaside in retirement – but, for many, that will remain a pipedream. People need to build bigger pension pots – especially with the rise of the centenarian, who will be drawing on their pot for a really long time – with the number of people aged over 100 having increased by 25 per cent in the last decade.

So, where will your source of income come from once you’ve stopped working?

The good news is that you’re not alone when it comes to saving for your retirement. The Government will offer support in the form of State Pension. The State Pension will usually be the bedrock of people’s income in retirement – and then you would add private income and any savings on top of that. So, to be clear, your State Pension and your private pensions are two completely different pension schemes and they don’t integrate – and, by that, I mean that they will operate separately and payments in retirement will be distinct.

There is a good chance that you’ll achieve your desirable retirement income using multiple sources. Your State Pension – plus any private pension or workplace pension wealth – plus you might also have savings in ISAs – or perhaps money in property – and it’s all of that combined that will allow you to achieve your income in retirement.

So, continuing with the State Pension – at present, the maximum that you may receive is around £10,500 a year – that is provided that you have 35 years of National Insurance contributions. You do need a minimum of 10 years of National Insurance contributions to receive any form of State Pension and, if you have somewhere between 10 and 35, it will be proportionately reduced.

What year you were born will determine what age you will begin to receive the State Pension. For those born before April 1978, State Pension age will be somewhere between 65 and 68. Those born after April 1978 – the State Pension age has risen to 68. There is every chance that the access age could increase above 68 as we are living longer – more people are drawing on the State Pension – and it’s becoming more and more costly. One way for the Government to reduce costs is to increase State Pension age.

£10,500 is certainly better than nothing but, if it is unlikely to provide for all of your needs – or you’d perhaps like to retire earlier than your mid to late-60s – the onus is on you – the individual – to start saving any shortfall.

I think it’s worth pointing out that the State Pension will increase each year. The mechanism that they use to do that is the triple lock – so you might have seen this mentioned in the press recently. So, introduced in 2010, the triple lock commits to increasing the annual amount that pensioners receive by the highest of 2.5%, inflation, or wage rises – and that’s meant that it’s provided an element of protection for pensioners during the cost of living crisis. They have benefitted from an inflation boost last year – when prices were rising faster than incomes – and they’ve benefitted again this year now that earnings are rising faster than prices – and these are pretty significant increases.

It does mean that, in April 2024, the State Pension will increase to around £11,500 a year. That means, from a weekly basis, it will increase to about £221 a week – up from about £204 – so it’s a pretty significant uplift.

One of the most popular questions we get asked is, ‘How much do I need to retire?’ Now, the Pensions Lifetime and Savings Association have done a lot of research to put an annual figure on what’s required in terms of expenditure – and you can see they’ve found three categories – ‘Minium,’ ‘Moderate,’ and ‘Comfortable.’

‘Minimum’ – for a single person – is £12,800 a year and it provides about £54 a week for food – that does include meals out. They wouldn’t own a car and they would stay here in the UK for their holidays, annually. If in receipt of the full State Pension, very little top-up would be needed as a single person to meet that requirement.

‘Moderate’ provides more financial security – more flexibility – but it’s a big jump at £23,300 expenditure a year. That translates to £74 a week on food, a three-year-old car replaced every 10 years, and a two-week annual holiday in Europe.

A comfortable standard of living for a single person is about £37,300. That £37,300 a year would provide about £144 a week on food – so more opportunity to eat out, three weeks in Europe each year – as well as more flexibility, a newer car – perhaps updated more frequently. So, more flexibility with a few luxuries thrown in.

HL’s nationwide barometer research exposes that just four in 10 people are on track to achieve a moderate retirement. Now, remember – to achieve these expenditure targets, you will combine both your State Pension with any private pension wealth that you’ve built up. I think it’s important to highlight that these expenditure requirements have also increased quite considerably over the last couple of years due to the cost of funding these having risen due to inflation.

If you think back to the Cost of Living webinar we held – where we explored the rising cost of essentials, energy, petrol, food – this has meant that the steepest increase faced by those on the smallest income. So, that minimum level – the very basics – has increased by just under 20% – from £10,900 up to £12,800 a year. Retirees have had to find a lot more cash in the last 12 months to continue their way of life.

These targets also assume that individuals in retirement won’t be paying rent or a mortgage – and that might not be the case for pensioners of the future. Home ownership of millennials is some way below baby boomers at the same age. A weekly retirement budget could climb significantly higher if housing costs need to be factored into expenditure needs, but do consider your mortgage – when that’s due to run out or you pay that off – and do consider rent in the accumulation phase of your pension.

If you want to take control of your retirement, it’s important to understand how the State Pension works and what it could offer you – so there is a calculator that will enable you to check your State Pension forecast. It’s important to check this periodically, and you can do that by heading onto the government website. The forecast will tell you what your predicted State Pension age is – how much State Pension you’re eligible for – for confirmation of your National Insurance record. Remember, 35 years is required to get that maximum amount – and it will also highlight if there are any gaps in your NI record that you could potentially plug in order to boost the amount of State Pension that you’ll receive – and it’s a good idea to check your forecast to make sure that your record is correct. So, for example, if there are gaps – ‘Were you aware of those, and do you know what they’re from?’

Your State Pension forecast might suggest that you aren’t entitled to the full State Pension amount – and that’s a really common question that we get asked. There are several reasons why an individual might not receive the full State Pension – and, in large part, is due to the number of changes to the rules around State Pensions in recent years, which could affect how your pension is worked out.

The new State Pension is based on your National Insurance record – so the most common reason that you don’t have the full entitlement is that you don’t have enough qualifying years of National Insurance credits. If you have gaps in your contribution history – due periods of unemployment – not working – you may not receive the full pension because that 35 years is needed. A key reason could be that, at some point in your career, you were previously contracted out. By contracted out, you will have either paid less National Insurance or had National Insurance contributions paid to a workplace or private pension. While that could have provided additional benefits, it will mean that you will receive a lower amount from the State Pension.

‘How do you know if you were contracted out?’ It’s quite likely if you were in a defined benefit pension or a public sector pension. Also, you can check by digging out a pre-2016 payslip – or P60. If the National Insurance line has a ‘D’ for Delta, ‘E’ for Echo, ‘L’ for Lima, ‘N’ for November, or ‘O’ for Oscar next to it, then you were contracted out. Once you’ve checked your State Pension, make sure you can identify those gaps to see if you can plug them.

If you have got a few gaps, there could be a couple of avenues open to you. The first thing is to see whether you can plug those with a benefits claim. Now, there are lots of benefits out there – that, if you claim them, they come with an attached National Insurance credit that contributes to your record. A few examples would be Child Benefit – that’s the big one – and I’ll expand on that on the next slide – but also Universal Credit, Job Seekers Allowance – and there are quite a few more. If you have a gap – and you know you qualify for one of those benefits – it is worth speaking to the Department for Work and Pensions to see if you can backdate a claim and get the credits accredited to your record. There is a full list of eligible benefits that come with that National Insurance credit on the government website – and you can see that address on-screen.

Child Benefit – so a lot of confusion around Child Benefit and the impact on an individual’s National Insurance record. Women, in particular, are missing out on State Pension credits due to big gaps on their record and it’s quite often because they haven’t claimed Child Benefit. If you are a parent – or carer of a child – and claim Child Benefit, you’ll be credited with National Insurance contributions until your youngest child is 12 – even if you’re not earning. Now those credits are automatically added to your National Insurance account when you claim. Many haven’t claimed due to the high income Child Benefit tax charge which covers households where one of the earners earns over £50,000. That tax charge gradually increases the tax payers with incomes between £50,000 and £60,000. At £60,000, the tax is equal to the value of the benefit, which has resulted in people in a household – where one earner earns above £60,000 – not claiming the Child Benefit – in order to avoid having to pay a tax charge via Self Assessment. What they didn’t realise is that they were also missing out on National Insurance credits towards their State Pension.

By not claiming Child Benefit, that’s a really big reason why women, in particular, have missed out on National Insurance credits towards their State Pension. The Government is aware of this, so they’ve actually recently changed the system. You can now opt to receive the National Insurance credits without receiving the Child Benefit itself – to avoid having to do that life admin. The other thing to flag is that sometimes the working partner has claimed Child Benefit in their name – without realising that this would mean the person staying at home looking after the children would not receive the National Insurance credits, leading to big gaps and a lower State Pension. There is a form that you can use to apply to transfer those credits between partners in order to top-up the non-working partner’s National Insurance record.

There’s also a little-known credit – which is called the Specified Adult Childcare credits – and that’s available for people under State Pension age who care for a young family member while the child’s parents are at work – so, quite often, applicable to grandparents – or perhaps soon-to-be grandparents – listening. The way this works is that parents have gone back to work so they can receive their National Insurance credits – and they get that via their employment – and the carer, therefore, can register for the free National Insurance credits. You might be able to backdate a claim – so, if you have any gaps – and you think this could apply to you – please do check.

You do have the option to buy voluntary National Insurance credits. ‘Why would you do that?’ – simply to top-up your State Pension. Once you’ve checked your State Pension – if you have any gaps, usually you’re able to plug these going back up to six years. Six years is usually a pretty strict limit – but, currently, if you are a man born after 5 April 1951 – or a woman born after the 5 April 1953 – then you have the opportunity to buy National Insurance credits going back further to 2006. It is a time-limited offer and the deadline is 2025. Importantly, the cost of buying those credits has also been frozen until 2025. You may have seen this covered in the media in recent months – the Government have had to extend this deadline due to the popularity of the offer. The phones were ringing off the hook – with people keen to get information and understand whether buying National Insurance credits was the right thing to do for them. So please be aware that, if you are going to reach out, then you might have to be patient when you’re getting in touch.

A full National Insurance year usually costs about £824 – which will give you one-thirty-fifth of your State Pension, which will add an extra £300 a year to your pension, roughly. That does mean that, on average, you’d need to live about three years after drawing your State Pension to make the money back on buying that one year. Do consider your life expectancy when you’re thinking about plugging those gaps because your State Pension entitlement dies with you – it can’t be passed on – and that’s a key difference to anything that you build up privately, which you can pass onto beneficiaries.

Partial gaps in one year will be cheaper to plug than a whole year – so it’s best to start by checking your record for those. It is a good-value way of boosting pension income – particularly if you think that the State Pension is inflation-proofed. That’s referring to that triple lock that I mentioned earlier, which means that the annual amount pensioners receive increases each year to ensure that it maintains its value.

Put simply, check for gaps – check if you can then plug those gaps for free with National Insurance credits from benefits – if not, work out whether it’s cost-effective to buy the credits. For some, paying to plug those gaps will be a no-brainer that could massively boost pension income in retirement – yet there are a lot of ‘Ifs and buts’ that could mean it’s not right for you – so do get in contact with the Future Pension Centre to get personalised information.

Hopefully, signposting that the State Pension will only offer a maximum of around £10,500 a year will really bring into focus how important your private pension savings will be. The State Pension is certainly better than nothing, but even the most frugal of us will struggle to survive on £10,500 annually. And let’s not forget that a moderate retirement costs twice that – so it really highlights that shortfall between the income offered by the State Pension and the level of income required to meet both the moderate and comfortable standards. That’s why your workplace pension is so important – because, hopefully, it’s going to help bridge that gap.

Think of life as two distinct phases – you have your accumulation years – you start working in your 20s and you need to accumulate savings that will last for your decumulation phase – that’s your retirement, where you will spend those savings that you’ve accumulated. When you are saving for your retirement, you are essentially saving for your longest-ever holiday. There is no one-size-fits-all retirement – everyone’s desirable plans will look slightly different – they are unique – and whether it involves choosing somewhere to live – or fulfilling your bucket list – or leaving something behind for loved ones. If you haven’t thought about these things, now is the best time to start. Even if your retirement seems a really long way off, only good things can come from being prepared.

Understanding your retirement goals will help you map out how much you’ll need to save each year. Once you’ve figured that out, you can then start to look at the level of risk you’re prepared to take with your investments – to see if meeting those goals is achievable. And we’ll explore both contributions and investments over the coming slides and in next month’s session.

To start off, I just want to touch base with auto enrolment, which was introduced by the Government in 2012 in order to try and place more responsibility on employers to ensure that their staff would join in pension schemes and saving in a place that would help them towards their retirement. Auto enrolment aims to address the issue of under-saving for retirement by making it the default option for eligible employees, and the intention was to create a more financially secure future for people whilst reducing the burden on the social welfare systems as people age so it’s been in existence now for over 10 years – and it’s not perfect, but it has been hugely successful in boosting private pension provision for millions of people across the UK.

As you can see, auto enrolment aims to capture a large portion of the workforce. You will automatically be enrolled into your workplace scheme if you meet the following criteria:

1. You were aged between 22 and State Pension age
2. You earn over £10,000 a year
3. And you ordinarily work in the UK.

Even if you don’t meet that criteria, it is still possible for you to join. You can opt into your workplace pension and you may still be eligible for an employer contribution. One example would be – an 18-year-old starting work would be able to opt into the pension scheme early, rather than waiting to be auto-enrolled at the age of 22.

Pensions are tax-efficient at various stages – so I just want to start by explaining – in simple terms – how the pension works and what we can do to get the most out of it. To keep it simple, we can view the private pension – or workplace pension – as a savings pot – a savings pot which we will be building up and eventually using to generate an income for ourselves in retirement. And inorder to build that pot up to a large amount over time, we can look at two main variables which will influence the value.

First of all, the contributions – I suppose it’s pretty obvious, but the more we pay in, the more we typically get out. Also, individuals benefit from tax relief on personal contributions at their highest marginal rate. Once the money then goes in, it doesn’t just sit there as cash – it’s automatically invested in order for you to try and grow that money and put it to work over time so that it will lead to a bigger pot at a later date.

The pension is also a tax-efficient wrapper – meaning that, as those investments you hold in the pension grow, they will do so free of tax. The earliest age that you can access your private pension is currently 55, but that is increasing to 57 in 2028 – so around a decade earlier than you will receive your State Pension. At which point, you can access 25% of your pension tax-free, whilst the remaining 75% will be taxable at your highest rate of income tax – at that point when you’re drawing it.

To summarise, that’s tax relief on your contributions on the way in – tax-efficient growth of the investment – and then 25% is typically tax-free on exit. By investing through your workplace pension, there are additional benefits to sweeten the deal. Firstly, in the form of an employer contribution – so the legal requirement is a minimum 3% of your salary, but your employer could offer a more generous contribution structure.

Another potential benefit is that your employer could deduct your contributions using Salary Sacrifice. Salary Sacrifice means that the contribution will be deducted pre-tax – that is the most tax-efficient way of paying into your pension because you will save both the income tax and the National Insurance on what you personally pay into your pot. Put simply, you’re redirecting that tax away from the coffers of the HMRC and you’re putting it away for future you. If you are unsure whether your employer offers Salary Sacrifice, your HR team will be able to confirm that for you.

It is pretty self-explanatory, but the more that we pay into pensions, the more we are likely to get out. I want to demonstrate the impact of varying contribution levels. So, if we take a 30-year-old – earning £35,000 – they’ve already built up a pension of £20,000. We assume that they will get investment annual growth at around 4%. If they’re contributing 10% into their pension – annually, until 65 – they could retire with a pension of around £207,000. That would mean a 25% tax-free cash entitlement of around £51,800 – and then, if they wanted to give the remaining 75% of that pension to an insurance provider – to buy a guaranteed income for the rest of their life – which is called an ‘Annuity’ – then that would give them £8,850 income a year. Alternatively, if the individual had contributed 15% – remember that these contribution bases would be – or could be – combined employer and employee total. At 15%, the pot would be worth £295,000, which would mean a higher tax-free cash sum of £73,700 and a guaranteed annual income of £12,600 a year.

Remember, it won’t cost you as much as you think it will – because of those income tax and potentially also the National Insurance relief. Money, for many, is really tight right now, but even uplifting 1% can make a positive difference. A really great habit to get into is uplifting your pension contribution in line with salary reviews. So, for instance, if you get a 3% salary increase, consider putting 1% or 2% into your pension – because, if you haven’t had it, you’re less likely to miss it.

When it comes to, ‘How much do you need in your pension?’ – the answer lies most often in what lifestyle you want in retirement. Everyone’s lifestyle is different, so it’s worth having a think about what retirement looks like to you. We have a pension calculator on our website that will project what your pot might be worth at a desirable retirement age, so you can see where you measure-up in terms of the Retirement Living Standards.

If you scan the QR code on-screen with your phone, then it will take you through to that calculator. I do need to stress that it will run on several assumptions – such as your selected retirement age, your salary only increasing with inflation, as well as an assumed level of investment growth – and the figures will therefore vary in reality – but the tool is nevertheless useful for seeing the impact of certain variables, such as delaying your retirement age, or increasing your contributions – or what would happen if you’ve got a salary change. So, you can use that calculator – without having to sign in online – just by scanning that QR code.

Today’s pensions are largely underpinned by investments – so whether you know it or not, you are a stock market investor. Investments underpin pensions, giving us an opportunity to beat inflation and to grow our hard-earned money.

This slide is designed to demonstrate the power of compounding growth over an extended period of time. So, here we have a lump sum of £30,000 being invested over a timeframe of 30 years – which is a typical timescale that you could be paying into a pension, but it could be slightly shorter or longer – and we’re going to compare 1%, 4%, and 7% annual growth.

Now, over a couple of years, you wouldn’t necessarily notice a large difference in what £30,000 might turn into but, when you extend that timeframe, you can see that the impact is really quite significant, and the longer that you run the timescale, the bigger the impact would be. So, if an individual managed to achieve 1% growth – for 30 years on that £30,000 – it would grow to around £40,500. If they managed to achieve 4% growth annually, that £30,000 would more than triple to around £97,000 – and if they managed to achieve 7% growth, then their pot could be around £228,000.

Interestingly, between 4% and 7%, the rate of growth hasn’t doubled, but the total pot value has more than doubled – from £97,000 to over £228,000. So, what we’re seeing is growth, upon growth, upon growth – and the longer the timescale, the greater the potential effects.

The magic ingredient in long-term investing really is compound growth – which is what we refer to often as ‘A snowball effect.’ As an investment gets bigger, it attracts more growth, and then it can get bigger and bigger over time – so if you think of it as pushing a snowball down a hill. With investing, time really is your greatest ally – so the earlier that you embrace your pension, the better.

Unfortunately – as I’m sure you’re all very aware – it’s not as easy as selecting a 7% growth. If you are looking for a higher return, it does generally mean taking more risks. So, now we’re going to look at what we mean by ‘Risk’ when it comes to the investments within your pension.

One of the questions that my colleagues and I are often asked is, ‘Why we would invest when we could hold cash?’ – and cash is often perceived as safe and secure – in short term, that is the case. If we look at cash over a 20-year period, cash doesn’t technically decrease in value – however, historically, over that long period of time, the growth is really quite minimal.

We encounter a problem when we add inflation to the chart – as the cost of everyday living is rising at a faster rate than the value of money – and inflation means that your money will buy you less today than it did five years ago – let alone 20 years ago – so you are effectively becoming worse off over time.

That means that we need to look at other ways to protect our pension from the impact of inflation – we can do that through other types of assets. So, first of all, that is bonds – that’s where you loan money to a company and, in return, they will give you a rate of interest on that loan. With a bond, you are taking more risk than simply leaving your money as cash in the bank, but with the aim of achieving a higher rate of interest. The additional risk relates to the fact that the institution you loan your money to may not be able to meet those interest payments. Also, bonds are traded on an exchange and the price of them can therefore fluctuate – dependent on demand.

