July 24, 2025 • 13 mins
There’s been lots in the news about workplace pensions recently.
In this episode, our host lona Bain is joined by L&G's CEO of DC and workplace savings, Paula Llewellyn. They unpack changes in the pipeline and what you can do to help your pension savings grow.
From the government’s push to simplify pensions and tackle the issue of multiple small pots, to a change which could see more of your money invested in UK companies and private markets, they explore how these reforms could help your financial future. Paula explains auto-enrolment, opportunities to increase saving into your pension and why this will make such a difference in the long run.
Whether you’ve just started your career or are years into working life, this episode is packed with helpful advice to help you get a little bit richer in retirement.
You can watch episodes on L&G’s YouTube channel
And see behind the scenes content on TikTok and Instagram
You can play the podcast and find other useful content on L&G’s website:
https://www.legalandgeneral.com/podcasts/a-little-bit-richer
Iona and her guests share their own personal thoughts and opinions in this podcast. These might be different from L&G’s take on things. They give financial guidance for a UK audience that’s relevant at the time of recording. It’s general best practice, not the kind of personalised advice you’d get from a financial adviser.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Announcer (00:00):
This series is brought to you by L& G, helping
you build a future that's a little bit richer.
Iona Bain (00:07):
Hello, I'm Iona Bain and welcome along to A Little
Bit Richer, brought to you by Legal & General. Today we're
touching on workplace pensions, and that's because they've been in
the news recently. There's some changes coming down the track,
including where some of your money is invested and what
happens to those small pots you build up as you
move between jobs. So we wanted to bring in an
(00:28):
expert from L& G as they are the largest provider
of defined contribution and workplace pension savings in the UK.
Paula Llewellyn heads up the team there, so she is
very well- placed to outline what's in the pipeline, why
it's important for your future. Welcome Paula.
Paula Llewellyn (00:45):
Thank you.
Iona Bain (00:46):
So Paula, there are some changes happening to workplace pensions
that people might have been hearing about recently. Can you
tell us a little bit more about what they are?
Paula Llewellyn (00:54):
Yeah, so look, pensions are really important for the standard
of living that people need to have in their retirement,
and that's why the government really takes a lead on
all things pension to make sure that people are getting
the best outcome that they want. So they're introducing some
new rules as part of a review that they've done.
Iona Bain (01:13):
So what the specific changes that the government's bringing in?
Paula Llewellyn (01:17):
So they're bringing in some new rules, which really means
that it's going to drive better outcomes for the longer
term for pension savers. But these things are not going
to happen overnight. They're going to take a number of
years to roll through. So nothing immediately is changing, but
will definitely see something over the next few years.
Iona Bain (01:35):
Interesting. And in particular, changes are happening to small workplace
pensions. Can you talk us through those? Because an issue that
affects a lot of people, isn't it?
Paula Llewellyn (01:44):
It is, yeah, absolutely. And research has shown that people
have on average 11 jobs over their lifetime. And so
as they move employer, they're building up these small pots.
And so what the new rules are going to do
is bring in the ability for people to combine these
small pots under a thousand pound. And that's got loads
(02:05):
of advantages. Number one, it makes it really easy for
people to manage, but also by combining these pots, you're
reducing the administration costs and potentially you'll see bigger growth
of your retirement savings over time.
Iona Bain (02:19):
That all sounds really good. I think people will be wondering, "
Do I have a small pension pot?" And maybe they
do thanks to something called auto enrollment. Could you just
quickly explain what that is and why it creates these
small pension pots?
Paula Llewellyn (02:31):
Auto enrollment basically means that if you are 22 or
over and earn over 10,000 pounds, you will automatically be
enrolled into your employer's pension scheme. So if you look
at how that's made up, there's normally 8% of your
salary which is invested into that pension scheme. 5% of
(02:53):
that comes from your salary, so 4% from your contribution
and 1% as tax relief from the government. And then
the 3% then comes from your employer.
Iona Bain (03:03):
So that means that people are contributing to a workplace pension,
but then when they move on from that job, the
pension pot doesn't go with them. And that's why you
can end up building up all these wee pension pots
and all sorts of places that you might forget about.
