Scotsman money: optimum third age investment

Many people are unclear about how to boost their pensions, and do not understand investment and the best ways to save more, according to analysis.

Image: Adobe Stock

New research from Lloyds Bank has found that only 43 per cent of Scots know how to put more into a pension.

To make saving for retirement simpler, Lloyds has launched its Ready-Made Pension digital-first product, suitable for people combining multiple pensions or opening their first pot.

The bank has 21.5 million customers regularly using its online banking service, with about seven million checking their pension via their banking app every week. Now they can use the Ready-Made Pension innovation to consolidate up to ten pots, and have a pension created for them, tailored to their age and retirement plans.

According to Lloyds, this move will support the industry-wide drive to improve pension engagement levels. Some 45 per cent of Scots surveyed in its latest research said they would like to be able to engage with their pension through a banking app.

Jo Harris, director at Lloyds, says: “We wanted to create a pension product that was genuinely easy to use, simple to access, and removed all the jargon which can often be so off-putting.”

The bank believes Ready-Made Pension’s accessibility removes many of the barriers self-employed people face when it comes to saving for the future. It refers to the Saving for Retirement in Great Britain: April 2018 to March 2020 report from the Office for National Statistics (ONS), which revealed that just one fifth of self-employed UK citizens were paying into a pension, compared to 80 per cent of employees.

Jackie Leiper, managing director of pensions at Lloyds, says: “For the self-employed, building a business is all down to the individual, and so is saving for retirement. Unlike employees, who get access to company pension schemes, being self-employed means taking care of their own pension. As there’s no automatic auto-enrolment through an employer, the self-employed will have to make a range of decisions at the outset that employees don’t have to consider.”

She adds that pension engagement is often lower among the self-employed due to their unpredictable income: “This is why it’s important to contribute an affordable amount each month, but also open a pension that allows you to stop, or increase the amount at any time and top up with lump sums when business is going well.

Last summer, Lloyds launched its Ready-Made Investments service, which it said makes it easier for customers who want to start investing from £50 a month.

It was developed specifically for those who believe that simpler instructions and having expert help would make investing less daunting. People can select from a shortlist of funds, ready-made by experts, based on their risk appetite.

Lloyds research found that half of the UK population is scared away from investing – rising to 58 per cent for women – and 38 per cent admit to being baffled by complicated jargon. The bank has since partnered with language expert and TV personality Susie Dent to help demystify daunting terminology.

Jo Harris adds: “We know there’s appetite amongst Brits to make their money work harder, but investing remains a confusing and intimidating topic for millions.”