I do, quite frequently, think about getting health insurance. To this day I have yet to actually have something push me to take the leap and get a policy, but I feel a couple of bad experiences away from doing so.

My experiences with NHS healthcare have been varied, unfortunately. But largely this has not been for myself (thankfully), rather I have watched (and helped) family go through the system a lot.

I have had both parents in the system to a significant degree at varying times. My wife has been through the maternity system with our first son (and is currently on her way through it a second time).

I’m not going to go into the details of those experiences as they are deeply personal, but safe to say they were very mixed – particularly for my parents.

The maternity and subsequent paediatric provision has always been great, I will say. It will be interesting to see how experiencing the same process two years on differs with our second child due in December.

Where my personal sentiment on the NHS begins to chafe really comes down to the primary services we receive. I can count on one finger the number of times I’ve ever actually been granted access to my current GP, for example.

We routinely have to queue, sometimes for up to an hour, for our local pharmacies to fulfil prescriptions. This is thanks in large part to a major national pharmacy chain withdrawing from our town and putting pressure on the remaining provision.

And dental – don’t get me started. We live in a dental desert and have to drive over an hour away for an appointment. That appointment isn’t even on the NHS, those are rarer than (healthy!) hens teeth in Devon.

But does this push me into getting private medical insurance for our family? Our problem is largely a primary care deficiency.

More from Edmund Greaves

Time for health insurance?

The reality for our situation is that it feels hard to apportion some of our monthly income to a health insurance policy because, frankly, so much of my income already goes on taxes which pay for the NHS.

The Government has a fun tool you can use to tell you exactly how much of your taxes went where in a given tax year, out of interest. I am aware this is getting into the territory of crying over a sunk-cost fallacy but it hurts to look nonetheless.

In the most recent tax year, 2023/24 – just over 20% of my tax went to the NHS. This works out at just under £4,000 a year. My partner earns less than me (and ironically enough is a n NHS nurse which provides its own insights into the Byzantine Health Empire which I will forgo for today), but between us I’d calculate we’re roughly paying in around £6,000 a year just to the health system.

This is great inasmuch as we’ve actually used it quite a lot having our son etc. But it is also certainly a lot more than we’d pay for equivalent private health insurance, which comes without the queues and more free smart watches. For context – a private policy runs between £70 and £200 depending on circumstances.

So even if myself and my wife were both paying the top end (we wouldn’t because we’re under 40) we’d still be paying less than the equivalent in tax.

Controversially (and perhaps under-noticed as of yet) political parties such as Reform have floated giving people tax breaks for opting out of NHS care and using private insurance. Given the potential cost differential already mentioned, this could be an extremely compelling way to save tax for people who would have lower annual premiums (i.e. the healthy and young).

But the implications are fraught especially given that it is the taxes of the healthiest who are essentially footing the bill for those in poor health in the nationalised system.

In totality, the Government spent around £258 billion on healthcare in 2024. That’s a big number. For context, the Government spend £1,279 billion on everything it does in the tax year 2024/25.

Brits spent around £46 billion on so-called ‘out-of-pocket’ healthcare expenditure in 2024. What this means is for all the money spent on healthcare in the UK, around 15% came out of our own cash. The Government spends 81% of the money. Just 2.6% of spending is done by private health insurance schemes.

Interestingly, the out-of-pocket spending used to be higher – 20% in 1997. At that time health insurance accounted for just under 4%. What this tells me is that there is still a significant unsatisfied demand for private healthcare coverage. Why?

In this week’s podcast we were joined by Dr Katie Tryon, chief commercial officer at health insurance provider Vitality. We got Katie on the podcast as probably one of the best-placed people in the country to actually explain to us the nuts and bolts of how health insurance works.

For a more detailed guide, we’ve also written up all you need to know on health insurance.

Dr Tryon explained on the podcast that the biggest area of growth that Vitality is seeing with regard to its health cover is thanks to the deficiencies of NHS primary care (i.e. GPs) – the exact issue my family and I face routinely. Our problems are being mirrored up and down the land and this is driving people to spend money, regardless of the sunk cost of their tax.

But they’re not buying insurance instead. And this is costing us, collectively, billions every year.

My challenge here then, is how do we solve the clear issue of a lack of coverage? While I still don’t feel as if my family is at the point of taking the leap, what is clear is we’re collectively as a nation spending a lot of money on health treatments that could potentially be covered more affordably by the pooling power of the insurance market.

My worry is that it is a mindset issue. We eulogise the NHS. For many reasons this is perfectly fair given the nature of the institution and the impact it has on many of our lives.

