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Workplace pensions
2 min read
Beginner
Pension basics

What is a workplace pension? 

A workplace pension is a scheme set up by an employer to provide retirement benefits for its employees. A percentage of your pay is put into the pension scheme automatically every payday.

In most cases, your employer also adds money into the scheme for you, and the government adds tax relief.

This means that for every £100 that lands in your pension pot, it might only cost you £50 or £60 from your take-home pay; which can really add up long term.

Read our full guide on pensions tax, relief and allowances.

The two core types

While there are many different names for pension schemes, almost all of them fall into two main categories based on how the money is calculated. 

What are defined contribution pensions?  

Most modern workplace pensions are Defined Contribution (DC) schemes. You and your employer pay into a ‘pot’. This is invested market into different assets such as shares, bonds and property

The amount you get out at the other end when you retire, depends on how much was paid in and how well the investments within your pot performed. The final amount is not guaranteed.

What are defined benefit pensions? 

These are sometimes called ‘final salary’ or ‘career average’ schemes. They are now a rare find in private sector employment (though you may have one from an older job)  but remain common in the public sector e.g. the NHS. 

Under defined benefit schemes, employers promise to pay you a specific income for life when you retire. The amount is calculated based on a combination of your salary and years of service. The investment risk is held by the employer, not you. 

How workplace pensions are structured

Behind the scenes, workplace pensions are set up in different legal ways. They are generally split into occupational (trust-based) schemes and group (contract-based) schemes.

Occupational pensions 

In occupational pension schemes, the pension is held in a trust and looked after by a board of trustees who have a legal duty to look after the members’ interests.

What is a company pension scheme? 

Historically, large companies ran their own pension trusts. Today, most modern ‘company pensions’ are actually master trusts (like Nest, The People’s Pension, or NOW: Pensions).

These are large multi-employer trusts that run the pension scheme on behalf of many different businesses.

What is an auto-enrolment pension scheme? 

Auto-enrolment is not a pension product in itself, but the government rules that determine who must be enrolled and what minimum contributions apply.

The pension your employer uses to fulfil this obligation will be one of the scheme types listed above.

Under Automatic Enrolment, employers must enrol eligible staff (aged 22 to State Pension age, earning at least £10,000) into a pension scheme.

These rules ensure there is a minimum contribution of 8% of qualifying earnings — 3% from the employer and 5% from the employee.

What is a SSAS pension? 

A Small Self-Administered Scheme (SSAS) is a niche type of occupational pension, usually set up by the directors of a small business.

A SSAS offers significant flexibility, allowing the pension to loan money to the employer for business costs, or to buy the company’s commercial premises directly in a tax-efficient way.

These schemes are generally a tool for business owners, not employees. 

Group pension schemes 

In these schemes, the employer hires a pension provider, but the contract is legally between you (the employee) and the provider.

What is a standard group pension?  

Also known as a Group Personal Pension (GPP), this is the most common type of private sector pension. The employer chooses a provider (like Aviva, Royal London, or Scottish Widows) to run the scheme. The provider claims tax relief for you and manages the investments. 

What is a group SIPP?  

A group Self-Invested Personal Pension (SIPP) is a GPP with added flexibility. A standard GPP generally offers a limited choice of funds, a group SIPP allows employees to choose their own investments, often including individual shares. 

What is a group stakeholder pension?  

Stakeholder pensions were introduced by the government in 2001 as a simple, low-cost option with capped fees and flexible contributions.

They have largely been replaced by modern GPPs and Auto-enrolment schemes, but some older schemes still exist.

Other key concepts

What is salary sacrifice? 

Salary sacrifice is a way to structure your pension contributions to save tax. You agree to sacrifice a portion of your salary in exchange for your employer paying the same amount into your pension as their contribution.

Because this technically makes your salary lower, you pay less National Insurance (and so does your employer). You end up with the same amount in your pension, but your take home pay is slightly higher. 

From April 2029, NI relief on salary sacrifice pension contributions will be capped at £2,000 per year. Contributions above this will attract National Insurance for both you and your employer. Income tax relief on contributions is unaffected.

Worth knowing: 

  • Salary sacrifice reduces your official contractual salary, which can have knock-on effects in a few areas. Mortgage lenders use your contractual salary when assessing affordability, so a heavily sacrificed salary could affect how much you can borrow.
  • Statutory payments such as maternity and paternity pay are also calculated on your reduced salary. If your life insurance or death-in-service cover is linked to your salary, this may be lower too. If any of these apply to you, it's worth weighing up the NI saving against the potential impact before committing.
What are public sector pensions? 

These are the pension schemes for workers in the NHS, Civil Service, Teachers, Police, and Armed Forces.

  • These are almost always Defined Benefit schemes.
  • Unlike private pensions which have a ‘pot‘ of money, most public sector schemes are ‘unfunded’This means there is no central pot; the pensions of retirees today are paid for by the contributions of workers (and taxpayers) today. 
What is an AVC? 

An Additional Voluntary Contribution (AVC) is a way to top up your workplace pension.

  • If you’d like to save more than the standard amount, you can pay extra into an AVC pot attached to your main scheme.
  • Why use it? AVCs are particularly popular for people in Defined Benefit schemes who want to build up a separate pot of cash to take as a tax-free lump sum, without reducing their guaranteed annual income. 

