Sometimes, the assumptions we have about money are hard to shake. One assumption many of us hold is that pensions are intimidating, complicated to set up or change and a sort-of prison for our money that we only get the keys for many years later. “I remember being in my early twenties thinking that I was paying into something I’d never see,” says Starling personal customer Andrew MacLeod. “I did set up a pension through my first job but I never really checked it.”
Andrew, 32, is one of thousands of people managing his pension through PensionBee, an app that enables you to combine old pensions into one new plan. He signed up 18 months ago through the Starling Marketplace, where customers can browse and connect to third-party products and services. He now checks the balance of his pension regularly through the Starling app and makes monthly contributions towards his retirement fund.
Collecting your old pensions into one new pot
“Pensions can be a bit daunting and heavy-going. But when I saw how intuitive and modern the PensionBee app was, I decided to transfer one of my old pensions over,” he says. “I had no idea how much was in there or what the interest rate was. The only thing I could tell you was who my provider was. Now I know everything about it - the information is right at my fingertips.”
A lot of Andrew’s motivation to maintain a pension came from his accounting course. “My dad kept going on about how important pensions were, but any time I looked at information about pensions, it seemed way too far in the future. It was only after studying accounting that I realised the difference each year could make.”
Like all investments, pensions benefit from compound interest, a term that refers to interest earned on interest. In addition, pensions are also topped up by the government as a form of tax relief. With PensionBee, most contributions will benefit from a 25% tax top, meaning that if you add £40 to your pension, an additional £10 will be added by the government. You can only receive tax relief on contributions up to £40,000 per year.
Investing in your future self
Starling customer Christie George, 26, was also lucky to learn about the value of pensions early on in her career. “When I was 17, I worked part-time in financial services. One of the financial advisors told me that I needed to start saving for my pension, which I thought was ludicrous as I was so young at the time. I didn’t think I’d need to do that until aged 30 onwards. But when he sat me down and explained some basic maths of how much you need to save each year for a comfortable retirement, I was completely blown away.”
The following year, when she started full-time employment, she opted into the company’s pension scheme and made sure she contributed the maximum amount possible. “I’ve done the same every year since with all the employers I’ve had,” she says.
Christie became a Starling customer in 2018 and signed up to PensionBee as soon as she received the email telling her about our integration. “With PensionBee, it was super easy. I told them where I’d worked and how long for and they moved that pot over. There was no admin on my side, which is always a win.”
Real time access and visibility of your pension
Andrew also appreciates the speed and ease of using PensionBee. “It’s all in real time,” he says. “When you look at it, you can see the growth or dips each day. It shows you everything in a graph - visually you can understand it immediately.” Christie doesn’t check her balance as frequently but loves having that information there in the background.
“I do check my pension in the Starling app from time to time but I try not to check it too much, especially now when it’s fluctuating,” she says. “It’s a long-term investment so you need to keep an eye on it but not be too rigid in checking it.”
It’s never too early to start a pension. “Stay committed to your pension at an early age,” says Andrew. “Adding smaller amounts over a longer period of time is a lot easier than putting higher amounts in over a shorter period of time. Every year you put money into your pension impacts the outcome. You can’t change that when you reach retirement age, you can only influence that now.”
Whatever your age - think about pulling old pensions into one new one with PensionBee and setting up a direct debit from your Starling account to keep growing it, month on month. “Starling and PensionBee - both apps combined - put me in power of my own finances,” says Andrew. “Money isn’t anywhere as daunting as it used to be. You’re always in control when you have these apps.”
The above article is intended as general information and does not constitute advice in any way. You should take independent advice if you have any questions about your specific circumstances.