Generally speaking though, bonds would be considered a lower-risk, lower-return asset class – particularly in comparison to shares – and shares you can now see plotted on the chart. That line shows the performance of the stock market over the last 20 years, and you can see that the performance is visibly much more volatile. You can see a big fall in the value during the financial crisis around 2008 and, more recently, the falls that we saw due to Coronavirus. If you were heavily invested in the stock market through those periods, it could be quite an alarming time – when you see those large falls in the value of your investment. However, why people might with a longer-term view might look to invest in shares is because, when we look at that bigger picture – and the more extended periods of time – you can see that there may be better prospects for long-term growth well in excess of inflation.

On the flipside, that volatility could pose problems – if we don’t have time on our side – because, if you think you’re accessing your funds in the short-term, that could mean that the value might fall by quite a large margin and it would impact your plans – and whether you might have to try and delay until things have recovered somewhat. So, typically – in your pension – you’ll invest in a fund which provides diversification – and we’ll begin to explore Funds in the next session.

Hopefully, this will help explain the types of assets your money can be invested into – and the benefits and risks associated with those.

In summary, ‘What does good pension planning look like?’ Consider these questions:

1. Are you contributing enough?
2. Will your pension provide enough income to support the desired lifestyle in retirement?
3. Have you checked your State Pension forecast?
4. Are there any gaps that you could plug that would lead to a bigger income at retirement?

With private pensions – both workplace and personal pensions – you have the reins – you’re in control – and evidence suggests that the two factors which have the biggest impact on your pot – and therefore your retirement income – is a) how much you contribute, and b) investment return – and it’s these two areas – contributions and investments – which we, as individuals, have the greatest degree of control and influence over – so we will be exploring those in more detail in next month’s session.

The Government incentivise you to save for your future by offering tax relief at your highest marginal rate, so do pay in as much as you can afford – get the tax relief you deserve – and ensure that you get the maximum contribution available from your employer – particularly if there’s an incentivise structure on offer – whereby, if you pay more, so do they.

Taking ownership and understanding where your pension is invested is really important because, if you can’t afford to put more aside, you can still make a difference with your investments – and, when it comes to investing, time really is your greatest ally. You do have the power to change investments and adjust your exposure to risk, should you wish.

Theoretically, if you are comfortable with a more adventurous approach, the earlier you do that within the lifespan of your pension, the better – because you have a much longer timescale for recovery, if needed. A combination of contributions and investment performance will hopefully lead us to having a nice big pot to take benefits from at retirement. In January’s session, we’ll spend more time on both of those factors – going into greater detail about how you can supercharge your pension to ensure you can retire on your terms.

In terms of ongoing support, there is a lot on offer –so you’re not alone in making these decisions. Accessing guidance and support will importantly mean more informed decisions – and today is a great time to get curious.

First-up is a reminder of the link for the State Pension forecast. Independent support is available on the MoneyHelper website, as it’s a treasure trove of free impartial guidance – a service provided by the Money and Pension Service – so backed by the Government.

For anyone over 50, there is Pension Wise – this is one-on-one specialist guidance to help you understand your options. The appointments are usually 45 to 60 minutes in length – so really worthwhile taking up that opportunity.

Everything discussed was informational – so please do read through the important investment notes on-screen. They reiterate that it was all information and not to be construed as financial advice – that top-market investments can increase as well as decrease – and that tax rules are subject to change.

Thank you so much for taking the time out of your day to listen to this webinar. Everything discussed was informational and, if you would like to book for January’s session – to learn about how you can supercharge your pension – please do scan the QR code with your phone and register for that session.

Thank you for listening, and hope you have a great Christmas period – and enjoy the holidays.

James Corke: Okay well, good afternoon again – for those of you that have just joined. Thank you for taking the time out of your day to dial into this and listen to this session. My name’s James Corke – I work for Hargreaves Lansdown – and my role at Hargreaves Lansdown is to help support employees who are using Hargreaves Lansdown for their pension savings – and I work in our Workplace Financial Wellbeing Team.

The purpose of this webinar – and this is the seventh webinar of a 12-webinar series of different financial education – or financial wellbeing topics. We run these webinars on the first Thursday of every month – and you register for each one individually – and there’s a QR code at the end of this session, if you want to register for next month’s session.

These sessions – the one today – and the next two sessions for the next two months after this – are all focused around pensions, and I’m going to be focussed around pension basics for individuals who are members of public sector pension schemes.

So my background very briefly is that I’ve spent the last 10 years speaking to members – employers – about their personal finances – quite heavily focused on pensions – running financial education sessions either in person or virtually – as we’ve seen in the last few years – up and down the country. What we’ll be looking at today is pension basics with that specific focus – as I said on public sector schemes – which, typically, are final salary or defined benefit pension arrangements.

Now, if you read the press, you might well be quite familiar with the general kind of summary – that these are usually hailed as the best types of pensions that you can be a member of – but that maybe is a little bit misleading in the fact that, whilst they are very generous arrangements – in a lot of cases – they are potentially quite complicated – and I speak from experience of my wife – who is a Nurse – she worked at the BRI for a number of years – before she moved to practice nursing – and, every so often, she’d ask me to have a look at her own pension statements and – for somebody who has dealt with pensions for a number of years – albeit in the private sector – I can sympathise with people who maybe are struggling to get their head around how their pension scheme works, and what it all actually means.

I’ve tried to put this session together with that in my mind – the kind of questions that she’s asked me in the past – and the things that I think are potentially going to be most useful for you. One of those complications – one of the themes around the complications – is the fact that there’s been a lot of changes over the years to her particular NHS Pension Scheme – and the rules have changed – and there’s different elements of her pension entitlement. So, there’s a lot of things that people need to get their heads around.

Of course, not everybody here I suspect is from an NHS pension background, and so I will be looking at a couple of other pension schemes as well. One thing I suppose that we have to be really clear on in these types of sessions is, firstly, I can’t give you advice – so I can’t tell you what I think you should be doing. If there’s any course of action that you think or feel you need to take – I can’t tell you whether that’s the right or wrong thing to do – and the other thing – and this is particularly relevant with these types of arrangements – is that people’s circumstances are so unique that how their pension provision shapes up is ultimately going to be very much independent on their own circumstances. Whilst in this session I’m going to try and give you a fairly high-level overview of how different types of public sector arrangements might work, ultimately, you will probably find that you’re going to need to look into your own situation in a bit more detail – and I’ve tried to put some useful contact details towards the end of the session that might help you do that.

I think we’ve got about 45 minutes for today, so there should, I would hope,be time at the end to go through some of the questions that you may have. There is a Q&A facility attached to this webinar, so please do raise any questions. If I don’t have time – or if I can’t give you an answer here and now – I can certainly try and take it away and see what I can find out, and maybe signpost useful resources for you.

With that in mind, I’ll start moving through the presentation – and, in terms of what we’re looking to discuss over the next 45 minutes – I thought – when it comes to pensions – I’d start with some of the basic principles of why pensions actually are so important for people, and why, unfortunately, you’ll find there’s a lot more onus on you, individually, to ensure you’ve got the right pension provision in place to support yourself in retirement.

I am gonna talk about some of the different types of pensions that you may have, and this is gonna try and break down some of the jargon that you might hear, which I think is – for a lot of people – quite a good starting point when it comes to understanding their retirement planning.

I’m gonna have to talk a bit about the State Pension because the State Pension is something that applies to the vast majority of people and again – like public sector pensions – there’ve been changes in there and those changes might affect you – so I thought it’d be useful just to go over what the State Pension looks like – what it used to look like – and what some of the things you may need to think about alignedto that as well would be. And then as I said at the end of the session – and actually dotted throughout – I’ve tried to put in place some what I think are quite useful resources for you to be able to take away and maybe look into things in a little bit more detail.

Now, as part of this session – and one of Hargreaves Lansdown’s principles around building financial resilience for savers – whether they’re using us or not – is there are five pillars that we encourage people to try and review when it gets into building their own financial resilience.

The first few sessions that we’ve been running over the last six months have very much been focused on those shorter-term things – such as controlling of debt, putting in place protection, and building up an emergency fund. Now – and for the next few sessions – we’re gonna be starting to look more towards planning for your later life – of which obviously a pension tends to be the bedrock of people’s provision.

So, firstly, just to kind of set the scene – and this may well be something that a lot of you are quite familiar with – particularly linked to your own professions – but that is that, generally speaking, we are living longer.

So, Hargreaves Lansdown was set up in 1981 – back in 1981, the average life expectancy for men was 79 years – for women, it was 83 years. Over the last 40 years – as you could probably expect – life expectancy, on average, has increased for people. It’s gone up about five years for men and just under four years for women. Now, that’s a trend that may well carry on but – with people living longer – one thing that hasn’t really changed that much over the same time period is the ambitions we all have to finish work. So, the average retirement age for people, typically, is around 65 and that hasn’t changed too much over the last 40 years. So, what that tells us is we are, generally speaking, all aspiring to finish work at a similar age – while we can still enjoy our retirement – but our retirement is likely to be a longer period of our lives.

It’s not unreasonable to think that you might spend a third of your life in retirement – which obviously sounds wonderful on one hand, but – at the same time – it can be a bit daunting because you obviously need to have a way of giving yourself an income or supporting yourself for that potentially quite substantial period of your life. Now, the good news is that we should all be making provision for that – and, for most people, that provision will typically come in the form of the State Pension – so the government’s pension that we are building an entitlement to based on our National Insurance contributions, but also combining that with private pensions and, probably more relevant for a lot of people is the workplace pension as well.

Now, it may well be that people have other sources of income in retirement as well that they can use to support themselves, but that isn’t certainly gonna be the case for everybody. So, for most people, the State Pension – and any private or workplace pensions – typically form the backbone of their retirement income.

When it comes to pensions, fundamentally, there are two different types of pensions that people might find themselves to be members of – certainly through their workplace – and again we’re now gonna start breaking down some of the different terminology that you might have heard.

The first type of pension – which you may all be most familiar with – based on your occupations – is what’s called a defined benefit – or final salary pension scheme. The alternative – and this is much more common in the private sector – the sector that Hargreaves Lansdown works in – is defined contribution or money purchase pension schemes. Now, there are fundamental differences between these two types of arrangement. With a defined benefit pension scheme, the income that you’re gonna get from it is typically determined by your salary – or more recently – and this is something we’ll going in to explore in a moment – your average earnings. It’s also based on your length of membership within that arrangement – and, for each year you are a member of the pension scheme, you typically build up a portion of your salary – or potentially your average earnings – as income in your retirement.

Now, they’re typically guaranteed arrangements – so, in the case of a public sector scheme, they’re usually unfunded, which means that, effectively, it’s covered by taxation – and that means you don’t need to worry necessarily about the money that’s in the pot – what’s happening to it – you just simply need to be a member of the scheme and you’ll receive an income in your retirement.

The income is typically fixed in retirement, and you may well get the option to take a lump sum either in addition to your income – depending on what scheme you’re a member of – or potentially you could exchange some of your income in retirement for a tax-free lump sum. In addition, with these types of arrangements – they usually have a set retirement age which is written into the rules of the arrangement of the scheme itself.

Now, looking at the other type of pensions – those defined contribution or money purchase types of pensions – those aren’t guaranteed arrangements – and that’s the fundamental difference between the two types of pot. A defined contribution or money purchase scheme is typically a pot of money that gets built up by an individual over time, and that pot of money will be driven up by contributions and, hopefully, by how that money gets invested. Typically speaking, the more money somebody pays into it, the more they should get out of it, but it’s not guaranteed – and the reason it’s not guaranteed is because the investments can go up in value or they could go down in value – and for many people saving into these types of arrangements – the investment area – whilst it is a key factor to determining what people get out of it, is also a factor that people don‘t feel that confident with.

Now, when you have money in that type of arrangement – in a defined contribution or money purchase scheme – you have a bit more flexibility than you might have with a final salary arrangement. The flexibility might come in the form of how you take your income out of it – so what kind of income you might take – when you might choose to take it as well. Typically, money in these types of arrangements can be accessed from 55 – although that age is due to go up to 57 in 2028.

Now, these are two fundamentally the different types of pension schemes that people can be paying into either privately or through their workplace. What we’re now gonna do is we’re gonna go into a bit more detail about how those defined benefit – or final salary – pensions might work.

So, with these types of arrangements, as I said, your income is determined typically by what your salary might look like when you reach your retirement date – and I’ve got a very basic example of somebody who is earning £21,000 a year and they were in the plan for three years.

Now, a final salary scheme – or defined benefit scheme – will typically have what’s called an ‘Accrual rate’ attached to it, and the accrual rate will be determined by the scheme at the outset. What we’re gonna look at is an accrual rate of one-sixtieth. So, a one-sixtieth accrual rate means that, for every year of membership of the scheme, they accrue one-sixtieth of that as income. So, if they were in the scheme for three years, they’d accrue three-sixtieths of their income as a pension in their retirement. So, for this purpose, we can see that three divided by 60 – times by £21,000 – which is their final salary – gives them a pension income of £1,050 a year. Often these types of arrangements will have a cap as to how many years membership that somebody can build up under this type of scheme – and, usually, it’s around 40 years of income. So, somebody can accrue an income for 40-sixtieth as a maximum pension income in retirement.

Now, this is historically how a final salary scheme would have worked – and, if you had joined a final salary scheme many years ago, this is usually what you would be looking at, but they will have different rules for calculating the income, and this will vary depending on which scheme you were a member of and, quite specifically – in a lot of public sector schemes – when you were actually a member of that arrangement.

Now, we’ve got another example of income but, this time, we’re gonna be looking at income that’s coming from your average earnings, and a lot of final salary or defined benefit schemes have started to move towards this approach – and what that means is it isn’t your salary at the end of your membership that determines your income – it’s your salary as you go through – and so, in this case, we’ve got somebody who – in their first year of membership – they’re earning £20,000 – they built up one-sixtieth of their income for that year – which is £333. The next year, their salaries – luckily – went up, but they were building up an income of one-sixtieth of their salary that year, which is a little bit more. In the third year, they had a pay rise – you can see that the amount of income they’ve accrued each year has gone up, but the income is based on their earnings for that particular year – hence it being called ‘An average earnings’ type of arrangement.

You can also see that the income that this person has accumulated under this set-up is actually slightly less – it’s about £25 a year less than it would have been had it been based on their final salary income. So, if you are in this type of arrangement, you can see that potentially – on the surface – it may not be as generous as the final salary arrangement – however, there’s a couple of things that’s worth pointing out. The first thing is that the income typically will get recalculated each year – so the £333 that the person’s built up in year one may well get an adjustment to ensure that it keeps going up with, say, the rise of cost of living prices etc – but this typically is how more and more pension schemes – in the final salary or public sector arrangements – are typically calculating their income.

In both cases, it may be possible to exchange some of your income for a tax-free lump sum – and I’ll talk a little bit more about that as we go through – but these are two basic examples of how a final salary pension scheme could potentially be calculating somebody’s income.

Now, if you are in the NHS Pension Scheme – or if you were in the Firefighters’ Pension Scheme – or if you are part of the Local Government Pension Scheme – then it’s important for you to be aware that how your income has been calculated will vary depending on when you joined the scheme – and this again is where things can become quite complex for individuals. So, what we’re gonna do now is just look at those three different schemes in a little bit more detail – just to try and give you an idea of how things might have changed over the years – and we’re gonna start with the NHS Pension Scheme.

So, with the NHS Pension Scheme, the amount of income you’re going to be accumulating – or you’re going to accumulate under that – depends on which section your pension income has been built up under – and it’s quite likely that, for most people, they may well have built up income under these different sections – meaning you’ll have different levels of income for each individual section.

What I’m now gonna do is just highlight some of the key points from each of these different areas – and hopefully show you how they’ve differed over the last few years with each change.

The first one is the 1995 section. So, the 1995 section – for any pension entitlement you built up under that part of the scheme – you were building up one-eightieth of your pension income in each year of retirement, and it was based on the best of the last three years of your pensionable pay. In addition, you would be building up a pension income which would be the equivalent of three times your salary as a tax-free lump-sum payment. So, that was paid in addition to whatever income you’re building up under that section.

Another feature of this element is that you would have had a normal retirement age – which is set at 60 – which means you would potentially be able to access this money on your 60th birthday. Now, when the rules around this section changed – which was in 2008 – there were some subtle differences as to how this income was being calculated, but it was still being done on that final salary arrangement. The formula though – the accrual rate – for how your income was built up under that section – changed to one-sixtieth – and it was based on your reckonable pay over a three-year period within the last 10 years. Now, what we mean by ‘Your reckonable pay’ – that’s calculated using the average of the best consecutive three years in the last 10. So, you can automatically see that it’s starting to get a bit more complicated to understand exactly what your pension income might be from that part of the arrangement.

Now, instead of getting the option to take additional money as a tax-free lump sum, you have the option to exchange some of that income for a lump sum, and that’s typically done at a rate of you being able to exchange £1 of income for £12 of tax-free cash – meaning you would get less income as a result, but you’d get more as a tax-free payout.

Another key difference between the two though is the age at which you would typically receive this income – which stands now at 65 – and you can see that, as people have been living longer, the retirement age has been recalculated to try and ensure that people are getting their income later to help support them for longer period of their life – in their retirement.

Now, the final section – and the more recent section – is the 2015 section. Under the 2015 section, it’s changed to a career average revalued earnings arrangement – and the accrual rate has dropped to one-fifty-fourth – which means, for each year you’re a member of the scheme, you’ll get one-fifty-fourth of your income for that year.

Now, this is again based on your career average earnings and you’ll be subject to what’s called a ‘Revaluation’ each year – and a revaluation rate is determined by the Treasury – so any income you built up under this section will get revalued and it will take into account what the Treasury suggest it should be increased by plus an additional 1.5% – so hopefully that money keeps growing for you over time. Again, similarly to the 2008 section, you have the option to exchange part of that income for a lump sum.

Now another key difference between this and the previous sections is the age at which you’re going to receive it – which is now linked to your State Pension age – and I’ll go in to discuss what the State Pension changes will be in about three or four slides’ time.

But this is the NHS pension – so, whilst it does offer that final salary income, you can see that, even being a member of a pension scheme – where you don’t necessarily have to worry about the day-to-day investment management of it – it’s still quite complicated to understand exactly what you’re entitlement would be, and so it’s important that you do keep on top of what your income’s going to be and when you’re going to get it and again there’llbe some references at the end to help you understand what that might be and where you would need to go to find out more detail.

Now, the next scheme we’re looking at is the Firefighters’ Pension Scheme – so another public sector scheme – but again, you will be able to see how it’s changed over the years – and there is a common theme running through these different types of arrangements.

So, with the Firefighters’ Pension Scheme, we’re starting at 1992 section. So, the 1992 section is a final salary scheme – and firefighters were building up one-sixtieth of their income for the first 20 years and then, after that, they were building up two-sixtieth – meaning it’s effectively like a double-accrual rate. The maximum number of years though that they could build up would be 40-sixtieth, which they would receive after 30 years’ service. Again, it was based on average pensionable pay – which essentially, in most cases, is their pension pay average over the last year of their service – and they would have a slightly earlier retirement age than normal under this section, presumably to reflect the nature of the work that they’re doing.

Now, this arrangement changed – and it changed in 2006 – and, under the 2006 section, you can see that it still remains as a final salary scheme – with that one-sixtieth accrual rate – but it didn’t have that double-accrual rate kicking in after 20 years. It was again based on their final pensionable pay, but the retirement age at which they received it has gone up to 60.

