Your annual pensions newsletter

Kia Commodore (KC): Hi, I'm Kia, and I'm passionate about helping people make sense of topics that might seem complicated, like finance. That's why I set up my financial education platform, Pennies to Pounds, to do just that, and also why I'm so passionate about talking about pensions.

 

I'm delighted to be invited back for the second year to host this year’s Annual Member Forum, brought to you by the Trustees of Mastertrust and the Independent Governance Committee who are the independent body responsible for looking after your interests when saving for your retirement with Legal & General. It is amazing to see so many of you all here. A warm welcome to you all and thank you for joining us.

 

Our theme this year is there’s power in your pensions, and you've all taken the first step towards that by joining us and carving out time in your day to talk about pensions. And we hope that future you will thank you for it. There'll be a live Q&A session at the end, so please do start putting your questions into the chat function and we'll get to them when we get to the Q&A session.

 

Just a reminder that this session is being recorded and we'll share that recording with you with a newsletter consisting of useful information about your pension in the new year.

 

We'll be hearing about how your investments are making a difference, and we'll have plenty of time to answer your questions at the end. We’ve received an incredible 1,400 questions in advance, so we'll try our best to address as many as we can, and those that are sent in during the session, at the end.

 

Just a reminder that this is your forum, your members forum, so as well as giving you useful information, we want to hear from you, our scheme members. That's why we sent two of our board members, Helen and Tegs, on the streets with a film crew and a microphone to hear what members of the British public think about pensions and retirement. Let's see what they have to say.

 

[Video is shown]

 

KC: That video talking about the challenges that people have when saving for their future in retirement is really eye opening and ties into what we're discussing today - that there's power in your pension and looking at the ways that your power can influence what your retirement looks like and we want to help you figure out some of those challenges.

 

We want you to walk away today feeling empowered that you have the power to control how your pension works and that you can reach your dream retirement. You may have heard Legal & General's podcast series ‘A Little Bit Richer’, hosted by me, and if you haven't, it's a great podcast to check out if you want to learn more about your finances.

 

I am currently joined by Kim, who's a pensions expert at Legal & General and a friend of the podcast, and we'll be doing a ‘live podcast’ talking about some of the practical tips that you can action today when it comes to your pension. Welcome, Kim. Happy to have you back.

 

Kim Brown (KB): Thanks, Kia. Excited for our first ‘live podcast’.

 

KC: This is monumental. I'm excited to get into it. So, Kim, we're going to be talking through some practical tips that our members can put into place to help them feel empowered when planning for their future. And one thing that was raised in that video, particularly by the younger members of the public, was around education. So tell me in a nutshell, how does a workplace pension work and why may people need them?

 

KB: Yeah, let's start with the foundation then that most people will be using for the majority of their income in retirement, which is the State Pension. So State Pension starts from age 66 currently, but the current government is phasing that up to 68. You'll receive if you've paid maximum contributions throughout your career, you can receive a maximum state pension of around £11,500. If you're not sure if you've paid those full contributions, you can go to Gov.uk to check. So, people will have to consider if that £11,500 is sufficient to meet their retirement needs. If you're still paying housing costs in retirement, you know if you're paying rent or you're paying off your mortgage still, you might find that that isn't enough and you need to explore additional incomes, particularly things like, additional savings and workplace pensions.

 

KC: Amazing. So, if I'm used to an annual income of, let's just say £21,000 or more, then I'm going to struggle on just a state pension, even if it's at the max. So, if that's at £11,000 of the max state pension, can you talk about the benefits of the workplace pension schemes?

 

KB: Absolutely. And I want, you mentioned at the beginning we've had so many questions in advance and we've had over 1,400 people join up and I'm sure that many of those will be engaging in pensions for the first time. So I wanted to talk to those members and try and illustrate to you the different components that make up your workplace pension. And I have a three year old and what that means is I have a lot of access to Duplo.

 

KC: Oh, I love that.

 

KB: To stand on, to play with, whatever you do with it. So I'm going to try and use it to explain the two key benefits of workplace pension, over and above the already brilliant thing you're doing, which is putting aside money today for your future.

 

So, first up, the bit you're probably aware of is that you're paying money into your pension. So, through automatic enrollment, if you're earning over £10,000 a year, your employer will automatically roll you into a pension and has to put 8% into that pot. So if we take your contributions first, these are these little blue box and each represents £10.

 

So first up, for the purposes of this example, I'm assuming you're putting £80 into your pension. Now, if you're a basic-rate taxpayer what that means is you'll get an additional £20 on top. If you're a higher-rate taxpayer that means you'll get an additional 40%. I'll use the basic example for now, but straightaway you can see that government boost has taken your £80 up to £100.

