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Pension drawdown
2 min read
Expert
Accessing your pension

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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Reignite your savings spark: Overcoming financial burnout
2 min read
Expert
Money Mindset & Lifestyle

Recognising savings burnout

Savings burnout is more than just feeling the pinch before payday. It can show up as:

  • Apathy towards financial goals;
  • Increased impulse spending;
  • Neglecting your budget;
  • Resentment towards your savings efforts.

If any of this sounds familiar, take a step back and review your financial patterns.

Have you been spending more or saving less? You might be experiencing savings burnout without realising it. Checking your actions holistically can help you pinpoint where things changed.

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Reframe your mindset

Rather than seeing saving as a sacrifice, reframe it as an investment in your future self. Every pound saved isn’t depriving you—it’s empowering your future.

For instance, for every £100 you save, use a savings calculator to estimate what it could be worth in 10 years with compound interest. Seeing your contributions grow over time can motivate you to keep going.

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Celebrate small wins

It's easy to overlook minor successes when chasing big financial goals. Did you resist an impulse buy? Or save that work bonus instead of spending it? Celebrate those achievements!

However, try to choose rewards that won’t drain your budget, like an afternoon to yourself, extra reading time, or skipping a social event you’ve been dreading. Sometimes, self-care and small indulgences are the perfect reward.

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Embrace flexibility

A rigid savings plan can lead to burnout. Build flexibility into your budget to allow for the occasional indulgence.

Setting aside 'fun money' can help you balance saving for the future with living today. It’s essential to enjoy the journey, not just focus on the destination.

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Diversify your savings strategy

Feeling stuck? Shaking up your savings approach might be what you need. Consider:

  • Exploring different types of savings accounts;
  • Checking out tax-efficient options like ISAs;
  • Looking into ethical investment opportunities.

A diversified approach can keep you engaged while potentially increasing your returns.

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Practise financial self-care

Just as you would take rest days in your fitness routine, incorporate financial self-care into your money management. This could mean:

  • Taking a day off from checking your accounts;
  • Treating yourself within your budget;
  • Spending time on low-cost hobbies.

Financial wellness is a key part of your overall well-being, so make time for it.

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Support and inspiration

If possible, connect with people who share your financial goals. Join online communities, listen to finance podcasts, or attend local savings clubs. Building a supportive network can help keep you motivated and accountable.

The Chip community is a great place to start. Engaging with like-minded individuals can rekindle your drive to save.

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Reassess, realign

If savings burnout persists, reassess your goals. Are they still relevant to your current life? Don’t hesitate to adjust your targets as needed. Regularly using the goal-setting feature in the Chip app can help you keep things aligned with your values and life circumstances.

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The path forward

Overcoming savings burnout requires a balance between discipline and flexibility. It’s about moving forward steadily, not racing to the finish line. With the right mindset and tools, you can reignite your savings spark and get back on track.

Remember, Chip is more than just a savings tool – it’s your partner in building a brighter financial future.

With each small step you take, you’re moving closer to your goals. Every great financial journey has challenges, but it’s how you overcome them that counts.

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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.

Retirement and long-term investing
2 min read
Beginner
Investing basics

Why retirement planning matters

Saving alone often isn’t enough. Rising living costs, longer lifespans, and inflation can eat into the value of your savings over time.

Investing helps your money grow faster than inflation — giving you a better chance of reaching your retirement goals.

Starting early means your investments have more time to grow through compound returns. Even modest monthly contributions can snowball into a chunky retirement pot if you begin in your 20s or 30s.

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What is long-term investing?

Long-term investing generally refers to committing your money for 10 years or more, often with retirement as the goal. It’s less about picking stocks and more about staying the course and letting time do the heavy lifting.

By sticking with your investments long-term, you’ll be able to see the effects of compounding (snowballing returns).

Short-term volatility will matter less, and you’ll be less tempted to make impulsive decisions, because you have a plan in place. 

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Common investment options for retirement

Pensions (State & Private)
  • State Pension: In the UK, this provides a basic income from age 66+, but for most people, it’s not enough to live on alone.
  • Workplace Pension: You and your employer contribute to help boost your retirement savings. You’ll get tax relief, and this is an opt-out scheme so if you meet the requirements, this will build automatically.
  • Private Pension (SIPP): You invest the money yourself, and you’ll still get tax relief. Offers more control and choice over where your money is invested. Generally, employers won’t contribute outside of a workplace pension so this could be a better option to supplement your workplace pension.

