“That is so exciting! No way!”
These were the first words out of the mouth of Hannah Driscoll, a 34 year old Senior People Operations Co-ordinator, when we called to tell her that she was the winner of our £40,000 giveaway competition. That's the amount she'll now be receiving into her pension pot.
We’d run the competition to encourage people to engage with those older pensions they’ve picked up through job changes.
One of the reasons people find it hard to see a clear picture of how much they’ve got (and will need) for their retirement is the various pots they have scattered around. Having them all in one place can make this easier to manage and transferring those pensions into Penfold got you extra entries into the competition.
Thanks to the magic of compound growth, Hannah’s £40,000 could be worth as much as £173,000 by the time she retires*. We checked in with her a week after we had delivered the news to see how she was feeling about her pension. How had she been?
“I've been really good! Very excited. A bit in shock really,” Hannah told us.
She works for the gig ticketing app Dice, which has recently changed the company pension to Penfold from the People’s Pension.
“We're trying to enhance our benefits all around, but I know for certain one of the things my manager liked about Penfold was that you can choose where you want to invest your money according to what's important to you. For example, if you're Muslim you can choose where you want to invest your money,” said Hannah (referring to our different investment options, such as our Sharia or Sustainable plans).
Because of her age, she’d recently been thinking more about her pension. The pandemic had forced Hannah into job changes and, as a result, she had several pension pots.
Although our £40K giveaway offered more competition entries if customers made a transfer, this wasn’t an incentive for Hannah, who had already transferred a few of her previous pensions into Penfold. What was her motivation for doing so?
“Previously I would opt into these workplace pensions and then you just get one piece of paperwork and then that's it – you kind of forget about it. With Penfold, there are regular emails coming through, and it's really easy to use. You can log on straight away and see exactly what there is.
“And then when I saw how easy it was to do the transfers, that's when I dug out all my paperwork because all the work is done by you guys. I never thought to do it before, amalgamate them all together, but it was just easy to do,” said Hannah.
She’s hoping to retire before the state pension age of 68 and when we asked her how much she thought she would need in retirement, Hannah told us it was probably 50% of her current salary. We took her through the process of the ‘two-thirds rule’ to give her another figure.
To do this, you work out what two-thirds of your current gross salary (before any deductions) is. For example, if you earn £30,000 per year, two-thirds of that would be £20,000.
The average retirement span is 20 years, so you would need 20 x £20,000, a total of £400,000. Hannah worked through this and arrived at a figure for herself of £480,000.
“Urgh! Even that figure of £480,000, it's quite daunting. I definitely do think about it, but I just don't have enough facts around how I'll get there. I just hope that as I go on, I'll make more and so on and so forth. And that I could get to where I need to be really comfortable,” said Hannah.
She won’t have to save all of this herself. Some of this will come from her company contributions, some more from tax relief, probably quite a bit from compound growth and possibly some from salary rises as her career progresses. And one thing’s for sure - that £40,000 is also going to help.
Do you know how much you need to retire comfortably? According to the Pensions and Lifetime Savings Association (PLSA), 79% of people in the UK are not saving enough.
We wanted to help with this, so we built the ‘Your forecast’ tool into the Penfold app. This enables you to see the value of all your pensions (including the state pension) and what that will pay for in the future. Find out more here.
*Based on 30 years growth. This includes tax relief and annual growth of 5% from investments, less fees. These figures are not adjusted for inflation.