[00:00:00] Scott: Hi, I'm Scott Fulton, the host of the Rebel Diaries podcast. This show will help you learn how to make work better for you, your colleagues and the organization you work for. I believe the modern workplace is broken for too many people with leaders and their teams, drowning in corporate complexity, information overload, and unnecessary levels of stress. 

[00:00:18] Scott: Having spent over 20 years leading disruptive high-performing teams who have won international awards for their impact. I've now dedicated my career to helping coach and train leaders and teams to deliver more value and impact at work whilst reducing the risk of burnout, overload, and wasted effort. 

[00:00:34] Scott: This podcast is dedicated to you and thousands like you who know work can and should be better.

[00:00:39] Scott: You'll get tips and insights from me as well as the amazing guests I invite to be the show, many of them have disrupted their industries and are thought leaders, speakers, and authors who have fascinating stories and advice to share. 

[00:00:50] Scott: Thank you for listening. I'm Scott Fulton and welcome to the Rebel Diaries show. 

[00:00:54] Scott: Chris is the co-founder and co CEO of Penfold, the digital pension. And this episode we discuss how 79% of the population is not on track for a comfortable retirement. How your company pension may not be all that. It seems. And more. I learned a lot from this episode and I'm sure you will too. 

[00:01:15] Scott: Hi Chris, welcome to the Rebel Diaries podcast. 

[00:01:18] Chris: Hi Scott. Great to be here. Thanks for having me. 

[00:01:21] Scott: Would you mind just giving us a bit of background of your career history, the path you took to be doing what you're doing now and so passionate about what you're doing now?

[00:01:28] Chris: Yeah, absolutely happy to. So definitely not one of those people that always knew they were gonna start their own business. Graduated from uni right in the middle of the global financial crisis. So took a fairly safe job on the Deloitte audit grad scheme. And it tried to make that more exciting by working in the team that worked with fast growth entrepreneurial businesses.

[00:01:51] Chris: So I suppose that opened my eyes to that sort of line of work. Like many, I moved out of the audit world as soon as I. When I qualified as an accountant moving within Deloitte, lots of opportunity to do that. Moved into their m and a team, again, working with founder led businesses in the financial services space.

[00:02:11] Chris: Looking at founders who wanted to sell their company or other buyers who wants to buy their company. And then moved into the final step before what I do now. Into the world of investment management and investing people's money was to a business called Man Group which is a listed asset management firm helping them look at buying other asset managers.

[00:02:30] Chris: So very much just finance, corporate finance, numbers based background. Certainly nothing, close to the world of pensions but certainly still a pensions outsider. I think I would just say that I think from that first job I had at Deloitte and I suppose had a quite numbers based background, having done maths in uni, going into accounting saw some, an early example of compound interest, which really just shows high lap highlights to power of saving early when you're saving for the long.

[00:03:01] Chris: And it's it's this example. It's if you saved a certain amount of money from age 20 to age 30 every month, you're likely to end up with more a retirement age than if you say, if that same amount of money from age 30 all the way to age 70. So saving for 10 years can end up, end you up with more than if you say for 40 years.

[00:03:20] Chris: And I think from that point on, became one of those annoying people. Nagged their friends to save more into their pension as early as they could. I guess the flip side of that is that I was forever frustrated by every pension platform I ever used and heard the same stories back from my friends, where, it's just hard to log on, let alone understand what you need to do through all the jargon, through all the paperwork, let alone get in touch with someone when something goes wrong, any sort of customer.

[00:03:49] Chris: And I think that sort of raised a couple problems that in the pension industry, in the long-term savings industry, there's lots of reasons and lots of problems in the market that had broadly fall into two buckets. One, Massive lack of understanding. The fundamentals of pension saving are really poorly, understood by society.

[00:04:08] Chris: And that's around how the tax breaks work. Things like compound interest, all the good reasons for people to be saving and how necessary it is. So a lack of understanding. And then number two is it's that people hate dealing with pension companies cuz they're so hard to interact with all of the friction in the user experience.

