Hannah is joining me today to chat about pensions, her career and the Women In Financial Advice Awards that is being held today. This is a really interesting one for me as I don’t ‘do’ pensions.
The 3 key takeaways:
- Pay into your pension, it’s the best investment for the future.
- Pay as much as you can into your pension. Don’t opt out and if you can, pay more.
- Watch out for scammers, they are very, very good! Hannah gives tips on how to spot these.
It’s a family affair next week, as I’ll be chatting with my Dad, Richard Lemmon, about his life and how he is living with Parkinson’s Disease. It’s an emotional episode for me, as my Dad is due to undergo deep brain surgery very soon and I am of course, a tad nervous about how he is going to be.
Kathryn: Hi everybody. Today I have Hannah Godfrey from Professional Adviser with me. Hi Hannah!
Kathryn: Hannah is joining me today as we’re going to be chatting about the Professional Adviser Women in Finance Awards that are happening on 8th October, the day that this podcast will be going live and what we’re going to be doing is chatting about Hannah’s career and her passion for pensions and why engaging women in finance is absolutely essential. This is the Practical Protection podcast. So Hannah, how are you doing? What’s been the latest things with you then?
Hannah: I am doing as well as you can be. It’s been a weird year. I would not want to repeat it, I have to be honest even though I fear that’s possibly where we’re heading. But it’s been okay, I’ve just had a lovely weekend with my boyfriend’s family. We haven’t seen them since Christmas so it was lovely to actually see them and I live in London and I’m not convinced we’re going to do many more weeks without extra lockdown restrictions so we timed it well I think.
Kathryn: Absolutely, absolutely. That sounds nice, I’m glad you managed to get and see them – obviously it’s a long time since Christmas isn’t it? It’s a really long time.
Hannah: It’s been a while.
Kathryn: I’ve got – my sister lives in Italy with my nieces and that’s really bizarre because usually we get to see each other in the summer and in Christmastime so we’ve actually not seen them in person since last summer and that feels really, really bizarre because obviously my children are young, her children are young and they’re growing up so fast and obviously we’re Zooming constantly to try and keep on top of seeing them and everything but it is – as you say, probably definitely don’t want to repeat this year but obviously we’re just all getting on and doing what we need to.
So we have a truth or lie feature on this podcast and last time I had Emma Thomson with me from British Friendly and the theme was favourite children’s TV shows and she said that her favourite show was The Mysterious Cities of Gold and I said that mine was Count Duckula and I was wondering if you could try and guess who was telling the truth?
Hannah: Well this is quite difficult for me because I have not heard of either of these TV shows –
Hannah: So in theory one could be entirely made up and I would have no idea but Count Duckula is quite fun and I think there’s been some sort of political spoof-type people spin-off. It would make sense that it came from somewhere so I think you’re telling the truth. Count Duckula?
Kathryn: I was going to say, that is one of my favourites but not my ultimate favourite so I have to say, I’d never heard of Emma’s Mysterious Cities of Gold so I need to do some YouTube research on that. Count Duckula was amazing as well about this vampire Duckula who accidentally had a sort of thing for ketchup rather than blood which was quite, you know, an unusual thing. I think my favourite children’s show has to be Danger Mouse. I adored Danger Mouse.
Hannah: See, I’ve heard of Danger Mouse.
Kathryn: Good bit, like you say, that would have been a bit better then. So thank you very much for taking part in that. Just a little daft thing we like to do at the beginning. So anyway, you work in the pensions space Hannah which is really interesting and fascinating for me because obviously I know of pensions, I know some things about pensions but it’s not really my thing and I think what would be really good is a lot of my listeners also will be mainly protection side as well but can you let us know sort of like what is it about pensions that kind of does it for you? What kind of – how did you end up in that career?