Paula Llewellyn (03:18):
That's right.
Iona Bain (03:19):
That sounds like it could be a huge problem.
Paula Llewellyn (03:22):
Yes, and that's exactly why the government is looking at
this now to really make it easier for pension savers
to manage their pensions. And I think paying attention to
your pension is really important, particularly because there's lots of
things that you need to be thinking about, what your contributions
(03:43):
are, how your investment is growing over time, etc. And
lots of companies make it easier now for people to
do that, whether that's online or through their app. We've
got a rate app at L& G that allows our
pension savers to be able to really get involved and
track what's happening in their pension.
Iona Bain (04:00):
That's such a simple win, isn't it? To just check
out your pension providers app, and maybe people don't realize
that that is something that they can do.
Paula Llewellyn (04:07):
Yeah, 100%.
Iona Bain (04:09):
There's been a debate around whether our pensions could be
used to try and kick- start economic growth. Could you
talk us through how that might affect pension savers?
Paula Llewellyn (04:18):
Yeah, absolutely. So people that manage pensions are focused on
getting really strong growth for their customers and to help
do this, they invest in companies in the UK as
well as globally. So in the changes that the government
have announced, they're keen to see more money from workplace
pensions being invested in the UK to help support the UK's
economy and growth. So in May, there was something called
(04:41):
the Mansion House Accord that really looked at some of
these changes in the types of areas the pension fund
managers like Legal & General can invest in. And so pension
companies have committed to invest at least 10% of the
money from some of their pension funds into what's called private
markets. So this covers companies that are not listed on the
(05:02):
stock exchange. So some of the largest and best- known
companies in the world are privately owned, and those are
household names like Aldi and Mars as an example. It
also covers investment into big building projects. So all of
that has the aim of boosting the UK economy through
creating more jobs, growing more businesses, and ultimately, helping people
(05:24):
grow their retirement savings.
Iona Bain (05:27):
And there are all sorts of checks and balances like
trustees for example, that really make sure that the pension
funds are being invested well on behalf of savers.
Paula Llewellyn (05:36):
100%. Yeah. And that's again, their duty to make sure
that the outcomes that we're driving for pension savers are
the best that they could be.
Iona Bain (05:45):
People might listen to that and think, well, that sounds
nice, but I do also want to make sure that
my pension is going to be there for me and is
going to get me the growth that I need so
that I can have the nice retirement that I deserve.
So what balance is being struck between making sure that
that money is being invested productively and making sure also
that people get a good return?
Paula Llewellyn (06:06):
This Mansion House Accord, how's the call, just helps to give a direction of travel,
I guess, in terms of balancing what we're doing with
pension savings as well as investing in the economy. So
yeah, it's something that pension companies like Legal & General are
really focused on, but ultimately driving that outcome for pension
savers is the most important thing. We've seen some of
(06:28):
these examples in other countries like Australia as an example,
where similar schemes really invest heavily into these private markets
and Australian businesses much more than in the UK. So
there is sort of a precedent already in the markets
of how to do this, and that's what the UK
is looking to do.
Iona Bain (06:46):
All this sounds really positive, but is there more that
could be done to help pension savers? And if so,
what could and should change?
Paula Llewellyn (06:55):
Let's stop where we've been from a pensions landscape. So
over the last 10 years, there's been significant changes in
retirement. So in the past, many pension providers would've paid
a guaranteed income in retirement, and that would've been based
on your salary and the number of years that you
worked for that employer. These pensions generally gave people a
(07:17):
relatively comfortable standard of living in retirement. But things have
changed, as I said over the last decade. And nowadays,
pension schemes off through employers don't really give the guaranteed
amount when you retire. So it's really dependent on how
much you put into your pot and how much those
investments grow over time. So this means that we all
(07:38):
need to take much more ownership of our pensions to
make sure that we have a really good standard of
living in retirement. So people do need to start thinking
about saving more during their working life, and that is
something that obviously will help them to have a much
more comfortable retirement. If we just think about what that
(07:59):
means for people in their 20s and 30s, if you're putting money
into your pension or not putting money into your pension,
probably because it's not high on the priority list, there's
lots of other things that are taking the demands of
what you're earning. And so yeah, lots of financial pressures
mean that people are probably not investing into their pension
(08:20):
at an earlier age. I saw some concerning stats recently
that we've done that said 12% of 18 to 44
year olds don't have any money saved for when they
retire. While I think it was 36% don't know what
their monthly contributions are. So all of that means that
I guess we need to start thinking about investing in
(08:41):
our pensions much earlier. So I mentioned auto enrollment earlier,
that is a way of helping people who are 22
or over to start to invest in their pension. And
while that's good, it's not enough, we believe that it's
probably not enough to give a comfortable standard of living
because it is the minimum amount. The 8% that I
(09:02):
talked about is the minimum amount. So I think that's
something that we need to consider. And there's also the
fact that employees who are not 22 or don't earn 10,
000 pounds a year aren't automatically included in the company
pension. So that could disadvantage them in the longer term.