And then, finally – in the 2015 section – at this point, it changed from being based on their final salary to that career average earnings scheme – with an accrual rate of 1/59.7. Based on their career average revalued earnings – so again, similarly meaning that each year they would have an entitlement built up on that year’s worth of salary, which would then be revalued.

Now, the normal retirement age for this one, unusually, has still stayed at 60 years of age – which I would suggest possibly reflects the nature of the work that they’re doing. Now – similarly with the NHS Pension Scheme – for members of these different types of arrangements – you need to understand how each different section of this might apply to your own pension provision.

Now, the final private sector scheme that we’re going to look at is the Local Government Pension Scheme. So, the Local Government Pension Scheme is effectively a national pension scheme for people working in local government – or working for other employers that potentially are linked to the Government – and again, similartheme– it’s broken down into three different sections.

First section is the pre-2008 scheme – so, for those people who have membership before 1 April 2008, you would have been building up an entitlement of one-eightieth of your final pay plus an automatic lump sum of three times your pension income. Now, your final pay under this arrangement is usually your pensionable pay in the year that you leave the scheme. You could potentially be using one of the previous two years if it was higher. The normal pension age for people building up benefits under this arrangement is 65.

Now, the next section of the scheme is the pre-2014 scheme. So, for this one, any membership built up between 1 April 2008 and 31 March 2014 – you would be receiving one-sixtieth of your final pay as a pension – and, again, you’ve now not got the automatic lump-sum entitlement, but you have the ability to exchange £1 of your income for the £12 tax-free lump sum. Normal pension age under this arrangement has stayed at 65.

Moving to the final part – the post-2014 scheme. Under this arrangement, it changed from a final salary scheme – similar to the other arrangements – to a career average scheme. So, from 1 April 2014, one forty-ninth of your pensionable pay was put into your account every year. Similarly, the balance of that is then adjusted each year – in April – to keep in touch with cost of living – so that figure will hopefully continue to increase – and again, you have the option to exchange £1 of your income for £12 of tax-free lump-sum payment. Now, your normal pension age under this part of the scheme is linked to your State Pension age again. If you choose to take your pension before your normal State Pension age – in all cases, it would usually be reduced to reflect the fact that it is being paid earlier – but, if that is something that, under any of these arrangements, you’re interested in exploring, you would need to speak to the administrators of these different arrangements and understand exactly what the impact would be for you.

So these are three typical examples of some of the largest public sector pension schemes that are available for people in the UK. When it comes to reviewing how this all works for you – ‘What should you be thinking about?’ – the key things we’d suggest people would focus on is, ‘What is their entitlement?’ As you can see, it could be made up of different elements – so understanding how those different elements might fit together. Quite importantly is, ‘When are you going to receive those different elements?’ – ‘Does that align to your own kind of retirement planning?’ ‘What happens if you were to pass away?’ So, with these types of arrangements, you are often able to provide an instruction so that, if you are to pass away, you can elect somebody to receive that benefit in your absence, but there are rules surrounding how that might work, and usually there are restrictions around who is classed as an eligible dependent and so it’simportant you understand what happens and, ‘Is there anything you need to do to make sure it aligns to your wishes?’

It may be that you’re able to buy additional years’ membership of your plan – ‘What are the rules around that?’ – and, ‘Who d’you need to speak to to enable that to happen?’ And, more generically, ‘What kind of income are you gonna need in retirement?’ – and, actually, ‘What is the State going to do?’ And what we’re now gonna do is just look at those two different questions – how much you might need and, ‘What is the State Pension entitlement likely to be?’

When it comes to thinking about how much income you’re gonna need in retirement, it’s a bit of an impossible question to give a precise answer to because, ultimately, it just depends on what your plans are for your retirement – but what we can do is look at what people who are retired today are currently spending their income on – and, through the Pension and Lifetime Savings Association – which is like an independent think tank – they’ve essentially broken it down to three different standards of living in retirement – ‘Minimum,’ ‘Moderate,’ and ‘Comfortable’ – and they’ve then broken that down further into an individual’s income need versus the income needs of a couple.

What you can see is that, for somebody to have a minimum standard of living in retirement – which is essentially covering the bare necessities with a little bit of luxury – an individual would need an income of about £12,800 a year. If you were doing this as part of a couple, your income needs would drop down slightly – you wouldn’t necessarily be just doubling your income, but it would go to just under £20,000 a year.

For clarity, when we talk about a ‘Minimum’ standard of living, what we’re looking at here is a week holidaying in the UK, eating out once a month, and maybe some affordable leisure activities every so often. It doesn’t necessarily include the budget for running a car.

So, what you can see is that somebody having a minimum standard of living – it really is just that – and, if you’re spending a third of your life in retirement, ‘Do you really want to be living at that minimum standard?’ Certainly, most people would be aiming and aspiring towards getting towards the ‘Moderate’ – or, ideally, the more ‘Comfortable’ standards of living.

The ‘Moderate’ standard of living – what we mean by that is giving you a slightly more luxurious lifestyle – so you’d have more money to spend on food each week – couple of holidays abroad throughout the year – eating out a few times a month. But a ‘Comfortable’ – we’re talking far more holidays – maybe updating your house, car, luxury treatments – like beauty treatments – far more money to spend on food as well.

So, what you should be doing is – when you’re working out what your pension income is going to be, you could potentially then compare it to these different standards of living. If you are thinking of this as a couple – understanding what both of your income is likely to give you in retirement, and again seeing how it might sit in line with these types of figures for what people should be aspiring towards.

Now, the good news is as we’ve said – it isn’t all on you. You have your own workplace pensions, but you also – in theory – will get support from a State Pension as well. So, the State Pension currently is £10,600 a year – so that will fund the vast majority of somebody who’s aiming towards that ‘Minimum’ standard of living. The State Pension – also it’s worth noting – does or has historically increased over the last few years – and it was announced in the Autumn Statement last month that it is due to go up to just over £11,500 next April. So, from 6 April, the State Pension is due to increase to around £11,500.

It is also, quite crucially – and we’ll come back to this – based on you paying National Insurance for 35 years. If you pay National Insurance for less, then – in theory – your State Pension gets pro-rata’d down as a result.

Now, as well as the State Pension increasing, you’re probably well aware that the age at which you’re gonna receive it has also been increasing – so the age at which people become eligible for the State Pension has been going up. Anybody born before 6 April 1978 – your State Pension age is going to be somewhere between 65 and 68 – depending on your date of birth. For those people born after 5 April 1978, your State Pension age is due to rise to 68.

Now, if you’re not sure when your State Pension age is going to be – and, for some of you, it’s clearly gonna be quite relevant because your pension schemes that you’re a member of will be linked to it – you can go onto the government website and get a State Pension age forecast and it will tell you what your State Pension age is going to be.

Now I mentioned, as well as there being changes to public sector pension schemes, there’s also been changes to the State Pension as well – and this is particularly relevant for people who’ve been members of a public sector scheme for a significant period of time. To understand what those changes are – and how they’ll affect you – you need to, unfortunately, understand how the State Pension has changed – and so the next few slides are gonna talk a little bit more about that.

So, under previous arrangements, the State Pension wasn’t solely based on being a member of it – it was actually based on your earnings – so it was effectively split into two elements. Now, the old State Pension rules changed on 5 April 2016 – prior to that point, you didn’t need to pay National Insurance for as long – you needed to build up a 30 years’ National Insurance record – and the old rules would have given somebody an income of about £8,122 a year – for a single person – but, if they paid more National Insurance, they could build up an entitlement to what they called ‘The Additional State Pension’ – which was known as the ‘State Earnings Related Pension Scheme’ – or SERPS.

Now, under the new rules, it is a flat rate for everybody. It’s based on a National Insurance record of 35 years – so, provided you pay National Insurance for 35 years, you’ll get the same State Pension as somebody else who’s also paid the same amount irrespective of your earnings – and as we said it’s the equivalent of £10,600 a year. So, on the face of it, it’s more generous for people under these new rules. However, for people who are paying more National Insurance – who could have built up an entitlement to this Additional State Pension – they could have actually found that they were losing out as a result.

Now, as part of this change, there was essentially what they call a ‘Foundation’ amount agreed – and it means that, if somebody was better off under the old rules, they would have retained that value.

The reason why this is potentially quite relevant for people in public sector schemes is because it was – under the old rules – possible to what’s called ‘Contract out’ of that Additional State Pension entitlement. So, I’ve mentioned it was referred to as the ‘State Second Pension’ – or SERPS – the State Earning Related Pension Scheme. You could contract out of it – which means that you would typically pay less National Insurance – or have that money paid into a workplace or personal pension. Now, unfortunately, it’s very common for final salary schemes to have been contracted out – which means it could have impacted on your State Pension entitlement.

Now, those rules have since been abolished, but it is worth just getting a State Pension forecast to understand exactly what your new State Pension is going to look like – because there is a possibility it might have impacted on your State Pension entitlement.

If you’re not sure whether you were contracted out, you can usually find out through your payslips – if you have access to those. If it has a National Insurance line of ‘D,’ ‘E,’ ‘L,’ ‘N,’ or ‘O’ next to it, that would indicate you were contracted out. But, as I said fundamentally, probably the simplest way for people to check is to go onto the government website and check their State Pension forecast – which you can do using the link you see on the screen. In addition – in that section – you could also find when you might be entitled to receive it.

Now, I can put this link back in the chat at the end of the session – if you need to – or I can send it on to you directly, should you wish to have that. Now, if you are not entitled to receive a full State Pension – perhaps you don’t have enough qualifying years of National Insurance credits – and you need that 35 years – once you’ve checked your State Pension, you can potentially identify if there’s any gaps and you can see if you can plug them.

In terms of how you would plug your gaps – effectively, it’s whether or not you can potentially claim a National Insurance credit and see if it can be backdated. Typically, there’s a link to things like claiming Child Benefit, Universal Credit, Job Seekers Allowance – but there’s a full list on the government website to help people understand what they might be entitled to.

Possibly the most common reason why people might be missing out on National Insurance – or have gap in their National Insurance record – is around Child Benefit – and not claiming Child Benefit is a big reason why women, unfortunately, typically will miss out on those National Insurance credits. It might be that you miss out because of a high-income Child Benefit tax charge, but you can opt to receive the National Insurance credits without claiming that Child Benefit cash. The partner at home with the children needs to claim the credits in their name – and, if the working partner claim the Child Benefit, you can transfer these credits between partners.

Now, in addition, if you have got gaps, you can buy voluntary National Insurance credits as well, and you can usually go back six years to do so. The cost for doing so at the moment is £3.50 a week for Class 2 National Insurance credits and £15.85 a week for Class 3 National Insurance credits. A full National Insurance year typically would cost £824 and could add a little over £300 each year to your pension – so, effectively, if you survive for three years after claiming your State Pension, you can make your money back.

In addition, the State Pension does typically increase each year in line with these government measures, so it could end up being worth far more. This may or may not be relevant for yourselves – but, if you aren’t sure – or you are thinking about buying National Insurance credits yourself – you should always check with the Future Pension Centre before making any commitment. If you need a link to that, I’ll happily pass that on to you.

So, what we’ve just looked at is quite a lot of information to take on-board in such a short period of time. What I’m now very quickly going to take you through is just to give you a bit more detail around how the other side of pensions might work – so these defined contribution or money purchase pension arrangements.

Now, these – typically speaking – are much simpler concepts for people to be members of, but they don’t, as I said, comewith those guarantees. In terms of how a defined contribution or money purchase pension works – it’s simply a pot into which money gets paid. Once the money is paid into that type of arrangement, it gets invested – and people can choose where that money gets invested, but it can clearly go up or it can go down.

In terms of how people get their money out of it – they can access it from 55 – although that age is due to go up to 57 in 2028 – at which point, they can take up to a quarter of it tax-free, and the rest of it can be taken as income. When it comes to taking that income, the individual needs to decide how they wish to have that income paid to them. They can use that money to buy what’s called an ‘Annuity’ – which is give them a fixed income for the rest of their life – similar to the kind of income you’d get from a final salary or defined benefit pension scheme. They could use that money and move it into a drawdown arrangement – where they can just spend it as quickly or as slowly as they wish – but they could run out of money that way. They could do a combination of those two different approaches. They could also take large lump sums from their pension, but only 25% of it can be taken tax-free. The rest of it is taxed as income – so it could potentially mean that people pay higher tax charges as a result.

For people in these types of arrangements – they need to be checking their income as well each year – and the way that they can do that is through tools like a Pension Calculator – in which people plug in their information – how much goes into the pension – and it will give them an idea – not a guarantee – but it will give them an idea of what their pension pot could be worth and how much income is available to be taken at the end.

Now, whether you’re a member of this type of pension or – in your cases – a private sector defined benefit final salary pension scheme, there are fundamentally some key points that people should be in the habit of reviewing on at least an annual basis. In your cases, I would suggest you should be reviewing your pension scheme rules and understanding which rules are applying to you – and for which section. That will help you understand what you’re gonna be on track for in your retirement.

You’re obviously gonna have to think about what income you’re gonna need in retirement – and whether that’s going to be sufficient – and think about when you’re going to get it as well. And a final point which I mentioned at the start – or earlier on in the presentation – is you need to understand what will happen to your pension in the event of your passing away – and is it aligned to how you wish for that money to be treated.

Now, in terms of where you can get more information – there is a lot of information out there – which can be helpful, but sometimes it can make it a bit tricky to understand where the best places are to go. So, what I’ve put up here are just the key resources for people – whether they’re a member of the NHS Pension Scheme, the Avon Fire and Rescue Pension Scheme – which is the Firefighters’ Scheme obviously – or the Local Government Pension Scheme – in which case, there are a couple of different options to go to.

Now, fundamentally, if you’re not sure about what is right for you to do, there is independent support available – and one of the most useful places you can go for that is ‘MoneyHelper’ – but, if you really feel you need assistance, then we would always encourage people to speak to a financial advisor, because they can help them understand and personalise their retirement targets so that it matches perfectly with what they’re aiming to receive in their retirement.

That brings us to the end of the session. The final slide is our important investment notes – so I do need to ask you to read through these before you depart from the session.

Thank you again for taking the time out of your afternoon to listen to this. I appreciate there’s a lot of detail that’s gone on here – hopefully though it’s given you some food for thought, and has at least maybe sparked some questions that you may have that you want to try and find out answers to. But, once again, thank you for listening and enjoy the rest of your day.

Hi – Happy New Year! Thank you for tuning into webinar number eight – and the first one of 2024.

I’ve posted a few of these now, but – for those of you who may just be joining us – I’m Clare and I’m a Financial Wellbeing Analyst at HL. Day-to-day, my goal is to get people talking about money and feeling more confident about their finances, and I do that through shedding light on how people can make their money work as hard as they do.

Today’s session is ‘Supercharge Your Pension’ – is the second of three webinars all about planning for later life. If you missed last month’s pension basics – due to the December festivities – you can catch up via the video.

As always, a bit of housekeeping before we get started. This presentation will last for around 30 minutes. I do need to stress that everything discussed is purely information and not financial advice. Given the time constraints, it’s not fully exhaustive, but I do hope that what I talk through will enable you go away and make decisions from a more informed position.

A quick look at the agenda. We’re going to begin with a recap of how pensions work, highlighting the tax efficiencies and why – for most people wanting to retire on their terms – your pension should be your best friend.

You’ll all have heard of the gender pay gap, but the gender pension gap is much less known and actually more severe. We’ll then move on to focusing on two key areas to supercharge your pension. Firstly, contributions – what you, as well as an employer, pay into the pension, and then investments – the considerations around where your monthly money goes – and that’s ultimately because these two areas will have the biggest impact on the value of your pot. Then we’ll finish up with some quick-wins for you take away that can really help boost your pension.

Please do remember that the content we’re running through today mostly applies to private sector and personal pensions – otherwise known as defined contribution or money purchase pensions. For the individuals in the audience who have a public sector pension, these operate differently. My colleague, James Corke, ran a separate session last month as to the mechanics of defined benefit schemes – put simply, they provide a specified amount in retirement which is managed by your employer.

Even if you have a defined benefit pension, it can still be useful to understand how defined contribution pension schemes work because you could open one to top up your retirement plan – or – if you change employers down the line – you could find yourself with a defined contribution pension. So to be really be clear, the vast majority of considerations I’m going to cover over the next 30 minutes or so will apply to defined contribution pension schemes.

This type of pension is the most common in the workplace today, and what you end up with at the end – in terms of pot size – is determined by what you pay in, what an employer pays in, and the level of investment growth that you achieve.

Pensions are tax-efficient at various stages and, by investing through your company pension, there are additional benefits. The Government are incentivising you to save for your future and any money which you put in will have tax relief added to it at your highest marginal rate. Then there is the employer contribution – the legal minimum is 3% of your salary, but they may offer a more generous contribution structure. Once the contribution is applied, the money is invested and the growth at this stage is really crucial to the size of your pot at retirement. There’s no further tax or capital gains tax due on the growth of those underlying holdings. Personal pensions are currently accessible from age 55, rising to age 57 in 2028 – at which point, up to 25% of the pension can be taken tax-free – so it’s possible to withdraw from your personal or workplace pensions around 10 years earlier than the State Pension – but be mindful – the sooner that you begin withdrawing from your pension, the longer it may have to sustain your lifestyle for.

When it comes to, ‘How much do you need in your pension?’ – the answer lies most often in what lifestyle you want in retirement. Everyone’s lifestyle is different, so it’s worth thinking about what retirement might look like for you. There’s a pension calculator on our website that will project what your pot might be worth at a desirable retirement age – so you can see where you measure up to in terms of the retirement living standards that we looked at last month. You can reach the calculator by scanning the QR code on screen with your mobile phone. I do need to stress that it does run on several assumptions – such as your retirement age, your salary only increasing with inflation, and a certain level of investment growth – so the figures will vary in reality, but the tool is nevertheless useful for seeing the impact of certain variables, such as delaying your retirement or the impact of the pot if you were to retire early – or increasing your contributions.

Your pension really is the starting point to supercharging your long-term financial wellbeing. Before we get into some practical pointers on how to get the most out of arguably the most valuable asset to your long-term financial wellbeing, I think it’s important to raise awareness of the gender pension gap – to lift the lid on the disparities between male and female pension pots. Unfortunately, women face more challenges than men when it comes to building a pension pot that will provide a sufficient income for them in retirement – and, to be forewarned, is to be forearmed.

We all know about pay inequalities, but how much d’you know about pension inequalities? The gender pension gap is the gaping difference between what men have in their pension pot at retirement age in comparison to what women have. As you can see from the slide, women – on average – have a pension around a third of the size of their male equivalent – £69,000 in comparison to a man’s pot of £205,800 – it’s concerning. Think back to last month where we explored those Pension Lifetime Savings Association Living Standards – a ‘Moderate’ lifestyle costs an individual around £23,000 a year – so that average female pension pot isn’t going to last long. Plus, research indicates that women live, on average, four years longer than their male counterpart, so common sense would suggest that actually women need bigger pension pots.

It’s interesting to understand what creates that gap and, of course, it starts with the pay gap – but, overwhelmingly, the biggest contributor is career breaks. You see when women start out in their careers, there’s no – or very little – difference in our pension pot size. In fact, women participate more than men in pension savings. However, it’s during the childbearing years – when women take career breaks – that the gap begins, and it grows – and it grows exponentially – what’s termed, ‘The Motherhood Penalty.’ Now, those career breaks aren’t trips around the world – or long holidays on an exotic beach – the career breaks are to look after our nearest and dearest – and women are also more likely to be caregivers later in life for elderly parents – what’s termed ‘The Good Daughter Penalty.’