 

The second benefit is that your employer has to contribute. So with this example of I said you've got your contributing 5%, your employer's contributing 3% on top as a minimum. Many employers pay more than that so you might be getting higher than that example. And additionally some offer that if you pay additional contributions, they'll match it. So we're starting to see this pot now rise. But again let me strip it back just to the minimum for the purposes of today and just show you for your £80, you've now doubled your money and you're sitting at £160.

 

KC: That's really good to visualise. So what happens to the money that members save into their pension?

 

KB: Well, your money doesn't just sit there in cash. Your money is invested. So your employer will choose a company like Legal & General, and they'll use your money with others to buy stuff. So that’s stuff like assets and the goal of that is to achieve growth over time. And that's either because the assets pay regular money into your savings, or because your investments grow in value.

 

So a good example of that is like property. The price of your property might go down as well as up, but over time what you're looking for is growth. And so this yellow block is to represent growth in your pensions pot. It's not scientific because your investment growth will be dependent on where you're invested and how that performs.

 

But I hope what it does is really illustrate and bring to life the value in your workplace pension. So you have your contributions. You have this boost from the government. You have an employer contribution, which I like to think about as a deferred pay, so they pay your salary today, but they're also required to put money aside for your future.

 

And the objective is that over time that pot grows and works for you. And I hope that example was helpful. I think probably it's been more confusing to Kia because that, unfortunately, is the view that you're getting.

 

KC: I'm seeing the little figures there, but that was a really good example for us. So now you've helped us understand the basics. Can we talk more about how people know how much they actually need when it comes to retirement?

 

KB: That I really wish I had, if I hadn't done the Duplo today, if I had, I wish I had a similar formula for people to figure out how much they need, but that really is dependent on people’s circumstances. I'd just be really pleased if people watching today were thinking about that and asking themselves those questions.

And the two things I think you need to think about is, what do you picture your retirement looking like? So when does it start and what does it feel like? And I appreciate that might, your retirement might look different over time. You might spend more at the start and that would perhaps reduce over time.

But, asking questions like how many holidays do I think I might go on? Are they overseas? Are they here? If you've got a family, how generous a grandparent you're planning to be, and give you an idea of what you want your retirement to look like.

 

Then you can ask yourself, how much do I need to be putting in now to save for that? And that's really difficult. And it's really difficult particularly for people that have got a long time until they retire. Because what we don't know is how our income might change over that time. And we don't know what the cost of living is going to be.

 

So instead of a formula, I've just got some tips which is to use the tools available. So at Legal & General we've got a retirement planner tool. It's available online through our portal, Manage Your Account. And what you can do is you can use those different living standards in retirement, so what you're expecting your retirement to look like, and it will show you what you might be needing to contribute today to afford that and whether you're on track to do it.

 

There's also some tools available through the government, through Pension Wise, they've got a guidance service as well as a helpful budget calculator for you.

 

And then the last point I wanted to mention under this is that we do have a gender pensions gap in the UK. So women are typically retiring with half the pension pot of men. So in particular, if you're one of those sort of underpensioned groups, you want to be thinking about things like contribution breaks for maternity leave, which is one of the causes of the pension gap, and any way that you can sort of help push back on that by continuing contributions if possible. You've seen the impact that it can make. You're probably very aware of the money that you need today, but thinking about it and visualising about the impact it could mean on retirement is helpful.

 

KC: And what are some of the different options when it comes to taking your pension when you reach retirement?

 

KB: Yep, so when you reach retirement, your pot has grown, you've got three options. And actually you can do a mix and match of all of those options when you reach retirement. You can take, across any of the options, 25% tax free up to lifetime allowance, sorry, up to cash sum allowance if you're a high earner.

 

So your first option is you can take an annuity. So you’d take your pot, you’d give it to an insurance company and they'll pay you an income for life based on your personal circumstances. Within that, you can choose to leave some of your pot to a dependent, and they'll continue in paying it to a loved one. That would result in reduced monthly income for you.

 

Your second option then is to go into what we call drawdown. Your money would remain invested, but you can choose to take either a monthly income or go in and take regular withdrawals from your pot. Sort of things you'd be considering there is making sure you've still got enough money.

 

And the third option is taking it all as cash. This is your pot. You know, you can take 25% cash free, but you can take the remainder as cash if you want to. That point about making sure you've got enough money is really key here, and also considering the tax implications of taking the full amount.

 

And on the tax implications, because in those questions we received online, we had a lot around tax and I'm sure we'll cover that later, but what you need to be aware of with the remainder of your income coming from pension is that there's a personal annual allowance of £12,500. So we mentioned the full state pension earlier is circa £11,500. So that is a sizable chunk of your personal allowance. Anything over that will be subject to tax at your marginal rate.

 

KC: That's really good to know. So obviously the members joining us today already have a private pension with Legal & General. But I want to ask you if you were just thinking of three things that a member watching could do when it comes to planning for their future that they can implement right now, what would you say?