So I think auto enrollment should absolutely be broadened out
(09:25):
to include every employee. I think that's the first thing.
Second, I would say the automatic consolidation of small pots.
We've just talked about some of the changes coming in
for POTS under a thousand, but small pots above a
thousand also benefit from better growth in the long term
if we combine those with other pension savings. So there's
(09:45):
more focus on this by the government and the industry
actually, and more changes are in the pipeline in this
area, which is really good to see. And then I
think finally the Pensions Dashboard, which is something which is
going to be introduced quite shortly. There's lots of work
happening where companies are looking all to connect into a
(10:05):
single source of information so everyone can go on, log
onto the dashboard and get a clear view of where
your pensions are, who you're invested with, and then take
the necessary action to potentially consolidate those small pots themselves
or just to keep a track of what's happening in
their pensions so they're more aware of some of the decisions
that they could be making.
Iona Bain (10:27):
I do like the sound of the Pensions Dashboard because
it reminds me of Star Trek and kind of navigating
my pensions out in space, but that's coming down the
track, but it's not with us just yet.
Paula Llewellyn (10:37):
It's not here yet. There's lots of work happening within
the industry at the moment to get ready for this.
So yeah, everyone is sort of working towards that.
Iona Bain (10:45):
Watch this space.
Paula Llewellyn (10:46):
Exactly.
Iona Bain (10:47):
In the meantime, whilst we wait maybe for some of
those changes to happen at some point, who knows, what
can we do to try to be in a stronger
position when it comes to our retirement? Have you got
three tips for us, Paula?
Paula Llewellyn (11:00):
I have, yeah. So I would say the first thing
is save as much as you can as early as
you can. Your future self will absolutely thank you for
this. And really, I think there's a few things that
you could do to make that happen. I think first
of all, look at your employer contributions and the tax
benefits available to you. They're in place and encouraged to
(11:22):
help you to start saving as soon as you can.
And also, if you get a pay rise, you can
increase your percentage of your salary potentially that's going into
your pot. Even just upping your contribution by 1% of
your salary can vastly impact your future savings growth in
your retirement. And you can also potentially look at investing.
(11:44):
If you get a bonus, can you invest some of
that as well into your pension? So start early and
invest as much as you can. Secondly, pay more attention
to your pension, find out how much you contributed, where
your investment is, how much they've grown, look at the
small parts, really get an understanding and start to think
(12:05):
about the things that you could do today to really
start to put yourself in a better position as you
go into retirement. And then I think thirdly, if you're
considering moving jobs, have a look at what the pension
scheme looks like. Have a look at what the benefits
are that that employer's offering. Some organizations make more generous
contributions into your pension, so rather than the minimum that
(12:28):
I talked about earlier, some can go much higher than
that. So I think having a look at what those
benefits are could really benefit you over the longer term.
And also, if you do move jobs, you can usually
move your old employer pension with you. Again, that keeps
everything nice and simple for you, keeps everything in one
(12:48):
place, but also gives you the opportunity to really grow
that investment over time.
Iona Bain (12:53):
That's really good to know. And yeah, I think you're
right. We need to make it normal for us to
look at an employer's pension arrangements just as much as
we might consider, whether they offer free donuts on a
Friday or a nice gym membership. The pension matters just
as much, if not more in the long run.