Ultimately, there is a price to pay – and that price is reflected in the gender pension gap. Many women will rely only on their State Pension, but here’s the thing about the State Pension that many people don’t realise – and that is, in order to get some State Pension, you need a minimum of 10 years’ worth of National Insurance contributions. In order to get the full State Pension, you need 35 years of contributions. As covered in last month’s session, not claiming Child Benefit is a really big reason why women in particular miss out on National Insurance credits and receive less State Pension than men. So, the first way to supercharge your pension – and your retirement income – is to check that your National Insurance record is correct and that you have the credits that you’re entitled to. The video from last month’s session is available, if you’d like to catch up and find out more.

When it comes to bridging the gender pension gap – or supercharging your pension – evidence suggests there are two main ways to influence the pot. First-up, is contributions. It’s pretty self-explanatory, but the more we pay into pensions, typically, the more we get out – and, with workplace and personal pensions, you take the reins – you are in control of your long-term financial resilience.

There are a few allowance rules to be aware of. Due to the tax efficiency of pensions, Governments will place limits on how much you can pay into one – and the first rule of thumb is that personal contributions are limited to 100% of earnings. It’s unlikely that any of us would want to put 100% of our salary into our pension – this is really just a rule that’s applicable for those times when you might come into a windfall of cash or perhaps come into some inheritance. For the majority, £60,000 would be the maximum that you can pay into a pension annually but – for a very few people who have an adjusted income over £260,000 – they will start to see that annual £60,000 taper down. It is possible to carry forward any unused allowance from the previous three tax years – provided you’re a member of a UK pension scheme at the time. The lifetime allowance charge was removed from 6 April 2023, though tax-free cash will be capped at a maximum of £268,275. Finally, another thing to be aware of is that, once you’ve flexibly accessed income – so this is taking anything other than your tax-free cash – then, going forward, you are restricted to an allowance of £10,000 a year. Now, that’s known as the Money Purchase Annual Allowance, and that £10,000 includes what you pay in – what your employer pays in – as well as any tax relief. This isn’t an exhaustive list so, if you are unsure, please do seek advice.

Your pension pot is effectively going to fund your longest ever holiday – your retirement. Now, one of the most common questions the Financial Wellbeing Team are often asked is, ‘What pot size should I aim for?’ – and, unfortunately, it’s a little bit like asking, ‘How long is a piece of string?’ – because determining the pot size hinges on you – the individual – and the lifestyle that you desire – it’s unique. It’ll differ to my ideal retirement – to your neighbour’s – and so on.

It’s best to think about what your retirement might look like – and that will then give you an idea of the potential expenses. But here’s a useful rule of thumb linked to age-based milestones. Let’s say you’re earning £40,000 a year and you would like similar in retirement. As such, age 30 – you should have at least £40,000 in your pension. At age 40 – twice that – so £80,000 – and, at age 50, £160,000. Of course, this is highly dependent on what you hope your retirement will look like, but it can act as a useful guide.

It’s going to cost you less than you think it will to save money into your pension because of the tax efficiencies. So, let’s have a look at what goes on behind the scenes with contributions. Firstly, we’re looking at relief at source calculations – and this is where your pension contribution is deducted after tax and then transferred into your pension. Your pension provider will claim basic rate tax relief on your behalf but – if you’re a higher or top-rate tax payer – you’ll need to claim the additional 20% or 25% from the HMRC – or via Self Assessment.

So, on screen, you can see the effective costs of putting £100 into a pension for all three rates of taxpayer. For a basic rate taxpayer, it costs £80 – and 20% is made up by the tax relief. For higher rate – the effective cost is £60 – with the 40% tax relief – and then, top-rate tax – the cost is £55, and then £45 is tax relief.

Alternatively, your employer may deduct your pension contribution using something called ‘Salary Sacrifice.’ This is the most tax-efficient method of paying into your pension because you save both the National Insurance as well as the tax relief. Using Salary Sacrifice, you don’t ever pay the Income Tax or National Insurance on your contribution because the money is deducted gross and deposited straight into your pension. It’s cleaner – it’s more tax-efficient – and much less admin for higher earners.

To put it into figures – if a basic rate taxpayer was looking to put £100 into their pension – via the relief at source method we just looked at – remember it cost £80 – using Salary Sacrifice, it costs £68. That’s the 20% Income Tax relief, but also the 12% National Insurance saving. Though, please be aware that, from 6 January, National Insurance for basic rate taxpayers is dropping from 12% to 10% – meaning that we all get to keep a few more of our hard-earned pounds – and the total cost would be £70 for £100 contribution for a basic rate taxpayer. National Insurance for higher – an additional rate taxpayers – is 2% – and you can see that on the screen.

Over the lifespan of your pension, that additional NI saving is going to make a considerable difference to the value of your pension. The general recommendation – when it comes to contributions – is that we all contribute 12% annually into our pension over a 50-year career to achieve a moderate standard of lifestyle in retirement. That means that the current auto-enrolment minimums of a combined 8% fall short. As a nation, we’re simply just not saving enough into pensions – and some research suggests that women may need to save up to 7% more than men in order to beat and bridge that gap due to the likelihood of having a career break at some point.

To further demonstrate the impact of varying contribution levels – if we take a 30-year-old earning £35,000 – they’ve already built up a pension of £20,000 – we assume annual growth of 4%. If they contribute 10% into their pension annually until age 65 – then they could retire with a pension worth £207,000. That means 25% tax-free cash of £51,800 and a guaranteed annual income of £8,850 – should they choose to buy an annuity, which is a guaranteed income for life.

Alternatively, if the individual personally contributed 15% - remember that this could be combined employer and personal contribution total – at 15%, the pot would be worth £295,000 – which would mean a higher tax-free cash allowance of £73,700 and a guaranteed annual income of £12,600.

Money, for many, is tight right now, but even uplifting 1% can make a positive difference. A really great habit to try and get into is uplifting your pension contributions in line with salary reviews. So, if you get a 3% increase, consider putting 1% or 2% into your pension – because, if you haven’t had it, you’re less likely to miss it.

If you can’t afford to put more aside, you can still make a difference with investing – and, when it comes to investing, time is your greatest ally. We find that investments are often the most overlooked area when it comes to pension planning.

Today’s pensions – defined contribution pensions – are underpinned by investments. So, whether you know it or not, you are a stock market investor. Investments are used to provide an opportunity to beat inflation and to grow our hard-earned money. Simply, ‘Why do people invest?’ Well, if we take £30,000 – it’s been invested for a 30-year period – and, for every year in that 30-year period, the individual manages to achieve 1% growth – then it will be worth somewhere in the region of £40,500 – but, if that individual managed to achieve a 4% growth annually – then, after 30 years, that £30,000 would more than triple to around £97,000. If they managed to achieve 7% growth, well they could be looking at a pot of around £228,000.

Interestingly, between 4% and 7%, the rate of growth hasn’t doubled, but the total pot value has more than doubled from £97,000 to over £228,000. Growth, upon growth, upon growth – which explains why Einstein allegedly called compound growth the ‘8th Wonder of the World.’

Over a couple of years, you wouldn’t necessarily notice a large difference in what that £30,000 might turn into but, when you extend that timeframe, you can see the impact grows – and the longer the timeframe, the greater the potential impact. Remember – with pensions – the timescale could be 40 or 45 years for someone that’s just starting out. Unfortunately – as I’m sure you’ve guessed – it’s not as easy as selecting 7% growth. If you are looking for a higher return, it will generally mean taking more risk. So now, we’ll take a look at what we mean by ‘Risk’ when it comes to the investments within your pension.

What I’m going to try and demonstrate is why people do choose to invest – even with the risk of it decreasing in value. Cash is often perceived as safe and secure and, short-term, that is the case. If we look at cash over that 20-year period – cash doesn’t technically decrease in value – however the growth is really quite minimal. The main risk that you face to cash is inflation. Inflation is how much more expensive goods and services are becoming over a time period – and inflation is increasing at a higher rate – particularly over the last couple of years – than the value of money. So, although your cash is secure, your buying power is reducing over time. So, actually, there is risk in taking no risk.

£1,000 today buys you less than it did five years ago – let alone 10 or 20 years ago – and that means that we need to look at ways to protect pensions and long-term savings from the impact of inflation – and we can do that through other types of assets. One of those is bonds – and that’s where you loan the money to a company and, in return, they will give you a rate of interest on that loan. With a bond, you are taking more risk than simply leaving your money as cash in the bank, but with the aim of achieving a higher rate of interest. The additional risk relates to the fact that the institution you loan your money to may not be able to meet those interest payments – but also, bonds are traded on an exchange, and the price may therefore fluctuate dependent on demand. Generally speaking though, bonds would be considered a lower-risk, lower-return asset class – particularly in comparison to shares. Shares – visibly – much more volatile – we can see that from the rises and falls in the chart – most evident by the financial crash in 2008 and the impact of Coronavirus is also evident in 2020. However, historically, there is no denying that shares outperform over that longer period of time – and it’s for that reason that people investing long-term may be prepared to consider investing in bonds and shares – excepting that potential short-term fluctuation – in the hope of higher performance over the longer period.

Please do remember that investments can fall in value as well as increase. Here, we are looking at individual lines of stock. Typically, in your pension, you’ll invest in a collective investment vehicle known as a ‘Fund.’

The best thing about funds is that we, as individuals, don’t have to be stock market experts because a fund is where likeminded people pool their money – the money is then invested by experts and analysts, which means you achieve diversification whilst, at the same time, reducing your costs and your administration. If you think of a fund as a shopping basket – industry experts will choose the products held within that basket and they’ll amend the asset allocation on your behalf. Funds can vary in size – they could hold tens, hundreds, or thousands of different assets – and that will be a combination of shares, bonds – government bonds, which are known as ‘Gilts’ – cash perhaps some property – and, for your workplace pension, you’ll have a default fund. It’s an auto-enrolment requirement – recognising thatnot everyone is going to be comfortable choosing their own investments – and your default fund will be a one-size-fits-all approach. It’s diverse by design, but it might not align perfectly with an individual goal because it’s due to its universal design. It has to be a one-size-fits-all approach by nature because it has to be as agreeable for an individual aged 50 joining the scheme, as it does for someone who’s aged 25 – and those two individuals that may have different aims and attitudes to risk due to the different timescale ahead of them of investing within the stock market.

We’re now going to look at some example funds to further examine the relationship between risk and reward. Three funds – which I’ve titled ‘Adventurous,’ ‘Balanced,’ and ‘Conservative.’ The ‘Adventurous’ fund – you can see – is entirely invested in shares. So, if you think back to the asset performance chart, you’re more likely to see short-term volatility from this fund. The ‘Balanced’ fund has a wider range of assets – shares – as well as fixed interest products – so it’s got that wider diversification. The ‘Conservative’ fund – typically, less money held in shares – a fund like that might be designed to aim to keep pace with inflation whilst at the same time providing shelter from stock market volatility. Individuals might consider such a fund if they’re naturally risk-averse, but remember – just because it is less daring in its approach, it doesn’t mean it won’t lose money. All investments come with risk – calculated risk. Generally speaking, the higher the concentration of shares within the fund, the higher the risk – but hope for higher return. Greater share exposure generally means more fluctuation, short-term, and it’s crucial that you’re comfortable with taking that risk. If you are comfortable selecting something more adventurous – and by that I mean that you have the stomach for those price fluctuations, should they happen – the earlier you do it within the lifespan of your pension, theoretically, the better – and that’s because you have a much longer recovery period, should you need it. You will be able to find out more about where your workplace pension is invested by looking at your statement – you could also check your online account – or you can reach out to your pension provider for further information.

The last chunk of today’s session is all about pension consolidation. Tracing and tracking a lost pension pot could really supercharge your pension and retirement plan. The Department for Work and Pensions estimate that there’ll be 50 million lost pensions by 2050. The big factors contributing to this are that people are changing jobs more frequently – nobody stays at the same employer for lengths of their career anymore. In fact, those under the age of 35 will likely have an average of 12 jobs during their lifetime, which could mean 12 pension pots with 12 different providers.

Another contributor is moving home – we’re likely to do this an average of eight times – and, if we forget to update our pension providers with changes to our name and address, then statements will no longer reach us – so it’s easy to see how you can lose track of pots along the way. But even the smallest of pensions will grow over time, and you could be missing out on hundreds or thousands of pounds that could contribute to your retirement income.

When it comes to consolidating our pensions, there’s a lot of benefits in doing so. Firstly, it helps us have a clear picture of our retirement savings and what we might be on track to receive. When pots are in different places, it can sometimes make it a little bit more difficult to visualise our plan. A big gripe when speaking to clients – is when it comes to managing pensions – or any type of financial product – is needing to remember all the different log-in information. Consolidating pensions can save a lot of time and stress that goes into managing that. Another thing to consider is the value for money that you’re getting with your pension – and that doesn’t necessarily mean choosing the provider with the lowest charge – but costs should come into your decision-making. You may find that, by combining your pension pots, you may actually receive cost savings, depending on the charging structure of the provider.

Although investments aren’t guaranteed – they can fall as well as rise in value – by focusing your attention on your pensions, this should also allow you to review your investments more regularly and in greater detail – meaning you’re more likely to select investments that meet your objectives – and consider whether your current provider will offer all of the options at retirement – including flexibly accessing your pension.

Pension freedoms today mean we’re able to split money even in the same pension – accessing it at different times and using different withdrawal methods to suit our own preferences and lifestyle – and we’ll expand on the different withdrawal options next month.

Pensions are much more fluid than they once were – it is likely that you may be able to amalgamate your pots – and, from my experience with clients, the main attraction is that it is easier – from an administration perspective – to have one pot, one log-in, and one consolidated statement. Other factors for consideration are management fees, investment choice – whether you prefer one provider’s website to another – or facilities. If you do choose to consolidate, it’s really important you check two things before placing an instruction. And firstly, it’s whether there is an exit penalty to leave your current provider – you can usually see that on current statements – so if there is a current value, and then a transfer value. If there’s a discrepancy between the two, then that would suggest that a fee is beinglevied. Also, you want to check whether you would lose any guaranteed benefits by transferring away. Those guaranteed benefits are more likely to be associated with final salary schemes, but you could have a guaranteed annuity rate wrapped up within your defined contribution pension.

If you’re looking to trace any historical pensions, we recommend contacting your old employer directly – if still in operation – to ask them who the pension provider was during the timeframe that you worked there. Failing that, you can check in with any old colleagues you’ve remained in contact with – see if they can shed light on the current provider. Alternatively, there is the Government’s free service – the HMRC Tracing Service. In theory, it is very broad-reaching, but it doesn’t guarantee to find your details and it can be quite administrative.

‘Gretel’ is a new service that can help find lost pensions, investments, and bank accounts. It is free – and, once you’ve registered your details, it keeps searching every 14 days – as the database grows – and will notify you if it finds something.

If you do locate a lost pension, you’ll likely need to send in ID documents to verify your identity and update your address and personal information – if it’s required – before you can access the pot and place any consolidation instruction.

A bit of a recap now. Five quick wins that can make a big difference to your pension and retirement plan – and, ‘Why not start the New Year by kickstarting your finances – and your long-term financial wellbeing?’ First, ensure you get the maximum contribution available from your employer. ‘Is there an incentivised structure on offer – whereby, if you pay more, so do they?’ If so, that is money that you won’t otherwise receive.

In summary, the earlier you save, the better – there is always going to be something more exciting to spend your money on than pensions – but, if you save more earlier, the money has longer to grow and compound growth makes your money work harder.

One in 20 people are estimated to have lost a pension – ‘Could that be you?’ Trace and track that pension pot – it is your money and it will provide a welcome boost to your retirement income.

Consider where you’re invested – ‘What is the timescale ahead of your retirement?’ Because, if you aren’t able to pay in more now, the investment return you achieve could have a big impact on the value of your pension.

Your pension doesn’t form part of your estate for Inheritance Tax purposes, so it could be the most valuable asset that you leave behind for your loved ones. Make sure that you set up your expression of wish. This is a clear record confirming who you would like your beneficiaries to be, should you pass away. You place that instruction with your pension provider – it takes just a couple of minutes – so less than the time to make a cup of tea – and that means that your intentions have been lodged, and it’s worthwhile making sure that you’ve done that with each of your pension providers – if you have multiple pots – and that you review that in line with life events.

Accessing guidance and support will importantly mean more informed decisions and today is a great time to get curious. First-up is a reminder of the link for the State Pension forecast – which we looked at last month. Independent support is available on the MoneyHelper website – it’s a treasure trove of free, impartial guidance and is backed by the Government. For anyone over the age of 50, there is Pension Wise – and that’s a one-on-one specialist guidance service to help you understand your withdrawal options. The appointments are usually 45 to 60 minutes in length and they’re really worthwhile taking up that opportunity.

Drawing to a close – I am required to ask you to please take a couple of minutes to read through the important investment notes on-screen. They reiterate that everything discussed was information and not financial advice.

Thank you for taking the time out of your day to listen to this seminar. In February, we’ll be honing in on retirement and the different withdrawal mechanisms when it comes to accessing your pension. If you haven’t already booked your place, you can do by scanning the QR code with your mobile phone and registering. Thank you again – I hope you found this session useful. Take care, and we hope to see you next month.

Ceri Williams: Hi – thank you for tuning into this webinar today. I’m Ceri – I’m a Financial Wellbeing Specialist here at Hargreaves Lansdown. My role is to help support members who use Hargreaves Lansdown for their pension savings – and I work within our Financial Wellbeing Team here.

We provide these webinars to give people foundational financial education to boost their financial resilience, with this specific session today focusing on ‘The Road to Retirement.’

So, this one is the ninth of a 12-webinar series which we’re hosting. Our previous webinars have covered topics, such as ‘How to Navigate the Rising Costs of Living,’ ‘Controlling your Debt,’ and also ‘Building a House Deposit.’

There is going to be a QR code at the end of the webinar – so, if you’d like to register for next month’s session – it’ll be focused on an introduction to investing – so please do wait around for that, if you would like to sign up.

I do need to let you know that the session is just for information purposes only today – as opposed to financial advice – but, hopefully, it’s going to be enough to help you make your own decisions.

Looking at what we’re going to cover, then – we’ll first start by looking at the importance of saving towards your retirement. So, we’ll focus on the current retirement reality, and also look at what income you might need. We’re then going to look at the options that you have when it comes to withdrawing the money from your pension.

I do want to make it clear that the retirement income options discussed today will refer to private and workplace pensions that aren’t public sector.

So, just to look at that in a little bit more detail – the previous two webinars that we’ve hosted in this series went into detail about private and public sector pensions, so please do take the time to go back and listen to the recordings of those – if you did miss them and you’d like more information about the differences between the two.

Since the introduction of pension freedoms in 2015, the retirement landscape has become a lot more flexible for private sector pensions, and you can mix and match different options to suit your different income needs. This compares to public sector pensions, where they are very much the gold standard of pensions, but are very rigid and individualistic.

If you are unsure on the type of pension that you have, I would recommend contacting your HR department, and they will be able to point you in the right direction of your pension provider for more information. So, I do just want to make it clear that the webinar today is going to be focused on defined contributions – so private sector schemes.

If you’re aiming to retire soon, then you do need to start planning on how you’ll make it happen. You first need to understand your retirement options and the logistics, including what you can actually do with your pensions. So, once you’ve got the knowledge, you can then be confident in your plans and retire on your own terms.

It is important to understand what you’re spending might be like in retirement – so, to help, in a couple of slides’ time, we’re going to explore some research – looking at different living standards, which are designed to help people picture what lifestyle they might need in the future in retirement.