Personally, I have seen the NHS at its best with the birth of my son. It was truly remarkable. Enough to make me clap on a Thursday evening. But I have also had a good look at it at its worst, particularly with what I went through with my mother many years ago.

Private healthcare is so often the bogeyman in arguments about how the NHS works and is funded. It is seen as the evil vulture capitalist in the room looking to ruin nationalised health from under our noses. But the mad thing is, while we argue over this, in the breach it is creating a coverage gap that is just making us poorer and less healthy.

It’s time we thought again about how to ensure everyone has their healthcare needs covered – through a combination of national and private health that doesn’t rely on judgement, just beneficial outcomes.

Photo Credits: Pexels

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Health insurance can seem daunting, but it’s a potential alternative, or complementary way, to manage your own health and access timely treatment as the NHS faces historic issues.

It is safe to say health insurance is not a widely used product in the UK. Just 2.6% of health spending is done via private medical insurance according to the Office for National Statistics.

But it is gaining some traction – especially given well-documented recent issues in the NHS. While waiting lists are falling, more than seven million are still holding on for procedures.

The UK’s healthcare system is still overwhelmingly nationalised. In practice, this means that the NHS is ‘free at the point of delivery’– but is ultimately paid for through everyone’s taxes. You can read editor Edmund Greaves’s weekly column for more on that.

That being said, a private healthcare system, although much smaller, does exist alongside the national provision.

The lines between private and public are at times blurred as some doctors and healthcare institutions look after both kinds of patient. But how that care is funded is ultimately what is relevant.

This guide explains what health insurance is, how it works, why it might be a useful or necessary alternative to the NHS, what to consider when purchasing and its potential role in your finances.

In compiling this guide, Mouthy Money spoke to Dr Katie Tryon, chief commercial officer at health insurer Vitality for an episode of the Mouthy Money podcast. You can listen to the full podcast episode with Katie to hear more about how health insurance works and what to consider.

What is health insurance?

Health insurance, commonly known as private medical insurance in the UK, is a form of insurance policy that funds private healthcare for specific medical conditions, treatments or other health-related services.

Unlike the NHS, which offers free care at the point of use, private health insurance grants access to private hospitals, consultants and treatments. These private services are typically much quicker than NHS care but there is a significant ‘out-of-pocket’ cost attached.

Private health insurance generally covers acute conditions, such as sudden illnesses or injuries requiring surgery, but often excludes chronic conditions like diabetes or long-term care. Policies differ, but many include hospital stays, specialist consultations, diagnostic tests and treatments like physiotherapy.

Dr Tryon explains: “Traditional health insurance covers private treatment for conditions like musculoskeletal issues, cancer, or cardiovascular problems, depending on policy terms. These are the big-ticket items people historically bought insurance for.”

But she notes that usage of so-called ‘primary’ services such as GPs is growing significantly in response to changes in NHS ease of access.

“The real growth has been in primary care – services like GP consultations, physiotherapy, talking therapies and even skin analytics. Since we launched our GP service in 2015, claims in this area have grown by hundreds of percent.

“Moving further upstream, prevention is a growing focus. We use tools like Apple Watches to encourage physical activity, better nutrition, smoking cessation, weight loss and regular screenings. Health insurance has evolved from just paying hospital bills to a holistic tool for managing and improving health.”

As Dr Tryon says, some plans provide additional benefits, such as holistic services, tech, dental cover or mental health support, depending on the provider and premium.

This is typically done as it is an effective way to ensure the customer remains healthy for longer and also doesn’t end up costing the insurer more in expensive health treatments down the line.

More from Edmund Greaves

How does health insurance work?

When you buy a health insurance policy, you pay a monthly or annual premium to an insurer, who agrees to cover eligible medical costs for private treatment.

The process begins with selecting a policy that matches your needs, budget and desired coverage level. Such cover ranges from basic plans for major treatments to comprehensive ones that include outpatient care and extra services.

If you need treatment, you contact the insurer, who may require pre-approval or allow a GP referral to a private specialist.

The insurer verifies if the treatment is covered, and if approved, you can book appointments at a private hospital or clinic within the insurer’s network. Typically, the insurer pays the provider directly, though some policies require you to pay upfront and claim reimbursement.

Premiums vary based on age, health, lifestyle and coverage. They may increase annually due to inflation or aging, depending on the terms and conditions of the policy.

Policies often have exclusions, like pre-existing conditions or cosmetic procedures, and may include excess fees, where you cover part of the costs. Reading the terms carefully ensures you understand the coverage.