Paula Llewellyn (13:09):
It does, in the long run, it absolutely does. Yeah.
Iona Bain (13:13):
Thanks so much, Paula. It's clear small actions today can
really make a difference further down the line. Next time,
financial strategist and founder of Mind Over Money, Krystle McGilvery
will be here to discuss how being neurodiverse might affect
how you manage your finances. If this episode has made
you think about your pension in a new way, great,
why not share the podcast and help others get a
(13:36):
little bit richer too? This podcast is brought to you
by L& G. You can keep up with the show
on YouTube, TikTok and Instagram at Legal & General. Until next
time, see you soon.
This series is brought to you by L& G, helping
you build a future that's a little bit richer.
Iona Bain (00:07):
Hello, I'm Iona Bain and welcome along to A Little
Bit Richer, brought to you by Legal & General. Today we're
touching on workplace pensions, and that's because they've been in
the news recently. There's some changes coming down the track,
including where some of your money is invested and what
happens to those small pots you build up as you
move between jobs. So we wanted to bring in an
(00:28):
expert from L& G as they are the largest provider
of defined contribution and workplace pension savings in the UK.
Paula Llewellyn heads up the team there, so she is
very well- placed to outline what's in the pipeline, why
it's important for your future. Welcome Paula.
Paula Llewellyn (00:45):
Thank you.
Iona Bain (00:46):
So Paula, there are some changes happening to workplace pensions
that people might have been hearing about recently. Can you
tell us a little bit more about what they are?
Paula Llewellyn (00:54):
Yeah, so look, pensions are really important for the standard
of living that people need to have in their retirement,
and that's why the government really takes a lead on
all things pension to make sure that people are getting
the best outcome that they want. So they're introducing some
new rules as part of a review that they've done.
Iona Bain (01:13):
So what the specific changes that the government's bringing in?
Paula Llewellyn (01:17):
So they're bringing in some new rules, which really means
that it's going to drive better outcomes for the longer
term for pension savers. But these things are not going
to happen overnight. They're going to take a number of
years to roll through. So nothing immediately is changing, but
will definitely see something over the next few years.
Iona Bain (01:35):
Interesting. And in particular, changes are happening to small workplace
pensions. Can you talk us through those? Because an issue that
affects a lot of people, isn't it?
Paula Llewellyn (01:44):
It is, yeah, absolutely. And research has shown that people
have on average 11 jobs over their lifetime. And so
as they move employer, they're building up these small pots.
And so what the new rules are going to do
is bring in the ability for people to combine these
small pots under a thousand pound. And that's got loads
(02:05):
of advantages. Number one, it makes it really easy for
people to manage, but also by combining these pots, you're
reducing the administration costs and potentially you'll see bigger growth
of your retirement savings over time.
Iona Bain (02:19):
That all sounds really good. I think people will be wondering, "
Do I have a small pension pot?" And maybe they
do thanks to something called auto enrollment. Could you just
quickly explain what that is and why it creates these
small pension pots?
Paula Llewellyn (02:31):
Auto enrollment basically means that if you are 22 or
over and earn over 10,000 pounds, you will automatically be
enrolled into your employer's pension scheme. So if you look
at how that's made up, there's normally 8% of your
salary which is invested into that pension scheme. 5% of
(02:53):
that comes from your salary, so 4% from your contribution
and 1% as tax relief from the government. And then
the 3% then comes from your employer.
Iona Bain (03:03):
So that means that people are contributing to a workplace pension,
but then when they move on from that job, the
pension pot doesn't go with them. And that's why you
can end up building up all these wee pension pots
and all sorts of places that you might forget about.
Paula Llewellyn (03:18):
That's right.
Iona Bain (03:19):
That sounds like it could be a huge problem.
Paula Llewellyn (03:22):
Yes, and that's exactly why the government is looking at
this now to really make it easier for pension savers
to manage their pensions. And I think paying attention to
your pension is really important, particularly because there's lots of
things that you need to be thinking about, what your contributions
(03:43):
are, how your investment is growing over time, etc. And
lots of companies make it easier now for people to
do that, whether that's online or through their app. We've
got a rate app at L& G that allows our
pension savers to be able to really get involved and
track what's happening in their pension.