 

KB: Okay, three things. So, first up, get yourselves set up properly. So, you're joining us today. You've made that first brilliant step to think about your future. I'd say after this download the App. You know, you've probably got your bank on there, your food delivery, your taxis. Get your pension on there. You can do things like look at your pension, change your investment. You can tell us any beneficiary you'd want to leave your income to in the unfortunate event you passed before taking your retirement. So we've got a brand new App. Download it today.

 

We've also got an online portal, Manage Your Account, which has some additional functionality that you can join, and you'll also, if you wish to, receive benefit statements through the post each year. So, keep us up to date on where you are so we can do that. So, first tip, get set up. Once you are I think track your pension annually. So, once a year pay your pension some attention.

 

And I think to help with that, what you could do is look to consolidate your pensions. So if you have a number of pension pots with different providers, you might want to think about bringing those together. That would be a decision that will need to be in your interests, and you'll need to make sure it's the right one. And I'd say the things to consider there are what you're paying elsewhere for the quality of service you get elsewhere and make sure it's the right financial decision.

 

And also if you are or if you have been in a defined benefit scheme, you might have protected benefits that you would lose if you transferred in. So, some things to check, but the benefits can really help in that paying your pension some attention once a year. You've got it all in one spot and it's more easy to sort of forecast and picture.

 

KC: Thank you so much Kim. That's really helpful and it's good to see that members...

 

KB: Oh I forgot my third tip, Kia. I'm so sorry.

 

KC: Do you know what, every time you talk I'm always mesmerised. Jump in. Go with the third tip.

 

KB: I've done my get online. I've done set yourself up. I've done track it. My last tip is then plan ahead. You know, I've mentioned the retirement planner that we have that will help you figure out if you're saving enough now for your projected retirement.

 

The second tool I wanted to mention was our guidance journey. I think we really appreciate the size of the decision when people hit retirement that they're taking, so we've developed this tool from age 55 with some personalised support to help you make the right decision for you when you're coming up to that decision point.

 

KC: Every time we chat, I learn so much more about pensions. So, thank you again for joining me. And it's good to see that members can really take action now when planning for their future. We hope this has helped you understand the power that you have to influence what your retirement looks like, and I really appreciate you joining me.

 

KB: Thanks Kia.

 

KC: This was a great live episode. I hope everyone at home enjoyed it.

 

KB: Just a few stumbles. I didn't drop any Lego so...

 

KC: It was great. It was brilliant. So, there is power in your pension if you use it. And so now it's over, it's over to you to get your phones ready and participate in our poll. There should be a QR code and link on your screens right now. All you have to do is scan the QR code with your phone, or on your browser go to menti.com and then enter the code 32258493, but it should be on your screens, and that will take you to the poll.

 

And the question that we're asking is, which of these tips are you most likely to do following this event? Is it number one, get online? Number two, bring all your pensions together in one place? Or is it number three, use a retirement planner tool? So we can see this live, Kim.

 

KB: Yeah, a huge amount straightaway for retirement planner, shows perhaps some of our audience is hitting the stage where they're thinking about their retirement options. But the app coming through strong now.

 

KC: It’s coming through really strongly.

 

KB: It's still the retirement planner, though, working out how much you need. That seems like a real area people need some support so that might be something you cover.

 

KC: Absolutely. I think it's great to know that there are tools available. So it's really good to see that everyone's coming through and that is amazing. So, thank you again, Kim. Thank you so much for joining.

 

KB: Thank you.

 

KC: This has been great. But now we want to hear more from members of the public from our day out filming on the streets. And we're going to hear about what people plan to do when they retire, as well as their tips for the future. Let's see what they have to say.

 

[Video is shown]

 

KC: There were some great retirement plans in there, and I particularly love the one from Rebecca about retiring in Italy and raising goats. I mean, that sounds incredible. More power to you, Rebecca. But I'm delighted to be joined by a panel of experts who'll be answering your questions live.

 

Welcome, all. Thank you for joining me. We have heard from members of the public about their retirement plans. So I want to come and ask my panel about what their plans are for retirement. So I'm gonna start with you, Brian. I'd love to hear a bit more about what you do and what your plans are for retirement.

 

Brian Paterson (BP): Sure. So I work in projects here at Legal & General, mainly to improve our proposition for advisors, clients and members. And there's no goat in my retirement plan, probably a dog. My wife and I would like to test the theory that it's cheaper to live on a cruise boat for a year than live in the UK. And then beyond that, football, running, golf, the things that I don't spend enough time on at the moment.

 

KC: I love that. I want to hear about the boat. I definitely, when you try that out, I need to hear the feedback on that. Then I'm going to come to you, Jayesh. Can you tell us a bit more about what you do and what your plans are for retirement?

