The Pearson Pension Plan

Here we will look at what to consider when setting up a budget planner, how to review your monthly expenditure and ideas for simple changes that could help you save money.

We have partnered with WEALTH at work to provide a programme of webinars covering a range of topics such as pension basics, understanding tax and planning for retirement, as well as wider financial issues. The webinars vary in length, and all have the opportunity for you to ask questions. You will receive an email from the Plan if you are eligible to attend.

How to plan your budget

Knowing your total monthly expenditure is the first step in creating a budget. Highlighting which monthly payments will always remain the same and the ones you have control over is essential.

A budget planner is a great way to get on top of your finances. There are a variety of tools available to help you.

• Spreadsheets – There are several free budget templates available online, or you can create your own. There is also the added benefit of your planner syncing between your computer and mobile devices, so it is available whenever you need it.
• All in one finance apps – These apps allow you to put all your bank accounts, credit cards, pensions, and investments in one place. You will even receive a monthly report categorising your expenditure. There is a link at the bottom of this page to a website that reviews a wide variety of apps so you can find the one that is right for you.
• Online banking – Most banks now give you insights into your monthly spending and a breakdown of all your transactions.

MoneyHelper has two useful guides on budget planning and bill prioritisation, the links to both are included at the bottom of the page.

• Setting up an emergency fund

  An emergency fund is money you save and put aside to cover an unexpected expense such as fixing a broken boiler or a leaking washing machine. It can give you peace of mind and prevent you from needing to take on debt. Getting into the routine of saving for an emergency is a useful habit. It can be a huge relief if the unexpected happens. Financial experts recommend that you should ideally save the equivalent of three to six times your essential expenses – for example rent or mortgage, utility bills and groceries.

  Saving an emergency fund can be difficult. One way to tackle this is to add it as a long-term goal within your budget planner and save in an amount of time that fits with your lifestyle. Save your emergency fund in an instant access account (or similar) and only use it when you need to. More information on instant access accounts can be found on the savings and investment page in the Information Centre, a link is included below.

• Home appliances

  Did you know that a tumble dryer on average costs £1.77 each time you use it and dishwashers cost 51p per cycle?

  Luckily many appliances have become more energy efficient over time such as lightbulbs, televisions, and mobile phones. Knowing what appliances use the most energy can further help you to reduce your monthly bills. You can find out more on the Which website using the link below.

• Recurring fees and ‘fleeceware’ apps

  Remember to check your bank accounts for any recurring payments. You may be aware of bills such as utility, phone, and gym memberships. However, it has become easier than ever to subscribe to a service on a free trial and then receive a bill when it expires as recurring payment is switched on by default.

  Many apps can cost much more than you think too. We have included a guide to ‘fleeceware apps’ at the bottom of the page.

• Reviewing unused subscriptions

  Subscription streaming services can offer you value for money. However, if you are not making use of the subscription you may want to consider cancelling it.

  An average subscription service may cost £30 a month, or more. If you then add a music, gaming or next day delivery subscription, you could be spending upwards of £70 a month. 

  Have you considered occasionally switching/cancelling your subscriptions? Most streaming services are easy to cancel and the reinstate at a later date.

• Loan repayments

  If you are paying off a few balances over multiple credit cards you might consider alternatives such as a balance transfer that may reduce the interest you pay and give you the option of consolidating your loans.

  If you would like to read more about how to manage your repayments, please follow the link at the bottom of the page to the section on loans and debt.

• Money saving hacks
  • Review your gym membership. Either consider a cheaper gym without a required term limit, or if you are not using your membership, you could cancel.
  • Review your insurance options. By regularly checking your car, home, or holiday insurance you can make sure you are getting the best deal. There are a number of comparison sites that do much of the work for you.
  • Has your phone contract run out? Some phone companies will continue to charge you your regular monthly bill if you do not change or cancel your plan when it finishes.
  • Switching supermarkets or using a variety could save you money in the long term.
  • Supermarket loyalty cards. Most supermarkets have loyalty cards to give access to discounts and money saving coupons. You can conveniently add your card to your Android and IOS devices via Google or Apple wallet to scan at the checkout.   
  • Have coffee free days. The average price of a coffee in the UK is £3.40, which can add up over time. If you have one coffee a day, you could be spending £100 a month or more.
  • Reducing the number of take-away meals. Sites such as Good Food, supermarkets and celebrity chefs all have a range of ‘fake away’ recipes so you can cook your favourites at home.
  • Pearson discounts. You have access to a wide range of discounts just by being a Pearson employee. A link to the employee benefits platform is included at the bottom of the page.

Saving for your retirement – Pearson pension benefits

Your pension can be a great tax-efficient way to save for your retirement. If you are a current employee of Pearson, you will have the option of joining one of two Defined Contribution (DC) sections; the Auto-Enrolment (AE) Section and Money Purchase 2003 (MP03) Section.  

Member contributions to the Auto-Enrolment (AE) Section are fixed at 5% of qualifying earnings, with Pearson paying 3% each month.

The minimum member contribution to the MP03 Section is 3% of pensionable salary, with Pearson paying double.

You could pay less and save more into your pension by switching to the Money Purchase 2003 (MP03) Section

When you start working for Pearson, you can apply to join the MP03 Section. If you do not apply, then eligible employees will be automatically enrolled into the AE Section. If you are enrolled into the AE Section, you can switch to the MP03 Section, where Pearson will double your contribution.

If your contribution to the MP03 Section is £100 a month, Pearson’s contribution is £200, so the total paid into your pension pot in one year is £3,600.00. Whereas the same contribution for an AE member would only result in an annual contribution of £1,920.00.

You can also save on National Insurance contributions if your pension contributions are made using salary exchange.