There isn’t a standard retirement age, as such, anymore – so the line between retirement and working life isn’t necessarily clear-cut. Your financial situation and health – they are likely to influence when you finish working. So, you might decide to retire early – or to carry on working well into later life. In fact, nowadays, many people choose the best of both worlds – and actually choose to semi-retire first.

It can be a good exercise to go through something like a budget calculator to look at your expenditure – see what you’re spending your money on – and that will give you an idea as to how much your bills are – perhaps how much is going on things like your commute to work – and it will be easier to then identify which of these costs could change in retirement. So, moving from things that you definitely will need in your working life to things you might not need when it comes to retirement.

You might find that some costs reduce – like, for example, those commuting costs to work – but other costs could increase. For example, many people might find that they go on holiday more often in retirement – with the extra time that they have – or might decide to take up additional hobbies – for example, golfing.

If you have grand plans to travel the world when you retire, then this will also need to be factored into those income considerations – when it comes to the planning. So, it is a good idea to start thinking about your retirement needs as soon as possible – even if it’s just setting generic income targets throughout your working life – as a way of planning your contributions into the pension.

Choosing how to access your pension is a very important decision, which will need some careful consideration. It’s a good idea to ask yourself if you want a secure income – that’s guaranteed – or, if you feel that your income needs – they might change – in which case, you might need some more flexibility.

You also need to consider if you go for a more flexible option – whether you’re happy to manage your retirement yourself – and if you’re comfortable with some of the remaining pension invested in the stock market – where there can be periods of volatility – and that value of the pension can fluctuate.

It’s also important to think about whether you need all of your tax-free cash in one go, or whether you can stagger it. It is good to bear in mind that tax-free cash – typically, it will get paid to your bank account, so it will then form part of your estate and, potentially, liable to inheritance tax.

I appreciate there is quite a lot to consider – but, running through these questions, it might help you to narrow down – or choose the most suitable option.

Understanding how much we might need in retirement can be quite a difficult question to answer – and also, for many of us, retirement can be quite a long way off, so possibly not at the forefront of most people’s minds. There are other various schools of thought – which you may have come across – such as needing two-thirds of your working salary to have a similar standard of living – but research has shown that this might not actually be the most helpful guide.

So, what we’re looking at here is a study carried out by the Pension and Lifetime Savings Association – and it’s identifying the amount of income that someone could need to have a ‘Minimum,’ a ‘Moderate,’ or a ‘Comfortable’ standard of living in retirement.

So, they interviewed lots of retirees to find out what they spend their money on. So, what you can see on the left-hand side – from the ‘Minimum’ value. This is an amount which is actually higher than what will be provided by the Government in the form of a State Pension. Confirming that this alone possibly won’t be enough to live on – a ‘Minimum’ standard of living is defined as being an amount to cover all of your basic needs, with some left over for fun. So, for anything else, this is where a private pension can come in to cover that shortfall.

The ‘Moderate’ income amount offers more flexibility and financial security – such as the ability to run a car and a couple of weeks’ holiday in Europe each year – and then a ‘Comfortable’ position allows for more financial freedom – some luxuries – for example, going out for dinner once a week.

Of course, another significant factor to bear in mind is where you’ll actually be living at the time. As most of you are aware, the cost of living in the capital is generally greater than the rest of the UK, so this would need to be considered if you plan to reside in London as a pensioner.

These standards of living – they’re also based on a few assumptions – so one of which being that there is no mortgage or rent to cater for, and the other being that there are no dependents. So, if this isn’t the case for yourself, then these figures are also likely to need to be inflated to reflect those additional costs.

All of the information provided to you here – it’s been obtained from the Pension and Lifetime Savings Association – so further details can be found on their website – so please do feel free to explore their findings in a little bit more detail.

Now, a very common question that we are often asked is, ‘Well, how much should I actually be paying into my pension?’ And our house-view is that, if people are able to contribute 12% –over a 50-year working life – this should provide them with that ‘Moderate’ standard of living in retirement. This figure is a combined total – so it could include an employer’s contribution – so highlighting the importance of having that boost from the company to help you reach that target.

Now, for every three years that you haven’t paid in that 12% – is suggested – you could look to increase your contribution by an extra 1% to make up for that shortfall. Ultimately, though, it is going to be down to your own affordability – and what you would feel comfortable with contributing each month. We do have a pension calculator tool available on our website – and this can be a useful way of highlighting what you’re currently on-track for – given your current contribution – so please do feel free to explore that after the session today.

Now, I thought this figure was useful to point out – so, someone turning 50 today – and retiring at age 65 – they will have 180 paydays left. You can make a very significant difference to your pension savings in those 180 paydays. 15 years – it’s a very long time to actually power-up your pension. So, that’s 180 further contributions which are benefitting from tax relief and potential investment compound growth. Every little does help – and bigger is nearly always better when it comes to pensions.

Since the introduction of pension freedoms, there is now a lot more flexibility in the way in which people can access the money in their pension. So, the money in the pension can be accessed currently from age 55 – that is rising to 57 in 2028 – so, when it does come to that time, what options do you have?

Now, the three main ways in which you can access the money in the pension are either through an annuity, drawdown, or a lump-sum withdrawal. Each option normally allows you to take up to 25% tax-free cash, and the remaining 75% will then be deemed as taxable income. You don’t have to access your pension all at once – you can take it in stages if you wanted to, and you can mix and match the different options to suit your income needs.

Deciding the way you want to access your pension is a big decision, so we’re going to look at each of these different methods of withdrawal in a little bit more detail – one-by-one – now.

So, the first option is something called an ‘Annuity.’ Now, for many people, an annuity is historically what they associate with their pensions as a way of generating income. The features of an annuity is that it’s a secure, regular income, which then gets paid to you for the rest of your life – however long that may be. If you do decide you want to take out an annuity – typically, people will take that 25% tax-free cash first – which will get paid out as a lump-sum payment. The rest of the pension then is passed onto an annuity provider – which would usually be an insurance company. They would then look at your age – they would look at your lifestyle choices – of course, the size of the pot that you’re actually giving them – and they would agree on an income to pay you – year-on-year – for the rest of your life.

There are different types of annuities on offer – so you can have one that pays the same amount of income each year – or one that increases with inflation – or a given percentage each year – but, once you’ve taken out an annuity, you are bound to that arrangement – you can’t make any changes. So, this can be difficult if your circumstances change into retirement.

Now, the death benefits of annuities are something to consider – they will need to be built-in at the time of taking the annuity out. So, if there are no death benefits selected, then the annuity essentially dies with you, as the income will stop.

You don’t have to use your whole pension pot to buy an annuity – you do have the option to use a smaller portion of your pension to buy a smaller annuity – and use the remaining pensions a bit more flexibly. For anyone with a need for a guaranteed income in retirement, it could be worth exploring annuities further.

To help you get an idea of what an annuity pays – so we compile the best annuity rates available for a £100,000-pension each week on our website. Annuity rates – they do change regularly – and quotes are only guaranteed for a limited time – so they could be higher or lower in the future – and the exact income that you’ll receive – it’s going to depend on the value of your pension, along with your personal details and the different options which you select.

So, I mentioned on the previous slide about building in death benefits to annuities at the point of purchase – and this is either for a guarantee period or for a joint life annuity, which you can see on the left-hand side of the table. So, a five-year guarantee period – for example – would work in that, if you were to pass away in Year Two – after taking out the five-year guarantee – your beneficiary could continue to receive what you would have received for the remaining three years in that guarantee period.

The other way to build in death benefits is ‘Joint-life.’ So, a joint-life 50% annuity could mean that, if you were to pass away, your beneficiary – so this would usually be a spouse or a partner – they could continue to receive 50% of the amount that you are set to receive for the remainder of their life.

Now, there is also the option for a level annuity – or one which increases each year – so with inflation – or, for example, 3% – as shown on the table – and you can find these figures – along with an annuity quote tool – on our HL website – so please do use those if you would like to explore the annuity rates further.

Now, the second option is ‘Drawdown.’ So, drawdown offers more flexibility over how you take your income. The thing is – with an annuity – you’re still able to take the 25% of your pension, tax-free – by a drawdown – but the difference comes when we look at that remaining 75%. The balance of your remaining pot is moved into a drawdown arrangement – and, from that, you can then decide how often – and how much income you want to take from your drawdown pot. The income from drawdown is taxable – and the more income you take in a tax year, the more tax you are likely to pay. Any money in your drawdown account can be invested – so you can have investment exposure to your pot – which does come with risk – but it can potentially see some investment growth into retirement, which could prolong the life of your drawdown arrangement.

Another feature of drawdown is that money within this arrangement can be passed onto your beneficiaries when you pass away. Pensions are held outside of your estate – so can be passed onto your beneficiaries – and, in most cases, must be free from inheritance tax.

So, along with the annuity calculator – which I mentioned – we do also have a drawdown calculator available on our website. You can use this calculator to help decide what income withdrawals might be sustainable, and how different investment growth rates – and different life expectancies – could affect how long your pension lasts. So, you’ll need to input a few details – as you can see on-screen there – something like your age, pension-fund value, and roughly how much monthly income you might require in retirement. You’ll then be shown results similar to those on-screen now, which estimate how long your pension could last – given three different investment growth rates.

Now, the final option is a lump-sum withdrawal – so this is often called an ‘UFPLS’ – or ‘Uncrystallised Funds Pension Lump Sum.’ As with drawdown, lump-sum payments are flexible – and you’re able to withdraw as much or as little from your pension as and when you need to. The difference is, however – with a lump sum, you’ll be withdrawing the 25% tax-free cash element along with the 75% taxable, all as one. This means that you may need to decide on which investments in your pension to sell – in order to raise cash for that lump sum.

So, with drawdown – where the tax-free and the taxables rule can be separated – with a lump sum – or with ‘UFPLS’ – it will all be paid together. Again, this can be done partially – so you don’t need to use all of your pension as a lump sum – you can withdraw it in stages, and the rest of the pension can remain invested as it is. There’s a lot more information about each of these options on our website, so please do feel free to explore the tools and the information further.

Now, under current legislation – put simply, in the event of death before the age of 75, money held in personal pension funds – or in an income drawdown – can be passed to your nominated beneficiaries, usually free of tax. The rules of different schemes can differ – however, generally, the benefits can be paid – either as a lump sum, or as a tax-free income to financial dependents or nominated beneficiaries.

The difference after the age of 75 is that beneficiaries will have to pay tax on any income – or lump sums – which they receive at their marginal income tax rate. Pensions are held outside of your estate – so the key point is that, in most cases, pension death benefits are free of inheritance tax whenever they are paid.

More thought around where and how to draw your own retirement income may be required. So, if inheritance-tax planning is important – in some cases, leaving the pension assets alone – and not taking withdrawals or tax free cash – may be more beneficial – though, of course, this isn’t always the case, and financial advice should always be sought.

Now, bad luck does have a habit of striking when we least expect it – and, usually, at the worst possible time. It could be that it was your boiler packing in – or the engine light on your car’s dashboard flashing ‘Red.’ The cost of dealing with these bumps in the road – they do all add up. While it’s impossible to predict when these type of events might happen, they inevitably will – so it makes sense to get ahead of the game by building up your rainy-day savings pot – and having a cash buffer for unexpected emergencies. There is no magic number – and the amount of cash will vary – and it will depend on your circumstances and lifestyle.

So, during your working life, we think it’s a good idea to hold around three to six months’ worth of essential expenses as cash to cover emergencies. When it comes to retirement, this increases to one to three years’ worth of essential expenses. For those in drawdown – they might consider erring on the side of caution by having the full three years’ worth of essential expenses.

Holding more when you’re retired – it’s a good idea because, if you need to dip into those rainy-day savings, it can be harder to replenish them without something like a monthly salary being paid. Your emergency savings – they should be kept within touching distance – and, by that, I mean in a savings account which can quickly and easily be withdrawn from. So, instant or easy-access savings accounts are usually the best option for this.

Keeping your rainy-day savings as cash – it also avoids having to sell your investments at a market low, or taking out credit to cover those unexpected costs.

So, accessing your pension is a really important decision – and it might be that you look to make use of all other available resources before coming to a decision. One of the key places you can go for guidance is Pension Wise – and Pension Wise is a government-run service which provides free and impartial guidance to anyone over the age of 50 – to help them understand their options at retirement. You can get in touch with them either online – or by giving them a call – or, in some cases, they might offer a face-to-face appointment – and you can arrange a session, which is usually up to an hour. It’s a chance for you to ask any questions that you may have about the pension – about withdrawal – and your options when it comes to retirement.

Pension Wise – it wouldn’t be a financial advice session, but they can talk through your different retirement options available. They can explain how tax works on those withdrawal options – as well as information, such as how to look out for scams. So, it might be that, if you’re still unsure after doing your own research – and speaking to Pension Wise – it could be a time to consider speaking to a financial adviser, as they will help work out the best way to access the pension – and what that might mean for yourself and your individual circumstances.

So, thank you for tuning in today – please do take the time to read over our important investment notes, which do just reiterate that everything covered today was informational and not to be construed as financial advice.

The QR code to sign up to our next session – which is ‘Introduction to Investing’ – will be displayed shortly, so please do wait around for that to pop up on-screen, if you’d like to sign-up.

Thank you again for listening today – hope you found it useful.

Take care.

Hi everyone, and welcome to the 10th session of this 12 part webinar series, focusing on building financial resilience. Thank you so much for taking the time out of your day to dial in. My name is Evi and I'm one of the Financial Wellbeing Specialists at Hargreaves Lansdown, which is otherwise known as HL. You may have tuned in to some of the previous sessions that we've hosted as part of this series already, so they've covered a range of financial wellbeing topics, and today's session is all about how you can get started with investing.

So in terms of timings today, we have 45 minutes scheduled, but it should only take about 30 minutes to run through the slides, so we'll have plenty of time for any questions that you have at the end. And if you don't mind just popping your questions in the Q&A facility on Teams on Zoom sorry, I can then take a look at those for you. Before we do get started properly I just need to let you know that firstly, the session today is being recorded, and that the content of this presentation is just information, it's not financial advice. The same goes for all other sessions in this series. Hopefully, the information does help you to feel a bit more confident in making some of your own decisions, but if you are feeling unsure about whether a product or an investment is right for you, please do ask for personal financial advice.

So In terms of what we'll be talking about today, there's a lot to cover when it comes to investing, so I thought I'd start by looking at what makes people financially ready to start investing their money, before then looking at why people choose to invest in the first place. The bulk of this session will focus on some of the investment options that are available to you, and how just hopefully focus on how you can go about choosing which investments are right for you as well. We'll then briefly touch on what accounts are available to hold your investments within, before finishing up with the importance of considering your time horizons when it comes to investing, to navigate market volatility.

So, when should you start investing? So You may have heard that time is your greatest ally when it comes to investing, and we'll explain this in further detail later-on. But before you start investing your money, it's really important to make sure that you're financially ready to do so. It can be hard to know where to start when it comes to prioritising your finances, and our financially fearless network has taken it back to basics, with a framework which outlines five steps that you can take to build your financial resilience. So We've been working through this framework as part of this webinar series with previous sessions looking at managing your debt, what protections you can have in place, the importance of having a pot of money to cover the cost of emergencies - otherwise known as a rainy day fund, and how pension savings can help you later in life.

So It's really important that these four steps are prioritised, but once you've met these steps, you can then then look to start investing some of your longer term savings to help it grow. Deciding whether to save as cash or invest your money ultimately comes down to your timeframes.

So Investing won't be right for everyone all the time, and as we've already mentioned we all have short-term needs, such as paying bills and clearing debt. Cash is a very secure asset as the value of it doesn't really change, which makes it a great asset for meeting these immediate short-term financial needs. At HL, we view the short-term as within the next five years, so if you feel you'd need the money within this timeframe, our house view would be hold to be hold hold the money as cash. But we also all have mid to long term financial goals as well, so this could be saving for a house, paying for a wedding, or preparing for retirement. And investing money that we don't need in the next five years gives it an opportunity to grow, so that it works a bit harder for us whilst we're not using it. Investing also gives our money a better chance of beating inflation, so that the income it provides us with is sufficient for when we come to use it further down the line.

So Unlike cash, there is a risk that investments fall in value, so why do people do it? And The simple answer to that question is for growth on their money. This slide shows how an initial investment of £30,000 can grow in value over a period of 30 years. If we were to take the £30,000 and invest it, and the investment achieved an annual return of 1%, by the end of the thirty years the investment could be valued at over £40,000. If the investment achieved an annual growth rate of 4% instead, the £30,000 could turn into over 97,000. And an annual growth rate of 7% could see the 30,000 turn into over £228,000.

Now the reason why the difference between the 7% growth rate and the 1% growth rate is so large is because of something called compounding, which effectively refers to growth on growth. This is where in the first year the growth rate will apply to that £30,000, and then in the second year the growth rate will apply to that new higher value. It's the effect of compounding over a sustained period of time that makes the difference. Unfortunately though, it's not quite as simple as just choosing an investment with a guaranteed growth rate of 7%. When it comes to investing to achieve greater return on your money, you do need to take greater risk, and that risk is that the investment value decreases, meaning you get back less than what you initially paid in.

This next slide has a graph on it, which hopefully illustrates investment risk in a bit more detail, as it can be quite a misunderstood term. So, if we were to take £1000 of cash, you can see that the value of it doesn't really change over a period of 20 years. So This makes cash a really secure asset for us, especially in the short-term, because we know exactly what we've got. But it can present as a problem when held for the long term because it rarely beats inflation. So, that's where people start to look at other assets to invest their long term savings, to give it an opportunity to grow. And One asset class that tries to beat inflation are bonds. So when you invest into a bond you essentially lend money to a company or a government, and in return for your money the bond will offer a rate of interest, plus the initial payment back once that bond has matured.

So, with a bond you are taking on more risk than simply leaving your money as cash in the bank, and the additional risk relates to the fact that the institution you loan your money to, may not be able to meet those interest payments. Also, one thing to note is that bonds are traded on an exchange, and the price of them can therefore fluctuate dependent on demand. Generally speaking though, bonds would be considered a lower risk - lower return asset class, particularly in comparison to shares which you can now see plotted on the chart. You can see that shares are much more volatile in the short-term as their value can fall, as well as it can rise, but over the long term they do offer the greatest potential for growth. When it comes to investing, time can help to smooth out any dips in the market, giving you capacity to take on the investment risk.

So, I thought we could explore the different assets in a bit more detail. Unfortunately due to the time constraints we won't be able to discuss every type of investment that's available, and I may mention a few that you've probably already heard of before, but hopefully the content will help you to understand what you can look for when you choose your own investments.

So Starting with shares as the first asset class. So As the graph shows, historically shares have offered the greatest potential for growth, but what actually are they? So, companies will issue shares in their business on the stock exchange for the public to buy, and people who invest in these shares will essentially become part owner of that company. This is a way of increasing the company's capital so that they can continue to grow and perform. Share price works on a supply and demand basis, because a fixed number of shares is supplied by the company, so when the demand for a share is high, the stock price will be driven by this and will increase, whereas when the demand is low, the price will come down.

The value of shares is based on the performance of that one company, and so in this sense it does make them a higher risk investment, because the onus is on you as the investor to monitor the company's performance. Some companies may also pay their shareholders a dividend payment as a thank you for investing in the business, so these are paid at the company’s discretion and their performance will often be a factor in the dividend payout. So share investors can earn money this way, as well as through the capital value of their shares increasing on the supply and demand basis that we've mentioned already.

