Climbing the property ladder

For many, buying their first home is a major achievement, but it’s rarely the “forever home.” As careers evolve and families grow, the need for a larger or different space often arises. Here’s how to successfully navigate moving up the property ladder:

Step 1: Assess your position

• Home valuation: Get your home valued by at least three estate agents to ensure accuracy. Ask them to explain how they arrived at their figures.
• Mortgage check: Review your current mortgage balance and term. Determine if it's portable if you have several years left.
• Equity calculation: Decide whether to sell your current home or keep it as an investment. Calculate the equity you can leverage for your next property.

Step 2: Set your target

• Define requirements: List what you want in your next home and prioritise your needs—e.g., is a south-facing garden more important than a new kitchen?
• Research areas: Investigate property types and average prices in your desired locations, considering factors like proximity to transport and schools.

Step 3: Create your savings plan

• Deposit target: Aim to save at least 20% of the new property's value for your deposit.
• Budget for costs: Account for legal fees, stamp duty, and moving expenses. Always set aside a contingency fund for unforeseen repairs.

Step 4: Optimise your savings

• Savings accounts: Utilise high-interest savings accounts or short-term  cash savings bonds.
• Mortgage offset: Consider an offset mortgage to reduce interest payments and build equity faster.

Step 5: Boost your borrowing power

• Credit score improvement: Regularly check and improve your credit score.
• Overpayments: Consider overpaying on your current mortgage to increase equity.

Step 6: Time your move

• Market awareness: Watch the property market and interest rates. The market tends to slow down in winter, which can be a good time to make offers.
• Acting on opportunities: Be prepared to act when conditions are favourable.

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Funding your child’s education

Education can be a significant financial commitment, whether you're covering private school fees, university costs, or extracurricular activities. Here’s how to effectively save for your child's education:

Step 1: Estimate the costs

• Research fees: Investigate current and projected costs for schools and universities, factoring in annual increases of 3-5%.

Step 2: Set your timeframe

• Funding timeline: Determine when you'll need the funds, whether it's for school in five years or university in 18 years.

Step 3: Choose your savings vehicles

• Short-term options: For savings needed in 5-10 years, consider cash ISAs or fixed-rate bonds.
• Long-term investments: For longer horizons, explore Stocks and Shares ISAs or Junior ISAs.

Step 4: Create a regular savings plan

• Direct debits: Set up monthly contributions to your chosen accounts, aiming to cover at least 75% of projected costs through savings.

Step 5: Explore additional funding options

• Scholarships and bursaries: Research available funding opportunities.
• Funding strategies: Consider how much you'll contribute through income or loans when necessary.

Step 6: Review and adjust regularly

• Annual Reassessment: Review your savings plan each year and adjust contributions to keep pace with inflation and fee increases.
  

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Planning for early retirement

The FIRE (Financial Independence, Retire Early) movement encourages individuals to save aggressively to retire well before the state pension age. If that appeals to you, here’s how to plan for an early retirement:

Step 1: Define your early retirement

• Target age: Decide on your ideal retirement age based on your lifestyle and career goals.
• Desired income: Estimate how much income you'll need, aiming for 25 times your expected annual expenses.

Step 2: Assess your current position

• Pension review: Calculate your current pension pot and growth projections, including your State Pension forecast.
  

Step 3: Identify the shortfall

• Gap analysis: Determine the difference between your current savings trajectory and your retirement goals, considering inflation and market fluctuations.

Step 4: Maximise your pension contributions

• Employer benefits: Take full advantage of workplace pensions, especially if your employer offers matching contributions.
  

Step 5: Diversify your retirement savings

• Flexible savings: Utilise ISAs for tax-efficient savings and consider property or managed funds for additional growth.
  

Step 6: Create additional income streams

• Passive income: Explore rental properties or dividend-paying investments.
• Part-time work: Consider how part-time work can supplement your income in early retirement.

Step 7: Optimise your investments

• Portfolio review: Regularly assess and rebalance your investment portfolio, gradually shifting to lower-risk assets as you approach retirement.
  

Step 8: Plan for healthcare costs

• Health insurance: Consider private health insurance or establish a healthcare fund for potential long-term care expenses.

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Conclusion

Saving for life’s major milestones requires careful planning, discipline, and adaptability. By breaking down your financial goals into actionable steps, you're not just dreaming about your future; you’re actively shaping it.