Why might you want or need health insurance?

Health insurance can offer some advantages depending on your situation. The NHS provides excellent emergency care and chronic condition management, but waiting times for non-emergency procedures, like knee surgery, can extend to months.

Dr Tryon is emphatic that health insurance is just about non-emergency procedures and issues but is increasingly being used an alternative for primary care.

“Our data shows a clear correlation between NHS waiting lists and our claims, especially for secondary care like hospital treatments. Primary care and prevention services are areas the public sector struggles to prioritise due to financial constraints.

“Another is the ‘quantified self’ movement. People are obsessed with data – heart rate variability, steps, calories – but often don’t know what to do with it. They’re looking for guidance and we help navigate that. Early intervention is also key. It’s cheaper and better to address issues early, like physiotherapy instead of a hip replacement.

“Finally, the digital revolution, supercharged by Covid, has transformed care delivery. Virtual services and community-based care leapt forward, enabling this shift.”

Private insurance can enable quicker treatment, which is vital if you’re in pain or need to resume work. It can also provide greater choice (depending on what is available in your area) allowing you to select your consultant, hospital and appointment times, offering flexibility the NHS may not.

Private hospitals can provide private rooms and better facilities, giving more comfort during recovery. For the self-employed or those unable to take extended time off, private care can minimise income loss by speeding up recovery.

Access to specialists or advanced treatments may also be easier privately, especially for complex conditions.

What to look out for when buying?

Choosing the right health insurance policy requires careful consideration to ensure it fits your needs and budget.

It is important to remember too that health insurance only works if you have a policy in place before a condition or issue emerges.

Dr Tryon says many policies are provided through workplace programs, but you can take out a policy independently. Costs vary between £70 to £200 (but can be more) depending on your age and health-related factors.

Here are some key things to consider:

Coverage scope: Check what the policy includes. Basic plans may cover only inpatient treatments, while comprehensive ones include outpatient consultations, diagnostics, and therapies. Ensure it matches your priorities.

Exclusions and limits: Most policies exclude pre-existing conditions, cosmetic surgery, or chronic illnesses. Some limit coverage for treatments like cancer care. Review the terms to avoid unexpected gaps.

Network of providers: Insurers partner with specific hospitals and consultants. Check that nearby facilities are included and available with your chosen provider.

Excess and co-payments: Some policies require an excess, like £100 per claim, or a percentage of costs, reducing premiums but increasing your out-of-pocket expenses.

Premium costs: Compare quotes from multiple providers, but don’t compromise essential coverage for a lower price. Use comparison sites or brokers for broader options.

Claims process: Choose insurers with a clear claims process and strong customer service. Look at reviews to consider the firm’s reliability.

Consider your age, health and finances when selecting a policy. Younger, healthier individuals might opt for basic cover, while older people or those with health concerns may need broader protection.

Why health insurance matters for your finances

Health insurance isn’t typically defined as something that can save you money or offer a sensible financial safety net, but its usefulness does extend beyond healthcare.

By protecting your health and potentially your family’s too, it can act as a financial safeguard that protects you against a loss of income, savings and stability through health issues.

For self-employed individuals or those trying to navigate long NHS waiting times, it can enable faster recovery times and outcomes.

Premiums, while highly variable depending on your age and health status, are predictable, unlike ‘out-of-pocket’ medical bills that can reach into the thousands.

However, the costs, often hundreds or thousands annually, require weighing against benefits, especially if you’re young, healthy, or rarely need care. For some, saving for emergencies may be more cost-effective.

Private insurance becomes more appealing for those who can afford it. It complements the NHS, easing the pressure on you to rely on public services while enhancing your healthcare options.

If you’re thinking about getting health insurance, assess your health and finances and consider consulting a financial planner or broker to find the best policy.

Understanding health insurance’s role in your financial plan can help you to make choices that support your health and wealth.

Photo credits: Pexels

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In this episode of Planner Unplugged, Mouthy Money’s Edmund Greaves speaks to Simon Harvey, Managing Director of bdhSterling – a financial planning firm that helps people manage their money between the UK and Australia.

Simon shares how he got into financial planning, what it’s like helping clients who move between countries and why your location can seriously affect your financial choices.

If you’ve ever wondered how expats handle pensions, tax, or investments, this one’s for you.

They also dig into how tech is changing the way we get financial advice, why so many people still struggle to access it, and what really matters when choosing a planner.

Simon offers useful tips for anyone thinking about a career in finance – and explains why helping people reach their goals is what makes the job worth it.