Hannah: Okay, well I don’t want to disappoint you or come across as someone that just, you know, had a – didn’t have a passion for pensions at 13 years old and always knew this was what I’d be doing but it was actually – it was a total accident. I was at university and then I did a Masters’ degree and I’d always quite fancied the idea of journalism but in all my wisdom and of course without having a crystal ball, I never studied journalism. I so nearly did a Masters’ in journalism but I just decided to do something else instead and I was looking obviously for jobs post-uni and I saw a grad scheme open at something called Incisive Media to be a journalist and I had a little look and I kind of, “Okay it’s this B2B publisher, that’s fine, don’t really know what that is but it’s a journalist job,” you know, and I was just given the pensions beat. I got the job and was just given, “Okay, you do pensions.” And it’s – I have to say, it’s a lot more interesting than I thought it would be. I kind of – I think it’s one of those things, especially when you’re younger, you just think, “Oh pensions, who cares about that? That’s something to think about when you’re older.” Which is completely untrue as I have learned in the last few years but it wasn’t, you know, the most exciting proposition but actually it’s been really, really interesting and it’s been an interesting few years, particularly in the adviser space. All that’s gone on with British Steel and regulatory changes and issues that consumers have had and it matters – it really affects everybody so I think it’s something to know and understand as well as you possibly can.
Kathryn: Absolutely. I think – again, I think it’s kind of similar to the protection space as well, you know, sort of like when you’re going into it, at first when you’re kind of looking from the outside, you kind of think, “What is protection?” You know, that’s the kind of thing of, “Oh it’s life insurance and a bit of income protection,” and it’s one of those things, yeah, when you’re a bit older and a bit more sort of like getting into the adulting kind of thing, that you need to sort of like look at and then when you actually get into it, probably very similar to pensions, you know, there are so many different aspects to it and so many kind of real scenarios as well where it’s a case of, wow, you know, if we don’t look at this when we’re young and really kind of get on top of it, it can actually be – it can really affect us later in life if we haven’t had that in place and like really had our eyes on it.
But I know there’s a lot going on at the moment obviously in the industry about concerns about the economy for everybody in the UK and, you know, people being furloughed, you know, interest rates on savings are dropping and I know pensions took a bit of a dip I think it was mid-year or just – I recently had my review of my pensions this year and, you know, I saw that the dip had gone down but then it’s obviously starting to come back up and I think – we’re kind of – I think you have kind of got three camps in a way, you either have people who are really watching – I know one of my colleagues is always watching his pension, probably on a daily basis he’s watching it. There’s me who kind of just like – I saw all this was happening with the economy and I thought, “You know what, for my own sanity’s sake, I probably shouldn’t look at it at the moment and just wait for the scary bits to all get over and done with.” And then we get people who obviously don’t really even sort of like really know what’s going on with it but what have you seen that’s sort of like in the pension space since like corona virus has struck, has anything kind of really stood out?
Hannah: Yeah, first of all I think you’re totally right to mention pension savings taking a real hit. My pension was down nearly £1,000 the last time I checked and do bear in mind I’ve only been paying into it for four years so as a percentage of the overall value of the pot, that’s a pretty bad hit and as – exactly what you just said, I think the most sensible thing you can do is be aware of what’s going on but don’t freak out. I don’t think there’s any point in looking at your pension every day.
Hannah: So the good news is volatile pension investments are not the end of the world for most people. So I’m 27, the odds are I’m going to be working until I’m something like 110 so I have got plenty of time to make up for losses as have an awful lot of people. The people this is going to affect the most are those who are at or near retirement like my parents for instance who really aren’t going to be working for much longer and so as a result of corona virus, they’re likely to have taken a real hit on the money that’s there that’s going to support their retirement. In the DB world, so that’s defined benefit for any listeners who maybe aren’t sure, that’s a little bit different. So a DB pension is paid by an employer and it’s based on the number of years a person has worked for that employer and their salary. They’re generally considered better than a DC scheme because in some cases this can be this really generous income for life however the risk that they carry is that something happens to that employer that means that they can no longer pay out that pension and that’s where corona virus comes in.
Kathryn: Yeah of course.