 

Jayesh Patel (JP): Yeah, so I'm Head of DC Clients at Legal & General, which is basically working with employers to help support their employees, much like the members who have joined us today. In terms of retirement, unfortunately, I'm probably still 15, 20 years away. But it's really for me, focusing on my two passions, going to watch Liverpool Football Club as much as I can so happy boy after yesterday and also travelling. So I love travelling and really want to make sure I can visit as much of the world as possible.

 

KC: I love that, I love travelling too, so I'm with you on that one there. Then Kinna, best for last. Tell us a bit more about what you do and what your plans are for retirement.

 

Kinna Patel (KP): Sure, so I'm a DC Investment Director and that means I work with employers on the default options that they offer their members. And in terms of retirement, haven't really thought about that, I mean it's still quite a long way off, but probably going to copy Jayesh’s answer, not to do with Liverpool because I'm a Man United fan, but I would love to just travel the world. That'd be great.

 

KC: Amazing. I think I'm going to nick some tips from everyone's retirement plans and put it into my own. I love that. So in this next section, we're going to be discussing some news hot off the pension press and we're going to be hearing from Kinna on investments that L&G have made and how some of that money invested in your pension is used hopefully to generate some returns and do some good.

So Kinna, thanks so much for joining me today. I think for some of our members, investments can be difficult to understand. Kim spoke earlier about the basics and covered that, but can you explain in a nutshell how investments work and how those investments can potentially have the power to make a real difference?

 

KP: Yeah, of course. So, when members pay money into their pension, all that money actually gets invested into different assets. So this can be things such as stocks and shares of a company, also known as equity, or things such as bonds and property. And the reason why your money is invested is because you want to give it the best possible chance to grow, so you have a fantastic outcome at the point of retirement. And now, ultimately, it does depend what you're invested in.

 

In terms of your pension having the power to do good, we actually offer a range of funds that aim to do just that. So we have some funds which actually utilise scoring, so they actually score companies across different environmental, social and governance metrics and we allocate more money towards the ones that score higher than to the ones that don't.

 

And these metrics cover a variety of areas, so, the number of women in executive positions in a company, companies having anti-bribery and corruption policies, and also not just that, we also invest in, we have funds which actually invest in areas such as renewables, for example. So there's a lot going on. But as I said, it ultimately depends on what you're invested in.

 

KC: That's really good to hear. And it's great to hear about sustainable investing because that sounds really interesting. So, can you give me some examples of what Legal & General are doing in this space?

 

KP: Yeah, of course. So, aside from what I've already mentioned, one key area is Investment Stewardship. So that's us engaging, talking to companies about their different policies and sort of how they're operating and also voting on different resolutions and by that I mean, as a shareholder, Legal & General actually have the right to vote on what a company essentially does or doesn't do.

 

So this can be anything from them being more transparent in their accounts, human rights of their employees, things such as the Modern Slavery Act, or even things such as cyber security. So, all of this really means that we're just holding companies to account to have better practices in place, which ultimately could affect financial returns. And that's everything from just even engaging with companies to make sure they're paying their employees the living wage, as opposed to the national minimum wage.

 

KC: So if Legal & General have these powers as a shareholder, do members also get a say in how Legal & General use their voting rights?

 

KP: Yeah, of course they do. So, we actually have this great tool available for members called Tumelo, and Tumelo's platform, it’s actually really cool. So you can log on and you can actually see which companies you're invested in through your pension, and then you actually have the power to put an expression of wish so how you would vote on these different resolutions essentially, and also leave comments. And the great part of that is that all of that great information that you, as members, put in, actually gets sent to our Investment Stewardship team, so we know what areas are important to members, what are not, and generally sort of how you feel about the different companies.

 

KC: That's really good to know. Kinna, I understand that the world of investments is changing and the pension companies like Legal & General have started investing in private markets. So please could you explain to everyone watching what does that mean?

 

KP: So, private markets are essentially investments in assets that are not listed or traded on an exchange. So this could be the London Stock Exchange for example. It can be anything from property, investments or even private equity.

 

KC: So why would you invest in private markets?

 

KP: So, private markets have the potential to generate better returns than more traditional public markets.

 

KC: And what’s private equity?

 

KP: So, private equity is stocks and shares in a company that haven't been offered to the general public, which that means they're not listed on that exchange that I spoke about earlier. And now, I know it can seem a bit daunting at first because it seems like a relatively new concept, but, to be honest, everyday companies that we sort of utilise and see around us are actually private. So, supermarket chain Aldi is a private company, as well as Lidl's parent company as well.

 

And not only that, so we actually access private equity through our Private Markets Access Fund. And that particular fund actually also invests in more impactful companies. So these are startups that are coming out of prestigious universities such as Oxford. And they're really geared towards changing the world and helping shape the world. So this might be in AI-enabled healthcare or even agricultural tech.

 

KC: Oh, that's really interesting. There's a lot going on in that space.

 

KP: Yeah, of course.

 

KC: When we talk about property or infrastructure, do we mean physical assets?