Iona Bain (04:00):
That's such a simple win, isn't it? To just check
out your pension providers app, and maybe people don't realize
that that is something that they can do.
Paula Llewellyn (04:07):
Yeah, 100%.
Iona Bain (04:09):
There's been a debate around whether our pensions could be
used to try and kick- start economic growth. Could you
talk us through how that might affect pension savers?
Paula Llewellyn (04:18):
Yeah, absolutely. So people that manage pensions are focused on
getting really strong growth for their customers and to help
do this, they invest in companies in the UK as
well as globally. So in the changes that the government
have announced, they're keen to see more money from workplace
pensions being invested in the UK to help support the UK's
economy and growth. So in May, there was something called
(04:41):
the Mansion House Accord that really looked at some of
these changes in the types of areas the pension fund
managers like Legal & General can invest in. And so pension
companies have committed to invest at least 10% of the
money from some of their pension funds into what's called private
markets. So this covers companies that are not listed on the
(05:02):
stock exchange. So some of the largest and best- known
companies in the world are privately owned, and those are
household names like Aldi and Mars as an example. It
also covers investment into big building projects. So all of
that has the aim of boosting the UK economy through
creating more jobs, growing more businesses, and ultimately, helping people
(05:24):
grow their retirement savings.
Iona Bain (05:27):
And there are all sorts of checks and balances like
trustees for example, that really make sure that the pension
funds are being invested well on behalf of savers.
Paula Llewellyn (05:36):
100%. Yeah. And that's again, their duty to make sure
that the outcomes that we're driving for pension savers are
the best that they could be.
Iona Bain (05:45):
People might listen to that and think, well, that sounds
nice, but I do also want to make sure that
my pension is going to be there for me and is
going to get me the growth that I need so
that I can have the nice retirement that I deserve.
So what balance is being struck between making sure that
that money is being invested productively and making sure also
that people get a good return?
Paula Llewellyn (06:06):
This Mansion House Accord, how's the call, just helps to give a direction of travel,
I guess, in terms of balancing what we're doing with
pension savings as well as investing in the economy. So
yeah, it's something that pension companies like Legal & General are
really focused on, but ultimately driving that outcome for pension
savers is the most important thing. We've seen some of
(06:28):
these examples in other countries like Australia as an example,
where similar schemes really invest heavily into these private markets
and Australian businesses much more than in the UK. So
there is sort of a precedent already in the markets
of how to do this, and that's what the UK
is looking to do.
Iona Bain (06:46):
All this sounds really positive, but is there more that
could be done to help pension savers? And if so,
what could and should change?
Paula Llewellyn (06:55):
Let's stop where we've been from a pensions landscape. So
over the last 10 years, there's been significant changes in
retirement. So in the past, many pension providers would've paid
a guaranteed income in retirement, and that would've been based
on your salary and the number of years that you
worked for that employer. These pensions generally gave people a
(07:17):
relatively comfortable standard of living in retirement. But things have
changed, as I said over the last decade. And nowadays,
pension schemes off through employers don't really give the guaranteed
amount when you retire. So it's really dependent on how
much you put into your pot and how much those
investments grow over time. So this means that we all
(07:38):
need to take much more ownership of our pensions to
make sure that we have a really good standard of
living in retirement. So people do need to start thinking
about saving more during their working life, and that is
something that obviously will help them to have a much
more comfortable retirement. If we just think about what that
(07:59):
means for people in their 20s and 30s, if you're putting money
into your pension or not putting money into your pension,
probably because it's not high on the priority list, there's
lots of other things that are taking the demands of
what you're earning. And so yeah, lots of financial pressures
mean that people are probably not investing into their pension
(08:20):
at an earlier age. I saw some concerning stats recently
that we've done that said 12% of 18 to 44
year olds don't have any money saved for when they
retire. While I think it was 36% don't know what
their monthly contributions are. So all of that means that
I guess we need to start thinking about investing in
(08:41):
our pensions much earlier. So I mentioned auto enrollment earlier,
that is a way of helping people who are 22
or over to start to invest in their pension. And
while that's good, it's not enough, we believe that it's
probably not enough to give a comfortable standard of living
because it is the minimum amount. The 8% that I
(09:02):
talked about is the minimum amount. So I think that's
something that we need to consider. And there's also the
fact that employees who are not 22 or don't earn 10,
000 pounds a year aren't automatically included in the company
pension. So that could disadvantage them in the longer term.
