How your pension is invested will affect its value and the income it will provide you later in life. If you’ve put off reviewing your pension fund, find out why it could be a worthwhile task.

While most pension providers offer savers plenty of fund options to choose from, many leave their money in the default option. Indeed, according to PensionBee (19.02.2025), more than 90% of pension savers remain in the default fund.

When you start contributing to a pension, you will usually be paying into the default fund option. This is convenient, as you don’t need to do anything, you simply make your contributions and the money will be invested through this fund.

The default fund is designed to be suitable for most savers, but it doesn’t consider personal circumstances or long-term plans.

Practical reasons the default pension option might not be right for you

The default fund doesn’t align with your risk profile

One of the main reasons you might choose to switch your pension fund is if the risk profile of the default option doesn’t suit your financial goals or circumstances.

For example, if you’re young and have decades until retirement, a default pension fund might be more risk-averse than is appropriate for you. As a result, you could miss out on investment returns, which, thanks to the power of compounding, may mean the size of your pot is significantly smaller at retirement than it had the potential to be.

According to the PensionBee research, a worker earning £25,000 a year at the age of 21 who benefits from a 2% average annual salary increase, and contributes 8% of their salary, would have £194,185 in their pension at age 68 (after an annual management charge of 0.7%) if their pension returned 3% a year.

If this individual changed their pension fund and received a 7% annual return, their pension would reach £697,247 over the same period. The higher returns could make a dramatic difference to the retirement lifestyle you can afford.

Before you switch your pension to a fund with a higher potential return, remember to balance the risks and assess what’s appropriate for you. Investment returns cannot be guaranteed, and typically, the higher the potential returns, the greater the risk.

As your financial planner, we can work with you to assess which pension fund is right for your circumstances and goals.

You are paying higher fees in the default fund

The fees you pay to your pension provider will affect the value of your pension. Take some time to review the fees you’re paying now and whether alternative options could reduce these charges.

Often, you’ll pay an annual management charge, which is typically a percentage of the value of your pension. You might also pay management or service fees.

Over the decades you’ll be saving for retirement, even a small difference in the fees you’re regularly paying could have a sizeable effect on the value of your pension when you retire.

You want your pension investments to reflect your values

Alongside financial factors, some investors may choose to consider ESG (environmental, social, and governance) factors. This could align your personal values with your financial decisions. For example, you might want to ensure your pension isn’t invested in fossil fuel companies if you’re concerned about climate change.

Pension providers will usually offer one or more ESG funds for you to switch your pension to. However, you should note that the aim of the funds can vary, and the investment decisions might not perfectly align with your values.

In addition, it’s still important to consider your risk profile and other financial factors when deciding if an ESG fund suits your needs.

Switching your pension is usually simple

The good news is that pension providers usually offer a range of funds with different risk profiles and goals. If the default pension fund isn’t the right option for you, you can often switch online in minutes.

When comparing options, you may want to look at the risk profile, the aim of the fund, and what the fund is invested in.

If you’d like to talk to a financial planner about the different investment options offered by your pension provider, and which might be right for your goals, please get in touch.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

While phasing into retirement can offer you greater flexibility, it may make your finances more complex. Read on to find out more about five key considerations.

1. Calculate if you’ll need to supplement your income

While you might still earn a salary as you phase into retirement, if you’ve chosen to reduce your working hours or switch roles, it might not be enough to maintain your lifestyle.

If this is the case, you may opt to supplement your salary with income from other sources. For example, you might start to take an income from your pension or deplete your cash savings.

A financial plan can help you assess what income you need and whether there’s a gap to close.

Remember, money taken from your pension will usually be added to your other income when calculating your Income Tax liability. As a result, it’s important to keep track of your different income sources so you don’t face an unexpected bill.

If you’re using assets to support your lifestyle as you phase into retirement, it’s also important to consider longevity and the effect of triggering the Money Purchase Annual Allowance (MPAA) if you access your pension. Both points are covered in greater detail below.

2. Decide if you’ll continue to contribute to your pension

Contributing to your pension as you phase into retirement could mean you’re able to afford a more comfortable lifestyle when you give up work. A financial planner can help you assess how your contributions will add up and whether contributing is advisable for you.