 

KP: Yeah, we do. So, one of the great things that this fund invests in is actually in affordable homes, so high quality, energy-efficient homes and different projects to develop fast growing cities around the country such as Oxford.

 

KC: And infrastructure?

 

KP: So that spans different areas. That will be utilities, energy and transportation as well.

 

KC: That's brilliant. So you mentioned affordable housing. So it sounds like the Private Markets Access Fund is doing some good. What else is it doing?

 

KP: So, for us,when we were actually designing this fund, responsible investment or sustainability was something that we were keen to make sure was integrated within it. And aside from what I've said, the fund also invests in timberlands. So that's timberlands that are certified by the Sustainable Forestry Initiative. And that's all about nature preservation in terms of forestry management.

 

We also partnered with a clean power sector specialist called NTR, that’s the company, and through them we actually invest in wind turbines, wind farms and solar as well. So really the power is really in your pension. It can do a lot of good. And through this fund with NTR, we're actually enabling to, you know, transform Europe and get away from their reliance on fossil fuels and just invest in a more greener economy.

 

KC: Oh wow, that's amazing. And, are the private markets available for members to invest in?

 

KP: Yes it is, but ultimately it depends on what fund you're invested in. So, the fund that I've spoken about today is actually within the Target Date Funds and the Lifetime Advantage Funds. In terms of how much you’re invested in those funds will depend on which fund you select.

 

KC: Amazing. Kinna, this has been very insightful. Thank you so much. We're now going to our long-awaited Q&A session live with our experts. So please do continue to enter your questions into the chat. But first off, let's hear from our members of the public with their questions.

 

[Video is shown]

 

KC: Great questions there from our members. So I'm going to come to you, Brian, could you help us by responding to some of those questions that were given to us from the members of the public?

 

BP: Yeah, sure. So, the first one they had about why saving a pension and do you need to understand the investment elements? So a pension is a good way to save for retirement. Kim explained earlier that it's a tax-efficient way with the relief that you get on your contributions, and you've got the contributions that come into your pot from your employer.

 

So it's a good option in terms of saving up a pot that could then give you a similar, the opportunity, certainly, for a similar lifestyle to what you're used to pre-retirement in retirement. That part about not understanding investments. That shouldn't be a barrier to saving, because each auto-enrollment pension scheme has a default fund, and that's selected by a group of experts and reviewed by those experts. And it takes that barrier away from someone saving towards retirement, because they can ignore that part completely if they like, or they could play an active part in that selection. So that was the first question.

 

The second one is what's a good way to plan for retirement, especially for younger members? This is a discussion that I've been having with my daughter recently. And you know, the longer that you save, the more chance you've got of giving your pot to grow. So, before you get used to not having a deduction for a pension, that would be a good point to say I'm going to accept that I'm going to save over a longer period.

 

It's a really good idea to see what's available from your employer in terms of the contribution structure. Is there matching available? And what's the right choice for you? And then you can review that on a regular basis. And, you know, tools, other things that were mentioned, are a good way just to revisit that. Annual statements might be a prompt to just check that your circumstances haven't changed. It should be reflected in your savings.

 

KC: Brilliant. Thank you so much for answering those, Brian. Now we're back to the live Q&A session and we’ve received so many questions from our members about pensions and we're going to try our best to get through as many as we possibly can.

 

So our first question, I'm going to come back to you, Brian. One thing that came up a lot is how do I consolidate my pension and how do I know if it's right for me? We heard earlier because Kim covered this in her update, but it's definitely worth us recapping. So please could you give us the pros and cons of consolidation? So that’s essentially moving your pensions from a different provider into, say, Legal & General?

 

BP: Sure. So, the pros might be that it's easier to understand in one place and might be easier to look at one account than several to get a feel for what the value is, what it might provide for you in retirement. So, that's one element.

 

The cons, it could be that there's different types of pension or things attached to the pension that mean it might not be in your best interest to consolidate. So if we kind of dig a bit deeper into this, there's what type of pension is it that you have. So, some defined benefit pensions describe what income you're going to receive in retirement and that's a guaranteed income.

 

And then you've got defined contribution pensions. That's like the pension provided by Legal & General where you make contributions, that builds up a pot and then you decide how you're going to use that pot in retirement. So, let's park defined benefit for a second and focus on the defined contribution.

 

So, there are different features and elements within defined contributions that should be taken into account in relation to whether or not to consolidate. The main factors are, are there any guarantees or benefits that you would lose if you transferred? If there are, let's put those alongside the defined benefit for a second.

 

The next might be costs and charges, and Kim referred to this earlier. This is where there will be deductions. Auto-enrollment approved pension schemes have a cap on the charge, so that gives a comfort. But that is something to look at when you’re thinking about consolidating.

 

And the third element is about value. So, you might want to consider what the investment return is that you receive on your pension accounts, how easy is it to understand and maintain, what's the online access like for other retirement options, and maybe some other features that are important to you?