Private pensions

Workplace pensions are fantastic for employees, but if you’re self-employed or want to save more than your workplace scheme allows; a private pension could be for you.

There are several options for private pensions depending on who you are, and how much freedom you want to choose your investments. The next guide will go through the possible options and how they work.

Meet the UK’s “Dashing Dozen”
2 min read
Expert
Global cap giants

When we think of stock market stars, it’s often the US names like Apple, Microsoft, and Nvidia that grab the headlines. But closer to home, a group of UK-listed companies has been quietly outperforming the wider market for years.1

They’ve been dubbed the “Dashing Dozen”. These are twelve firms that have consistently flown the flag for the UK.
A recent feature in MoneyWeek highlighted them for substantially outperforming the stock market and “clearly doing something right” so let’s take a look.

Who are the Dashing Dozen? 

This group spans a range of sectors — from defence and engineering to gaming and data services. Some familiar names include:

  • BAE Systems – benefiting from increased global defence spending.
  • Rolls-Royce – rebounding strongly with a surge in aerospace demand.
  • Games Workshop – the maker of Warhammer, proving that niche hobbies can mean big business.
  • Next – a high-street and online retail giant with a proven ability to adapt and thrive

Other members of the Dashing Dozen include: London Stock Exchange Group (LSEG), Halma, Diploma, Goodwin, Cohort, Concurrent Technologies, RELX, and 3i Group.

What they have in common is a track record of consistent growth, with all 12 businesses profitable and all paying dividends1. These are qualities that appeal to investors building a long-term portfolio.

Always remember, when considering any investment, a diverse portfolio across different asset classes, sectors and regions can manage risk and smooth returns.

Why it matters to you

For years, FTSE 100 has been seen as a bit sluggish compared to US markets, but the “Dashing Dozen” prove that the UK market still packs some punch. 

While not a guarantee of future performance, they do highlight that businesses with durable advantages and strong demand – in sectors like defence, data, and gaming – can offer investors both resilience and opportunity.

So next time you think about your portfolio mix, remember: sometimes the dash for growth doesn’t require looking across the Atlantic – it could be right here at home.

How Chip can help you take advantage

With Chip, we offer a range of index funds such as the FTSE 100, that include all of these high-growth companies in a single investment, as well as other popular indexes like the NASDAQ 100 and S&P 500.

Open a Stocks & Shares ISA in minutes, invest from £1, and manage everything right from our app. Just go to the ‘Invest’ tab to get started.

Passive income strategies explained
2 min read
Intermediate
Investing strategies

What is passive income?

Passive income refers to earnings generated with minimal ongoing effort. Unlike active income, such as wages from employment, passive income typically stems from investments, a side business, or assets that continue to generate returns without your daily involvement.

In investing, passive income can take various forms: interest from savings, dividends from stocks, rental income from property, or returns from bonds and funds

While setting up these income streams often requires upfront capital or effort, the long-term goal is a source of financial stability that works for you in the background.

Advantages and disadvantages of passive income

Advantages of passive income could include:

  • Financial freedom: Passive income can supplement or even replace earned income, offering more control over your time.
  • Compounding benefits: Reinvesting passive earnings can accelerate long-term wealth accumulation.
  • Diversification: Passive income streams can help balance risk across different asset classes and reduce reliance on employment income.

Disadvantages of passive income could include:

  • Capital requirements: Many passive income strategies require an initial investment, whether in time, money, or both.
  • Market and interest rate risk: Investment returns may fluctuate, especially with stocks, bonds, and property.
  • Maintenance considerations: Some “passive” strategies (like rental property) require ongoing management or decision-making.

Passive income investing ideas

Passive income doesn’t come from a one-size-fits-all approach. Here are several tried-and-tested investing avenues for UK investors:

Dividend Stocks

Dividend-paying shares distribute a portion of a company’s profits to shareholders, typically on a quarterly or annual basis. These can provide a regular income stream in addition to any potential capital gains if the share price rises. Understand how stocks work.

  • Tax note: UK investors benefit from a tax-free dividend allowance (subject to change), but income above this threshold may be taxable. Chip does not offer tax advice.
  • Risk level: Moderate to high, dependent on market volatility and company performance.
Mutual Funds & Index Trackers

Rather than picking individual shares, investing in mutual funds or index trackers offers exposure to a broad range of assets. Some funds are designed to focus on income-generating holdings, distributing returns to investors at regular intervals.

  • Example instruments: UK-focused equity income funds, global dividend funds.
  • Risk level: Varies, diversified funds tend to carry lower risk than individual stocks.
Income Bonds

Income bonds (not to be confused with NS&I Income Bonds) are debt securities that pay investors regular interest over time. These are popular among risk-averse investors who prioritise predictable income.

  • Considerations: Interest rates affect bond performance, when rates rise, existing bonds may become less attractive.
  • Liquidity: Some income bonds can be difficult to sell before maturity.
Property & Real Estate

Buy-to-let properties or investments in Real Estate Investment Trusts (REITs) can provide regular rental income and potential property value growth.