Hannah: So if the firm that pays a DB scheme – say that firm fails, the pension protection fund pays compensation to members of that DB scheme and it’s more than reasonable I think to assume over the next couple of years that there’s going to be this trickling effect of various businesses with DB schemes that enter into solvency at least in part because of pressures to do with corona virus and as a result of all this I suppose we might see an uptick in people wanting to transfer out of their DB scheme because they’re worried about their firm going bust. Think airlines, things like that for example or more simply we might see some individuals receiving a less generous pension if the pension protection fund ends up funding their retirement. And away from all that, we’ve seen an increase in scams and pension scams are a part of that. Older people tend to be particularly vulnerable and especially over lockdown when it became the norm to communicate via telephone or via email, people were probably a little less guarded about pension cold calls or unsolicited emails from supposed pension companies. All that sounds very, very doom and gloom but for most people, to be fair, I think their pension is actually a smaller concern right now in the grand scheme of everything going on. But for some, this virus will have made really quite a big impact on their retirement savings.
Kathryn: Yeah, I think it’s, you know, you said there’s all the sort of like the kind of things that we don’t necessarily think about, you know, when we’re just generally – if it doesn’t apply to us, if we don’t have employers who are maybe doing that kind of defined benefit pension, you don’t necessarily think of all the connotations that, you know, it’s not just potentially businesses getting shut down, maybe going, you know, obviously being made redundant and from our side of things, the protection world and unemployment insurance isn’t available any more – it stopped at the beginning of the year to new people wanting it and there’s just so many different aspects of it that it kind of filters into and you’re maybe not just faced with redundancy but, you know, obviously the employee benefits changing but potentially also actually your pension just potentially in a sense going, which is obviously quite scary I imagine for a lot of people?
Kathryn: So we started chatting around the time of the Professional Adviser Women in Finance awards and I really enjoyed it last year. I was there and I was very, very happy to be presented an award and I got to stand up there with Zoe Lyons who, you know, she was incredibly funny that night, it was wonderful and just wondering, you know, we see many, many women standing out as key players in the finance world now and I think it’s one of those things as well that even more so – I mean, I joined our industry in 2010 so 10 years ago and then, you know, obviously there were quite a lot of women that I could see and different things but now it just feels like there’s women everywhere that I see which is absolutely fantastic. But there is always this constant thing of saying, you know, that we need to generate greater awareness for women about the need to look out for their financial futures and, you know, from my side of things, obviously yes the life insurance but very, very key is the need for income protection for women and women not necessarily realising just how important that can be for them and – do you find sort of like the pension space, is there still that kind of big drive to try and sort of like get more and more women to sort of like engage with these things?
Hannah: Yes. I definitely think there is and there’s all sorts of – a medley of reasons why women have smaller pensions than men and it’s partly because of a gender pay gap, it’s partly because they take time off to give birth and, you know, raise children and they are generally as well the carers if something, you know, happens to a parent and you need somebody to deal with that. So there’s definitely still a focus on women really needing to pay attention to their finances and I think there’s a lot of biases as well that are there that somehow the man still handles the finances and I think in the world of advice there has been mistakes made by some advisers – not all, nowhere near all I should say, but sort of say a man and a woman who are married – a married couple go in to see an adviser. The adviser will sometimes just speak to the man and it leaves the woman feeling very alienated so yes, there is a big push I think to get women spending more time paying attention to their finances and getting their finances in order as well.
Kathryn: I think as well looking at it from like the protection side of things, as I say I don’t do pensions, investments, anything of that sort but being in the finance world, I know that pensions are incredibly important and obviously I make sure that mine is sorted and I’ve even set up pensions for my children. My youngest was one when he got his pension set up for him. What would you say to, you know, you just mentioned there a little bit about the reasons that people sometimes haven’t been able to put into their pensions as much but, you know, for women or – I say women, it can be anybody stay-at-home parent or maybe somebody who is working flexible or reduced hours who is maybe not monitoring their pension so much. What would you want to sort of like say to them?
Hannah: Well first things first, well done to you, that’s absolutely brilliant. That’s a really, really great thing to do and of course the earlier you start a pension, the more that money has time to compound and grow and ultimately when he reaches a time where he can access that money it’s going to be a lot healthier than, you know, had you not started that. So well done, that’s a fantastic thing to do.
Kathryn: Thank you.