 

KC: Amazing.

 

BP: If I come back to those that we kind of put on the shelf earlier, those are the ones where I think it's most likely that you would need to seek some advice before consolidating, and that comes back to the point that it might not be in your best interests.

 

KC: Brilliant. Thank you so much, Brian. I'm coming to you with this one, Jayesh. So, we mentioned a little bit earlier that Legal & General have launched their new App. And, please could you let us know how members can download the App and give us an overview of how it works and what information is available on there?

 

JP: Yeah, of course. So let's start with the how first of all. So, depending on your device or your mobile device, you would go to the App Store or Google Play Store, type in Legal & General and you will find the Legal & General App, and you can download away.

 

Now, if you have an online account already, then you can simply put in the details that you registered with that and you're away and kicking. If you don't have an online access account set up, then register online, use those details and you’re away. In terms of why you'd want to do this, I think there's a number of reasons which we explained earlier whereby you really, from our perspective, you're putting your pension in your pocket and you can really get engaged with your retirement savings.

 

So, within the App you can check the value of your DC pension account. So just understand how that's moving. You can check about how your investment funds are performing. You can nominate your beneficiaries, which is really important just to make sure that if you were to pass away where your pension benefits would pass down to.

 

And Brian also spoke about transferring your pensions. So if you wanted to take that action, you can also do that via the App. So lots of, several benefits, and we really urge people, I did see there 25% of people were looking to download the App. Let's make that 100%.

 

KC: Let's make that 100% and there's a lot of information in the App so, thank you so much for that. We have some members who plan to retire overseas. I'm with you guys, me too. I'm going to bring this back to you, Brian.

 

What happens to your pension when you move abroad and how can you access it? Also, just to tag on a follow up question, we've had a few people ask, can I transfer my pension into a different pension scheme overseas?

 

BP: Okay, so I guess the first thing is that, that pension still belongs to you. So it's your money and it's your decision as to what you do with it. There's two main options. The first one is to receive the income from that pension when it remains in the UK.

 

And the second option is, as you mentioned, you could transfer. Now, there may be pros and cons to either option. From the income side, there are agreements in place between governments that mean you won’t, you know, experience double taxation. If you are looking to transfer, there are only certain providers that are approved by the HMRC, the government, in terms of those that can receive a pension from the UK.

 

So there's a few bits there. Because there's numerous places that our members could go off and retire to, it's very difficult to say it may or may not be in your best interests to, you know, go for either option. So, this is one of those areas where it may be in your best interests to seek advice.

 

KC: Thank you for that. This next question is for you, Kinna.

 

KP: Okay.

 

KC: I understand that as people approach retirement age, you move their funds into safer assets, so I'd like to know a little bit more about how you do that.

 

KP: Sure, so this does again depend on the fund that you're invested in. So if you're invested in our Target Date Funds or Lifetime Advantage Funds, yes, when you are ten years away from your selected retirement age, we actually begin sort of de-risking you, and what we mean by that is your money is coming out of higher growth, more growth-orientated, riskier asset classes into more of your traditional defensive asset classes, and that happens over the ten year period.

 

But what's really important here is that this is designed in accordance to when you are selected to retire, when you believe you will retire, and the Target Date Funds and both the Lifetime Advantage Funds are actually five-year date ranges when you go and select your fund. So it's really, really important that you do keep your retirement date correct on the system. You can do that via the App or even logging onto your account and just make sure that that's correct and in there.

 

KC: That's good to know. Back to you, Brian. We've heard that there's a lot of announcements being made, especially in the budget. But what does that mean for pensions? So in particular, we've received a lot of questions about inheritance tax. We did touch on it a little bit with Kim earlier. But what does that actually mean for members and their pensions?

 

BP: Yeah, I think that was the main change in the budget for members. So, if we look at currently, if a member passes away at the moment, it's unlikely that their pension, defined contribution pension, would be taken into account within their estate for inheritance tax purposes.

 

What I mean by estate is the value of their possessions, their property and the money that they have. That is proposed to change from April 2027, where the government will include those benefits for inheritance tax purposes. Now there is a threshold of £325,000 that applies, and it's only anything above that amount that would fall within the sphere of the inheritance tax. However, spouses and civil partners and charities are exempt from that. So it's mainly where the estate passes on to beneficiaries that this might apply.

 

KC: That's good to know. Thank you. Staying with you, Brian. How do you cash in the 25% which is currently at age 55 but going up to 57, and does this affect you if you're still working? For example, can you continue putting in money into the pot if you are still working?

 

BP: Okay, I think the first thing to say is, although the padlock comes off your pension at age 55, soon going up to 57, that doesn't necessarily mean that you need to go and access it at that point. It comes back to that concept of the longer you save, the more likely it is to provide the benefits that you need.