  • Management effort: Rental properties involve ongoing responsibilities, finding tenants, property maintenance, and legal compliance.
  • Upfront costs: Stamp duty, mortgage deposits, and ongoing fees can be significant.
Savings Accounts

While not typically thought of as an "investment", high-interest savings accounts and cash ISAs can generate passive income in the form of interest.

  • Best suited for: Conservative investors seeking capital preservation and low risk.
  • Returns: Generally lower than other investment vehicles, especially during inflationary periods.

Learn more about investment types and asset classes.

Passive and active investing summary

Passive income can be a powerful pillar in your overall investing strategy, especially for those seeking long-term wealth with less hands-on effort. 

While it's not entirely “effort-free,” with the right knowledge and setup, passive investing can complement, or even surpass, active income over time.

In the next part of our Investment Strategies series, we’ll explore the Buy and Hold strategy, a long-term option for those looking to build wealth through passive income channels.

Soho House founder Nick Jones: ‘We were never trying to be exclusive’

2 min read

I am familiar with Café Clement before I arrive for lunch. All summer long Instagram has delivered me images of the restaurant’s Thames-side terrace as if it was feeding a foie gras goose. Within weeks of opening in June, Café Clement had become one of the most sought-after reservations in London, welcoming a stream of A-listers from Stanley Tucci to Paul Mescal and Adele.

Its lure should perhaps be no surprise.

The restaurant is part of the new St Clement hotel — the latest project from Nick Jones, founder and former chief executive of Soho House and one of the most influential people in global hospitality.

Source: St Clement Hotel

With Soho House, which he founded in 1995, Jones is credited with upending the traditional private members’ club model and creating a new form of casual exclusivity that prioritised cultural cachet over wealth or class.

He is celebrated for his eye for design and an instinctive understanding of how a venue should make people feel, with a unique ability to bring together decor, staffing, music, food, drink and membership to produce the desired effect.

Under his stewardship, Soho House grew from a single venue to a global empire, spanning dozens of “Houses”, health clubs, restaurants, workspaces and a range of home furnishings.

While critics say it sacrificed exclusivity for growth, the company floated on the New York Stock Exchange in 2021 (a $2.7bn take-private deal was agreed in August last year), before Jones stepped down as chief executive in 2022 following treatment for prostate cancer.

The glitzy St Clement — a 90-room, 15-suite new-build hotel, with two restaurants and a health club (the site is expected to be fully open in the coming weeks) — is his first project since.Inside, at the top of a plush, curved green staircase, Café Clement’s hostess greets me and notes a request for a quiet table, before leading me towards the back of the restaurant.

Jones’s assistant, Sophie, arrives to say that he will join me shortly (I am 10 minutes early for our midday lunch). She returns moments later to ask if I would mind moving to a different spot.

“Nick really likes this table,” she says, directing me to the core of the restaurant and a curved banquette along the back wall. From here we will not only see guests arriving at the entrance to our left, but also the terrace to the right, and the entire dining room, which soon fills with people who have IMDb pages or honours bestowed by the monarchy.

Jones, 62, with greying blond hair, bright blue eyes and wearing a navy pinstriped bomber jacket, arrives soon after. “I’m a bit nervous,” he says with a smile, taking a seat. He is speaking at the FT Weekend Festival in two days’ time. “The FT is making me nervous this week.” A server comes over to ask if we’d like drinks; I opt for a glass of champagne, while Jones orders a Bad Belze beer. “We’re launching it here with Daniel Craig,” he says. “It’s his beer.”

His eyes move around the room, and I ask what he looks for when he comes into a restaurant.

“If the lighting is right, the music is right, the team is smiling. If there’s anyone I need to quickly say hello to,” he says. “And you look at the customer . . . If the customer is laughing, they’re deep in conversation, they’re not looking around thinking ‘where the hell is my food’, you don’t need to go up and ask if everything is all right. That’s the worst thing anyone can say in a restaurant, because you should be able to radar it.”

Jones, who grew up in Surrey, has calibrated his radar over decades. Severely dyslexic and struggling at school, he worked behind the bar at his local rugby club from the age of 13 and joined Trusthouse Forte, the hospitality conglomerate, at 17.

He tells a story of a chef throwing a sack of potatoes at his belly, ordering him to peel them and calling him a very British expletive. But he loved it. “I was a shy teenager . . . I went to private school, I had a posh voice, I suppose, and I went into an industry where there was no one from private school,” he says. “The kitchen was full of people from different continents and different backgrounds.”

Our server stops by to ask what we’d like to eat. We’ve not looked at the menu, so she suggests some snacks to get started — zucchini fritters, crostini and a parmesan custard. Jones interviews every member of staff here as the final stage in the job application process.

“Anyone who runs a hotel should spend five minutes with the people you’re going to employ,” he says. “It creates a connection and people know they’re being taken seriously.”

I ask what he looks for at that stage. “When you’re customer-facing, you haven’t got long to make an impression,” he says. “So you need to have an instant sort of feelgood factor.”His instincts haven’t always been so acute. Jones left Trusthouse Forte after eight years to launch his own venture, a trio of ill-fated restaurants called Over the Top, at which customers chose a base meat and paired it with different toppings named after famous mountains.

“There were so many things wrong with it,” he laughs. He eventually converted the Soho location, a corner site on Old Compton Street and Greek Street, into Cafe Boheme, a French-style all-day brasserie that opened in 1992.