Hannah: So I think that’s a hard question to answer because everyone’s circumstances are so different. I think paying into a pension is probably the best investment you can make so of course I would say, “Pay more attention to it,” and you can set up pension pots without too much hassle even via apps like Money Box. So it’s really easy to do and to regularly pay into and your future self will obviously thank you for it, though needless to say, shop around. There are different pensions that carry different investments, different charges, so it’s well worth doing your homework. If that person is a part of their employer’s pension scheme, assuming that is the case, pay more money into it if they can and for parents taking some time off to raise children, they can actually claim child benefit and it’s really, really important they can do that or state pension credits will be lost. I have to say, this isn’t even close to my area of expertise but for anyone listening who is taking some time off after having a child, I would urge them, just Google ‘Child Benefit Pensions’ or something similar to that and get that benefit sorted because not doing so could lead to losing out on state pension credits which is obviously particularly important for a non-working parent and I should say as well, regardless of income, this child benefit can be claimed so actually wealthier individuals here stand at risk of missing out on this because they think that, you know, they don’t qualify for it. So they do. So it’s really, really important and it’s worth everybody looking into this.
Kathryn: Absolutely. So would you say that’s kind of your three key things in a sense to take away? If you could summarise the top three.
Hannah: Okay, if I had – so if I’m summarising the top three things to pay attention to – so first and foremost, just pay into your pension and honestly I’ve warned so many friends against stopping paying into their pension because they want the additional money for something else every month. Fortunately, they have mostly listened to me but it’s really just – like I said, it’s the best investment for your future you can make. So do not opt out of paying into your employer’s pension and if you’re self-employed, set yourself up with a pension and set aside a certain percentage of your income per month to pay in or even a certain amount depending on how your business is set up.
Secondly and on not a too dissimilar note, pay in as much as you can. So a lot of employers will work on the minimum automatic enrolment contribution rate which is currently 8%. So legally, an employer must pay 3%, so assuming you haven’t opted out, you’ll be paying a minimum of 5%. Some employers have incentive schemes that mean if you pay more they’ll pay more and others don’t but regardless of what they’re willing to pay, there is just no harm in voluntarily paying more into your pension every month if you can afford to do it and if you’re not sure how to do that, go and talk to a company’s HR department and they should give you the details on how and who to get in touch with, whoever.
And thirdly – and to be honest this actually might be the most important point – watch out for scams. So when it comes to financial scams generally, if it looks too good to be true, it probably is. Pension scammers use all sorts of tempting language to get people to part with their money and that can devastate peoples’ life savings and it’s nearly impossible to get that money back. So often scammers try to persuade pension savers to transfer their savings or release funds from their pension by making these really lovely sounding promises that they just have absolutely no intention of keeping. So it might be a scammer claims that there’s some brilliant investment in something that sounds really clever and legitimate like a renewable energy bond for example that’s promising this 20% return on investment and given that right no achieving a 3% interest rate with a bank would be considered pretty phenomenal, please believe me when I say nothing out there promising anything even close to those kind of returns or above is legitimate.
So to be clear, you should never, ever, ever receive a cold call, email or text about your pension. It’s illegal, it’s probably the sign of a scam and if you start hearing terms like free pension review or pension liberation, just hang up the phone, ignore the email, do not get suckered in to losing your life savings and if you find yourself unsure, if something looks brilliant and despite everything I have just said you think you’ve found the exception to the rule and you believe it’s not a scam, just do me a favour, do everyone a favour and contact your pension provider before you do anything with your money or contact Pension Wise, tell them who’s been in touch and what that investment is and remember high pressure sales tactics like, “You’ve got to send your money in the next week otherwise you’re going to lose out on this brilliant investment,” is a classic sign of a scam so please, please do not fall victim to that.