According to some estimates, at one particular time there was around 58,000 listed companies in the world, and they had a combined market value of $80 trillion at that particular time. So it is easy to understand why some people will feel overwhelmed when it comes to choosing individual shares. The stock price will indicate how in demand a particular stock is, and it's very much down to public perception as to how that company is doing. But the price to earnings ratio tells us whether the stock price accurately reflects the earning potential of the company. So This is known as its value over time, and in other words, it can give you an idea as to whether a company is over or undervalued. So price is really important, but so is valuation, and there's the old adage that price is what you pay, and value is what you get.

The price-earnings ratio effectively tells you how much the market is willing to pay for £1 of the company's earnings. If we use an example to illustrate what this means, a stock may have a stock price of £100, it may then have earnings equal to £4 for every share that's an issue. This means the price to earnings ratio is 100 divided by four, which equals 25. In other words, this means that it would take 25 years of earnings for the company to cover the cost of the investment. The ratios will never stay still as stock prices are always moving, and companies will release data around their earnings on a quarterly basis. It is really important to compare price-earnings ratios with similar companies to understand whether or not the valuation looks high, and the price-earnings of a pharmaceutical company for example, will be very different to that of a fashion retailer.

On the HL website you can look at the price-earnings ratio under the Financials tab of the stock, and the price-earnings ratio can help you to identify growth stocks from value stocks. A high price-earnings ratio would indicate that the stock price is higher than the company's earnings, suggesting it has room for growth. Whereas lower price-earnings ratios tend to indicate a value stock, so looking at companies whose earnings support the stock price a bit more.

With growth stocks the company's earnings are expected to grow, and this means they can be a bit more volatile at times, but they tend to perform well when the economy recovers and interest rates are low, as typically people are spending more as opposed to saving. Whereas value stocks tend to trade at a lower price than what the company's earnings and performance may otherwise indicate, and investors can capitalise on this inefficiency as value stocks tend to hold their value over the long term, though this means they tend to do better in periods of decline or when interest rates are higher.

So, where can you find these types of stock? It’s important to preface here that Japan and the US have the biggest stock markets in the world, so naturally both growth and value stocks can be found on these exchanges. There is also some overlap between industry sectors as well, since not all companies in a sector will have the same characteristics, but generally speaking tech and consumer industries offer growth stocks as these are typically items that you don't necessarily need to buy. Whereas the financial and healthcare industries are more value style, as these offer more essential products that we need, regardless of the economy.

The other asset class that we looked at earlier was bonds. Shares and bonds are very different kinds of investment. Shareholders will own parts of that company, whereas bondholders simply lends that company money. In return bond investors can expect the company to pay them a rate of interest, plus the initial payment back at a specified date. This means the risk reward profile is very different; bondholders just need the company to have enough cash to repay the loan and service the debt. Profits could half, ordinary dividends could be slashed, but as long as the company can meet its obligations to bondholders they should continue to receive a fixed rate of interest, and their capital back at redemption. Although there is no guarantee, and if the company is unable to return all or some of the capital and interest payments, the company will be known in the bond market as having defaulted.

The UK Government can also issue bonds, these are called gilts, but they work in a very similar way. So whilst past performance is not a guarantee of future performance for any type of investment, history has never seen a UK government default, and so they've always been able to pay back their loans, and historically, this has made them a less risky and more secure investment.

People buy bonds for two reasons, the first is to have a fairly regular and fixed stream of income, and the second is to make a profit on the bond if they don't plan on holding it to the specified maturity date. The bond market is inversely related to interest rates, so this means when interest rates go up, the value of existing bonds will decrease, because newer bonds will be issued that offer a higher rate of interest, so this makes existing bonds less attractive and therefore less in demand. On the flip side of that, when interest rates go down, the existing bonds will offer a higher rate of interest, and so demand for them increases, meaning their value goes up. Investors can choose to sell their bond early if they wanted to lock in this higher value, although it does mean that they'd miss out on future interest payments.

We recognise that it can be very hard for investors to know exactly which shares, bonds, and assets to invest their money into, especially as it means you're reliant on the performance of that one company performing well, and/or not defaulting. So, what some people prefer to do instead is to invest into a fund where you can use the knowledge and the expertise of a fund manager, to decide how to spread your money between asset classes and companies. What this also means is that you're shifting the monitoring responsibility from the investor onto the manager, although because of this funds will typically have an ongoing charge that the fund manager takes.

So just to explain how funds work in a bit more detail. When you invest into a fund, your money gets pooled with the money of lots of other investors. A fund manager will then invest all of this money in a range of different asset classes, such as shares, bonds, property, and cash. In return, you will get units in the fund which represent a spread of all these underlying investments, so by investing into the fund, you get exposure to a range of different asset classes to spread and diversify your money. The type of assets and the type of companies that the fund manager chooses to invest into, will ultimately determine the overall level of risk that the fund takes, and there is usually some form of mandate over where exactly the fund can invest.

When choosing a fund, it's really important to understand where the fund manager is investing, as this will determine the level of risk that the fund takes. Typically, funds with a higher percentage allocated to shares will in theory be more volatile in the short-term, but potentially offers greater growth opportunities in the long term. Funds like this will be seen as taking a more adventurous approach, whereas funds that allocate less to shares and more into cash and fixed interest assets, are considered to be less adventurous. They're said to take a more cautious approach, as things like investment grade bonds are usually issued by bigger well-known companies who are less likely to default.

So with a cautious fund it won’t necessarily expect huge returns, but it should fall less sharply when markets take a downturn, providing some stability to people's portfolios. Understanding the asset allocation will help you to understand the aims of the fund, and make sure that they align with your own attitudes to risk. It is important to look at some other characteristics of the fund as well.

When you invest into a fund, you get exposure to lots of different companies and asset classes, which diversifies your money. Different assets and different companies will perform differently at different times, and so some will be riskier than others.

This slide has a table on it, which has a list of sectors down the left hand side, and the green boxes show the sectors which were best performing in that particular year. Whereas the red boxes show the worst performing sectors. Now as you can see, only one sector was best performing in two consecutive years. You can also see how the riskier UK smaller companies sector has been the best performing in one year, and then the worst in the next, so this is just a reminder that past performance is no guarantee. But the basic idea behind diversification is that by having exposure to lots of different assets and sectors, the ones that perform well at a particular time will hopefully outweigh, or balance out the ones that aren’t doing quite as well, and so the overall value of your portfolio is less affected by the performance of just one sector.

Now, we understand that the natural instinct may be to sell when you see a sector that you're investing in run at a loss, but this is where it can be reassuring to look at other sectors. So as you can see on the screen, some of the green squares show that even the best performing sectors in that year were running at a loss, potentially just showing that it was a tough year for all. This is where taking a long term approach to investing is really emphasised, there will be times of volatility, but holding out for the long term can help to smooth out those dips.

Now Some people may feel that one fund offers enough diversification, and most default pension funds will by nature be very diverse. But other times some people may want to build a portfolio with multiple funds or shares in it that cover different areas, and potentially invest in different industry sectors. At HL, our house view on building a diversified portfolio is to potentially have one core fund that the bulk of your money is invested into, but then some additional satellite funds that sit on the side, to aid diversification.

Another way build a diversified portfolio is to have a mixture of fund management styles, tho actively managed funds aim to outperform their peers on the stock market, although there are no guarantees that they will actually achieve this. So, active fund managers are usually a bit more engaged, they'll be constantly monitoring their underlying holdings, and tailoring the fund’s portfolio to make sure that it achieves its aim of outperformance. Whereas passively managed funds are often known as tracker funds, and they take a very different approach. They don't try to outperform anything; they simply just want to track the performance of a particular index on the stock market.

Both management styles have advantages and it's usually down to personal preference as to which you go for, and we have found this to be an area that people can feel quite strongly about. So At HL, we think there's room for both actively and passively managed funds, in helping people achieve a well-balanced and diversified portfolio. One thing to note is that passive fund managers are less involved, so typically, they will have a lower ongoing charge. But with that comes a lower outperformance potential. As we'll discuss on the next slide, not all active fund managers will outperform their benchmark though, and it can be hard to identify the best fund managers, or ones with the strongest track records. So, whether you go for an active or passively managed fund, depends on whether you feel the fund manager is skilled enough to pick the best stocks for the cost of their service.

So, what we'll do now is compare the performance of two actively managed funds. First to the graph is the sector average, so this shows how the average fund in this example sector performed. Sector average is often used as a benchmark for active funds to outperform and for passive funds to track or mirror. It's likely that the performance of a passively managed fund would look very similar to this, and hopefully would achieve this at a fairly low cost.

If we now add fund A to the chart; fund A is an example of an actively managed fund that has underperformed the sector average. In this instance, the investor potentially paid higher charges for underperformance, demonstrating that not all managers will make the right decisions all the time. So it's possible that in this instance, a cheaper more passively managed fund may have been a better option. But if we add fund B to the chart, you can see that the fund manager has justified the levy for quite significant outperformance against the benchmark.

The type of account that you hold your investments in is also a really important consideration, and there are lots of different investment accounts out there, they're often referred to as products.

For the new tax year we’ll see lots of changes affecting people's finances, which makes choosing the right account even more important. So, to outline just a few of the changes they’re expected to see, the capital gains allowance will halve again to £3000, and the dividend allowance will follow a very similar pattern, halving to £500 in the new tax year. It is therefore really important to consider whether any income or growth that you receive from your investments are sheltered from these taxes, by being held in tax efficient wrappers. This is just so that you can enjoy more of your returns. The same goes for any interest that you might receive on your cash savings. Salary increases could push you into higher tax brackets where your interest allowance will also reduce. The individual savings accounts which are otherwise known as ISAs are an example of a tax efficient wrapper that you could hold both your cash savings in, and your investments in as well, and any income or growth that you receive will be sheltered from this type of tax.

There are a couple of different ISAs available, and you can contribute up to £20,000 to ISAs each tax year. We have about four weeks left to make the most of your annual allowances for the current tax year, and this could be in the form of adding new money to an ISA, or potentially moving existing investments that are held outside of a tax efficient wrapper into an ISA instead.

So with a stocks and shares ISA you can invest any money that you add, and any income or growth that you receive from your investments is sheltered from capital gains and income tax. You can also sell your investments back into cash at any time, and you can withdraw from stocks and shares ISAs at any time as well, although we do still encourage a mid to long term approach to holding those investments to smooth out those dips. If you choose to hold your money in a cash ISA, any interest on your cash is also sheltered from tax, and there are both easy access and limited access products for you to choose from.

Now if you're aged between 18 and 39, you can also open a lifetime ISA and continue adding money to it until the age of 50. So currently you can pay in up to £4000 into a lifetime ISA each tax year, and this £4000 will use up some of your overall £20,000 ISA allowance, but you can get a 25% bonus from the government on any money that you pay into the lifetime ISA. Again, this money can be invested into stocks and shares to help it grow in value, and the investments can be sold or switched at any time, however withdrawals from the lifetime ISA are more restricted. There are lots of terms and conditions that you should understand before opening one, but broadly speaking withdrawals from the lifetime ISA can either be used to fund your first time property, or from the age of 60 onwards.

You can also open junior stocks and shares ISAs for your children, so these work much in the same way as an adult ISA, in that the money and investments within the ISA can grow tax free. The allowance is £9000 per child across all types of junior ISAs, and the account would be run by the parent, but it is held in the child's name. The child would gain access to it at the age of 18, at which point withdraws can be made. The junior ISAs do not eat into the adult annual allowance, so this £9000 can be paid in on top of the £20,000 allowance that you have for your own personal savings.

The next session of this series we will look at stock market movements in a bit more detail. Markets are very unpredictable, and periods of volatility whilst they’re unpleasant, unfortunately they're not uncommon. The impact of markets dropping on your investments is that you're likely to see them fall in value, potentially to below what you initially paid in, and so it may feel as though you're losing money. When you see your investments falling in value, it's understandable to think about selling the investment to prevent it from falling further, but it's not until you decide to sell the investment back into cash that the loss is actually made, and this would suggest that you're trying to time the market, which is not something that anyone can do.

At HL we feel that time in the market is much more important. Markets do recover, it's hard to know when, but holding your nerve and remaining invested for longer periods of time will allow for any dips in the market to hopefully smooth themselves out.

Investing can feel quite complex at times, but hopefully this webinar has provided a little bit more clarity. There are lots of other resources available to help support your understanding, just make sure that the guidance you received is coming from an FCA regulated provider.

Now as we come towards the end of today's session, I thought I’d just mentioned three golden rules that you can hopefully take away with you.

Number one is to remember that investments should be for the long term, so make sure that your immediate needs are met beforehand. You need to make sure that expensive debts are paid off, and that you have an easily accessible pots of cash to cover the cost of emergencies, before you start thinking about putting money aside to invest.

Number two is that investing comes with risk, but with risk comes the possibility of return. So get exposure to different assets, geographical areas, and industry sectors to help diversify your portfolio, and balance out your returns.

Finally, number three, as we saw in the last slide, time is your greatest ally when it comes to investing, so remember your long term approach in times of volatility.

Thank you so much everyone for your time today and for listening. If you could take a few more minutes to read the important investment notes on screen, after you've read these, we can then spend some time going through any questions that you might have.

Clare Stinton: Good afternoon, everyone – thank you for joining me for the penultimate seminar in our 12-month Financial Resilience Programme.

If you’re just joining us, I’m Clare – I’m a Financial Wellbeing Analyst at HL – and I’ve spent roughly the last seven years speaking to both individuals and employers about personal finances – delivering education up and down the country.

As such, I’ve delivered a few of these – all of which have been recorded – and you can catch up on any sessions that you’ve missed by going online to the video hub – and I’ll drop a link to that later into the chat.

As the title suggests, today’s focus is all about the stock market – and we’re going to be explaining the ups and downs.

Investment risk is largely misunderstood. We hear, too often, about investment losses and very rarely the success of long-term investment growth. That’s resulted in people tending to overestimate the risk involved in investing – because you are more likely to hear about a stock market crash than about long-term potential that investments can offer.

Creating a positive dialogue could really help turn the tide to encourage people to take that first step into investing – particularly for women, who are less likely than men to invest. Understanding stock market volatility – and understanding that it’s a normal occurrence within the market cycle – will help prevent investors from making kneejerk reactions and acting on emotions. In fact, volatility can lead to growth – and we’ll see that over the coming slides.

Before I do get started, this presentation will last for around 30/35 minutes. I do need to stress that everything discussed is purely information and not to be considered as financial advice.

Please put any questions that you have into the Q&A, and I will look to answer as any of those at the end of the session.

A quick look at the agenda for today. First-up, we’ll look at why people invest – and how investing over the long-term can help you build your financial resilience. Next-up will be the history of stock markets. They’ve been around in one form or another for over 1,000 years. Then, for the rest of the webinar, we’re going to hone in on what falling stock markets mean for you as individual investors – including some golden rules in times of uncertainty. Finally, we’ll take a brief look at the world of ‘Responsible Investing’ – and that’s the style of investing that enables you to allocate your money to do good to some degree – meaning you don’t have to choose between profits and your principles.

So, hopefully – over the last 10 months – what’s become really clear is that there are multiple components to your financial resilience. Building your financial wall of defence – in other words, protecting what you’ve got – and the life that you have – is the first priority before growing wealth. Otherwise, it’s ‘Move one step forward and two steps back.’ Investing to grow your money is the final piece of the puzzle – and investing your money does come with risk: calculated risk. I will stress that throughout the presentation, but it should be considered as a long-term exercise. Therefore – as we’ve discussed in previous webinars – the priority should be to assess any outstanding expensive debts – that you have and try and clear those off before you begin investing – things like credit cards, overdrafts. If left unchecked, those expenses – debts – can spiral out of control and could be detrimental to have money tied up in investments when you are trying to get on top of things.

Once any debt is under control, the next focus is the emergency fund to ensure your short-term financial resilience – and that provides that cash safety net, should life throw you any curveballs. Once you’ve got that secured for your short-term resilience, then you can start looking at your longer-term financial resilience.

There are many reasons why you might want to keep your savings as cash – one reason is for easy access. As an example, if you’re saving for an emergency fund – or an imminent purchase, like a holiday or a property. Another reason for keeping your savings in cash is because you are not willing to take a huge amount of financial risk. So, with a cash ISA – rather than a stocks and shares ISA, for example – you have the peace of mind that your balance is going to steadily accrue interest without being affected by the stock market movement.

On the flipside of that, you’ve got investing – and this is where you take your cash and you put it somewhere to, ultimately, make it grow – hopefully over the longer-term. But, for that to happen, it’s really important to consider investing as a long-term endeavour – and, by that, we’re really looking at five years-plus.

Investing will provide an opportunity to grow money over the long-term – and, importantly, it provides an opportunity to out-beat inflation. What’s not talked about nearly enough is the risk of taking no risk. Inflation is a very real – but invisible – threat that eats into your purchasing power over time. And so, here we’ve got a few examples – let’s start with looking at inflation at 2%, annually – that’s what the Bank of England targets each year, but of course it’s been higher in recent years. So, £100 – if we assume 2% inflation – in one year’s time, that’s dropped to about £98 – five years’ time, it’s real value is £96.04. Extend that timeline further to 10 years and it’s worth just over £90.

Now, if we look to a higher rate – so, if we look at 5% inflation – in two years’ time, your £100 has dropped to £90.25.

Investing holds the key to unlocking long-term financial resilience – and that’s because it can help you grow your money over the longer-term and out-beat inflation. And there’s a much better chance of beating inflation by investing in the stock market – but of course it does fluctuate, so your money is not secure.

Now we’ve covered why you might want to invest, I think it’s important that we bust a myth that we often hear – and that is that investing is only for the rich. It’s often assumed that you need to have lots of cash to invest – or have a lump sum of money lying around – and that’s not the case. Investing is really accessible now.

Once you’ve built your emergency fund, you can start investing from as little as £25 a month – and, actually, regular investing is a great option for people starting out. Not only does it make investing more accessible, but it can also be psychologically easier than investing a big lump sum. Plus, the automation that’s offered by a direct debit removes the requirement to remember each month – and encourages a really good habit.

Small, regular sums can make a big impact over time – and that’s because of the secret source in long-term investing, which is compounding. And that’s essentially what we refer to as ‘The snowball effect.’ As an investment gets bigger, it attracts more growth, and becomes exponentially bigger over time. So, think of it like pushing a snowball down a hill. As it moves down the hill – over time, it picks up more snow and it grows. And for that to happen, it’s much better to do what you can now – and invest small sums – than it is to wait and do bigger sums later on in life.

Now, let’s explore that with an example. Let’s take £30 – that’s what a round of drinks costs these days – although perhaps not all of the drinks that we have pictured on screen, that might be a stretch. If you invest this £30 each month – and achieved 5% investment return – after 30 years, it would be worth around £24,500. If you upped that £30 to £200 a month, then you’d have around £160,000 after 30 years with that same 5% investment return. That’s about £80,000 more than if you’d left your money in cash, earning 1% interest over that same period. So, those small payments over a long time could have a really big impact in terms of growing your wealth.

So, now we’ve looked at that, we’re going to move on to what’s happened in stock markets previously in terms of crashes.

The first recorded bubble was actually in the 17th century – and it centred around tulips – the flower. A sale of 40 tulip bulbs went for around 100,000 Florins – which, in 2016, was the equivalent of around 1.1 million Euros. More recently, we’ve witnessed Black Monday – which is one of the most notorious days in financial history – and it still holds the record for the biggest one-day market crash – with the Dow Jones market falling nearly 22% in a single day – and we’ll look at some of the more recent events – including the 2008 financial crisis – in greater detail in a moment. But, before doing that, we’re going to look at how different assets have performed over the last 20 years.