He abandoned the gimmicky menu and “did the opposite”, opting for a more romantic, Parisian style. Cafe Boheme was social and frothy, and critically, at a time when most venues in Soho, the hub of London’s creative, media and artistic scenes, shut down at 11pm, was open until 3am on weekends. It was a hit.

Our snacks arrive — a reminder that, while the restaurants Jones launched under the Soho House umbrella were more about what is now called “vibe dining”, there is a serious chef behind Café Clement, Danny Bohan, who has worked alongside Rowley Leigh, Rose Gray and Ruth Rogers, most recently as the head chef of The River Cafe, where he spent 20 years.

The piles of zucchini fritters and tomato and anchovy crostini are light and moreish, but it is the bowl of parmesan custard (a Leigh recipe, Jones tells me) that steals the show: a silky flavour-bomb topped with a dollop of caviar and served with a side of salted crisps.

We order our mains: I go for the turbot while Jones chooses the chicken casserole and some sides for the table, including the house “crinkles” (hand-cut chips). I’ve heard good things about the gruyère soufflé, so that’s on the docket too, as well as two glasses of Muscadet.

Jones was eventually offered the lease on the Georgian townhouse above Cafe Boheme, and opened it as a members’ club, starting with the creatives who had become regulars at his restaurant. A 25-person committee, mostly from film and television, recruited the first 500 members.

Jones called the venue Soho House because it was a house in Soho. Why make it a private club? “Because it had a small door,” he says. “I thought public restaurants should have a bit of frontage. It was as simple as that.”

The opening coincided with a political and cultural shift in London: the rise of New Labour and Cool Britannia, and an optimistic rebranding of British identity. It arrived as the traditional establishment fractured, making way for an influential, youth-driven creative class — and Soho House became its de facto headquarters.

Over the next three decades, Soho House grew from Greek Street into a multinational network, with houses from New York and Berlin to Mumbai and Hong Kong, spawning an aesthetic — low lighting, mid-century-style furniture, vintage pieces and rich fabrics — that became a hospitality genre in itself.

Today there are 50 clubs in 19 countries and about a quarter of a million members. (Since returning to the UK in August, Meghan, Duchess of Sussex has been spotted at Soho Farmhouse in the Cotswolds, where the Beckhams are regulars. The club keeps its membership lists private, and photography and video recording are banned inside.)

As our main dishes arrive, so does Jones’s wife, Scottish broadcaster Kirsty Young, who is also having lunch here today. “Is he saying anything interesting?” she jokes, before heading to her table.

My turbot is beautifully cooked: soft, flaky and basted with butter. The crinkles — thick-cut, furrowed chips — were Jones’s addition to the menu. “I said, ‘Danny, I make these things at home, with an old crinkled chopper’ that Kirsty got me for Christmas one year,” he says, before describing a Blumenthalian method of boiling, freezing and frying, “but without perfection. They have to be a bit messed up.”

The dining room is heaving now, and with plenty of food on the table, I ask Jones about previous comments he’s made that he wanted Soho House to feel warm, and not too popular. “I always said I wanted it to be like a warm bread roll,” he says. “So it’s not cool but it’s still very relevant.” Can you control that? “You can try . . . when you open a place, everyone wants to go there, but you’re in it for longevity.”

Source: Soho House

Critics of Soho House say that it felt less exclusive as the company expanded — exacerbating the “friction between people with cachet and people with cash”, as the FT’s Janan Ganesh wrote. “We were never trying to be exclusive, we were trying to be inclusive,” Jones says. “We went into cities where you find 5,000 members who are interested, like-minded people.”

Is a membership model not inherently exclusive? “Without naming names, you had the most famous actor in the world in one corner, and a struggling one yet to get their first part in the other,” he says. “You had the same with artists. And we had the under-27 membership fees [typically discounted by around 50 per cent] . . . I think that’s inclusive.” (Fees vary by location and use. The annual cost for a member in London with access to all global houses is £4,500, or £2,500 if under 27 years old).

“[Soho House] has been around a long time,” he adds. “There are going to be moments where people have different perceptions.” He says his replacement, the current CEO Andrew Carnie, has found the right balance of expanding the brand globally and keeping it warm.

Soho House’s parent company traded publicly for four years before it agreed to go private last year.

Asked whether he would go public again, knowing what he knows now, Jones pauses to consider his response. “Probably not,” he says. “We did it for the right reasons, which was expanding growth. It was certainly tougher than I expected.” He says the business “didn’t quite fit” the quarterly public-market system, which inevitably changes culture. “Your washing, clean or dirty, is hung out to dry every quarter.”

Were there decisions he made then that he wouldn’t make now? “Personally, when I ran Soho House, because I love creating — I did The Ned, Mollie’s, Pizza East, Chicken Shop — in hindsight, even though I love those places and they stand alone in their own right, I probably should have just focused all my time on Soho House.” Did he ever feel spread too thin? “At times when we were opening seven, eight houses in a year — yes.”

The soufflé arrives — a twice-baked beauty sitting in a pool of thick, creamy sauce. Jones, the consummate host, hands me a spoon. “Take this and scoop up some of the sauce,” he insists. It is delicious.

Jones was diagnosed with prostate cancer in the summer of 2022. He stepped away from Soho House that autumn, following successful treatment.