These plans are flexible; life can be unpredictable, and successful savers adapt their strategies to accommodate changes. Regularly reassess and adjust your plans, seeking professional advice when needed.

Whether you’re aiming for your dream home, securing your child's educational future, or planning for early retirement, the key is to start early and remain committed. With these strategies, you’re well on your way to achieving your financial aspirations.

What are the biggest companies in China by market cap?

This list ranks China’s biggest public companies by market capitalisation; the cumulative value of a company's total outstanding market shares. We’ll also be highlighting other key figures, such as the company's revenue, gross profit, and 1-year return (all based on the previous fiscal year). 

Some other key facts such as the exchange the company is listed on, the founding year and country the company is headquartered in are also covered.

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1. Industrial and Commercial Bank of China (ICBC)

• Market cap: $349 billion‍
• Revenue: $221 billion‍
• Gross profit: N/A 
• 1-yr return: +34.6%‍
• Exchange: SSE‍
• Year founded: 1984‍
• Country: China

ICBC is the world's largest bank by total assets. As one of China's "Big Four" state-owned commercial banks, it provides a comprehensive range of financial services to a massive customer base.

• Corporate banking: Offers financial services to corporations, government agencies, and financial institutions, including loans, trade financing, and asset management.
• Personal banking: Provides a full suite of services to individuals, including deposits, loans, credit cards, and wealth management.

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2. Agricultural Bank of China (AgBank)

• Market cap: $338 billion
• Revenue: $193 billion
• Gross profit: N/A
• 1-yr return: +55.36%
• Exchange: SSE
• Year founded: 1951
• Country: China

Another of the "Big Four" state-owned banks, AgBank was initially established to serve China's vast rural population but has since expanded into a major commercial bank.

• Sannong banking: A core focus on providing financial services to the agriculture, rural areas, and farmer demographics.
• Corporate & personal banking: Offers a wide range of standard banking services to both corporate and individual clients.

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3. China Construction Bank Corp. (CCB)

• Market cap: $267 billion
• Revenue: N/A
• Gross profit: N/A
• 1-yr return: +27.48%
• Exchange: SSE
• Year founded: 1954
• Country: China

CCB is one of the "Big Four" state-owned banks in China and is a market leader in infrastructure loans.

• Infrastructure lending: A primary focus on providing long-term credit for major infrastructure projects like transportation and energy.
• Corporate & personal banking: Offers comprehensive financial services, including corporate finance, personal banking, and treasury operations.

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4. Kweichow Moutai Co.

• Market cap: $265 billion
• Revenue: $21.7 billion
• Gross profit: $19.5 billion
• 1-yr return: +12.17%
• Exchange: SSE
• Year founded: 1999
• Country: China

Kweichow Moutai is the world's most valuable liquor company, famous for producing Moutai baijiu, a prestigious and fiery spirit that is considered China's national liquor.

• Moutai Baijiu: Production of its high-end baijiu, a spirit distilled from fermented sorghum, which is a staple at state banquets and a popular luxury gift.

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5. China Mobile Limited

• Market cap: $245 billion
• Revenue: $146 billion
• Gross profit: $38.1 billion
• 1-yr return: +8.04%
• Exchange: SSE
• Year founded: 1997
• Country: China

China Mobile is the world's largest mobile network operator by number of subscribers, providing telecommunications and mobile services to a vast domestic market.

• Mobile voice & data: Its core business involves providing mobile and 5G services to over 900 million subscribers.
• Broadband & digital services: Offers wireline broadband and a range of digital services for both personal and corporate customers.

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6. Contemporary Amperex Technology (CATL)

• Market cap: $228 billion
• Revenue: $52.3 billion
• Gross profit: $12 billion
• 1-yr return: +99.65%
• Exchange: SZSE
• Year founded: 2011
• Country: China

CATL is the world's largest manufacturer of electric vehicle (EV) batteries, supplying a huge portion of the global automotive industry.

• EV battery systems: Designs and manufactures rechargeable lithium-ion batteries for electric vehicles for major clients like Tesla, BMW, and Volkswagen.
• Energy storage systems: Develops large-scale battery systems for storing energy from renewable sources like solar and wind.

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7. PetroChina Co. Ltd.

• Market cap: $217 billion
• Revenue: N/A
• Gross profit: N/A
• 1-yr return: +7.36%
• Exchange: SSE
• Year founded: 1999
• Country: China

PetroChina is China's largest oil and gas producer and distributor, playing a pivotal role in the country's energy sector.