[00:04:27] Chris: That's my, that was, those were my views of the world of pensions. And I was catching up for a beer with a guy that I worked with from Deloitte. It was both of our first jobs and we stayed in contact. And he had just set up the workplace pension for the business. He was working out and a, it was really painful experience for him as an employer.

[00:04:49] Chris: But. None of the staff, none of the couple hundred people who worked there paid any attention to the pension all made, bad financial decisions as a consequence. And so we got talking about this, how you've got this, these problems I've described in the pension mark. What they result in is a massive societal issue that we have at the moment where, Hardly anyone is saving anywhere near enough to be able to support themselves in life.

[00:05:14] Chris: After work, 79% of the population is not on track for a comfortable retirement. 62% of the over forties think they'll be working well into their eighties. And the tip and the average pension pot people have at retirement likely is only enough to last them a couple years left alone in the 20 or 30 years they want to keep on living.

[00:05:33] Chris: So huge problem. Despite it being a massive industry and a massive opportunity to see if we can fix that problem, create a great business, but, a mission that we are both quite passionate about solving. So passionate enough that we decided to leave our sort of corporate lives and embark on setting up a pension company to try and solve that problem.

[00:05:51] Scott: Great. That's really interesting. Yeah, it's always good. Have that passion behind solving the problem, removing friction. Cuz I, I was in digital space and st and yeah I've seen the difference myself between the old school banks and modern banks, so I use Monzo and there's loads of other ones out there, and it's just, To the point that I actually enjoy using my bank.

[00:06:13] Scott: And it sounds like that's the kind of thing, if there's any friction to anything, people are just gonna switch off. And if there's already barriers, as you've described around lack of understanding, lack of education, that's just putting more and more barriers in the way of, people being set up later, as you've said.

[00:06:29] Chris: And particularly, Pensions where the benefit is, it's quite deferred. You are taking the pain now of parting with your hard owned cash and it's only gonna benefit you in 30 years. That's a hard enough sell as it is, let alone, when you actually try and go and try to do that, it's then very hard to actually do it.

[00:06:47] Chris: It doesn't take a lot to put it to the bottom of someone's to-do list, which I think is what's happen. And it takes, being in your fifties and, planning, okay, what am I actually gonna do when I start work and realizing, oh crap, I, I don't have anywhere near enough. It's that sort of shock moment that is pushing people into action now, but really your best chance at having enough is by starting when you're in your twenties.

[00:07:08] Chris: I think removing that friction and increasing that education is really the recipe to solving this problem. 

[00:07:14] Scott: And do you think, I mean you may have some data, but do you think it's getting worse now with cost of living? People are struggling just to, to pay current bills and if they're thinking or not even thinking, I should be putting some of this aside for the future, it's surely that's gonna be dropping straight off the radar down if it's about my immediate situation and problem now is I can't even pay to feed my family.

[00:07:36] Scott: So it sounds does that fair, is the crisis gonna actually be worse longer term? 

[00:07:40] Chris: Absolutely a hundred percent. And it's totally understandable that, there are immediate pressures today, which have to be prioritized over the problems for the future. And so it is harder for people to part with their sort of net pay and their earnings to to save for the long term.

[00:07:55] Chris: I think there's, if we think about the world of workplace pensions, where if you are in full-time there's an obligation for your employer to set up a pension for you pay 8% at least off your earnings into that pension where you are paying 5% and the employer's paying 3%, so everybody's enrolled into that by default.

[00:08:14] Chris: It can be very tempting for someone to say, actually, I'd rather take that 5% in cash so I can pay my bills. I think it's just important for people to realize that if you do that, yes, you have more cash today, but you're missing out on that extra 3% from the employer. So there's a double whammy of you're not, you're no longer paying for late to life and you're missing some cash that's on the table from the employer.

[00:08:33] Chris: So if there's other areas of your life to be able to get it. Get that extra bit of money from rather than dipping into the pension. We would encourage people to do that because of that sort of extra money piece. But absolutely it's the environment is difficult for everybody at the moment, and the cost of living and the cost of housing is not making things any easier.

[00:08:51] Chris: Yeah. 