If you’ll be supplementing your income, you should be aware of the MPAA and how much you can add to your pension each tax year.

In 2025/26, the maximum amount that can be paid into your pension before paying an extra tax charge is £60,000. This is known as the Annual Allowance. However, if you withdraw a flexible income from your pension, you may trigger the MPAA, which would reduce the amount to £10,000.

According to a Wealthify survey (17.09.2025), just 3% of pension holders understood what “MPAA” meant. Yet, this little-known allowance could limit your future pension contributions and affect the income you receive later in life.

3. Determine when to claim your State Pension

The current State Pension age is 66, and it will rise gradually to 68 by 2046.

When you reach State Pension Age, you won’t automatically start receiving payments. You must claim it. This means, if you choose to, you can defer claiming your State Pension until you stop working completely.

The money you receive from the State Pension is added to your other sources of income when calculating Income Tax liability. Deferring your State Pension might reduce your overall tax bill as a result.

In addition, for every nine weeks you defer the State Pension, the income you’ll receive from it when you do claim it will rise by 1%.

4. Assess how your pension and other assets are invested

Your pension is typically invested, and you might have other investments that are earmarked for retirement. If your plans have changed to include a period of phasing into retirement, you may benefit from assessing how your money is invested.

Often, your pension will be moved to investments that are more stable as your retirement age approaches. If your money will now remain invested for longer, this may not be the most appropriate option for you.

5. Establish your long-term income needs

It can be difficult to understand how the value of your pension and other assets will change during your retirement, particularly if your income needs will shift.

Setting out your income needs at each phase of your retirement and using a cashflow model could help you visualise how your pension and other assets could change. This can help you see if your assets will provide you with security for the rest of your life or if there’s a shortfall.

A cashflow model will make certain assumptions, such as the average annual return of your pension or the rate of inflation. The outcomes aren’t guaranteed, but they can provide a useful insight into your long-term finances and the effect of your decisions.

A financial plan can identify retirement considerations that are important to you

Alongside these five considerations, you might have other important questions to weigh up when you’re retiring, including whether to phase into the next chapter of your life. A tailored financial plan can help you understand your finances now and how they might change as you gradually give up work and eventually stop completely.

Please get in touch if you’d like to talk to us about your retirement plan.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate tax planning or cashflow modelling.

Humans are programmed to act in certain ways. We have behavioural biases built into us, created over the history of mankind, to keep us safe in the face of danger.

For example, we don’t like losing things. This is because our ancestors would be faced with a very nasty situation if they stumbled across a beast while out hunting, and realised that they had left their spear at home.

In today’s society, however, we are considerably less likely to be faced with a sabre-toothed tiger. Some of our behaviours don’t always act in our best interests, and some can even be taken advantage of by others. This is especially true around financial decisions.

Here, then, are three behaviours that we all exhibit to one degree or another, how they might not be serving us well, and what we might do about it.

The endowment effect

Researchers asked candidates to value a coffee mug. Half of those candidates were given the mug in advance, and half were not. The candidates who already owned the mug valued it around twice as highly as those who had not seen it before.

This is called the endowment effect. It describes how we tend to value something we already own more highly than its real worth.

There could be many reasons for this. Perhaps it holds sentimental value. Perhaps we overpaid in the first place, but we don’t want to admit it.

This also means that we often pay more for something than it is worth. Marketing and advertising take advantage of this. Take the trial period. At the end of that trial period, you are not only more likely to buy, but you are likely to be willing to pay more than you would before you had used the product.

Awareness is the enemy of the endowment effect. To stop ourselves from overpaying for something, or overvaluing stuff we already own, we should try and take a dispassionate and arm’s length view, and perhaps do some research on real valuations.

Framing

Framing describes a form of expectation.

An example of this is the 17-year-old daughter going to a party. She wants to be out until midnight, but knows that her parents wouldn’t normally allow this.

 As she’s getting ready, her father asks: “What time will you be home?”

The daughter replies: “About 2 o’clock.”

“You will not, my girl,” says the father. “You’ll be back by midnight.”