 

But when you are ready to access your pension, you can contact us as your provider and let us know your plans, and we'll help you to get everything ready and to, you know, put in place whatever benefits you want to access from your pension pot. And yes, it is possible with your Legal & General pension to continue your contributions after the point that you've tapped into some of that money.

 

KC: So if a member is thinking at home that they would like to pay more, how can they do this?

 

BP: Sure, so regular contributions are typically paid via payroll. And there's various ways in which you might want to get an instruction to payroll to make an adjustment. So it might be that you've got a flex benefit site, it might be there's an online form, or maybe another method to make that request.

 

You can also make one off contributions to your pension. That may be via payroll. So let's say you are lucky enough to get a bonus. You may want to allocate some or all of that bonus towards your pension. Again that's an instruction to payroll and a request that they would be able to fulfill. Some pension schemes allow a direct contribution from the member's bank account directly into the plan as well.

 

KC: Good to know. Thank you so much. Kinna, I’m coming back to you, we’re talking about investments again. So pension money is invested in all sorts of different things. And some of the members have asked why Legal & General invest in things like oil and gas and why they do that because it can be harmful to the environment. So what would you say?

 

KP: Yeah, of course. So, as I mentioned earlier, we have a wide range of funds. Some do exclude investing in oil and gas companies in its entirety. Others don't invest in companies that generate greater than 20% revenue in things such as coal mining and oil sands. And then some funds actually, they're called index tracking funds and what that means is they actually have to invest in whatever the underlying index invests in. And that may have some exposure to oil and gas companies.

 

So it's important to always know what you're invested in. And one thing I will say is, and this is the point I spoke about earlier regarding Investment Stewardship and our Stewardship team, that when we engage with companies, we talk to them, we talk to them about a whole load of different areas, and it's always important to have a seat at the table to be able to influence change. And that's something that, you know, we really pride ourselves in.

 

And you're actually able to go to our website and see how we've engaged or voted with different companies. So you can just really take a look at it yourself and see that we are really taking this seriously and really engaging with the companies.

 

KC: That's good to know. On the topic of investments, because I’ve got you here, do Legal & General have Shariah funds? And if they do, what is this? And is it available?

 

KP: So, I'm actually really excited to announce that yes, there are Shariah funds available for members to invest in. And for those of you who may not know, Shariah funds are funds which are adhering to Islamic investment principles.

 

And that could mean excluding things such as, alcohol, pork or gambling, for example. And we have a range of options available for members. So we have a lifestyle option available. So that has the de-risking, switching out of assets, which I spoke about earlier. But we also have three standalone funds spanning different asset classes too.

 

KC: Thank you so much. Brian, I'm coming back to you again. So, a question that we had come through is what happens to my pension when I pass away, and how do I nominate beneficiaries so that I can choose who my pension money is left to when I pass away?

 

BP: Okay. So any unspent pension is payable on death and you can make Legal & General and the trustees aware of who you would like those benefits to be paid to by completing a beneficiary form. And the easiest way to do that is via the App.

 

KC: Jayesh, we haven't forgotten you, I’m coming back, don't worry. This is one for you. So I want to ask you, what developments are Legal & General rolling out to help members understand their pensions? But in particular, could you tell us a bit more about guidance and what this means?

 

KP: Yeah, so in terms of exciting developments, I've already spoken about the App clearly, but another really big excitement from our perspective last week was that we went live with our guidance journey.

 

So essentially what this means is that those above the age of 55 have access to the online guidance journey. You can go on to your online account, Manage Your Account, and you will see there the guidance journey.

 

Now, what this will enable the member to do is to input their information around their, not just their Legal & General DC pension account, but also they can put in and insert information about all the other pensions that they no doubtfully have. They can also put in other savings arrangements that they may have, because we understand that when people think about their retirement and how much they need and how much they have, it's not going to be just about the pension pot they've got with us, and it's not going to be just about retirement savings.

 

So we consider things like the value of your house, and whether you are still renting, or whether you still have a mortgage. And importantly, we play this back in a really simple way where we set out the options. So Kim referred to the options earlier about whether you take a pension or drawdown or taking it in one go.

 

So we really try to help inform the individual about how they can take their options. So one of the things that we urge all the callers, people that have dialled in, is to go and visit that tool, and really help them almost build out a holistic plan about how they want to take their benefits when they come to retirement.

 

KC: That's a really useful tool. Definitely worth checking out for sure. So Kinna, again we've had a lot of questions around investment. So we've had some of our members who would like to choose sustainable investments. So what are sustainable investments and how do members select the funds which are sustainable?

 

KP: Sure, so a lot of this stems down to what I was speaking about earlier in terms of we have a wide range of funds and each of the funds do different things. They integrate sustainability or responsible investment in different ways as well, whether that's the scoring methodology, Stewardship, etc., and you can find out more by going on to our website. There's specific ESG placemats available which show you how sustainability is integrated into different funds and to what degree, there's also responsible investment guides and generally just a lot of information that is available. So please, please do check it out.