The post Planner Unplugged – Simon Harvey appeared first on Mouthy Money.

If I had to consider the biggest question facing my pension, what would it be?

Is it invested right? Am I contributing enough? Should I consolidate my pots?

These are all reasonable questions.

But no, the biggest question I have for my pension is ultimately – will it be enough? And how do I even work out what enough is?

Fortunately, the Pensions and Lifetime Savings Association (PLSA) has answers. So let’s go on a pension savings journey.

Age is just a number

I am 36 years old. I work a desk job, so assuming my brain (and fingers) hold up I could have a career that spans another 30 years easily.

Now, I started work in 2012, but I only opened my first pension in 2016. In the intervening period, I’ve accrued just over £34,000 into my overall pot.

Finding this number actually surprised me, I had thought it would be lower (especially considering this year’s market shenanigans).

So back to my question – is that enough? Turns out I might need that pension to be worth just under £1 million to retire on. Uh oh.

Retirement living standards

The PLSA compiles generalised figures for what it constitutes as either minimum, moderate or comfortable retirement income standards.

It released the latest iteration this week.

For the purposes of this thought experiment, let’s go for the middle ground option here. For what the PLSA calls a moderate retirement in 2025 I would need to be able to generate around £32,000 in income each year. This excludes housing costs and assumes you own your home without a mortgage (I do, fortunately for me).

If you include the full state pension at just shy of £12,000 a year then your pension would have to generate around £20,000 a year in income.

To do this you would need a pot of around £510,000 (based on drawing down 3.5%) a year – in today’s money.

This is well and good, but these are figures for someone retiring TODAY.

So what about me, in 30 years?

To save you the complicated further sums, I’ve worked out I’ll need a pension of just over £925,000 just to achieve a moderate income of £58,000 (assuming 30 years of average 2% inflation) in 2065.

More from Edmund Greaves

Confounding factors

There are some confounding factors here to be aware of:

• Being married reduces the per-person income requirements. I am fortunately married and my wife is younger than me by three years so hopefully that persists as it would make the target pot size smaller.
• State pension will likely not kick in for me until I turn 70 which means I have to front load some of my income depending on when I retire.
• I’ve assumed the state pension will still even exist (lol).
• I haven’t accounted for things like tax-free lump sum.
• Nor have I accounted for future tax changes.
• I’ve made a bunch of general assumptions about inflation that might prove optimistic (too low) in time.
• I haven’t accounted for my other assets which might generate a future income or windfall, such as my home or my Lifetime ISA.

Before things get boring the point here is that pensions are very complicated.

This is what I chatted to Clare Moffat about on this week’s podcast. I asked Clare to share the most common pension questions she gets in her work as a tax and pensions expert at mutual insurer Royal London.

In short, people are grappling with even the most basic aspects of their pension – before we get into the mad stuff like Money Purchase Annual Allowance (MPAA) and all that jazz.

I’ve never finished a conversation feeling more like I needed some actual financial advice to make it happen.

But I still haven’t answered my original question – is it enough?

To hit that fabled £925,000 pot – I’d need my current contributions and pot to return just under 9% per year. That’s pretty ambitious. Or is it?

I’m mostly invested in global index trackers – including Fidelity Index World. This fund has returned 8.81% over five years.

Including investing charges and pension pot charges I’m likely to fall a bit short. But boy, it is closer than I thought it might be.

Photo credits: Pexels

The post To have a “moderate” income in retirement I need a million-pound pension pot appeared first on Mouthy Money.

The Pensions and Lifetime Savings Association (PLSA) has released its latest Retirement Living Standards update, revealing a notable decrease in the cost of a minimum retirement lifestyle, while moderate and comfortable standards have seen increases.

The changes are driven by lower energy prices and shifting public expectations on retirement income levels.

For a two-person household, the cost of a minimum retirement lifestyle has dropped to £21,600 annually, down £800 from previous levels, while a one-person household now requiring £13,400, a £1,000 reduction.

The decline is largely attributed to a significant fall in energy costs, with weekly domestic fuel budgets for a two-person household at the minimum level decreasing by £12.44 and by £8.82 for one-person households.

These savings reflect broader economic shifts, including lower energy prices, which have eased financial pressures for retirees at this level.

Zoe Alexander, director of policy and advocacy at the PLSA, said: “For many, retirement is about maintaining the life they already have not living more extravagantly or cutting back to the bare essentials. The Standards are designed to help people picture that future and plan in a way that works for them.

“Everyone’s situation is different, and contributions should be manageable. But if your circumstances improve, even small increases can make a big difference to your future.