So, here we are comparing the performance of different types of assets over a 20-year period – not only does this help explain why you might invest your money, but also into what types of assets you might want to invest your money into – and the benefits and risks associated with them.

So, we started with cash – that’s that red line on the charts there. So, if you’d invested £1,000 into a typical bank or building society account around 20 years ago – and received interest on that. Saving cash with the bank is a very safe way of investing your money because the value won’t fluctuate. You have protections up to certain limits– and, of course, you might get interest on those savings. However, over the longer-term, the risk that you face is inflation – and we saw that a couple of slides ago – in terms of monetary amounts.

But inflation is the rise in price of goods and services – and the rise in cost of living. If this increases at a rate that is higher than the interest you receive on your cash, then your cash becomes worth less and less over time. That means your savings erode in value – they’re able to buy you less – and we know that £1,000 today buys us less than it did five years ago – let alone if we extend that timeframe to 20 years.

So, in order to try and give ourselves a better chance of beating inflation, we’re going to look at two other types of asset classes. One of those is global bonds – and that’s actually where you loan money to a company – and, in return, they give you a rate of interest on that loan. And, with a bond, you are taking more risk than simply leaving your money as cash in the bank, but with the aim of achieving a higher rate of interest.

That additional risk relates to the fact that the institution you loan your money to might not be able to meet those interest payments. Also, bonds are traded on an exchange, and the price may therefore fluctuate dependent on demand.

Generally speaking though, bonds would be considered a lower-risk, lower-return asset class – particularly in comparison to shares – and shares, you can now see plotted on the chart – so that is the global stock markets over the last 20 years. As you can see, performance is much more volatile – we can see that from the rises and falls in the chart – and you can certainly see that around 2020, when we had the pandemic impact – and going back to the 2008 financial crisis.

If you were heavily invested in the stock market through those periods, it would have been quite alarming to see large falls in the value of your investments. However, why people with a longer-term view might look to invest in shares is because, when we look at that bigger picture over the 20-year period, you can see that, actually, there may be better prospects for long-term growth well in excess of inflation.

Now, this slide is quite busy – so bear with me – and I’ll talk through it as best I can. So, it further evidences the importance of a long-term view. We’re looking at three different events which have a negative impact on stock markets: Black Monday, the Dot-Com Bubble Burst, and the financial crisis of 2007.

Now, this red line represents the returns after five years. In all cases, after five years, markets had recovered – people saw a positive return on their money. In the case of the Dot-Com Bubble Burst – and the financial crisis – actually those would happen a bit quicker: they saw positive returns within three years.

Now, that does not suggest that what occurs – moving forwards – is going to follow that exact path – but it does really ring true to the theory that investing over a five-year period is when you give yourself the greatest potential for growth on your money – and the longer your timescale, then the greater time horizon you have to ride out any ups and downs.

Taking a more detailed look at shares, you’ve just seen that they can be more volatile than other assets, such as bonds. Shares should be thought of as slices in an individual company. They represent partial ownership of that company – and there are often millions of shares per company, but there will be a finite number issued and sold within circulation – and they can be traded. A company that has listed as a ‘Public’ – which means they’ve gone through the valuation process – or slicing process, if you’re considering the cake – and they can now be bought on the stock market by you and I. And that practice helps companies raise capital for company growth and company operations.

‘How do they work?’ So, it’s really important to keep in mind that the value of shares will fluctuate whilst the stock market is open. Those prices will change minute by minute on the live market, and share prices are influenced by supply and demand dynamics. So, when demand is high, prices will rise – and, when demand is low, prices will fall – and that’s because there’s a fixed number of shares in circulation.

The value of shares is based on the performance of that one company. So, in that sense, it does make them a higher-risk investment – because the onus is on you – the investor – to monitor the company’s performance. Some companies may also pay their shareholders a dividend payment – as a ‘Thank you’ for investing in the business – and those are paid at the company’s discretion, and their performance will often be a factor in that dividend payout – but each share would provide an equal distribution of profits.

So, share investors can earn money this way as well as through the capital value of their shares – and that’s the profit that could be realised if you bought a share at £1 and then it increased in value over time to, say, £2.

Drilling down into this idea further, ‘What could cause their prices to fall?’ The main factors that determine whether a share price has moved up or down are supply and demand. So, what we’ve talked about on the previous slide – but, essentially, if more people want to buy a share – and sell it – the price will rise because the share is more sought after – so that demand is outstripping the supply.

On the other hand, if supply is greater than demand, then that price will fall. It’s a bit like if you’d walked into a shop – and the shop had a surplus of an item that nobody would really buy – you might expect that shop to reduce the item – or, if you’re popping into a supermarket and there are some yellow labels. It’s because hasn’t been bought, and it’s going close to that sell-by date.

Now, public perception of a company is really important. If a company is performing well – and the future outlook looks good – if there’s an expectation that it will continue to perform well, then that will all feed into the supply and demand. And a big reason that will cause a negative market reaction is a fall in profits. So, if a market announcement is made that profits will be lower than expected – whether it be due to business costs spiralling – or sales being lower – that will almost always be a cause for a fall in sentiment.

Change in risk appetite – we’ve certainly seen this over the last couple of years due to greater concerns around economic stability – but it could be something like concerns around a particular sector.

Individuals shares do carry more risk because you have all of your items in one company’s basket – and that will play a factor – and is closely aligned to that broader theme of certainty.

There are multiple factors that influence supply and demand: the health of the economy. So, if the outlook is generally poor, demand will decrease, and that will lead to adversity around stock markets. Industry trends and market sentiment will also have an impact – as well as unexpected events, including natural disasters.

Volatility is the measure of risk – and that’s reflected in the price movement of shares. There are three main reasons why share prices fall during recessions – and other periods of uncertainty – and we did see some of these play out during the COVID-19 pandemic as a response to that. So, company profits were expected to fall – that meant that shares were worth less. Uncertainty increased – that meant the stocks were viewed as riskier – and worth less – and investors generally wanted to take less risk. They might then sell their shares to hold safer, less risky investment – like bonds or cash.

It’s natural that, when markets fall, people focus on what the impact is for their existing investments – and what they have accumulated so far. The reality is that, if there is uncertainty, you might see a fall in value – and ongoing uncertainty at the moment with the rising cost of living and global events means that we could see more volatility in stock markets, but it is important to remember that these concerns are not isolated to the UK – that volatility can be far-reaching – particularly due to the interconnectivity of global markets and of globalisation.

Other considerations that we’d want people to think about is the impact on any future contributions – and this is particularly true if you have regular payments going into an investment – something like your pension, for instance. Your contributions will likely be invested in the same place as your existing investments – going into a default fund, perhaps – and what you’ll see is that the future contributions, the value of what you’re paying might go further. It will potentially buy you more units in the investment – and that’s the price of the units of that investment have fallen in value – and that’s known as ‘Pound cost averaging.’ So, you’re spreading the cost of your investment over prolonged period of time. So, as investments rise and fall, you’ll benefit from the fall in prices.

To illustrate those two factors, the next two charts that I’m going to show you will show you how a £6,000 investment would have performed in the period January 2007 to January 2012 – so covering the span of the credit crunch: the fall and the recovery. What you can see is that £6,000 invested at the start of 2007 – by early 2009, the investors would have seen that investment significantly decrease in value. They would have lost money – and, at that point, they would probably be wondering how much worse it could get – considering whether to remain in the market, or whether they should perhaps sell-out and accept the loss. This chart, though, shows that the people who were prepared to sit on their hands – to wait it out – and let the market recover – then, after that five-year period, they would have seen growth on that money. So, that £6,000 investment, originally, would have grown to around £6,500 by 2012.

If we then factor in that the person may have continued to make contributions to their investment – let’s say £100 a month – you see that, as the price fluctuates during the time it had an impact on what they were accumulating, that actually the end result was better. Their £6,000 investment over that same time period was worth £7,000 at the end.

The benefit of pound cost averaging is that, when prices are falling, you’re generally getting better value for your money – it’s going further. Unfortunately, without a crystal ball, nobody can predict stock market movements – or whether they will recover after a fall – however, this gives you an indication that, at some point – assuming markets do recover – if you carry on making contributions, you can potentially benefit from that volatility.

If you take one thing away from today’s session, it should be that investing is for the long-term – that time is your greatest ally. The value of the S&P 500 – which is an index that follows the 500 largest companies on the US stock market – it rose by 284% in the last 20 years – if we don’t take into account dividends. Remove the 10 best-performing days over that 20 year period, and you’d have seen only a 76% return. So, if you had sat on your hands – and not tried to jump in and out based on emotions or panic – being rocked by the market – you would be in a much better position. In fact, a lot of the best days on the market come after a crash – and it’s that sort of ‘Bounce dynamic’ that’s another key reminder about long timescales.

Attempting to time the market is virtually impossible – and, if you sell-out of your investment, it could mean that you have to buy back into the market at a higher price. Investing needs to be seen as a long-term activity.

So, we would urge people to consider their own timescales. The longer your timescale, the longer you have to ride out any uncertainty – and the shorter your timescale, the closer you are wanting to access any investments may influence how you decide to act.

Generally, stock-market movement is a good opportunity to review your investments – consider factors, such as your attitude to risk. ‘Are you someone who’s naturally risk averse?’ ‘Do you need to adjust your investments to reflect that?’ Equally, if you’re someone who is comfortable taking more risk – and you have a long timescale ahead of you – think of future gains. ‘Do you want to increase your exposure to shares that – when markets recover – you might actually end up achieving higher growth, having purchased them at a discount?’

So, just going to recap three golden rules. So, the first is – if we save sufficiently prior to investing – so this is really you’re building your financial wall of defence to protect you and loved ones from life’s twists and turns – you only invest with money that you can afford to lock away for five or more years.

The second is its time in the markets – not timing the markets – and, as we’ve seen, dipping in and out can harm investment returns.

And then, the third one is – don’t put all of your eggs in one basket. So, more on this over the next couple of slides.

So, not putting all your eggs in one basket is what we call ‘Diversification’ – and it’s one method of reducing risk. This is diversifying your investments across different sectors, industries, and geographies. You can both minimise risk and maximise returns by spreading your money across those industries and global markets that will react differently to the same events.

So, this slide puts that into a bit more perspective because you can see how different global stock markets have performed each year over the last 10 years. And, although it seems like a very busy table, you can see – each column – the order of the best to the worst-performing markets each year – and the performance can vary quite a bit.

Certain markets perform much better than other markets at different times – and diversify across those different markets to mitigate the risk of concentrating all of your investment into one geographical area – and being at the mercy of how that performs.

Funds is another option for investing – popular for the diversification that they offer – cost-effectiveness and convenience. The best thing about funds is that you don’t have to be a stock market expert. A fund is a collective investment – where likeminded people pool their money. If you think back – one with the shopping basket – industry experts will choose the products held within that basket, and they’ll amend the asset allocation on your behalf.

Funds can vary in size – and they can hold tens, hundreds, or perhaps even thousands of different assets – and that will be a combination of shares, bonds – of government bonds – perhaps property, cash: those assets that we looked at earlier on that performance chart.

There are several advantages to this. So, firstly – it does diversify your investment – and that’s a really important point. If you invest all of your savings into one individual company – and that company goes bust – then you could lose everything. But, if you spread your money across 100 different companies, then you mitigate that risk to an extent. Also, it’s much more cost-effective because the average person – to pool their resources with fellow investors – because if they try to buy multiple different shares on their own, then they would face multiple different dealing fees. Which could eat into the amount that you might be looking to save on a monthly basis.

Also, you have access to the expertise of a Fund Manager. So, they – themselves – or through their knowledge and research – would be in a really good position to choose how that fund is invested in order to help it achieve the long-term returns that you’re after. Here we can see how a fund could be allocated towards a different concentration – and we’ll move onto that on the next slide.

So, continuing that thought of the different allocations that can make up a fund – if we take an X-ray view of, four example, funds here, you’ll notice the makeup is very different between each one. So, there is an ‘Adventurous’ – a ‘Moderately Adventurous’ a ‘balanced’ – and a ‘Cautious.’ You’ll notice that the adventuring fund is entirely invested in shares – so overseas shares and UK shares.

So, if you think back to the asset performance chart, you’re more likely to see short-term volatility from this fund. Generally speaking, the higher the concentration of shares within a fund, the higher the risk and hope for higher return – but, remember, just because something is an alternative – a fund is labelled ‘Cautious’ – it doesn’t necessarily mean that it can’t lose money. All investments do come with risk, but it is a calculated risk.

You should also consider the number of assets within a fund. So, something that’s concentrated – with fewer underlying holdings – something in the 10s, perhaps – could be more volatile – and that’s, with a bigger contextual asset than one under-performs, you’re more likely to see that reflect in the price movement. In the same respect, if a stock performs well, then that will be reflected – and that’s taking advantage of a fund that has hundreds or thousands of underlying holdings.

Also consider where that fund invests – you will be able to see the top-10 holdings – top-10 sectors – and top-10 countries. So, here, you can really consider your diversification – see where you’re spreading your money. If you are comfortable selecting something more adventurous – and, by that, I mean that you have the stomach for those price fluctuations – should they happen – the earlier you do it within the lifespan of your pension theoretically the better – because you do have that much longer recovery period, should you need it. So, that’s within a pension – or even considering investments within ISAs – just really think about your timescales.

So, the best time to invest was ‘Yesterday’ – but, if you didn’t manage to do that, then do it today. So, once you’ve got your financial wall of defence built – your security blanket in terms of paying down any high-cost debt – and building that emergency savings pot – then you’re looking to grow your wealth – saving for longer than five years or more – then investing can offer an opportunity to out-beat inflation – and you can do it through small, regular sums.

Our final topic for today is ‘Responsible Investing.’ The overall aim of investing is simple: it is to grow money over time. Responsible investing aims to provide a financial return – but, at the same time, responsible investments aim to do good to varying levels of degree. So, now it’s possible for you to align your investments to your ethical beliefs and values – and you can add it – your capital – for the benefit of the environment and society. So, it’s a really great opportunity to help yourself whilst – at the same time – helping others. An example would be that perhaps you could invest into companies that are trying to reduce their carbon footprint, while making a conscious effort to improve the diversity of their workforce.

Fundamentally, responsible investing does mean different things to different people – it is open to individual interpretation. So, what one person considers responsible and ethical could be very different to the next person. As an example, some individuals might accept animal testing – if they believe the potential benefits outweigh the harm – whereas other individuals might believe that there is never a justification for purposely inflicting harm to another living creature – and that group of people are, therefore, unlikely to want their hard-earned money funding companies who do test products on animals.

There are lots of different words that are being used to describe ‘Responsible Investing.’ There’s ESG funds – ethical, sustainable, responsible – but ESG stands for ‘Environmental, Social, and Governance.’ And ESG funds will take into account the environmental, social, and governance factors alongside other factors when choosing investments – so that underlying asset allocation. And that analysis can be done in lots of different ways – and it is slightly open to interpretation – but it’s worth pointing out that ESG issues will likely affect every single one of us at some point in our lives.

Most Fund Managers are now implementing ESG – to some extent – as part of their wider analysis of governance to simple risk management. So, ‘How is a company managed?’ – and its ethics – to the sector application – and that can, therefore, affect profit.

Environmental and social issues are harder to absorb than ever before – and that’s, in large part, due to the pandemic and climate change.

So, responsible investing can potentially offer financial returns – as well as non-financial returns – by making an impact. When you invest responsibly, you do reduce the risk of reputational damage. It can give the company a competitive edge – it could be a unique selling point. Clothing and global manufacturers have really benefitted from selling on the basis of sourcing their product responsibly – and treating their employees fairly – and that, quite often, will be their entire marketing strategy – to focus on the ethics of the brand. They may also benefit from global shift – so, as the world cares more about renewable energy and climate change, companies already operating in a sustainable way could benefit: they’re ahead of the curve.

So, an example here would be electricity generation – so there’s a large push away from greenhouse gas emissions. Companies already producing sustainable electricity generation – as the need for electricity increases – coupled with people wanting a greener source – that company could have the competitive edge because they already have the product and infrastructure in place. So, it’s really thinking about that supply and demand again.

Governments, regulators, and consumers – they are all looking to show preferential treatment to companies who are looking after their customers, staff, and the planet – and failure to engage with these themes could be detrimental for businesses – and could result in fines, scandal, or perhaps a loss of market share.

So, as a number of countries raise standards with legislation and policies, companies already exceeding the then minimum are less likely to be affected by the changes. It’s becoming more widely accepted – so investing with these considerations in mind is simply good risk management. In order for a company to be sustainable, the management must be taking into account threats to the business’s financial health – and looking at those ESG factors.

So, that brings this session to a close – and where we’ve looked at both stock market volatility as well as the different types of investments that you can hold for diversification – and for ethical reasons. On-screen is a final slide from our Compliance Team – so if you need a couple of minutes to read through the important investment notes. They reiterate that everything discussed was purely information and not to be considered as financial advice. Stock market investments can decrease as well as increase in value – which we have seen today – and that tax rules are subject to change.

If you do have a question, please do pop that into the Q/A, and I will look to answer that in a minute or two’s time.

James Corke: Good afternoon, thank you for taking the time out of your day to dial into this session. My name’s James Corke and I work for Hargreaves Lansdown. More specifically, I work in our Workplace Financial Wellbeing Team. My role – that of my colleagues – is to travel around the UK talking to employees who are using Hargreaves Lansdown for their company pension scheme and trying to help them understand how their pension works, but also talk to them about some of the wider financial questions that they may have.

This session is the final part of our series of Financial Resilience presentations, which we’re aiming at people in the Bristol area as part of the Bristol Financial Resilience Action Group. This session we’re going to be talking about saving and investing for children.

I’ve tried to write this presentation a little bit from my own perspective – as a parent of two young children myself – but I’ve also tried to ensure that the content that we’re going to discuss isn’t just for people who have children. It could be for anybody who’s simply looking to understand what the options are around saving on behalf of a child. It could be a family member, or it may be that you’re just looking to understand what the options are for the future – and you may have family members, themselves, who are potentially interested in saving on behalf of your children.

One definition that I think is fairly constant through this session is that, largely, it’s talking about saving and investing on behalf of people under the age of 18 – but, even if you do have children over that point, there’s still going to be some useful information for you.

We’ll probably take about 30 minutes to cover the content. If you’ve got any questions, you’re more than welcome to submit them. There’s a Q&A feature, and we should have time at the end of the presentation to go through those. It is also being recorded so if you would like to listen back to this session – or any of the previous sessions that we’ve done – you will get a chance to do that as well.

In terms of what I’ve put in the presentation I’ve tried to keep it fairly light. There’s a lot of potential depth that we can go into and sometimes it’s hard to know where to start. With that in mind, I thought it be useful to start by going over some of the typical savings goals that we encounter – both from myself, a personal perspective, but also in our working capacity, talking to people about their finances.

Obviously, goals will vary so we’re just going to look at some of the examples that we potentially encounter. We’ll then move on to talk a little bit more about some of the different savings products that are generally available to people – and some of these products will have links to timescales and, therefore, it’s quite possible that after choosing a savings product you might then need to think about making an investment choice to go into that product, so I’ll talk a little bit about that as well.

There’s plenty of time for questions – so, if you have any questions, feel free to submit them. The session is being recorded and I will also be asking for feedback at the end of the session because this is the last in the series. I’m going to put up an email address at the end, and we’re really keen to hear your thoughts around what’s worked and what hasn’t worked over the series – and, if there’s any other comments you have, it would be really valuable for us.