 

KC: Thank you. Jayesh, I’m coming back to you. So some of our members have asked about tax on pensions. Is there a tax calculator to help people see what tax that they might have to pay?

 

JP: Yeah, so I think thinking about tax in which we've discussed a bit earlier on, in broad terms, up to 25% of your pot, as we mentioned, can be taken as your tax free account. And the rest is then subject to marginal rate, depending on how you take your benefit. Now, we know that some people consider taking their complete DC account in one lump sum, or maybe two. And, one of the key things that people should think about before doing so is the tax consequences.

 

So one of the things that we're building and developing is a simple to use pension tax calculator, particularly for those who are looking to take it maybe in one lump sum or a couple of tax years, and it will show, or illustrative terms anyway, the estimated amount of tax they could pay on that before they make those decisions. So we're looking to develop that, and we're very much on track to be releasing that by the end of this year.

 

KC: That's amazing. Now we're down to our last question that was sent in, in advance. So just another reminder to everyone watching, please do enter your questions into the chat function because we're coming to that just after this question.

And my last question is for you, Brian. So, the one that's been sent in is will I be sent a pension benefit statement regularly which shows the value of my pension and how my investments have performed?

 

BP: Yes. So, at least, you know, annually we'll send a statement that will summarise the contributions paid, how the investments have performed, and what income you're likely to get in retirement.

 

KC: Brilliant. Thank you so much. We are not done. We are coming to our live questions. So we've got the first one, Jayesh, this is for you. And the question is, does Legal & General have any tools to help with consolidation?

 

JP: Yeah, so again we've spoken today about the reasons where you might or consider consolidating your pensions, transferring your pensions, bringing it together, whatever you want to call it. Our consolidation tool is called My Future. And what you can do there is go on either via the App, as I mentioned, or you can go on to the online account, and you can go on to that and then think about how you want to take your benefits or actually combine your pensions.

 

KC: Thank you. Next one for Brian. So, we've mentioned it a little bit earlier, but in the sad event that someone passes away before they retire, what will happen to the pension fund that they've built up?

 

BP: Yeah, so this is where anything unspent is payable. It's your money, now it's who you want to leave it to. And that's where you can put that expression of wish to Legal & General or the trustees as to who you would like to receive that money.

 

KC: Brilliant. Thank you. We're just waiting for another question. There we go, Jayesh, back to you. You've got loads of questions coming up. So you mentioned that people can take 25% of their pension pot tax free. Has that changed? And can they take all of that 25% in one go?

 

JP: So that hasn't changed. There was a lot of speculation pre-budget about possible tax changes. Brian alluded to some changes around inheritance tax. There was speculation around the 25%, but no, there weren't any changes on that particular piece.

 

And no, you don't have to take it in one go. You can choose if you want to, we spoke about drawdown earlier, and you can take that in different stages should you wish to do so. Again, always check with your, you know, the options available as you consider that.

 

KC: Brilliant, good to know. Keep sending your questions, we’re waiting for a few more to come up. Oh, there we go. We've got our last question. Last question, a big one. Brian, it's for you. So the last question is, what happens to any money I don't withdraw? Does it stay invested?

 

BP: Yeah. So it's exactly as it was before you started withdrawals, that you're saving for retirement, that money's invested, it's got the potential to grow. And, you know, you then make a decision as to what you do with those benefits when you're ready.

 

KC: Brilliant. Thank you so much. And thank you to everyone at home. There were tons of questions sent in advance and you put loads in the chat function. We tried to get through as many as we could. Hopefully you got some answers and some guidance there.

 

But before the event ends, we would love to receive your feedback on what you thought of today. Once again, please scan the QR code that should be on your screen right now, or go to menti.com on your browser and the code is 38662331. We'd be so grateful for your time in taking a moment to let us know your thoughts.

 

There should be a poll up because we want to know what did you think about the event? How did you find our presentation? Do you have any additional comments for us? And what would you like us to cover in the future? So just a reminder, the QR code should be on your screen now. Go to menti.com and the code is 38662331.

 

But that's all we have time for today. Hopefully you enjoyed this session. We will share the recording with you in a newsletter with useful tips in the new year so please do look out for that.

 

Remember to download the brand new Legal & General App if you haven't already. There should also be a QR code on your screen to get that to make it even easier for you. Thank you so much for taking part and being a big part of today.

 

And thank you again to my amazing panelists, Kim earlier and everyone behind the scenes who have made today possible.

 

Most of all, thanks to you, our members, who have stayed with us and raised some excellent questions. We hope that you're walking away feeling empowered that your pension is in your hands and that you use some of these practical tips that we've discussed today. We hope to see you here again soon. Thank you so much and goodbye.