“I was very lucky. I self-screen,” he says. “I had an MRI, then a biopsy. I had a pretty serious, aggressive tumour and something had to happen.” He describes the period when he didn’t know whether it had spread into his bones or other organs: the sleepless nights contemplating how many more years he might have to hold his grandchild, see his children, wife and friends.

Cancer changed his priorities. “What I didn’t want was to continue to be on a plane every day,” he says. He wanted to spend time with people and enjoy days off without jet lag (he cooks Sunday lunch for his family each week).

“I didn’t really have a next step for what I was going to do,” he says. “Even though I didn’t want a life of running around the world on planes and opening houses, I still love this business.”

The opportunity to work on the St Clement came through property developer Mark Wadhwa, with whom he collaborated on Soho House Berlin and other projects. Jones describes the undertaking as “creating a luxury hotel for today”.

“It’s got to feel friendly and relaxed. When the Savoy was built,” he says of London’s first luxury hotel, a nine-minute walk from our table, which opened in 1889, “everyone was in tails and bowler hats and high heels and dresses. Now people are in cashmere T-shirts and trainers.”

He credits his designers, Alex Eagle and Sophie Hodges, for pushing him in a new direction. I ask how much of the granular stuff he is involved in. “Probably too much,” he says. “I like detail. I think customers notice details. They notice a sense of generosity.”

Source: Soho House

He thinks about what he would want as a guest — and what he sees annoys guests, like lengthy check-in procedures and putting a card down for the minibar. Guests should not be charged for a KitKat. (Other new hotels in London have pushed basic rates above £1,000 per night. Entry-level rooms at the St Clement start around £600-£800, with chocolate included.)

He says he is not a control freak, however. “I think to get the best results, you want to listen to everyone’s opinion and then make a decision. What you don’t want to do is make a decision to try and keep all the people who’ve given you an opinion happy.” Does anyone challenge him? “Yes.” What does he have bad taste in? “I’m not allowed to choose the music here.”

Jones is also not at the hotel every day: “I’m a recovering workaholic.”For dessert, we order the chocolate mousse for two, but Ewan Venters, the executive chair of Paul Smith, formerly of Fortnum & Mason’s parish, briefly distracts Jones, so I steal a bit more than my fair share. Its name is an understatement: the pudding is the handsome progeny of a mousse and a fondant, warm and gooey, and served with a scoop of custard ice cream.

With lunch over, Jones offers me a tour of the hotel, starting with Bobbi’s Bar, the late-night, speakeasy-style venue on the ground floor that he modelled after a character he created.

“I fit it to this person who is very social, and everyone loves going back to Bobbi’s apartment,” he says. “It’s always full of interesting people. There’s a DJ playing vinyl and it’s sort of Bobbi’s bangers. People start singing.”

This, I realise, is how Jones designs. “You have to put the slight story behind it,” he says, “to be able to refer back to when you’re doing something to make sure it fits.”As we walk through the various hotel rooms and encounter the final bits of construction under way, Jones warmly greets and chats to the builders, housekeeping staff, chefs and photographers we encounter, while showing me the views, finishings and furnishings he’s most proud of.

With the tour complete, we say our goodbyes. He has an afternoon of interviewing prospective staff ahead. I zip back to the office, resisting the urge to Instagram any of the evidence.

Investing: Why you should ignore the ghost stories
2 min read
Beginner
Investing strategies

The word investing can send a chill down some people’s spines.

Terms like “volatility” and “risk” can sound straight out of a horror film. And ‘losing all your money’ well that’s the stuff of nightmares.

But here’s the truth: investing doesn’t have to be scary. In fact, once you understand it, it’s far less Freddy Krueger and much more Casper the friendly ghost.

Let’s (ghost)bust a few myths and show you how Chip helps keep your money safe from what’s lurking in the shadows.

Myth 1. “I could lose everything!?”

This is the classic jump scare. But barring something like a zombie apocalypse, it's almost impossible. 

Yes, markets go up and down, that’s part of the story. 

But when you invest through Chip, your money is spread across hundreds (sometimes thousands) of companies, sectors, and regions. So even if one part of your portfolio takes a fright, others can help you get through the night.

And if we do have a ‘28 Days Later’ scenario, then I think we all have bigger problems than the stock market.

Myth 2. “I need to be an expert”

You don’t need to be a mysterious, all-knowing spectre hiding in a candlelit library to invest. With Chip, you can start from as little as £1, choose from clear, ready-made investment funds that are good to go.

The hard work is done for you, partnering with (real) experts who manage your investments funds for a low-transparent fee, so you can focus on growing your money without wondering what’s hiding under the bed.

Simple, smart, and built for everyone – not just the wizards of Wall Street.

Myth 3: “Now’s not the right time.”

Trying to time the market perfectly is like trying to cheat death in Final Destination – it’s highly unlikely to happen

Markets move, the news cycle changes, and there’s always a new headline to worry about. But history shows that staying invested, rather than trying to time it, is how you survive the scary bits and see the best long-term results.

If you’re nervous, try easing in with pound-cost averaging: investing small amounts regularly, so you smooth out the ups and downs over time. It’s a calm, steady way to build your confidence - and your wealth.

Myth 4: “You need loads of money to get started.”