“This year’s findings show that costs can go down as well as up. But planning matters more than ever. Whether you’re on your own or sharing your future with someone else, these Standards are here to help savers picture and plan their retirement – with real figures, real choices and real flexibility.”

The Retirement Living Standards, calculated by Loughborough University’s Centre for Research in Social Policy, are based on in-depth discussions with UK residents to define three retirement lifestyles: Minimum, Moderate and Comfortable.

While the minimum standard saw reductions, the moderate and comfortable standards have risen slightly due to inflation across various expenditure categories, though lower energy costs – down £16.74 and £15.38 per week for two- and one-person households, respectively – helped offset these increases.

Professor Matt Padley, co-director of the Centre for Research in Social Policy at Loughborough University, said: “Our research on what the public agree is needed in retirement at these three different levels continues to track changes in expectations, shaped by the broader economic, social and political context.

“The consequences of the cost-of-living challenges over the past few years are still being felt, and we’ve seen some subtle changes in public consensus about minimum living standards in retirement, resulting in a small fall in the expenditure needed to reach this standard. 

“In these uncertain times, planning in concrete ways for the future is ever more important, and the RLS help people to think in more concrete ways about what they want their retirement to look like, and how much they will need to live at this level.”

Public discussions also highlighted evolving expectations for the Minimum standard, with small adjustments in spending on clothing, hairdressing, technology, taxi use, and charitable giving. However, rail travel budgets increased, rising from £100 to £180 per person annually, reflecting higher fares and greater reliance on trains for longer journeys.

More from Edmund Greaves

This year’s update introduces new terminology, replacing “single” and “couple” with “one-person” and “two-person” households to better reflect modern retirement living arrangements.

A PLSA survey found that 75% of people live with family members, 22% live alone, and 3% share with non-family members. Looking ahead, 77% of non-retired individuals expect to live with someone in retirement, with only 12% preferring to live alone, signaling openness to shared living to reduce costs.

The RLS serve as a guide, not a rigid target, encouraging retirees to tailor plans to their lifestyles.

Alexander urges savers to consider pension contributions beyond the 8% automatic enrolment default, suggesting 12% or more for a better chance at their desired retirement.

Photo credits: Pexels

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UK pension default funds are pre-selected investment options offered by workplace pension schemes for employees who do not actively choose their own investments.

These funds are designed to suit the average pension saver, balancing risk and potential returns.

Most UK workers are automatically enrolled into a workplace pension under auto-enrolment rules and if they do not make an investment choice, their contributions go into the scheme’s default fund.

Understanding these funds is key to planning for retirement as how they are invested can have long-term implications for pension outcomes.

Default funds are typically managed by professional fund managers and aim to provide steady growth over the long term.

They are often low-cost and diversified, spreading investments across assets like stocks, bonds, and sometimes property to reduce risk.

The goal is to grow your pension pot while protecting it from major market swings, especially as you near retirement age.

How do UK pension default funds work?

When you’re auto enrolled into a workplace pension, your employer and you contribute a percentage of your salary to the scheme typically 3% and 5% of your salary respectively.

If you don’t select specific investments, these contributions are invested in the default fund. Most UK pension default funds use a strategy called ‘lifestyling’ or target-date investing. This approach adjusts the fund’s asset allocation based on your age or expected retirement date.

In your younger years, the fund might invest heavily in equities (stocks) for higher growth potential, as you have time to ride out market fluctuations.

As you approach retirement, the fund gradually shifts towards safer assets like bonds or cash to preserve your savings.

This automatic adjustment reduces the need for you to actively manage your pension investments, making it a hands-off option for many UK savers.

Default funds are regulated to ensure they meet standards for risk, cost, and transparency.

Charges are typically low, often capped at 0.75% per year under Government rules, which can help improve long-term costs.

However, returns are not guaranteed and the fund’s performance depends on market conditions.

Alternative options for pension investing

While UK pension default funds are convenient, they may not suit everyone’s financial goals or risk tolerance.

There are some alternative options for UK pension savers looking to take more control over their investments:

1. Self-select funds

Many workplace pensions allow you to choose from a range of funds offered by the provider. These might include equity funds, bond funds, ethical funds, or sector-specific funds.

This option lets you tailor your investments to your risk appetite or values, such as investing in sustainable companies.

However, you’ll need to research and monitor your choices, as higher-risk funds can lead to greater losses.

2. Self-invested personal pension (SIPP)

A SIPP gives you greater flexibility to invest in a wide range of assets, including individual stocks, exchange-traded funds (ETFs), investment trusts, and even commercial property.