• Exploration & production: Manages the exploration, development, and production of crude oil and natural gas.
• Refining & chemicals: Operates refineries and chemical plants to process crude oil into a wide range of petroleum and chemical products.

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8. Bank of China Ltd.

• Market cap: $175 billion
• Revenue: $86.50 billion
• Gross profit: N/A
• 1-yr return: +16.13%
• Exchange: SSE
• Year founded: 1912
• Country: China

The fourth of the "Big Four" state-owned banks, the Bank of China is the most international and diversified of the group.

• International banking: Has a significant global presence, specializing in foreign exchange and international trade finance.
• Corporate & personal banking: Provides a full range of financial services to clients both in mainland China and abroad.

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9. Foxconn Industrial Internet Co.

• Market cap: $166 billion
• Revenue: $99 billion
• Gross profit: $6.8 billion
• 1-yr return: +224.07%
• Exchange: SSE
• Year founded: 2015
• Country: China

A subsidiary of the Taiwanese giant Hon Hai Precision Industry (Foxconn), Fii focuses on the more advanced aspects of electronics manufacturing.

• High-performance computing: Manufactures cloud servers, data centers, and industrial AI solutions.
• 5G & IoT: A key producer of communications network equipment and Internet of Things (IoT) devices.

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10. China Merchants Bank Co.

• Market cap: $149 billion
• Revenue: N/A
• Gross profit: N/A
• 1-yr return: +37.91%
• Exchange: SSE
• Year founded: 1987
• Country: China

China Merchants Bank is China's largest non-state-owned bank and is widely regarded as a leader in the country's retail and private banking sectors.

• Retail banking: A major focus on serving individual customers, particularly affluent clients, with a strong reputation for its credit card and wealth management services.
• Corporate banking: Provides a range of services to corporate clients, though it is best known for its retail operations.

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What are the biggest companies by total annual revenue?

• PetroChina Co.: $431.66 billion 
• Sinopec Corp.: $425.11 billion 
• China State Construction Engineering: $305.88 billion 
• China Mobile Limited: $145.74 billion 
• Industrial and Commercial Bank of China: $120.33 billion

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What are the biggest companies by workforce?

• BYD Company: 968,870 
• China Mobile Limited: 455,400 
• Agricultural Bank of China: 454,720 
• Industrial and Commercial Bank of China: 415,160 
• China Construction Bank: 376,850

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Summary

Understanding a company's performance is crucial; it's how you truly know what you own. These metrics directly drive the value of your stocks and funds. When you understand these key drivers, you can navigate market changes with confidence, rather than just reacting to headlines.

Next we’ll be looking at the biggest companies in South America by market cap.

All market data sourced from TradingView and company reports as of 17.09.2025.

What is pension drawdown? 

Pension drawdown is the overarching term for taking income directly from your invested pension pot, and since the 2015 Pension Freedoms, almost all new drawdown arrangements are set up as flexi‑access drawdown (the modern, unrestricted version of drawdown).

Introduced as part of those reforms, alongside the ability to take up to 25% of your pot tax‑free, it allows retirees to choose how much income they withdraw each year while keeping the remainder invested.

Pension drawdown is a method of taking a retirement income from your pension pot as you need it, whilst keeping the rest invested with the aim of generating further growth.

Instead of receiving a fixed income for life, you decide how much income to withdraw and when. This differs from purchasing an ‘annuity’, where you hand over your pot in exchange for a guaranteed income (we’ll cover this option in another guide).

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How does flexi-access drawdown work? 

Flexible pension drawdown works by moving your pension funds into a specific ‘drawdown’ account that allows for variable withdrawals.

1. Move your funds: Not every pension scheme offers drawdown directly. Many older workplace schemes are designed only to build up savings, not to pay it out flexibly in retirement. If your current provider does not support flexi-access drawdown, you will need to transfer your pension to a modern provider or a Self-Invested Personal Pension (SIPP) that does. 
2. Take your tax-free cash: When you move money into drawdown, you are typically entitled to take 25% of the pot as a tax-free cash lump sum, up to a maximum of £268,275. This cap was introduced when the Lifetime Allowance was abolished in April 2024. For most people with pension pots below around £1.07 million, the 25% figure will still apply in practice. You can take this all at once or in stages. . For example, if you have a £100,000 pot, you can take £25,000 immediately tax-free. The remaining £75,000 stays in the drawdown account.
3. Invest the rest: The remaining 75% of your pot stays invested in the stock market, bonds, or other multi-asset portfolios. The goal is to achieve investment growth that helps replenish the money you withdraw, ideally outpacing inflation.‍
4. Set your income: You then choose how to withdraw from the invested 75%. You can set up a regular monthly payment (like a salary), take occasional lump sums for holidays or big purchases, or take nothing at all for certain years. Crucially, every penny you withdraw from this part of the pot is treated as taxable income whenever you take it.