Chip does not currently provide these types of investment products.

Index funds and ETFs

Using low-cost, diversified funds that track a broad market index, can be a great vehicle for retirement investing. More information about what ETFs are.

As the holdings of these funds are adjusted in line with market movements, it can be a great passive option, as you don’t have to choose stocks yourself. 

Other ETFs can also offer great diversity, but make sure you’re aware of the holdings, and make sure you aren’t over exposed to one particular sector or market, as any downturns might have a bigger effect on your retirement portfolio. 

Learn about different investment types and asset classes.

Target-date retirement funds (TDF)

Target-date retirement funds automatically adjust the weighting of a portfolio as the investors retirement date approaches.

Weightings shift from higher risk assets such as stocks to lower risk assets like bonds, in line with the funds roadmap. 

The main benefit of using a TDF is the professional management. The ‘glidepath’ or roadmap of the fund is carefully designed to map out an investment journey that mitigates against overexposure to risk, but also seeks to significantly outpace inflation. 

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How much should you invest for retirement?

There’s no one set path for budgeting for your investments, but there are a few popular rules you can follow to keep yourself on track each month:

  • The 50/30/20 rule is a simple budgeting technique that ensures each month you can take care of the essentials, like rent and bills (50%), enjoy the things you love (30%), and pay something towards your future with saving or investing (20%). Full guide here.
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  • The 25x rule or 4% rule helps you calculate the total amount of money you should aim to save before retiring. Multiplying your yearly retirement expenses by 25 assumes you’ll be covered, withdrawing 4% of your invested portfolio each year to sustainably cover living costs. 

These are a couple of options that can help, but everyone’s situation is unique, so it can be good to play around with calculators to help you.

A Monte-Carlo simulator allows you to input your investment asset allocation and details of your investing timeline, providing you with a series of outcomes.

No portfolio path is binary, and viewing the variety of possible outcomes and their probability, can help you ground your expectations. 

Starting early will always give you the best chance of reaching your retirement goals, and in some cases you may be able to beat your retirement target.

Starting in your 20s is ideal as you can comfortably invest little and often, but it’s not too late for you if you’re starting in your 30s, or even 40s. 

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Strategies for long-term investing success

Stick to the following principles, and you can build a long-term, passive investment strategy that you can have confidence in:

  • Start early, stay consistent. Even small amounts compound over time
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  • Automate your contributions. Remove friction and emotion
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  • Diversify your portfolio. Reduce risk and improve stability
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  • Reinvest dividends or choose accumulating assets. Accelerate growth through compounding
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  • Avoid market timing. Focus on time in the market, not timing it
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  • Review and rebalance annually. Adjust as life goals and risk tolerance evolve

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Mistakes to avoid when investing for retirement

Keep the following in mind when investing with retirement as your goal:

  • Starting too late. Start as soon as you can, even small amounts can make a big difference
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  • Taking on too much or too little risk. Make sure your asset allocation is right for where you are in your investment journey
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  • Not accounting for inflation. Remember to account for the effect of inflation when tracking your required retirement pot
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  • Cashing out early (highlight penalties or lost growth). There are tax implications for taking your pension early, and you might miss out on potential growth. Stick to your plan
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  • Ignoring fees and charges. Fees compound in the same way returns do, so don’t pay more than you need to

Learn more about behavioral investing and common mistakes.

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Ethical and thematic investing

The investing landscape is shifting. Ethical and thematic investing is growing in popularity, as more investors week to align their portfolio with their own values. 

Our next guide will go into what ethical and thematic investing are, the different types, how they work and how to get started. 

5 Easy Ways To Help Save Money
2 min read
Beginner
Savings Strategies & Tips

There are many simple and effective ways to cut down on your spending, so you can save more money each month. 

If you're looking for some inspiration on how to save money in the UK, here are five great tips to help you get started. See how long it will take to reach your savings goal with our savings calculator.

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1) Make a budget and stick to it

The first and most important step to saving money is to have a budget. A budget is simply a plan for your money, which helps you see exactly where your money is going.

Make a list of all your income and expenses, and see where you can cut down. 

Once you have a savings budget, make sure you stick to it. This is the key to saving money and keeping your finances under control. Learn about different savings accounts.

This is not financial advice - this is about simple tips to get going, while not impacting your day to day life or living a life of extreme frugality.