[00:08:52] Scott: We're in a different world now. You hear about people don't tend to be in the same jobs for a long time. Like I was in my job for 20 years and had a pension setup right from the start, and it was public sector pension. So it's reasonably good. And I've been told I'm, it's, I'm in a pretty good place just with that for now.

[00:09:08] Scott: But people switch jobs a lot more these days, don't they? And or maybe have a period. Redundancy. They may be out of work for X number of months, and if they don't have their own pension on top of that, then there's gonna be gaps as well. Do you think that's also a problem, and is employee pensions enough for those people employment, or would you advise they should be actually looking at topping that up if possible. An additional 

[00:09:32] Chris: pension. Two very good questions. And so yes, number 1, 20, 30 years ago, most pension schemes were like the one you described defined benefit where, you know you just had to work in a job for a certain amount of time and the employer would guarantee you, or the government would guarantee you a certain level of income in retirement.

[00:09:50] Chris: Those broadly don't exist anymore outside of the public sector. And now it's much more on the individual to save. People moving jobs it's important to I guess the big problem with people moving jobs every couple years as they do now is that every time you move jobs, you end up with a another pension scheme that you've gotta keep track of.

[00:10:08] Chris: So the next employer you move to may have a different provider. It's quite hard to combine those together, or it used to be quite hard to combine those together. It's quite hard. Keep track of all the details of those old pensions, and that's led to this massive problem where there is 28 billion pounds currently in lost pension pots out there.

[00:10:28] Chris: Where someone who's worked five jobs has lost track of the details of the first two, and that's their money that they've just no longer have access to and has no central database yet to find those things. Moving jobs very important to of keep track of those previous pensions using consolidation services.

[00:10:44] Chris: Guess Slack unfold. Others are. To combine those together is really helpful to your second point. Is it enough? The problem with the 8% auto enrollment rule that I mentioned earlier is that it's a great thing in that it's got multiple people saving for later life, but it has created a bit of a false sense of security.

[00:11:04] Chris: People think this is, the government recommended him out. If I'm doing that's enough. Unfortunately it's not. Broadly speaking, it's different for everybody, but broadly speaking, you need to be at 12% or more, maybe even 15% of your earnings throughout your career. Being put aside to give you enough to support yourselves with the type of lifestyle that you want when you're in retirement.

[00:11:25] Chris: So if you've been on that 8% throughout your working career, you need to top that up. You can do that through your employer by increasing the amount you paid, or you can set up a private pension. What's worse, at 8% sometimes isn't calculated on your full salary. Employers can choose to only calculate it on a portion of your.

[00:11:42] Chris: It's called qualifying earnings. And a lot of people don't realize that. I didn't know that might end up being something more like four or 5% of your total salary, which is about a third of what you need to be saving. Wow, I suppose actionable advice for people. Check what's currently being paid into your pension there are calculators out there that can help you and work out what that'll get you, but you might find it, it needs to be higher than what's currently being paid in. 

[00:12:06] Scott: So that was news to me about the employer can set like a, they can almost choose which portion of your salary or earnings to pay attention towards.

[00:12:16] Scott: How is that something that people. Negotiate with their employer and say, oh wait, you're not paying me enough. Or would your advice be, you need to be having a separate pension that you top up?

[00:12:27] Chris: I think it's difficult. For an employee to, cuz they're, if they would effectively be asking their employer for more money.

[00:12:34] Chris: And if they feel confident doing that, then absolutely. I think starting the conversation is a really useful first step because actually a lot of employers don't realize that what they're doing isn't enough and that the best employers are paying a pension based on total earnings are even doing matching above the eight.

[00:12:52] Chris: So starting the conversation is always the best thing. Just go approaching an employer or an HR department to understand their, what their current arrangement is and and understand what they're willing to do. It may be the case that they're not willing to pay more, and I the choice is whether it's on qualifying or total salary or total learnings.

[00:13:12] Chris: And. So there's a bit of education in terms of moving from qualifying to total. I think in terms of moving from 8% up to the 12% that I mentioned is probably where you need to be. Again the employer may not be able to increase the amount that they're paying into your pension, but you can always, there's no limits to the amount that you can pay in.