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Investment risks and sustainability

The defining feature of drawdown is that your income is not guaranteed. It is linked directly to the performance of your underlying investments, which means your pension pot can rise or fall in value.

• The sequence of returns risk: This is the danger of a poor market performance occurring just as you start your retirement. For example, iIf your portfolio drops by 20% in year one, and you continue to withdraw your planned income, you are selling assets at lower prices. This depletes your capital much faster than expected and makes it difficult for the pot to recover even if markets bounce back later.‍
• Risk of withdrawing too much: Because there are no guarantees, you need to choose a sustainable withdrawal rate. Historically, many people referred to the ‘4% rule’ (withdrawing 4% of your pot annually), but more cautious approaches such as a 3% withdrawal rate may offer an extra layer of protection against running out of money.

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Is a drawdown pension a good idea?  

Drawdown can be a good idea for those who want control over their pension pot and are comfortable with some investment risk during retirement, but it isn’t the right choice for everyone.

Pros:

• Income flexibility allows you to reduce withdrawals when you can rely on other income to cover your expenses, or take more when your expenses are high or unforeseen. 
• Potential for growth on your remaining invested pot, giving you the potential to keep up with or even outpace inflation. 
• Death benefits, any money left in your pot when you die can usually be passed on to beneficiaries. Learn more.

Cons:

• Your income is not guaranteed, as the invested value of your pot can move up as well as down depending on investment performance.
• There is a risk that your pot could run out during your lifetime, unlike an annuity, which can provide a guaranteed income for life.

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Do you need financial advice? 

Deciding how to withdraw your pension is one of the most complex financial decisions we make in our lives. Because of the risk involved, taking regulated financial advice can be a good idea if you’re feeling unsure about your options.

An advisor can help you stress-test your retirement plan by modelling different scenarios and seeing how this would affect your pot. They can also help you navigate the tax  considerations involved in taking income, helping you avoid unexpected bills and ensuring you don’t accidentally breach your allowances. 

You can also take advantage of MoneyHelper’s free, government-backed Pension Wise service, which helps explain your options for withdrawing money from your defined contribution pension.

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Drawdown death benefits 

One of the benefits of pension drawdown is that any remaining pension savings can usually be passed to your beneficiaries when you die.

• If you die before age 75, any money can typically be inherited by your beneficiaries tax-free. They can take it as a lump sum or as an income.

• If you die after age 75, your beneficiaries can still inherit the remaining pot, but they will normally pay Income Tax on any money they withdraw at their own marginal rate.

It is worth noting that the government has announced plans to bring unspent pension pots into your estate for inheritance tax purposes from April 2027. If this change comes into effect, the tax treatment of inherited drawdown pots would change significantly.

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Annuities 

The main alternative to flexible drawdown is buying an ‘annuity’. This is where you give all, or part of, your pension pot to an annuity provider to purchase a fixed, guaranteed retirement income. 

Annuities are a much lower risk option than drawdown, as it guarantees an income for a fixed period or the rest of your life. You don’t, however, get the same potential growth benefits you could get from a drawdown pot. Read our annuities guide for further information. 

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Several forces are pushing gold higher:

• Global uncertainty: Concerns over U.S. monetary policy, rising trade tensions, and inflation are driving investors toward safer assets. Just in case.²
  
  
• Central bank buying: Countries like China, India, and Turkey continue to stockpile gold, reinforcing its role as a long-term store of value.^{3
  ‍}
• ‍Weaker dollar & rate cut bets: Investors are anticipating future rate cuts, making non-yielding assets* like gold more attractive.⁴

‍*Chip explains: Non-yielding assets are investments that don’t pay you an income while you hold them, so their value comes from the price itself

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Why it matters for you

Gold’s latest rally is a strong reminder of why it has held its place in portfolios for centuries. It isn’t about explosive growth or short-term gains – it's about stability, protection, and balance. 