SIPPs are popular among experienced investors but often come with higher fees and require active management. They’re best for those confident in making investment decisions or working with a financial adviser.

It is important however not to forgo the workplace pension entirely however, as you’ll be turning down valuable employer contributions if you opt solely for a SIPP.

3. Financial advice or robo-advisers

If you’re unsure about investment choices, a financial adviser can help create a personalised pension strategy. However advisers tend to require minimum capital levels before being able to help with planning.

Alternatively, robo-advisers offer low-cost, automated investment management based on your goals and risk tolerance.

Both options can help you move beyond the default fund while keeping your pension aligned with your retirement plans.

But be aware of the costs associated with having a third party manage investments for you. It is also important too to ensure the adviser is regulated and has a strong track record of good outcomes for their clients.

Why consider alternatives to default funds?

UK pension default funds are a solid starting point, but they’re designed for the average saver, not individual needs.

If you have a higher risk tolerance, want faster growth, or care about ethical investing, exploring alternatives could better align your pension with your goals.

Reviewing your pension regularly ensures it reflects your financial situation and retirement aspirations.

Disclaimer

This article is produced for general informational purposes only. It should not be construed as investment, legal, tax or other forms of financial advice.

If in any doubt about the themes expressed, consider consulting with a regulated financial professional for your own personal situation.

Past performance is no guarantee of future results. Investments can go down as well as up and you may get back less than you started with.

Investments are speculative and can be affected by volatility. Never invest more than you can afford to lose.

For more information visit www.fca.org.uk/investsmart 

Photo credits: Pexels

The post What are pension default funds? appeared first on Mouthy Money.

Leading pension providers have announced a new agreement, dubbed the ‘Mansion House Accord’ to channel significant amounts of cash into UK investments.

The agreement could reshape how pension funds are allocated, affecting retirement savings for many.

Below is an overview of the Mansion House Accord and its implications for your pension.

What is the Mansion House Accord?

The Mansion House Accord is a voluntary commitment between the Government and 17 prominent pension providers.

Under this agreement, these providers will allocate 5% of their members’ pension funds to unlisted UK investments – those not traded on public stock exchanges – by 2030.

The Government estimates this could unlock approximately £25 billion for UK-based projects.

Additionally, up to 10% of pension capital will be directed toward infrastructure, property, and private equity investments, which may include both UK and international opportunities.

This shift could mobilise up to £50 billion into assets typically inaccessible through mainstream pension funds.

The accord applies exclusively to defined contribution (DC) pension schemes, which are common in workplace pensions. It does not affect defined benefit (DB) or final salary schemes. While most major providers have joined the accord, some notable firms, like Scottish Widows, have not signed on.

More from Edmund Greaves

How does this affect your pension?

The accord will influence the ‘default funds’ offered by pension providers. These are broad, long-term investment options designed to suit most members but not customised for individual needs.

When you join a company pension scheme – usually at the start of a new employment – your pension will likely be automatically invested in the pension provider’s default fund.

If your workplace pension is with a provider signed up to the accord, your savings may be increasingly invested in UK-based projects, such as infrastructure or private equity.

This shift has sparked some concerns. Investments in unlisted assets or UK-focused projects may carry higher risks or deliver lower returns compared to global opportunities.

Historically, pension funds have favoured international investments due to their stronger returns, often bypassing UK assets seen as less attractive.

The Government’s push to prioritise domestic investments is a step back toward ‘financial repression’: a strategy where capital is constrained to local markets, potentially limiting growth due to weaker domestic opportunities or inflationary pressures.

This approach was common in the post-World War II era but largely phased out by the 1970s.

However, there is no mandate forcing pensions into UK investments at this stage. The accord reflects growing Government enthusiasm for keeping capital within the UK, but it remains voluntary for now.

Photo credits: Pexels

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Is your retirement plan on track? How would you even know?

I have only the vaguest idea of what my retirement looks like in pure financial terms – or even if its going to be enough.

I know roughly how much is in my pension pots. And I know how much I (and my employer) contribute each month.

This is a good starting point, but extrapolating what this means when you want to retire is the hardest part.

The good news is we’ve found rather a good tool for it!

This was the subject of this week’s Mouthy Money podcast. We were joined by Kevin Hollister, founder of www.guiide.co.uk to talk about how not to run out of money in retirement.

Kevin has developed Guiide as a nifty tool to help create a plan for your retirement income.

Inputting the variables of what you want (such as retirement age, if you want a tax-free lump sum etc) and what you currently have and contribute – and it will give you an indication of whether you’re on track.

