The Pearson Pension Plan

The increased cost of living can have a significant impact on household budgets and savings. As bills increase, people are more aware of the impact of inflation. In 2023 inflation reached a peak of 11.8%, meaning that £100 in 2022 would be worth £88 in 2023.

Whilst your money might not stretch as far as it used to, there are still steps you can take to help to reduce your outgoings.

Create a budget planner

By reviewing your monthly outgoings, you can highlight any bills or payments that you were not aware of or do not use. There are tools available to help you, such as budget templates, online apps, and itemised banking that will simplify your finances.

Also, if you can add a monthly emergency fund payment into your budget it will help to reduce anxiety if the unexpected happens.

If you are looking for more budgeting tips, use the link below to go to our dedicated budgeting page.

Reviewing loans and debt

After reviewing your household expenditure, you may be able to redirect funds towards debt repayments if you need to. This will help reduce the monthly cost of your direct debit and help you to pay off your debt quicker.  

You can find more information on our dedicated loans and debt page which you can access using the link below. You will be able to find out more about the types of loans available, interest rates on repayments, how to check your credit score, the effect of overpayments and what to look out for when applying for a mortgage.

Additional support

• Marriage allowance

  The marriage allowance is a UK tax benefit that could save you and/or your partner tax. It allows you to transfer a portion of your personal allowance (the amount of income you earn before paying tax) to your spouse or civil partner, reducing the amount of tax that the higher earner might have to pay.

  To be eligible for the marriage allowance:

  • you must be married or in a civil partnership
  • the partner transferring their allowance must be a non-taxpayer or earning below the personal allowance
  • the partner increasing their allowance must be at least a basic rate taxpayer.

  You can find links below to GOV.UK and the MoneyHelper websites where you can read more about the marriage allowance.

  Please note that the marriage allowance should not be confused with the married couple’s allowance. To be eligible for the married couple’s allowance the marriage must have taken place before 5 December 2005 and one partner would have to be born bbefore 6 April 1935. For more information on the married couple’s allowance please use the link to the government’s website below.

• Tax-free childcare

  This is a government scheme to help working parents afford childcare such as nurseries, registered childminders, after-school clubs and more. You will be able to claim up to £2,000 a year for each child (£4,000 if your child is disabled). The scheme works by every time you pay in £8 the government will add £2. We have included a link below for further reading and to check eligibility.

• Council tax discount

  You can save anywhere from 25% to 100% on your council tax if you meet certain criteria. You may be eligible for a council tax reduction if you:

  • live alone
  • are living with someone with a disability
  • receive benefits such as, pension credit, income support or jobseeker’s allowance.
  • are on a low income
  • have moved into a care home or hospital
  • are a student.

  A link to MoneyHelper’s guide on council tax, including eligibility criteria, is included at the bottom of the page.

• Government energy bill support scheme

  A link is included at the bottom of this page that outlines all the help the Government currently offers to help specifically with the cost of living. The site will also allow you to check your eligibility.

How you can save money with your pension

Your pension can be a great tax-efficient way to save for your retirement. With the immediate pressure on your income brought on by the increases to the cost of living, we understand that it may be tempting to reduce your pension contributions. Reducing or even stopping your pension contributions could have a negative impact on your income in retirement and we therefore recommend that stopping your pension contributions is a last resort.

• 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.

• Pay less, 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.

MoneyHelper

If you are worried about bills, rising mortgage payments or not having enough left over to pay essential bills we recommend following the link at the bottom of the page to MoneyHelper’s ‘Help with the cost of living guide’. The guide covers;

• tools and calculators including bill prioritisation and debt advice locators
• support and actions to take on a wide variety of issues
• additional information on Government support you may be entitled to.

Retirement advice

We appreciate that at this time many people will be looking into whether retirement is an option. If you are considering retirement, we would suggest you speak to a financial adviser to make sure the decision to retire is right for you.

MoneyHelper provides a range of great guides to get you started, which are linked below. Also, if you are over 50 and have any Defined Contribution (DC) pensions, Pension Wise provides guidance calls giving free impartial guidance to help you understand the options available to you.