Kathryn: Absolutely. One of the things that we did sort of towards the beginning of lockdown is there were starting to be quite a lot of scam activity within the protection space and we sort of like did a contact out to all of our clients just to say to them, “Look these are the things to watch out for,” and it was kind of like – I think it applies to anybody as well, it was kind of that thing of, if someone’s ringing you and saying, “Oh can you just confirm your policy number for me and how much you’re paying and who it’s with?” If it’s from the person who’s advised you, if it’s from your pension provider or us, from the life insurer or from us as a broker, we already have that information so we don’t need you to confirm it to us. And I think stuff like that can just be – it’s very easy I think potentially to fall for it and get duped in because of the way – the way that sometimes they can turn it and I know that in the protection space, we even have it with some people where people are finding out from clients that their clients have been contacted because somebody was ringing them up and saying, “Do you know your life insurance doesn’t cover you if you die from corona virus?” And we found that, you know, just – it just absolutely flabbergasted us because it was just like – in the middle of everything and all the fear that everybody’s experiencing right now, how on earth can you actually live with yourself, you know, calling up somebody and saying stuff like that? It was just – it baffles me.
Hannah: They’re dreadful, they are absolutely dreadful scammers. They are terrible people, they are awful individuals. I wish they could be thrown in prison and the key be thrown away. People lose – I mean, imagine you’ve saved up your retirement your whole life and you’re talking here – I think I read that the average loss is something like £82,000 from pensions which is a huge amount of money.
Hannah: And you’re going from – yeah, you could be going from a really reasonable looking retirement to nearly desolate, like it’s absolutely dreadful and these people are vile. There is a lot being done. The FCA has started this – well they’ve had their Smart campaign for a while now but they pointed out actually that a lot of victims – it’s not just the elderly. Everybody thinks it’s the elderly and they are particularly vulnerable but they found recently that it was actually – I think it was men in their 50s that had been the worst affected by scams and in that circumstance I think it’s the exact point you just made that anybody can fall for this stuff, but also that men I think in that demographic are quite embarrassed about becoming a victim and falling for it. So they’re not going and even talking to people about it and trying to rectify the mistake and get the money back and it’s dreadful, it really is dreadful.
Kathryn: It is, thank you obviously for giving those tips though, I think that’s really, really useful and so important for everybody that’s listening. So usually we’d have a truth or lie thing at the end of the episode but today with it being the Women in Finance awards which will be tonight, because it’s going out on 8th, what I thought would be really good is for you to share who your kind of ultimate female icon is and just sort of like share your thoughts on that.
Hannah: Okay, well she has probably been on my mind recently because unfortunately she died very recently but I’d have to say probably Ruth Bader Ginsburg because this tiny woman was just a titan in the world of women’s rights. She was the second female justice to sit on the US Supreme Court and she was one of a very small number of women at the time who studied at Harvard Law and she totally went against all these unconscious biases that we have about, you know, careers for men, careers for women etcetera and she was academically brilliant. She was kind and she worked tirelessly for gender equality and I think what makes her such a wonderful female icon is that she opened the door as well to so many other women, you know, she helped to pull women up. She’s also got the coolest nickname in the word – The Notorious RBG. If that isn’t icon-worthy, I don’t know what is. Even her glasses were iconic.
Hannah: She just absolutely embodies all that an icon should and I am just so sorry that the world lost her at such a politically pivotal point.
Kathryn: Absolutely. No, she was absolutely a force to be reckoned with and I saw that there was – a lot of the things that she achieved as well, sort of like at Harvard Law School while at the same time she was raising her daughter and looking after her husband who had cancer at the time and just, yeah incredible what she was able to achieve and as you say, what she’s been able to pave the way for so many other women.
Kathryn: Thank you for listening everybody and thank you so much Hannah for joining me. So this has been one of our inbetweeny episodes in the podcast. I’m going to be back very soon, probably a little bit quicker than usual with an episode that I’ve recorded with my Dad. As some people know who are listening, my Dad has Parkinson’s Disease and very, very shortly he will be going for some deep brain surgery to try and help him with the condition so we’ve done a podcast in a sense beforehand so he can say what it’s like, what he feels like and then fingers crossed he’ll be back in the not-too-distant future and we’ll be chatting about what it feels like after having an operation like that.
If you’d like a reminder of the next episode, please drop me a message on social media or visit the website www.practical-protection.co.uk and don’t forget that if you’ve listened to part of this as part of your work, you can get a CPD certificate from the website too. Thank you so much for joining me Hannah, and good luck to everybody at the awards tonight.