It is modelled on the Pensions and Lifetime Savings Association (PLSA) Retirement Living Standards benchmarks.

Those benchmarks map out three variable retirement lifestyles and the consequent income needs to meet those ambitions. It is very interesting and worth a look.

More from Edmund Greaves

Pension shock and horror

For the purposes of the podcast episode with Kevin, I went through the Guiide process. The results made me nervous.

It showed me that with my ambitions as they stood, I would start running out of money after about five years.

The good news is the tool helps you to map what you can do in order to ensure you meet your goals.

Broadly though you’ll need to do one (or more) of the following:

• Lower your expectations
• Take more risk
• Find other assets (such as home equity)
• Contribute more to your pension

With minor tweaks to the first three – I was able to make my plans work, hurrah!

But the process really unlined for me the fact that my plan although it appears to work, is fragile.

A big market fall, a loss of income, stagnation in the housing market – or any other kind of risk – could seriously hamper these plans.

I recommend having a go at the tool – it is quite enlightening.

As we say time and again now – have a plan, make a plan! Don’t stick your head in the sand!

The post Mapping my retirement income is bad for my nerves appeared first on Mouthy Money.

Pensions Minister Torsten Bell has announced the Government’s plans to legislate for so-called ‘collective defined contribution’ (CDC) pension schemes.

The Government will legislate to create collective pension schemes in the Autumn as it looks to improve pension outcomes for workers.

This will see pension funds from multiple employers pooled together into much larger pots. The Government says by increasing the size of the pension funds it spreads the risk and improves outcomes for members.

Minister for pensions, Torsten Bell, comments: “Success in the world of pensions isn’t just about getting people saving, it’s ensuring their savings work as hard as possible for them.

“Too often at present we are leaving individuals to face significant risks, about how their individual investments perform and how long their retirements last.

“Pooling some of those risks will drive higher incomes for pensioners and greater investments in productive assets across the economy.”

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CDC pensions explained

Currently when an employee joins a company, they are auto enrolled into the company scheme. But the variety of choices, sizes and performance of these pensions are mixed.

Instead, the Government intends to launch so-called ‘collective defined contribution’ or ‘CDC’ schemes. Such schemes are much larger. This makes them more powerful and also more accountable with larger numbers of members reliant on positive outcomes.

Currently the only CDC scheme in the UK is run for Royal Mail employees. It has over 100,000 members and offers them a combination of cash lump sum and income for life in retirement.

The Government will set out new legislation in the Autumn to widen the reform to more employers and schemes.

It plans to offer members of such schemes products on retirement such as annuities as an option for a secure lifetime income instead of managing funds and savings independently once retired.

What collective defined contribution means for pensions

While there is no current indication of whether your pension will be affected by the collective defined contribution pension reforms, there are changes coming in this Parliament.

Workers will potentially see their pension funds moved into larger schemes, which could give them less control over their investments.

The trade-off here is more assurance that their savings are being invested fruitfully for the future – but this is by no means guaranteed.

CDC schemes will have more power to invest in long-term assets such as illiquid investments (such as infrastructure) and more UK-based investments. This is a part of the Government’s wider priority to see more savings invested locally in the UK to boost the economy.

Other types of pensions such as legacy final salary (defined benefit) and private pensions such as self-invested pension pots (SIPPS) will be unaffected by the reform.

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Planning for retirement is a critical step toward financial security, yet many of us overlook simple ways to enhance our pension pots.

With long life expectancies and increasing living costs, building a robust pension is more important than ever.

By increasing contributions, securing higher-rate tax relief, reviewing investment choices, using salary sacrifice, and directing pay rises into your pension, you can significantly improve your retirement savings.

This article looks at five practical tips to boost your pension.

1. Increase your pension contributions

One of the most effective ways to boost your pension is to increase your contributions. The more you pay into your pension, the larger your retirement fund will grow, thanks to compound interest over time.

In the UK, workplace pensions often include minimum contribution rates, typically 5% from employees and 3% from employers under auto enrolment rules. However, these default contribution levels may not suffice for a comfortable retirement.

Consider incrementally raising your contributions, even by 1% or 2% annually. For example, if you earn £30,000 and increase your contribution from 5% to 7%, you could add thousands to your pension over a career.

Many employers match additional contributions up to a certain level, so check your scheme’s rules. Use online pension calculators to estimate how small increases can impact your future savings.

Starting early maximises growth, but even mid-career adjustments can make a significant difference.