In times of uncertainty, gold can act as a hedge against inflation and market swings, helping to smooth out the bumps. Think of gold as the solid foundation that can support your more growth-focused investments. 

With prices now* at record highs, the message is clear: gold continues to earn its reputation as a safe haven. For investors, that means confidence that even when markets are unpredictable.

But always remember to take a balanced view. Past performance is not a reliable indicator of future results and the price of gold can go down as well as up.

‍*Accurate as of 2 September 2025 spot gold price at $3,529.01 per ounce.
‍

How Chip can help you take advantage

At Chip, we offer exchange-traded commodities (ETCs) such as Physical Gold, which gives you a way of tracking the price and performance of the gold price, without the costs and admin of owning physical gold bullion. 

If you want to get involved, you can 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.

Source: 1 BBC 2 JP Morgan 3 The National 4 The Economic Times 

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What is an annuity? 

An annuity is a type of insurance product that allows you to exchange some or all of your pension for a guaranteed, regular income once you reach the minimum pension retirement age (currently 55, rising to 57 in 2028) 

It is a popular option for savers who want a certain payout each month, removing the risk of leaving a portion of your pension pot invested.

The trade off is that you won’t benefit from any investment growth, and generally annuities can’t be changed once set up. 

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How does an annuity work? 

An annuity works by handing over a lump sum of pension savings to an insurance company. This provider will calculate and offer an ‘annuity rate’ based on your life expectancy and market interest rates.

For example, a rate of 6% would mean that for every £100,000 of your pension paid to the provider, they would pay you £6,000 a year for the rest of your life. 

• If you live to be 100 your insurer loses money but you would likely profit. However, if you passed away two years after buying your plan, the insurer usually keeps the rest of the pot, unless you purchased specific guarantees. 
• Once you purchase a lifetime plan, the decision is usually irreversible. You cannot change your mind or ask for your lump sum back. 

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The main types of annuity 

If you’ve decided an annuity is right for you, you can tailor it to suit your specific needs, but every feature you add will affect the rate you’re offered. 

• Lifetime annuity: This pays you a regular income for the rest of your life, no matter how long you live. This may be the best protection against the ‘longevity risk’ of living longer than your savings allow. 
• Fixed-term annuity: This pays you a fixed amount for a set period, like five or ten years. At the end of your term you may also get back a ‘maturity amount’, which you can use to buy another plan or move into drawdown. 
• Index-linked annuity: This type of plan will start with a lower payout, but increase each year to track inflation, and protect the purchasing power of your payments. 
• Single-life annuity: These are designed for a single person. When this person dies, payments are stopped and the plan ends. Typically these offer a higher starting rate, because the insurer expects to pay out for a shorter time. 
• Joint-life annuity: This continues to pay an income to your spouse or partner after you die. You usually choose what percentage they receive e.g. 50% or 100% of your income. Because the insurer expects to pay out for longer, the starting rate is lower than a single-life policy.
• Enhanced annuity: This is a type of lifetime annuity that pays a higher guaranteed income if you have certain health conditions or lifestyle factors (like smoking or high blood pressure) that may shorten your life expectancy. As the insurer expects to pay out for a shorter period they offer a more generous rate.
• Purchased life annuity (PLA): This provides a guaranteed income bought with cash savings rather than a pension pot. The primary benefit is tax efficiency, as the government treats a large portion of each payment as a tax-free ‘return of capital’. 

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How to buy an annuity? 

When buying an annuity, consider the following:

1. The most important rule of buying an annuity is to consider your options. The first offer you get may not necessarily be the best, and you can potentially boost your income for free!
2. Make sure you make accurate health declarations. When getting quotes, you’ll be asked health related questions, and it's important you're totally honest. If you smoke, are overweight, or have conditions like diabetes or high blood pressure, insurers may offer you an ‘enhanced annuity’. Lower life expectancy means they can afford to pay a higher income. 

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Annuity vs drawdown 

Choosing between annuity and flexible drawdown is a big decision, so consider the following factors:

• Income security: Annuities guarantee an income, whereas flexible drawdown accepts a degree of uncertainty because of investment performance.
• Flexibility: Annuities have low flexibility as income is fixed once set up. Drawdown is highly flexible as you can adjust your income whenever you like.
• Investment risk: Annuities carry no investment risk, this risk is transferred to your insurer. Drawdown can be a  higher risk as your investments can move up and down in value.
• Death benefits: Annuities generally have poor death benefits and income stops when you die (unless joint-life). If you choose to draw your own income, the remaining pot will be passed on to your beneficiaries.