So if this sounds like it’s for you, read on!The following should not be taken as advice or guidance around financial hardship. If you're in this situation, there is support available from GOV.UK or Citizens Advice that can help.

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2) Cut down on your food expenses

Food is one of the biggest expenses in many households. By being smart about your food shopping, you can save a lot of money. 

For example, buy food in bulk when it is on sale, and freeze it for later. Consider swapping big brands for own brand products or using discount supermarkets.

Cook meals at home instead of eating out, and bring your lunch to work instead of buying it. These small changes can add up to big savings.

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3) Reduce your energy bills

Another way to save money is by reducing your energy bills. You can do this by washing your clothes at 30 degrees, using energy-efficient light bulbs, and turning off appliances when they're not in use.

Heating is a big expense so turning down radiators and the flow temperature of your boiler to 60 degrees can also help you make big savings over the year. 

There are plenty of resources online such as GOV.UK with tips.

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4) Shop around for the best deals

When it comes to buying things like insurance, broadband, and mobile phone contracts, it's important to shop around for the best deals. 

Don't just go with the first offer you see, take the time to compare prices and find the best deal for you. You can use price comparison websites to make this easier.

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5) Save a little each month

Finally, one of the easiest ways to save money is by setting aside a little each month. You don't have to save a lot, just a few pounds here and there.

Start by setting up a regular amount (on payday for example) to go from your bank account to a savings account and watch your savings grow over time.

Saving money is all about being smart with your finances. By following these five money-saving tips, you'll be able to cut down on your spending and keep more money in your pocket. So, why not get started today?

How inflation affects investments
2 min read
Beginner
Economic context

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. 

What is the UK unemployment rate and why do investors care?
2 min read
Intermediate
Economic context

Every month, the Office for National Statistics (ONS) releases the latest figures on the UK labour market from its Labour Force Survey (LFS). While this data is obviously important news for job seekers and politicians, it is also one of the most closely watched days in the calendar for investors. 

The Unemployment Rate represents the percentage of the labour force that is without a job but is actively seeking work. It’s important to note that this figure doesn’t include everyone who isn’t working. Students, retirees, and those not looking for a job are classified as ‘economically inactive’. 

When investors are interpreting unemployment figures, they’re typically looking for three things:

  1. The headline rate: Is this figure going up and down? 
  2. Wage growth: Are pay packets getting bigger?
  3. Vacancies: Are companies trying to hire?

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Why do investors care?

For investors, employment data is a key economic health indicator and can be a key catalyst for other key indicators. It can have a direct effect on interest rates, consumer spending and inflation. 

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The link to interest rates

This is the biggest reason the markets care about jobs data. Unemployment is a key data point for the Bank of England Monetary Policy Committee when determining their base rate of interest, which determines the cost of borrowing for other banks. 

If unemployment is low: businesses are in greater competition over staff, pushing wages higher. When wages increase, so does consumer spending, and inflation can follow suit. The Bank of England may raise interest rates to stop the economy from ‘overheating’. Higher rates are tougher on borrowers, and cause markets to dip as debt becomes more expensive. 

If unemployment rises: this suggests a potential slow down in the economy, and the Bank of England may cut interest rates to try and stimulate growth. Lower rates are often welcomed by markets and investors, as they make borrowing cheaper and encourage spending.

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The link to corporate profits

The UK economy is heavily driven by consumer spending, and this has strong links to employment.

When jobs are safe (low unemployment): People buy cars, book holidays and subscribe to services. This pushes profits up for consumer goods and services companies like airlines, high-street shops and restaurants.

When jobs are at risk (high unemployment): Consumers tighten their fists and generally stick more to essential spending. In this environment, consumer essentials suppliers like supermarkets and utilities tend to show more resilience, whilst higher end discretionary spending like luxury goods and leisure suffer.    

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The ‘good news is bad news’ conundrum

Drawing a clear link between job growth and a robust economy can be tricky, and the stock market's reaction to positive employment data is not always consistent. 

This often happens due to inflation fears. If the job market is doing ‘too well’, investors’ inflation fears deepen, and predictions of Bank of England rate increases can dampen market spirits. Markets prefer a stable number that shows a strong economy, without being so strong inflation fears creep in. 

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Read our full guide on economic indicators investors should watch out for.

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Introduction to pensions
2 min read
Beginner
Pension basics

What is a pension? 