So I think auto enrollment should absolutely be broadened out
(09:25):
to include every employee. I think that's the first thing.
Second, I would say the automatic consolidation of small pots.
We've just talked about some of the changes coming in
for POTS under a thousand, but small pots above a
thousand also benefit from better growth in the long term
if we combine those with other pension savings. So there's
(09:45):
more focus on this by the government and the industry
actually, and more changes are in the pipeline in this
area, which is really good to see. And then I
think finally the Pensions Dashboard, which is something which is
going to be introduced quite shortly. There's lots of work
happening where companies are looking all to connect into a
(10:05):
single source of information so everyone can go on, log
onto the dashboard and get a clear view of where
your pensions are, who you're invested with, and then take
the necessary action to potentially consolidate those small pots themselves
or just to keep a track of what's happening in
their pensions so they're more aware of some of the decisions
that they could be making.
Iona Bain (10:27):
I do like the sound of the Pensions Dashboard because
it reminds me of Star Trek and kind of navigating
my pensions out in space, but that's coming down the
track, but it's not with us just yet.
Paula Llewellyn (10:37):
It's not here yet. There's lots of work happening within
the industry at the moment to get ready for this.
So yeah, everyone is sort of working towards that.
Iona Bain (10:45):
Watch this space.
Paula Llewellyn (10:46):
Exactly.
Iona Bain (10:47):
In the meantime, whilst we wait maybe for some of
those changes to happen at some point, who knows, what
can we do to try to be in a stronger
position when it comes to our retirement? Have you got
three tips for us, Paula?
Paula Llewellyn (11:00):
I have, yeah. So I would say the first thing
is save as much as you can as early as
you can. Your future self will absolutely thank you for
this. And really, I think there's a few things that
you could do to make that happen. I think first
of all, look at your employer contributions and the tax
benefits available to you. They're in place and encouraged to
(11:22):
help you to start saving as soon as you can.
And also, if you get a pay rise, you can
increase your percentage of your salary potentially that's going into
your pot. Even just upping your contribution by 1% of
your salary can vastly impact your future savings growth in
your retirement. And you can also potentially look at investing.
(11:44):
If you get a bonus, can you invest some of
that as well into your pension? So start early and
invest as much as you can. Secondly, pay more attention
to your pension, find out how much you contributed, where
your investment is, how much they've grown, look at the
small parts, really get an understanding and start to think
(12:05):
about the things that you could do today to really
start to put yourself in a better position as you
go into retirement. And then I think thirdly, if you're
considering moving jobs, have a look at what the pension
scheme looks like. Have a look at what the benefits
are that that employer's offering. Some organizations make more generous
contributions into your pension, so rather than the minimum that
(12:28):
I talked about earlier, some can go much higher than
that. So I think having a look at what those
benefits are could really benefit you over the longer term.
And also, if you do move jobs, you can usually
move your old employer pension with you. Again, that keeps
everything nice and simple for you, keeps everything in one
(12:48):
place, but also gives you the opportunity to really grow
that investment over time.
Iona Bain (12:53):
That's really good to know. And yeah, I think you're
right. We need to make it normal for us to
look at an employer's pension arrangements just as much as
we might consider, whether they offer free donuts on a
Friday or a nice gym membership. The pension matters just
as much, if not more in the long run.
Paula Llewellyn (13:09):
It does, in the long run, it absolutely does. Yeah.
Iona Bain (13:13):
Thanks so much, Paula. It's clear small actions today can
really make a difference further down the line. Next time,
financial strategist and founder of Mind Over Money, Krystle McGilvery
will be here to discuss how being neurodiverse might affect
how you manage your finances. If this episode has made
you think about your pension in a new way, great,
why not share the podcast and help others get a
(13:36):
little bit richer too? This podcast is brought to you
by L& G. You can keep up with the show
on YouTube, TikTok and Instagram at Legal & General. Until next
time, see you soon.
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