Framing happens all the time with money. For example, when you visit a financial adviser, what are you expecting? Presumably, advice on your finances. And yet the adviser is just as interested in hearing about your plans for the future.

Framing is used in marketing all the time. It is why prices are so often stated as £9.99. Why is yoghurt 90% fat-free, not 10% fat? Once you understand framing, you will start to see it everywhere.

We can also positively use framing. Just a focus on strengths rather than weaknesses can result in making better financial decisions. This can make us feel more able to manage our finances and address some of those issues that we might have been avoiding.

Loss aversion

We feel the loss of something significantly more than its equivalent gain. Consequently, we try to avoid losses.

This is why the special offer with a limited time is used so much. Research from Which? suggests that most products on sale on Black Friday are actually cheaper at other times of the year.

Loss aversion is often applied to investments, whereby we might be less likely to invest if there is a risk of loss, even though the potential upside might be high. It can also lead to poor financial decisions as we try to avoid poor outcomes, which prevents potential positive outcomes.

Framing can actually help here. Taking some time to properly understand the potential loss (‘What’s the worst that can happen?’) can reframe the decision to fully take into account the upside.

Bonus tip: Avoid advertising

I go to great lengths to avoid adverts. When I go to the cinema, my family go in to watch the trailers and adverts. I sit outside.

Research has shown that advertising makes us unhappy. It presents unrealistic and unattainable images, then suggests that the only way we might achieve those versions of success is to buy that particular product.

Marketing and advertising are all around us, and they’re all designed to get us to spend money that we might not necessarily want to, or even able to afford to, spend. A little bit of work and knowledge to understand our behaviours and how to change our habits can make a big difference to our relationship with money.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

After months of speculation and rumour, chancellor Rachel Reeves has delivered the Autumn Budget for 2025. In this update, we’ll explain the key changes and what they mean for you. 

Last year, in her maiden Budget, the chancellor sought to balance the public finances with tax rises to cover a reported £22 billion black hole.

This year, Reeves arguably faced an even more difficult landscape. In turn, she has announced an estimated £26 billion of tax rises by 2029/30. 

The chancellor had to start her speech, however, by acknowledging the “deeply disappointing” and “serious error” of the Budget announcements being released early by the Office for Budget Responsibility (OBR). 

It’s also notable how many predictions ultimately proved to be wide of the mark.

Now that we know exactly what’s included, it’s important to understand the changes and how they could affect you.

The headlines regarding GDP, national debt, and inflation

The chancellor says the government’s plans will reduce borrowing more over the rest of this parliament than any country in the G7.

GDP is expected to grow by 1.5% in 2025, higher than the OBR’s 1% forecast from earlier this year. In subsequent years, the estimations are as follows:

• In 2026, the economy is forecast to grow by 1.4%, below the previous forecast of 1.9%.
• In 2027, GDP is forecast to expand by 1.6%, falling short of March’s estimate of 1.8%.
• In 2028, GDP is estimated to rise by 1.5%. In March of this year, the OBR said this figure would be 1.7%.
• In 2029, the economy will expand by 1.5%, again falling short of the previous estimate of 1.8%.

Due to weaker underlying productivity growth, the OBR estimates that tax receipts will be £16 billion lower in 2029/30 than initially forecast in March 2025.

Average inflation is expected to fall over the next three years.

• In 2025: 3.5%, an increase of 0.2% from the OBR’s original forecast.
• In 2026: 2.5%, up from the OBR’s 2.1% forecast from March.
• In 2027: 2%.

National debt will stand at £2.6 trillion this year. £1 in every £10 the government spends is on debt interest.

Tax threshold freezes extended until 2031

The Labour manifesto promised not to increase Income Tax or National Insurance (NI), and despite pre-Budget speculation, the government has kept to that promise in this Budget. 

However, the chancellor did announce that the Income Tax thresholds will remain frozen for a further three years beyond the previous 2028 freeze, staying where they are until April 2031. This move will raise £8 billion for the government. Similarly, the Inheritance Tax (IHT) threshold freeze is extended from 2030 to 2031. 

While this will not increase your Income Tax or IHT bills directly, this fiscal drag means more of your income and wealth may be exposed to tax over time. 