At its simplest, a pension is a long-term savings plan with special tax rules. Unlike a regular bank account, the government adds money to your pension in the form of tax relief, and your employer will often contribute too.

The money you save is invested, meaning it buys shares, bonds, and other assets to help it grow over time. The goal is to build up a large enough pot of money to provide you with an income when you retire.

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How do pensions work? 

Pension pots are built up through ‘compound growth’. You contribute a small amount regularly over many years, and that money earns a return. That return is then reinvested to earn its own return.

Money gets into your pension in one of three ways:

  1. You pay in: Regular monthly payments or lump sums.
  2. Your employer pays in: If you are employed, your company is usually legally required to contribute.
  3. The government pays in: This is called tax relief, effectively ‘free money’ from the government to reward you for saving. We’ll come back to this later.

Read our full guide on pension contributions.

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Building your pension pot

What are the main types of pension? 

When building your retirement fund, almost every UK pension falls into one of two categories: Defined Contribution or Defined Benefit. 

Defined Contribution pension scheme 

Most modern private and workplace pensions are Defined Contribution schemes.

  • You and/or your employer pay into a pot. That pot is invested.
  • The final value of your pension depends on how much you paid in and how well your investments performed. This amount is not guaranteed.
  • Examples: SIPPs, Nest, most workplace schemes.
Defined Benefit pension scheme

These are often called ‘final salary’ or ‘career average’ schemes. They are now rare in the private sector but common in the public sector (e.g., NHS, Teachers, Civil Service).

  • Your employer promises to pay you a guaranteed income for life when you retire.
  • The amount is based on your salary and years of service, not on investment performance. Your employer takes the risk, not you.

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Sources of pension income

What is the State Pension? 

The State Pension is a regular payment from the government, based on your National Insurance record, not your personal savings.

  • Current amount (2025/26): The full New State Pension is £230.25 per week (approx. £11,973 a year).
  • You usually need at least 10 ‘qualifying years’ on your National Insurance record to get anything, and 35 years to get the full amount.
  • You can claim it when you reach State Pension age, which is currently 66. 

Read our full guide on the State Pension.

What is a workplace pension?  

A workplace pension is arranged by your employer. Thanks to Automatic Enrolment laws, employers must set up a pension for eligible staff and contribute towards it.

  • Minimum contributions: Currently, the minimum total contribution is 8% of your qualifying earnings. 3% must come from your employer. 5% comes from you (including tax relief).
  • If you opt out, you are essentially turning down a pay rise in the form of employer contributions.

Read our full guide on workplace pensions.

What is a private pension?  

A private pension (also known as a Personal Pension) is one you set up yourself. This is essential if you are self-employed or want to save extra money on top of your workplace scheme.

  • SIPPs: A Self-Invested Personal Pension (SIPP) is a popular type of private pension that gives you full control over where your money is invested.
  • Flexibility: You can usually stop, start, or change your contributions whenever you like.

Read our full guide on private pensions.

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An intro to pension tax rules

What is pension tax relief? 

Tax relief is how the government encourages you to save. It effectively refunds the Income Tax you paid on the money you put into your pension.

  • Basic rate taxpayers (20%): To save £100, you only pay £80. The government adds the other £20.
  • Higher and additional rate taxpayers (40-45%): You can claim back an additional 20-25%, meaning a £100 contribution effectively costs you only £55-60. The first 20% is typically paid out automatically into the pension and the additional 20-25% will need to be claimed through a Self Assessment tax return. 
What is the pension annual allowance? 

The amount you can save into a pension each year while still benefiting from tax relief is limited.

  • The limit (2025/26 tax year): For most people, the Annual Allowance is £60,000 per tax year (or 100% of your earnings, whichever is lower).
  • High earners: If you earn over £200,000, your allowance may be reduced (tapered).
  • If you don't use your full allowance, you can often carry forward unused allowance from the previous three years.
  • Once taxable income has been taken by an individual through flexible drawdown or the tax-free lump sum, tax relieved contributions to defined contribution pensions are limited to £10,000 per tax-year. This is the Money Purchase Annual Allowance (MPAA).

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

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Understanding SIPPs

While workplace pensions are a great foundation, they often lack flexibility and investment choice.

A Self-Invested Personal Pension (SIPP) allows you to choose exactly where your pension is invested. Read our next guide to discover how SIPPs work and if one is right for you.

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January money check-in
2 min read
Accounts & Products

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.

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