2. Review your pension investments

Where your pension is invested plays a crucial role in its growth. Many UK workers remain in their workplace pension’s default fund, which may not always deliver optimal returns.

Default funds are often designed for low risk, which can mean lower growth, especially for younger savers with decades until retirement. Underperforming funds can cost you tens of thousands over time – even if you can’t plainly see it.

Request a pension statement to see your fund’s performance and compare it to similar funds using tools like Morningstar or Trustnet.

Look at the asset allocation. Is it heavily weighted in bonds rather than equities? For those far from retirement, a higher equity allocation may offer better long-term growth.

Consider switching to a fund with a stronger track record or a different risk profile but check for exit fees. If unsure, consult a financial adviser to align your investments with your retirement goals and risk tolerance.

3. Use salary sacrifice schemes

Salary sacrifice is a tax-efficient way of boosting your pension.

Instead of receiving part of your salary, you ask your employer to pay it directly into your pension. This reduces your taxable income, saving on income tax and National Insurance contributions (NICs).

For example, if you sacrifice £1,000 of your salary, both you and your employer avoid NICs, and the full amount goes into your pension, often with employer contributions added.

This strategy is particularly beneficial for middle and high earners. However, it may affect benefits like statutory maternity pay or mortgage applications, as it lowers your official salary.

Salary sacrifice can significantly enhance your pension while reducing your tax bill. This is particularly salient for higher earners with young children, who face a significant tax and benefit cliff-edge when they go from earning £99,999 to £100,000.

Check with your employer if they offer salary sacrifice and calculate the savings using a pension calculator. Always ensure the scheme complies with HMRC rules to avoid unexpected tax issues.

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4. Direct pay rises into your pension

When you receive a pay rise, it’s tempting to spend the extra income. However, allocating some or all of it to your pension can go a long way to boosting your pension without impacting your current lifestyle.

For example, if your salary increases by £2,000 annually and you direct half to your pension, you’ll barely notice the difference in take-home pay but will see substantial long-term gains.

This approach works because it prevents lifestyle creep, where spending rises with income. Set up an automatic increase in your pension contributions whenever your salary rises.

Many workplace pensions allow you to adjust contributions easily through payroll. If your employer matches contributions, you could double the impact.

This habit ensures your pension grows in line with your career, keeping your retirement plans on track.

5. Secure higher-rate tax relief

If you’re a higher-rate or additional-rate taxpayer, ensuring you claim higher-rate tax relief is a must.

In the UK, pension contributions receive tax relief at your marginal rate. Basic-rate taxpayers (20%) get relief automatically, but higher-rate (40%) and additional-rate (45%) taxpayers must claim extra relief through a self-assessment tax return or by contacting HMRC.

For instance, a £10,000 contribution costs a higher-rate taxpayer only £6,000 after tax relief, as the government tops up the difference. Failing to claim this relief means missing out on free money for your pension.

Check your tax code and recent payslips to confirm your tax band. If you’ve overpaid tax or haven’t claimed relief, contact HMRC promptly.

Additional considerations for pension planning

Beyond these five tips, regularly review your pension to ensure it aligns with your goals.

Consolidate old pensions from previous jobs to simplify tracking and reduce fees but check for valuable benefits like guaranteed annuity rates before transferring.

Stay informed about pension rules, such as the annual allowance (£60,000 for most in 2025/26).

If you’re self-employed, set up a personal pension and contribute consistently to benefit from tax relief.

Inflation and life changes also affect your pension needs. Use forecasting tools to estimate your retirement income and adjust contributions accordingly.

If you’re nearing retirement, gradually shift investments to lower-risk options to protect your pot.

Seeking professional financial advice can provide clarity, especially for complex situations like defined benefit pensions or tax planning.

Concluding thoughts on boosting your pension

Boosting your pension doesn’t require drastic changes; small, consistent actions can yield significant results.

By increasing contributions, claiming higher-rate tax relief, reviewing investments, using salary sacrifice, and directing pay rises into your pension, you can build a stronger financial future.

Start today by assessing your pension statement and exploring one or two of these strategies. With compound growth and tax advantages, your efforts now will pave the way for a secure and comfortable retirement in the UK.

This article is produced for general informational purposes only. It should not be construed as investment, legal, tax or other forms of financial advice.

If in any doubt about the themes expressed, consider consulting with a regulated financial professional for your own personal situation.

Past performance is no guarantee of future results. Investments can go down as well as up and you may get back less than you started with.

Investments are speculative and can be affected by volatility. Never invest more than you can afford to lose.

For more information visit www.fca.org.uk/investsmart

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