This one is another work of fiction – like a 104-year-old vampire who decides to use his immortality to endlessly repeat high school.

In fact, getting started early (even with small amounts) can make a huge difference thanks to the magic of compounding; where your returns start earning returns of their own.

At Chip, you can begin with just £1 and build from there. No big commitment, no minimums — just a realistic, approachable way to put your money to work.

So this Halloween…

Don’t let the fear of the unknown and old ghost stories stop you from getting started with investing.

And as an added bonus, start now and pay 0% platform fees* until 31 January 2027. Eligibility & T&Cs apply.

With Chip on your side, a clear plan, and a little guidance, investing isn’t a horror story — it’s just another way to grow your money.

* Fund management charges apply.

What happens to my pension when I die?
2 min read
Intermediate
Accessing your pension

Pension death benefit rules  

The tax rules for passing on a pension depend almost entirely on the age at which you die.

Before age 75

If you die before age 75, your remaining pension pot can usually be passed to your beneficiaries tax-free.

  • Beneficiaries can usually choose to take the money as a single lump sum or as a flexible income stream.
  • Currently they won’t pay Income Tax on the money they withdraw, regardless of earnings.

After age 75

If you die after age 75, your pension can still be passed on, but it is no longer tax-free.

  • Your beneficiaries will pay Income Tax on any money they withdraw.
  • This money is included in your beneficiaries earnings for the year and taxed at their marginal rate.

Pension death benefit 2 year rule 

The ‘2-year rule’ states that for death benefits to be paid tax-free (when dying before 75), the pension provider must pay the funds (or designate them to a beneficiary’s drawdown account) within two years of being notified of the death.

If the provider takes longer than two years to settle the funds, the money becomes taxable even if you died before age 75. 

Important to note:

  • Beneficiaries should notify the provider promptly of the death to preserve the tax-free status of pots (where death was before 75). 
  • Tax-free lump sums are limited by the Lump Sum and Death Benefit Allowance (LSDBA) of £1,073,100. This is a limit on the total tax-free lump sums paid out across life AND death. 

If a spouse, civil or cohabiting partner passes away, separate Bereavement Support Payments are available, provided the bereaved meets certain eligibility criteria.

Pension beneficiaries  

Because pensions are held in a trust, the pension provider’s trustees have the final legal say on who receives the money. They are not legally bound by your Will.

Expression of wish form  

An Expression of Wish (or Nomination of Beneficiaries) form is a document that tells your pension provider who you would like to receive your pension when you die.

  • While the provider’s trustees ultimately have discretion, they will almost always follow your latest Expression of Wish.
  • If you forget to update this form, for example, following a marriage or divorce, the trustees may pay this money to an ex-partner, as that is the last instruction they have on file.

Rules for defined contribution pensions

Defined contribution pensions (like SIPPs and workplace pots) are the easiest to pass on.

  • Your remaining pot is fully inheritable. 
  • This money can be passed on multiple times, for example, to a spouse and then if any is left when they die, onto children.

Rules for defined benefit pensions

Defined benefit (or final salary) schemes are less flexible. Because there is no ‘pot’ of cash, you cannot usually pass a lump sum to children.

  • Most schemes will pay a reduced income (often 50%) to a surviving spouse or civil partner for the rest of their life.
  • Some schemes pay an income to children if they are under 18 (or 23 if in full-time education).
  • Once your spouse dies and children grow up, the pension payments usually stop completely.

Changes to inheritance tax on pensions (April 2027)

Historically, pension pots have been exempt from Inheritance Tax (IHT). This made them a popular way to pass wealth to family without hitting the IHT threshold.

However, the government has announced that from April 2027, unused pension funds and death benefits will be included in the value of a deceased person’s estate for Inheritance Tax purposes.

  • What’s changing? Your remaining pension savings will be added to the value of your other assets (like property and non-pension savings) when calculating if your estate owes Inheritance Tax.
  • What could be owed? If your total estate, now including your pension, exceeds your tax-free allowances, the estate may be liable for Inheritance Tax at 40% on the excess.

You can find regulated and impartial advisers through the MoneyHelper website. Or, if you’re over 50 with a defined contribution pension you can get free and impartial guidance through Pension Wise.

Personal Savings Allowance Guide
2 min read
Intermediate
Rates, Tax & Economics

What is the Personal Savings Allowance and what does it mean for my savings?

The Personal Savings Allowance is a tax exemption introduced by the UK government to enable individuals to earn interest on their savings without being taxed on it.

The amount of interest you can earn tax-free depends on your tax bracket. As of the current tax year, there are three tax bands:

  • Basic rate taxpayers: If you are a basic rate taxpayer, you can earn up to £1,000 in savings interest tax-free.
  • Higher rate taxpayers: Higher rate taxpayers have a Personal Savings Allowance of £500, meaning they can earn up to £500 in interest tax-free.
  • Additional rate taxpayers: Unfortunately, individuals in the additional rate tax bracket do not receive a Personal Savings Allowance, and all their savings interest is subject to tax.

What counts as savings interest under the Personal Savings Allowance?

The Personal Savings Allowance covers various types of savings interest, including interest earned from:

  • Bank and building society accounts.
  • Credit union and National Savings and Investments (NS&I) accounts.
  • Interest distributions from authorised unit trusts and open-ended investment companies (OEICs).
  • Income from government or corporate bonds.
  • Most types of purchased life annuity payments.