Annuities are generally suited to people who want peace of mind and essential income covered. Flexible drawdown is better for people who want full control, and some potential growth at the expense of taking on some risk. 

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What happens to your pension when you die?

Historically, pensions have been one of the best vehicles for passing wealth down the generations because they aren’t included in your legal estate, meaning they’re usually not liable for inheritance tax. However, this is handled differently depending on what type of pension you have, and the age at which you die.

Note: from April 2027, unspent pension pots are expected to become subject to inheritance tax, this may affect how you think about drawdown vs annuity

Read our next guide for more understanding.

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Financial Advice

Chip does not provide financial advice, if you’re unsure what pension options are right for you, speak to a regulated financial adviser. They’ll be able to guide you through your options and give you advice based on your personal circumstances. 

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

The Nasdaq 100 hit a record high on Tuesday as a retreat in oil prices and optimism about AI developments drove a rally in tech stocks.

The index — which is heavily weighted towards the share prices of big tech companies, particularly AI and hyperscalers — closed 0.8 per cent higher at a new peak. It also struck a new intraday high that overtook its previous record set in early June. The broader S&P 500 closed fractionally lower.

Investors said that the success of Meta’s new Muse AI model, which quickly became the most downloaded free app on the Apple App Store after its launch this month, generally boosted sentiment this week. Meta rose 11.4 per cent on Monday, though shed 0.6 per cent on Tuesday.
‍

Michael Zigmont, co-head of trading at Visdom Investment Group, said the moves “look like the start of a broad momentum trade” for tech stocks, describing Monday’s trading session on Wall Street as an “everybody back into the pool moment”.

Tech stocks have wavered since early June, when a brutal unwinding of big bets on the sector saw some of this year’s biggest stock market winners tumble, including South Korea’s chip and memory giants. The sector has struggled to regain its footing since then, as soaring oil prices and a bond market rout have added to investors’ list of worries.

Oil prices have fallen and bonds have rallied in recent days on hopes of progress towards a settlement in the Iran war. Brent crude fell as much as 2.9 per cent in early trading on Tuesday after Saudi Arabia signalled the reopening of a key export pipeline.

“AI Fomo [fear of missing out] is back in force,” said Emmanuel Cau, chief European equities strategist at Barclays, adding that there were “several factors in play” in the rally, including lower oil prices and reports of US-China talks on AI.

Cau said that “the move was reflective of much cleaner positioning in the tech space” after the June deleveraging.

Chipmakers were among the biggest gainers on Tuesday, as investors bet that the success of models such as Muse would boost chip demand.

Sandisk gained 6.8 per cent, while Seagate Technology gained 4.8 per cent and Western Digital was up 3.7 per cent.

Treasury yields across maturities fell, with the benchmark 10-year yield down 0.01 percentage points at 4.95 per cent. Yields have risen dramatically in recent months, with prices falling, as traders have demanded a higher premium for their exposure to risks including price pressures related to the US war in Iran, worries about the US deficit and an economy firing on all cylinders.

The jump in Treasury yields, which lifts interest rates on debt for companies, has hit the share prices of tech companies heavily dependent on borrowing.

What is an employee pension contribution? 

An employee contribution is the money taken from your salary to fund your pension. Depending on how your company runs its scheme, this is usually taken in one of two ways:

• Net pay: Taken from your gross salary before tax is deducted. You get full tax relief immediately (because you don’t pay income tax on that chunk of earnings). 
• Relief at source: Taken from your net pay after tax. The pension provider then claims the basic rate tax back from the government and adds it to your pot. 

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How much should I contribute to my pension? 

While auto-enrolment rules set a legal minimum, relying solely on this may not be enough for a comfortable retirement income. Financial experts sometimes suggest two strategies to set your contribution level.

Pension contribution percentages (‘half your age’ rule) 

A widely cited rule of thumb for ‘comfortable’ retirement savings is the ‘half your age’ rule.

1. Take the age you start contributing
2. Half it
3. Match total contributions to that number as a percentage until you retire

For example:

• Starting at 22? Aim for 11% total contributions
• Starting at 30? Aim for 15% total contributions
• Starting at 40? Aim for 20% total contributions

Note: Total contributions are your contributions, your employers and tax relief.