The government is also upholding its commitment to bringing pension pots into the scope of IHT from April 2027, and reforms to relief for business and agricultural assets from April 2026.

The tax rates on dividends, savings, and property income will rise by two percentage points 

Tax rates are set to rise for dividends, savings, and property income.

• Dividends: From April 2026, ordinary and upper rates of tax on dividend income will rise by two percentage points to 10.75% and 35.75% respectively. There is no change to the additional rate, which will remain at 39.35%.
• Property and savings: From April 2027, the rate of tax on property and savings income will increase by two percentage points across all tax bands to 22%, 42%, and 47% respectively.

The government confirmed that, even after these reforms, 90% of taxpayers will still pay no tax on their savings. However, these changes are set to impact business owners and landlords.

The chancellor says these increases will raise £2.2 billion in 2029/30.

The ISA allowance will be reformed for under-65s, and some allowances have been frozen

The chancellor announced that from April 2027, the Individual Savings Account (ISA) allowance will change for under-65s.

As it stands, adults can contribute £20,000 across their ISAs, including Cash ISAs and Stocks and Shares ISAs, each tax year. 

From April 2027, £8,000 of this allowance will be reserved exclusively for investments, leaving an available £12,000 that savers can pay into their non-investment accounts, such as Cash ISAs.

Savers over the age of 65 will continue to be able to save up to £20,000 in a Cash ISA each year. 

The allowances for Junior ISAs and Lifetime ISAs are frozen until April 2031 at £9,000 and £4,000 a year, respectively. 

Salary sacrifice on pension contributions to be capped at £2,000

The chancellor put a cap on NI-efficient pension contributions made under salary sacrifice.

Salary sacrifice schemes cost the government £2.8 billion in 2016/17, but this figure was set to triple to £8 billion by 2030/31.

The government will charge employer and employee National Insurance contributions (NICs) on pension contributions above £2,000 a year made via salary sacrifice. This will take effect from 6 April 2029.

The chancellor says that many of those on low and middle incomes will be able to continue using salary sacrifice as normal, while high earners can expect to pay increased NI.

New “mansion tax” on high-value properties

The chancellor announced the much-speculated “mansion tax” that will affect the top 1% of properties. 

The new property surcharge will be paid alongside Council Tax. 

There will be four price bands starting with £2,500 for a property valued between £2 million and £2.5 million. For properties valued more than £5 million, the levy will be £7,500. 

The measure is estimated to raise £400 million by 2031. 

Welfare reforms expected to increase by 2029/30

The BBC reported that changes to the government’s previously announced winter fuel payments and health-related benefits will cost £7 billion in 2029/30.

In addition, Reeves revealed she would remove the two-child benefit cap. This will cost £3 billion by 2029/30.

State Pension: Removal of overseas access to Class 2 National Insurance contributions and committing to the triple lock

As a result of a loophole in the Class 2 voluntary NICs regime, overseas individuals with a limited connection to the UK can build a State Pension entitlement through cheaper rates.

The government is looking to end this by removing access to the cheapest Class 2 NICs for these individuals. Additionally, it will increase the initial residency or contribution requirements for those living outside the UK.

The chancellor also confirmed the government’s commitment to the triple lock. From April 2026, this will increase the basic and new State Pension by 4.8%, offering up to an additional £575 per year to pensioners, depending on their entitlement.

A range of significant changes for business owners

In addition to the Dividend Tax increase, the chancellor announced a range of changes that could affect business owners, including:

• Increases to both the National Living Wage (NLW) and National Minimum Wage (NMW). From 1 April 2026, the NLW paid to workers aged 21 and over will rise by 4.1%, from £12.21 to £12.71 an hour, increasing annual income by approximately £900 a year for full-time employees. For those aged 18 to 20, the NMW will rise by 8.5% from £10 to £10.85 an hour, equivalent to around £1,500 a year if working full-time. For 16- and 17-year-olds, and those on apprenticeships, the NMW will rise by 6%, going from £7.55 to £8 an hour.
• Listing Relief from Stamp Duty Reserve Tax for some businesses. The chancellor said this will “make it easier for entrepreneurs to start, scale, and stay in the UK”.
• Reduced Capital Gains Tax (CGT) relief for Employee Ownership Trusts (EOTs). When a business is sold to an EOT, CGT relief will fall from 100% to 50% starting from November 2025. This will raise £0.9 billion from 2027/28 onwards.
• Fully funded apprenticeships for under-25s. This will make them effectively free for small- and medium-sized businesses (SMEs) from April 2026.
• Lower business rates for more than 750,000 retail, hospitality, and leisure properties. That move will be funded through higher rates on properties worth £500,000 or more, such as warehouses used by online retail.
• Customs duty will apply to parcels of any value from March 2029 at the latest. There is an existing exemption for parcels worth less than £135, favouring large-scale importers. 

Other announcements that may affect you

• Household energy bills will fall. Reeves is scrapping the Energy Company Obligation (ECO) scheme, saying that on average, families will save £150 a year in 2026.
• A new tax on electric vehicles. The Electric Vehicle Excise Duty (eVED) will come into effect in 2028 and equal 3p per mile for battery electric cars and 1.5p per mile for plug-in hybrids. The rate per mile will increase annually in line with the CPI. 
• Fuel duty will be frozen until September 2026. In addition, a new “fuel finder” will help drivers find the cheapest fuel, saving the average household £40 a year.
• Reducing the levy threshold on soft drinks. From 1 January 2028, the sugar tax will also be applied to milk-based drinks, including bottled milkshakes and lattes.
• A spousal exemption for agricultural and business asset IHT relief. Unused combined business and agricultural asset IHT relief will become transferable between spouses and civil partners.
• Tobacco Duty and Alcohol Duty will both be uprated. Tobacco Duty will be uprated as announced last year, and Alcohol Duty will now rise with inflation.
• Rising taxes on online gambling. From April 2026, Remote Gaming Duty will increase by 21% to 40%. A new Remote Betting Rate set at 25% will be introduced from April 2027, though horse race betting will be exempt from the changes. 

Other key thresholds that remain the same

More broadly, the chancellor made no mention of other key thresholds that will remain the same. These include:

• The pension Annual Allowance
• Stamp Duty Land Tax for residential properties
• The headline rates of Income Tax, NI, and VAT, as outlined in the government’s election manifesto.

Please note

All information is from the Budget documents on this page.

The content of this Autumn Budget summary is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice. 

While we believe this interpretation to be correct, it cannot be guaranteed, and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any new arrangement.  

Our approach to investment management is based in evidence — we rely heavily on academic research to guide our decisions.  That’s led us to favour a long-term strategy built around low-cost, highly diversified portfolios of equity and bond index funds, with an overweight position in smaller companies and value companies.  We keep trading to a minimum to reduce costs and avoid unnecessary complexity.  All the evidence tells us that this is the most effective way of building and sustaining long term wealth.

At present, gold is getting a lot of attention, especially with inflation concerns and a recent price rally.  But when we look at the long-term data, gold’s performance tends to be short-lived and doesn’t stack up well against equities.  It also doesn’t generate any cashflow, which makes it harder to justify as a core holding.

There are also practical concerns.  Most people access gold through Exchange Trade Funds (ETFs), but that relies on trust — trust that the gold is actually there.  And with far more paper claims than physical supply, there’s a real risk that many investors don’t truly own what they think they do.  Holding physical gold is one solution, but it’s expensive and logistically difficult for most.

That said, it’s worth noting that through our globally diversified equity portfolio, we do hold shares in mining companies — and some of those companies do mine gold.  So if the price of gold rises, that increase is likely to be reflected in the share prices of those businesses, which means we still benefit indirectly from movements in the gold market without holding the asset itself.

Finally, we need to consider future risks. There’s a huge amount of gold in the oceans and even in asteroids. If technology ever makes those sources accessible, it could flood the market and dramatically reduce gold’s value. So while we’re keeping an eye on developments, we don’t believe gold fits our strategy right now and ultimately, I think if we were to add gold to our portfolios we would increase risk for no real long term benefit.  That said, we’re always reviewing the landscape and remain open to change if the evidence supports it.