It's important to note that dividends from shares and other investments are not considered savings interest and are subject to different tax rules.

How much do I need in savings before my interest is taxed?

The Personal Savings Allowance applies to your total savings interest earned in a tax year, which runs from April 6th to April 5th of the following year. The threshold depends on your tax bracket:

  • Basic rate taxpayers: You can earn up to £1,000 in savings interest tax-free.
  • Higher rate taxpayers: You have a tax-free allowance of £500 for savings interest.
  • Additional rate taxpayers: Unfortunately, there is no tax-free allowance for savings interest in this bracket.

For example, if you are a basic rate taxpayer and earn £800 in interest within a tax year, you won't have to pay any tax on it. However, if you earn £1,200, the excess £200 will be subject to tax. See our interest rates calculator.

You're taxed on savings interest in the tax year you can access it

It's important to remember that the tax year you're taxed on your savings interest is based on when you can access the funds and not when they were earned.

For example, if you earned interest in March but couldn't access it until April, it would be taxed in the following tax year.

Summary

The Personal Savings Allowance offers a great opportunity for UK residents to earn tax-free interest on their savings.

By understanding the tax bands and thresholds, you can make the most of your savings and potentially keep more of your hard-earned money.

Remember to consult with a financial advisor or HM Revenue and Customs (HMRC) for personalised advice and stay informed about any changes to the tax laws.

The financial question most couples cannot answer

2 min read
Money Mindset & Lifestyle

Many couples do not share a bank account. Some claim to be blissfully unaware of their partner’s penchant for purchasing campervans and coffee machines.

But, in all seriousness, do you actually know how much (or little) your partner has stashed in their pension?

In my experience, most couples don’t know the size of their personal “pensions gap”. Most of us have a ragtag collection of pensions from previous jobs and millions of people have lost track of one or more of these. But the higher earner is likely to have the lion’s share of the pension savings — especially so if the couple have children.

The person with the smallest pension is almost always a woman. It’s not always the case — I am an exception to this rule — but raising a family weighs more heavily on a woman’s lifetime earnings potential.

The associated “gender pensions gap” means that by the age of 55, the average manh as amassed a pot that’s nearly twice as big as the average woman’s.

You might think: “Well, if one of us has an OK-sized pension, we’ll muddle through.”

But there is a powerful case for the higher earner paying into what can be one of the family’s most neglected financial assets — the lower earner’s pension.

Yet, even if couples wanted to do so, there’s a big reason why they wouldn’t: tax relief. If the higher earner can enjoy higher- or additional-rate tax relief on their own pension contributions, why fund contributions for a lower earner, who may only get basic-rate relief? As millions more workers are dragged into higher-rate tax bands, this issue will intensify.

It’s an even worse deal for non-earners. The higher earner can pay a paltry £2,880 per year into their pension (topped up to £3,600 with tax relief). Introduced in 2001, this threshold has scandalously never increased with inflation. If it had, it would be around double this level by now.

Sir Steve Webb, the former pensions minister and partner at pension consultancy LCP, has a bold request for the new chancellor: let’s change pensions policy to make it more attractive for couples to even out their pension saving by making higher-rate tax relief transferable.

“We don’t need yet another report on the gender pension gap, we need some action to close it,” he says.

Changing tax relief rules to incentivise higher earners to divert pension savings into their partner’s name is one of the only meaningful ways to close it. Crucially, this would benefit couples that stay together, and those who split up.

“It is far better for women to have decent pensions in their own right while part of a couple than to hope that pension sharing after a relationship breaks down will do the job,” he says.

Webb is urging the government’s Pensions Commission to consider the dramatic rise in the number of single pensioners. The number of divorced over-65-year-olds has trebled in the space of two decades (see chart). Technically, pensions should be part of divorce settlements, yet only 13 percent of divorcing couples consider pensions in financial settlements, according to L&G.

In fact, solicitors tell me the new “no-fault” divorce rules discourage couples from pursuing the admin hassle of a pension-sharing order in their desire to achieve a quick uncontested split.

But that’s assuming you’re married. The number of cohabiting adults has nearly doubled to 5.4mn over the past two decades. Nowadays, nearly 15 per cent of all couples who cohabit are over 50, up from just 2.6 per cent.

Solicitors tell me that when relationships break down, older women in this position are flabbergasted to learn they’re entitled to nothing from their partner’s pension or future earnings (the myth of the “common-law partner” has a lot to answer for). The government recently launched a consultation into this problem, but that won’t yield quick results. Webb notes that pensioner poverty is rising fastest among the divorced and those who have never married, and women are the worst affected.

Changing tax relief to incentivise couples to build up pensions more equally while they are together would help to address this, but why would any chancellor agree?

“The question to ask is, what would happen otherwise?” Webb argues.

If one half of the couple benefits from the tax relief that the other half would have received anyway, there’s no additional cost to the taxpayer. And if the lower earner ends up with a much better pension, they’ll be less likely to claim means-tested benefits in future should the couple split up.

But even if you are married and stay together, another emerging risk is that your future pension could die with your partner.