Maximising employer matching contributions 

Many employers offer a ‘matching contribution’. For example, if you increase your contributions from 5% to 7%, the employer will also contribute 7%.

If your employer offers this and you are able to make this extra contribution, maximising it ensures you receive the highest possible contribution from your employer.

Make sure if you are able to make the extra contributions, you’re claiming the maximum amount your employer will match.

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What is an employer pension contribution? 

An employer contribution is money from your employer paid into your pension. It does not come out of your salary; it’s an extra cost to the business, on top of your wages.

Because this money is paid directly into a pension, it is not liable for Income Tax or National Insurance contributions at the point of payment, making it a highly tax-efficient way to be paid.

‍

How much does my employer contribute to my pension? 

Your employer must contribute to your pension if you are an eligible worker. You must meet the following criteria:

• Be between age 22 and State Pension age. 
• Earn at least £10,000 a year.
• Ordinarily work in the UK. 

The amount they pay is dictated by Automatic Enrolment rules.

Note: Even if you don't meet the criteria for automatic enrolment, you may still be able to join your employer's pension scheme voluntarily. If you earn between £6,240 and £10,000 a year, or are aged 16–21 or above State Pension age, you have the right to opt in, and your employer will still be required to contribute. 

Auto-enrolment thresholds

The government sets total minimum contribution rates for employers and employees, which are currently 8% of your ‘qualifying earnings’ (between £6,240 and £50,270).

This 8% is usually split as follows:

• 3% from the employer (the legal minimum they must pay). 
• 5% pay contributions from the employee (the amount you must pay to make up the difference).

Opting out means losing your employer's 3% contribution entirely, effectively a reduction in your overall pay.". 

Read our full guide on workplace pensions.

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Pensions tax, relief and thresholds

Now we’ve covered your contributions, it’s important to understand how the government treats that money once it’s in your pension.

A pension is one of the few places you can earn money without immediate taxation. A key benefit of a pension is tax relief, where the government adds money to your pot.

However, the generosity isn’t unlimited, and there are strict thresholds on how much you can save; and how much tax-free cash you can take as a lump sum.

Read our next guide to understand the limits you need to watch out for.

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What is inflation?

Inflation is the rate at which prices for goods and services rise over time, reducing the purchasing power of your pounds. 

For example; if the inflation rate is 5% per year, something that costs £100 today, will cost £105 in a year. If your savings or investments return 3% during that time, you’ve effectively lost money in real terms, even if your balance is showing a positive return. 

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What causes inflation?

Inflation doesn’t usually have just one cause, and it’s often the result of several factors working together. Some of the main things that can drive prices up include:

• Demand-pull inflation: When demand for goods and services exceeds supply, prices can rise.
• Cost-push inflation: When production costs (like wages or raw materials) increase, businesses may pass these onto consumers. 
• Built-in inflation: When workers expect prices to rise, they may demand higher wages, which can lead to higher prices, creating a feedback loop.
• Monetary policy: When central banks increase the money supply, too much money chasing too few goods can drive up prices.

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Why is inflation bad?

While low and predictable inflation is generally considered a sign of a healthy economy, high or unpredictable inflation can cause various economic problems such as:

• Erosion of purchasing power: Your money buys less over time.
• Distorted investment returns: A 4% return in a 5% inflation environment is effectively a loss.
• Increased uncertainty: Investors and businesses may hesitate to make decisions when future costs and prices are unclear.
• Impacts fixed income assets: Pensioners or bondholders with fixed payouts see their real income decline. 

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How inflation can affect investments

Inflation can reduce the real (after-inflation) return on investments. If your investment portfolio grows at 4% in a year, but inflation is at 6% in the same period, your returns have effectively shrunk by 2%. 

Some further effects of inflation include:

• Influence on investor behaviour, encouraging shifts toward inflation-resistant assets. 
• Central banks may raise interest rates to combat inflation, which can affect asset prices and market sentiment. 

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The impact inflation can have on different investment assets

Many investors choose to build a balanced investment portfolio that contains different asset classes. Inflation can have various effects on these asset classes:

How inflation can affect stocks

• Inflation can reduce company profits if costs rise and firms can’t pass them on to consumers.
• Various sectors and industries have historically performed better during inflationary periods whilst some have performed worse.
• Long-term, equities tend to outpace inflation, but short-term volatility can increase.
• Learn what stocks are.