The final point that I do need to stress is that this session is purely aimed at giving you information. It isn’t intended to be advice around any courses of action that we think you might want to take for your own circumstances.

If you’re in doubt about any kind of aspect of this, then we would encourage you to speak to a financial advisor.

Firstly, we’ll start with some of those typical savings goals and what we see. Generally speaking, I’ve picked on four different areas that we, typically, encounter when it comes to saving for children – one being cost of education both under-18 and potentially beyond when you start talking about university costs. Teaching children money skills is something that people like to try and aim to do for their own children – and, from my line of work, it’s something I’ve been trying to do for my kids. Inheritance-planning – saving for children can be a useful way of passing on parts of your estate to children. Getting on the housing ladder as well is another common thing that we encounter – people looking to help their children buy their first property.

Certainly, when it comes to education costs and getting on the housing ladder, I’m going to give some examples of the challenges that people are facing – and that future generations are going to face – and it may be a little bit gloomy at points. Teaching good money skills is something that will help build children’s own financial resilience – which could then, in turn, feed into things like further education costs and also getting on the housing ladder. So, those few are potentially quite interlinked.

With inheritance-tax planning, it is a much broader subject. The rules are quite complex – there are lots of allowances that people can use, but it’s understandably quite tightly regulated. So, I would suggest – whilst I will mention points of that – if that’s something that you feel is really relevant to your own circumstances, this very much is an area that’s best left to a financial advisor. If you are thinking about this from an inheritance-planning point of view – strongly suggest speaking to a financial advisor to get a bit more support on that.

But firstly, looking at education costs. In Bristol, we’re blessed with lots of great local schools – primary and secondary schools. We also have an abundance of private schools as well. It may be that some people will have aspirations of sending their children to one of those private schools. I did a little bit of research in looking into average costs that people might face when it comes to sending their children to a private school. This is a UK average, so it is going to be distorted slightly, but some of the schools all across the UK – but the average is, typically, at the moment, £15,200 a year. So, if you have children that you’re looking to send to private schools – from Reception through to the age of 18 – you’re looking about £212,000, just over £212,000 a year as an overall cost. And, if you’re just looking at secondary schooling, you’re talking more like £106,000.

Those are the costs, potentially, today – but there’s obviously going to be additional costs that you need to consider, which often get lumped onto the bill. So, things like lunch, clubs, trips etc. Future increases as well – these school fees, typically, do increase each year, at least in line with inflation. Obviously, politically, there’s also some question marks over the future of private schools and how they’re registered that could have an impact on future fees that people might have to pay.

A lot of private schools will offer the ability to make payments in advance – so, if somebody was in a position where they have a lump sum available, they could potentially use that, pass that to the private school of choice and that would cover the bulk of the fees with an ongoing to commitment to just pay the difference each year as fees rise with inflation, for example. By going down that route though – which could be a really great way of passing a lump sum to cover the cost – part of that challenge is that, by making that kind of commitment, you may have some questions to think about with regards to the security of the school.

Private schools are businesses – at the end of the day – and, if a business fails, what happens to any money you’ve paid in advance. Obviously, it also doesn’t give you a great amount of flexibility in terms of if your position changes or you simply decide that school isn’t right for your child. So, clearly, it’s going to be a long-term commitment. If you’ve got more than one child, then the second child may well benefit from a sibling discount to bring the cost down. There may be scholarships as well, which could be means tested, or they could be based on the child’s ability. But for people looking to put money aside for private schools, it’s a long-term commitment and it could be quite expensive for you.

The other costs that people are potentially looking to try and help children with – or effectively adults as they leave school – is the cost of university. Just taking some average figures – a three-year degree, currently around £27,750 would be the cost of those three years, plus living costs on top, which using averages comes to a figure of about £66,000/£67,000 over that three-year period.

With university fees, you need to think about things like future increases. Children can apply for tuition fee loans and maintenance loans if their course starts on or after 1^st August 2016 – which can potentially qualify them for loans of up to £9,250. For a maintenance loan, you’d have to give details of your household income, course start date, and the amount you’d get would vary depending on whether you live with parents, or away from your parents, whether you live in London – you may get a grant to cover some travel expenses as well.

There is a student finance calculator to help people estimate what kind of maintenance loan they might be eligible for. So, if you are in a position where you’ve got a child who’s due to start university, that could be something that’s worth exploring.

When it comes to the loan repayments, they will typically start when somebody’s earning over £25,000 – and then, from that point, it’s usually 9% of the income over that threshold.

So, this is potentially something that people might be looking to save for their children. Once a child has left education, it may well be that their aspirations are to try and get themselves on the housing ladder – which potentially comes with its own challenges.

So, the average deposit required for first-time buyers in the UK, last year, was £53,000 – and it’s estimated that it takes about 12 years, on average, for somebody to build up a deposit of that kind of value.

Bristol is a little bit more expensive than other parts of the UK, so, if you’re wondering how long it might take for somebody to hit that kind of figure – I’ve just gone with a figure of £60,000 to reflect the fact that Bristol is a little bit more expensive. If somebody was paying in just over £300 a month for 12 years – and they were getting a decent rate of growth on that money over that 12-year period – then they could expect to potentially hit that £60,000 target. The more they pay in, the shorter the timescale should be – but, if it’s eight years, then potentially they were putting in over £500 a month, they might find themselves at target. Realistically, it’s probably going to take them a little bit longer than that – given the fact that they have other expenses that they need to juggle at the moment.

With that in mind, it can paint a little bit of a gloomy picture – especially when people are coming out of university with significant amounts of debt that they need to repay. Naturally then, they might think about getting on the housing ladder. If somebody didn’t go to university – left school at 18 and started trying to save for their first property – on average, it looks like it could take them up to the age of 30 to have a big enough deposit to be able to do that. So, it is quite a gloomy picture – so it’s understandable that people might be trying to see how they can potentially support their children.

When it comes to supporting children, you might think, ‘It’s a bit of a luxury to have that spare kind of disposable income to be able to put aside for my kids, when we’ve also got our own costs to face’ – and so one of the things that people might be looking to try and help their children with is around teaching them about money skills. And this is something that we often hear in our line of work – when we’re talking to people about their personal finances – ‘Why isn’t this kind of stuff taught at school?’ I think that’s been highlighted by the cost-of-living crisis as well – expenses have gone up quite rapidly in the last couple of years for people and it’s really put a squeeze on society.

From my perspective with my children – so I have a 12-year-old and a nine-year-old – and they have an unbelievable ability to spend money in places that I wouldn’t imagine you’d be able to spend money. Even picking them up from school, it’s ‘Can I get an ice-cream?’ – that kind of stuff – and as is reflective of today, even saying something like, ‘I haven’t got my wallet with me’ doesn’t really cut the mustard because they know I can spend money on my phone, I can spend money through my watch if I really wanted to. And this is an example of where we need to look to try and educate our children as we move from this cashless society. A lot of the education now needs to be around how people handle digital money – and that could be either security of their money, how they can keep track of finances – because it’s easy to spend money, therefore, people can potentially lose the value of what things cost.

Fortunately, there’s lots of great apps available. For myself – as part of my drive to try and help my children understand how much money costs, and effectively get them spending their own money rather than my money – my wife and I set up an account, which we could then add our children onto. Money would then be deposited each month – just a little bit of pocket money that they could build up – plus any birthday money from family members and it’s given them a bit more independence when it comes to their spending. But, equally, as the adult, I have control because I can set limits – and there’s lots of different accounts out there that will help people with making that kind of step.

These are just some typical goals that people are looking to potentially try and achieve when it comes to putting money aside for children. Once you’ve decided whatever your goal is, the next decision is then thinking about, ‘What are the different saving options – and how does investments fit into those?’

What I’m now going to do is talk through some of the common examples of different savings accounts that you can get and some of the features that you might want to be aware of.

The first thing we’ll look at is just a very straightforward saving account for children. Most banks and building societies – even National Savings and Investments – will offer these types of children’s products.

The interest rates on these types of accounts tend to be a little bit more competitive than you might expect to receive from an adult account. I think part of the reason for that is that, generally speaking, they’re not dealing with huge sums of cash in these types of accounts – but also there’s a desire from the banks and building societies to get these people as customers, early.

I had a quick look online – interest rates are currently available up to 5.8%, so not an insignificant amount of interest available for these children.

You will often get a choice of easy-access accounts and they will allow you to set up regular savings amounts with no limits that you need to have to set the account up. They may come with a debit card – you might like that feature because it gives children the ability to spend their money themselves. Equally, I can see that it could go the other way and you might prefer not to have that type of feature. So, that’s another consideration you might have when it comes to choosing which type of saving account.

A key principle as well – and this is a chance where you can potentially try and start educating your children through these types of arrangements – is that you can also start thinking about the impact of inflation on these types of savings accounts. Generally speaking, if you’re putting money aside for anything longer than five years, you’re starting to look towards more medium to longer-term savings – and inflation is going to be a bit more of a problem for these types of arrangements. So, while these types of accounts might be great for those more pocket-money, shorter-term spending needs, if you’re looking to set money aside for a longer period, then you might look to something that gives you the ability to control it a little bit more – and potentially gives you some investment flexibility as well.

So, moving away from a straightforward junior savings accounts, we’re now going to look at some of the tax-efficient accounts that are available for children – and these, primarily, come in the form of ISAs. So, the ISA (Individual Savings Account) – they offer a child’s equivalent of those types of products. A Junior Stocks and Shares ISA or a Junior Cash ISA – which has a combined annual allowance of £9,000 each tax year – you can split the allowance between the two products. So, for example, if you put £5,000 into a Junior Cash ISA this year, you could put £4,000 into a Junior Stocks and Shares ISA.

It's available for anybody up to the age of 18. The difference between the two is once money goes into a Junior Stocks and Shares ISA, you can invest into pretty much whatever you’d like. If it goes into a Junior Cash ISA, it is cash, so you would expect to receive interest on those deposits.

Once the child reaches the age of 18, both of those junior products would convert into the adult equivalent ISA, which would give them a greater allowance – whereby you can then start paying in up to £20,000 a year – and you can choose between whether you want a Cash ISA or a Stocks and Shares ISA.

With these types of products, any investments you make, or any interest you earn, grows free of any further tax – and rolling your ISAs into the other one doesn’t affect the annual allowance.

Another type of ISA arrangement that’s available is the Lifetime ISA – this is also aimed at people aged 18 upwards. It’s aimed at people aged 18 up to the age of 39 – and the reason for that is because it’s primarily aimed at people looking to build a deposit for their first property. It has a reduced allowance of £4,000 a year, but the allowance is slightly different in that, once you pay contributions into it, you’re eligible for a bonus of up to £1,000. So, if you put £4,000 in, you can potentially get a bonus taking it up to £5,000. And you can make that £4,000 contribution every year – once the Lifetime ISA is opened – and then receive a bonus to the age of 50.

Now, the reason why you get that bonus is because the Lifetime ISA is primarily aimed at people buying their first property. If you withdraw the money from the Lifetime ISA to buy your first property, then you will do so, and you’ll keep that bonus, and you won’t pay any tax on any growth – either investment or cash – interest that you’ve earnt. If you withdraw money from the Lifetime ISA for any other reason – before the age of 60 – then you will have to pay back the bonus and you’ll also pay a charge as well.

So, these types of vehicles might be useful for people who are looking to make some larger savings – or more longer-term savings. If you pay money into a Junior ISA up until the age of 18, it could then roll into the Adult ISA, and then you could potentially then convert chunks of the Adult ISA – depending on the value – into a Lifetime ISA from the age of 18 to take advantage of the bonus and use the money to put aside for their first property.

If you were in a position where you were looking to make larger contributions – or you had larger sums to invest – then you could move away from the ISA vehicles and you could look at just straightforward Junior Investment Accounts. So, a Junior Investment Account is an investment account that is designated towards the child – and the act of designating the investment account to the child creates what’s called a ‘bare trust’.

A bare trust is fundamentally the simplest type of trust that you can get. They’re typically set up by a donor – which is usually a grandparent for a reason I’ll explain in a moment – where they make an irreversible gift into the account, with the child being named as the beneficiary of that gift. The donor – let’s say the grandparent – acts as one of the trustees and the parent typically acts as another trustee. There’s no restrictions on eligibility – so all children are eligible for this type of account. There’s no investment limits. You can withdraw from it at any time, provided the withdrawal is being made on behalf of the child – for example, you were using it to pay school fees.

The assets – so any investments in this type of account would typically sit outside of the parent’s estate – and any gains or income are typically taxed against the child. So, every person in the UK would have the same tax rates – tax allowances – available to them. The thinking being that the child is less likely to maximise theirs and, therefore, money in these types of accounts – tax against a child – could be quite a tax-efficient way of doing it.

As with the ISAs – once the child reaches the age of 18, they do automatically become entitled to the assets within these types of accounts.

Now, the reason why these types of accounts are typically set up by a grandparent – and not the parent – is because there is a rule around whether the income is taxed against the child or the parent and it’s known as the ‘£100 rule’. It’s effectively an anti-avoidance rule. What it’s essentially trying to do is stop parents [laughs] from sheltering their wealth into these types of accounts on behalf of their children.

So, in the situation where a parent funds this type of account, if there’s any income or capital gains that exceed £100 from this type of arrangement, it will be taxed as the parent – so you couldn’t use the child’s allowances in that situation. But, if the account was set up and a donation was made by somebody other than the parents – so a third party, like a grandparent or, potentially, alternative – then it would be taxed against the child. So, this is another type of investment vehicle that could potentially be used by somebody looking to put money aside for their children.

Another type of investment vehicle – which is much more of a longer-term view for people, but it does come with some significant attraction – is a pension, a junior pension. Pensions are available to everybody in the UK – including children. For children though – or for anybody who doesn’t earn any income – they would have a reduced allowance, which is £3,600 a year gross. £3,600 a year, gross, would be eligible for 20% tax relief, which would bring the cost down to £2,880. So, simply speaking, £240 a month would attract tax relief to take it up to £300 a month – and then a total contribution over the course of the year would be £3,600.

Any investment that is made within the pension account will grow free of any further tax whilst it remains in the pension, but the key point with putting money into a pension is that it is then locked away – and the earliest people can withdraw from a pension is currently 55, although that age is going up to 57 in 2028. So, clearly, this wouldn’t be the type of vehicle somebody would use to pay for school fees – or help somebody get on the housing ladder – but it would potentially give them quite a healthy head start when it came to saving for their retirement.

To give you some kind of context for that – what you’re now looking at is a chart which shows different savings rates from when a child is born to the age of 18. If you were putting £300 a month from when a child was born to the age of 18 and then stopped making contributions, when that child reached the age of 65, they’d have just around £580,000 in their pension pot – and that’s only based on contributions made in the first 18 years of their life.

It isn’t something that’s going to appeal to everybody – tying up your money for this longer time period – but it could give your children a great head start when it came to saving for their retirement so it is potentially something that people might consider for those reasons.

Now, in the case of the pension account, in the case of ISAs and the Junior Investment Account – the Bare Trust Account – these, typically, will be investment vehicles. So, they’ll be aimed at people looking to put money aside for a more longer-term view – a more longer-term plan. With those types of accounts, once you’ve decided to open them up and decided your contribution levels, you’d then need to think about how that money would be invested within those types of arrangements.

Investing for a prolonged period of time can attract significant amounts of growth due to the fact that it compounds year-on-year. So, if we look at somebody who’s paying £150 a month for 18 years – if that total contribution of £32,400 had grown at 1% a year, it’d be worth just over £35,000. If it grew at 4% a year, it’d be worth just over £47,000. If it grew at 7% a year, it would be worth over £63,000.

So, what might look like fairly small differences in percentages in growth year-on-year, over time, it will add up. And so, when you’re making an investment into a longer-term savings account, if you can get more growth – particularly on the early stages – it should help drive the account upwards.

Now, unfortunately, it isn’t as simple as just saying, ‘I’ll open my account and I’ll choose the investment that gives me 7% growth a year.’ Unfortunately, if you’re looking to try and get more growth on your money, you’ll need to be prepared to take a bit more risk – and with that risk could come volatility as well.

The reason why we talk about investing over a longer period is largely down to the figures that this chart’s going to demonstrate. If somebody investing for 20 years as cash, they’re going to have security with their money, but they’re also going to see that inflation – so just how much more expensive everything gets – is just going to chip away at the value of their cash savings over that time period.

If somebody wanted to try and get a slightly better return on their money – and was prepared to take a bit more risk – they would look to try and potentially invest that money. They could invest it into fixed-interest investments – which are things like gilts and bonds – which come with a bit of security, but they come with a bit of risk at the same time – and the rates of return that they tend to offer reflect that by the higher rate of risk.

But if somebody was prepared to try and get as much growth as possible – and was comfortable taking risk with their money – then they might look to have that money invested in the stock market. Which, over the last 20 years, has significantly outperformed the other asset classes – but, obviously, it’s come with dips along the way. So, for this reason, the longer your timescale, the more comfortable you might be with taking this kind of exposure to risk – because you have more time for things to recover if you do go through a period of volatility.

Now, when you set up an investment account – whether it’s a Junior Stocks and Shares ISA or Lifetime Stocks and Shares ISA, an investment account, or even a pension – you’ll be presented with a range of different investment choices that you can make with those types of products. But, most likely, you’ll get the opportunity to invest some of that money into funds.

So, funds are a way of pooling your money with other likeminded investors. Given to the Fund Manager and that Fund Manager, their job is to invest that money – and they will usually invest it into a combination of different things. So, some of it might go in shares, some of it might go into property, some of it might go into fixed-interest investments and some of it might be held as cash. Your role is really trying to identify which Fund Managers within that product you would want to invest into.

There’s lots of research available for you – to help you make that decision – but, generally speaking, if you’re looking to try and take more risk with a Fund Manager, you might consider investing into a Fund Manager that has a higher proportion invested into shares over the asset classes, such as property, cash, and fixed-interest investments.

Making a decision around whether you go for cash, or whether you look to invest your money, it is an important decision – and is one that you might want to give some consideration to.

As a broad principle, with cash, your capital is going to be secure, normally. You’re going to, hopefully, attract rates of interest which are going to make it grow over time – but, over a long time period, it’s unlikely the cash would beat the rate of inflation.

If you’re considering whether to invest the money, then typically we would suggest investing is aimed at people who have got a longer-term timescale – so, usually, that means five years or longer. You’d be comfortable that the money you’re investing isn’t secure – isn’t guaranteed – but you do have a greater potential returns over that time period, and, ultimately, a better chance to beat inflation.

This presentation was deigned to give you a bit of a tour of why people save – and what common goals are – which will obviously vary depending on your own circumstances. And we looked at some of the different products that are available to you.

We have lots of useful information online – so I’ve just included some links to our website, our Hargreaves Lansdown website, where we have a ‘Learn’ section, which talks about some of those different products, some of the different investment principles that you might consider. The ‘Tools and Calculator’ section is useful – I use that to try and give you an idea of how long it might take to get to £60,000, for example. We have a dedicated section around ‘Investing for Children’ – so, if you do want to read up a little bit more on that, you’re welcome to do so.

We have recorded all of these webinars – this being the final one in the series. They are being stored online. I think we’ve had a slight delay in getting the last couple online – so, bear with us, but they will be on there in the not-too-distant future. I’ll pop these links in that chat at the end of the session.

But the final slide that I just need to move onto – as we conclude the session – is our important investment notes. So, I do need to ask you to read through these before you depart from the presentation – and, in a short moment, we’ll move onto any questions that you may have, which I’ll be more than happy to try and answer now.

Thank you.