The person whose name is on the pension is solely responsible for deciding how this money will be invested or accessed. Presently, record numbers of retirees are trading their defined contribution pension pots for annuities, but two-thirds of those sold are single-life policies. Buying a joint-life policy would leave a widowed partner with an income after the policyholder dies, but many shun this as it reduces the amount of income paid out every year.

All of the UK’s big workplace pension schemes are currently designing “default” retirement journeys for members who do not make an active choice when accessing their pots. Many industry watchers fear that if single-life annuities become the default, the potential damage to women’s pension prospects in later life will be even more acute — something that must not be allowed to happen.

We may wait in vain for policymakers to address any of these risks. So, here are three basic things couples could do this weekend to boost their joint pension prospects.

First, check your state pension forecast — if the lower earner has missing years of national insurance contributions, it could be worth paying to top these up and boost their state pension in retirement.

Second, if they work, they should email HR to ask if their employer will match any extra workplace pension contributions (this is worth doing even if they only get basic-rate tax relief).

And third, make sure you’re each other’s “nominated beneficiary” on all of your pensions. This takes less than a minute to sort on most workplace pension apps, but considerably longer if one of you dies without doing so.

Pensions might not sound like the most romantic of topics, but there’s a lot to be said for caring about a more secure retirement for your partner.

What is a recession and how it affects investing
2 min read
Beginner
Economic context

What is a recession?

A recession is a significant decline in economic activity across the economy, lasting more than a few months. In the UK, it is commonly defined as two consecutive quarters of negative GDP (Gross Domestic Product) growth.

Recessions affect many areas of the economy such as employment, business profits and consumer confidence. While often seen as negative, they are a natural part of the business cycle and can set the stage for future growth. 

What causes a recession to happen?

Several factors can contribute to a recession. These factors can include:

  • High inflation: When prices rise too quickly, consumer spending can fall, slowing the economy.
  • High interest rates: To combat inflation, central banks (like the Bank of England), may raise interest rates, which increases borrowing costs for businesses and households.
  • Falling consumer confidence: When people become uncertain about the future, they tend to spend and invest less.
  • External shocks: Events like global pandemics, geopolitical conflicts, or oil price spikes can disrupt economic activity.
  • Financial market imbalances: Asset bubbles (rapid price rise above value) or debt crises can lead to sudden market corrections (a drop of more than 10% in an index's market value) that can ripple through the broader economy.

Often, it’s not one cause but a combination of several factors that can lead to a downturn at various stages of a recession. 

How long do recessions last?

The length of an economic recession varies. Historically, UK recessions have lasted anywhere from a few quarters to several years. For example, the 2008 global financial crisis caused a recession that lasted around five quarters in the UK. 

However, economic recovery often begins before people realise, as confidence and spending start to pick up. 

How does a recession affect investing?

Given how recessions have an immediate impact on the economy, a recession can affect various investment asset classes, including: 

  • Stock market volatility: Share prices often fall as company earnings decline and investor sentiment weakens. 
  • Bond markets: Government bonds may become more attractive as investors seek safer assets.
  • Dividend cuts: Companies may reduce or suspend dividends to conserve cash.
  • Property market: Housing prices may fall due to reduced demand and tighter credit conditions.
  • Currency fluctuations: For example, the pound may weaken, especially if the UK economy is underperforming compared to others.

For investors, a recession can bring short-term losses, but it also creates long-term opportunities, particularly for those who remain calm and strategic. Understand investment risks and strategies

How can investors prepare for a recession?

Preparation is key. There are various investment strategies investors can take into account. This includes: 

  • Review your risk tolerance: Make sure you review the amount of loss you’re prepared to handle while making an investment decision.
  • Diversify: Spread investments across different asset classes and sectors to reduce exposure to any single area.
  • Maintain an emergency fund: Cash reserves help cover living expenses without needing to sell investments during downturns.
  • Focus on quality: Strong companies with strong fundamentals and healthy balance sheets are more likely to survive and recover. 

Avoid trying to predict the exact timing of a recession. Instead, focus on building a resilient portfolio that can weather a range of outcomes.

How to invest during a recession?

Investing during a recession can feel counterintuitive, but it can also be a time of opportunity. 

  • Stay invested: Attempting to time the market often leads to missed gains when markets rebound.
  • Look for undervalued assets: Prices may fall below their true value, offering long-term potential.
  • Use pound-cost averaging: Regularly investing a fixed amount can help smooth out price volatility over time.

Remember, recessions don’t last forever. Markets typically begin recovering before the wider economy does.

What are the risks of investing during a recession?

A recession brings economic uncertainty. For investors, it’s important to understand potential downsides:

  • Increased volatility: Markets can swing widely in either direction. Learn about stock market basics.
  • Company defaults: Some businesses may not survive, particularly those with high debt levels.
  • Lower income: Investors relying on dividends or interest may see reduced payouts.

Risk cannot be avoided entirely, but it can be managed through careful planning, diversification and understanding the risks involved. 

Recession and investing summary

Recessions are challenging, but not unusual. For new investors, understanding how they work, and how markets tend to react, is a key part of building confidence and resilience. 

By focusing on long-term goals and maintaining a diversified, risk-aware strategy, it’s possible to navigate economic downturns more effectively.

Up next, learn what liquidity is and how it can affect investors. 

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