How inflation can affect ETFs

• The impact depends on the ETF’s underlying assets. 
• Equity ETFs in inflation-sensitive sectors may offer some protection. 
• Bond ETFs may underperform if interest rates rise in response to inflation.
• Learn what ETFs are.

How inflation can affect bonds

• Fixed-rate bonds lose value when inflation rises, as their interest payments become less attractive.
• Inflation-linked bonds adjust payouts with inflation and can offer protection. 
• Learn what bonds are. 

How inflation can affect commodities

• Often seen as a hedge against inflation, especially gold, oil and agriculture. 
• Prices for physical goods tend to rise with inflation, making commodity investments more attractive during such periods. 
• Learn what commodities are. 

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How to protect your investments from inflation

While inflation can’t be avoided, investors can take steps to mitigate its effects and attempt to protect their investment portfolio value. This can involve: 

• Diversification across asset classes with different sensitivities to inflation. 
• Focusing on real returns, not just nominal growth (pre-adjusted figure).
• Stay focused on the long-term. Market cycles often balance out inflation over time. 

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Inflation and investments summary

Inflation can quietly erode the value of money and investments if not properly understood and managed.

By recognising how it impacts different assets and taking a thoughtful, diversified approach, investors can better preserve their wealth in real terms. 

Next in our economic context series, is understanding interest rates and the stock market. Understand how central bank rate decisions can impact financial markets and what it means for investors. 

January is where all those “I’ll sort it next year” moments and prior good intentions are suddenly in the present.

That’s why this month at Chip we’re focusing on simple ways to get control of our money and feel a bit more organised.

Last week, we looked at savings challenges, with fun, motivating ways to build better habits.

This week, we’re tackling the real-life money situations people find themselves in right now. If any of them sound familiar, you’re not alone – and there’s an easy next step.

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1. “I haven’t used any of my ISA allowance”‍

Your ISA allowance resets in April and if it's been quietly sitting there unused, January is a good time to revisit it.

ISAs let your money grow tax-free¹, which makes it one of the most valuable tools for long-term saving – yet many people don’t take advantage of them.

Your ISA allowance doesn’t roll over either, so it’s important to use it before you lose it after 5 April.

¹Chip does not provide tax advice. Tax treatment depends on individual circumstances and may be subject to change in the future.

How Chip can help:

The Chip Cash ISA gives you a tax-efficient place to hold your savings, while still keeping access when you need it.

You can deposit up to £20,000 per tax year, earn interest tax-free, and stay flexible if plans change. It’s a simple way to make sure more of your money stays yours as your wealth grows.

Pleae note that the Chip Cash ISA is now closed to new customers.

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2. “My money is just sitting in my current account”

This is one that many of us are guilty of. In fact, it’s estimated that £526 billion is currently sitting idle in current accounts.

We get it, our salary is paid in, and it can be easy to just leave it there. But If your spare cash sits in your current account earning 0%, it’s likely losing value to inflation when it could be earning interest.

Current accounts are great for day-to-day spending, but not so great for holding onto money you’re not actively using.

How Chip can help:

The Chip Instant Access account lets your money start earning interest straight away, with unlimited withdrawals that arrive in seconds, whenever you need it.

It’s ideal for cash you want to spend in the short-term; so you can use it to top your current account as you go, while you pocket that extra interest.

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3. “I’ve got something coming up this year I’m saving for”

A holiday. A wedding. A house move. For a big life moment, January is often when those plans start to feel real – and so does the need to save for them.

But it’s not just about saving. The hard part can be staying on track. This is where ‘unlimited access’ isn’t actually that helpful, and some guard rails can come in handy.

How Chip can help:

The Easy Access Saver is designed for short-to-medium-term goals. With up to three penalty‑free withdrawals a year, it gives you structure without locking your money away; helping you stay focused on what you’re saving for.

It’s a gentle nudge towards consistency, and a simple way to avoid temptation and impulse purchases.

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Making it easy to get started:

Whichever situation you’re in, getting your money organised doesn’t need to be complicated. With all Chip savings accounts, you can:

Deposit in just a few taps using seamless Open Banking technology.‍

Move money instantly between accounts to suit your needs.‍

Set up automatic recurring deposits, so saving happens before you even think about it.

Less effort, less account admin, just more progress towards your goals. Use Chip to give your money a setup that works for the year ahead, so you can focus on your other resolutions this year.