[00:13:33] Chris: So you up to the annual limits on how much you can pay into a pension, which is 40. Reading to 60 counseling let's say you have to go from 8% to 12%. You can just ask your employer to pay 4% more of your paycheck into your pension. Most should be able to do that. Some pension providers are a bit painful.

[00:13:51] Chris: Some workplace pension provides, it's a bit painful, in which case you'd need to open a personal pension and pay that money in direct from your from your cash, basically. 

[00:14:00] Scott: Okay. And if your employer was able to pay that extra percentage from your salary, presumably they wouldn't then top that up as well.

[00:14:06] Scott: That would just be money coming out of your salary or depends on their local policy 

[00:14:10] Chris: words. As I say the best employers with may match. So if you put in an extra 3%, they may put in an extra 3%. But again, that's more cost to the employer, so that would be based on their policy. But yeah, so the default would be that it comes out of your pay.

[00:14:25] Chris: Okay. Great. 

[00:14:26] Scott: Can we delve into your business journey from the company, Penfold was it like a scrappy startup and getting traction and getting investment? How can you tell us a bit about that? That'd be quite interesting.

[00:14:37] Chris: Yeah, absolutely. I think anyone who tells you the best startup wasn't scrappy at the start, is laughing unless they're incredibly lucky. Knew exactly what they were doing from day one, which may be the case. But no, it's been a really interesting journey. We quit our jobs in March of 2018 and kicked off Penfold in June once we worked our notice period.

[00:14:58] Chris: And, day one, it was myself and my co-founder sat in a. Having some sort of big picture conversations, putting a pitch deck together, and then going to try and raise some money. One thing I would say is that the tax breaks for investing in ver at the very earliest stage are very good in this country.

[00:15:17] Chris: The s e I S scheme basically gives an investor 50% of their investment back straight away and allows them to write off any losses against their tax bill. Someone putting in a hundred K into your startup is only really risking 10,000 pounds of money. So as long as you have a, a credible team and a big idea and a big vision, getting that first funding isn't, it's obviously difficult, the system is set up in a good way to attract that.

[00:15:40] Chris: So we were able to get that money fairly soon, which allowed us to then start now, take the next step, which will start building a product, start finding some customers. It's just been a, it's been a case of sort of one step after the other. From that point onwards through I think five funding rounds I guess five years, we're almost coming up to now.

[00:15:59] Chris: And we've just hired our 70th person. Things are, things change very quickly. Those early days, there was the highs and lows are very accentuated. The lows feel like it's the end of the world. The highs feel like the best. The best thing ever has just happened. Be it someone says yes to an investment or you get in it, get your second customer, or whatever it is.

[00:16:18] Chris: Still, there's still an element of that now, things that we, we still haven't achieved many of the big things that we want to, so there's still that sort of rollercoaster journey going on, but perhaps a little bit less less steep those ups and downs, these. 

[00:16:31] Scott: So if you had your chance to start it again, are there any things you do differently with the benefit of hindsight?

[00:16:39] Chris: Yeah, I guess it's a difficult question because absolutely I would want to shortcut a lot of the things that we've now learned and I guess an important part of a startup. As quickly as possible testing things and if they don't work, moving on to the next thing and then the thing that does work, doubling down on it.

[00:16:57] Chris: So yes, it would be great to find those things that did work and double down on them. So hard to say. I would've done anything different. I think with the wisdom or experience of the last five years, one thing is probably you can never do. Really deep sort of customer research at a start and design and product design work.

[00:17:19] Chris: Thinking through deeply the problems and needs of the customer and how your product and solution can solve those. And then starting with the most simple part of, this is product development 1 0 1 and we of course did lots of that customer research and a lot of that thinking.

[00:17:35] Chris: The avenues we went down probably took us meant that it took a bit longer to get to the sort of the final result because, you. If you haven't really bottomed out exactly how your product is gonna solve those problems I talked about earlier around people understanding pensions and people wanting to save into a pension.

[00:17:52] Chris: So yeah, take some time to, to really understand your customers and invest. It's hard to invest when you don't have much money. They invest in some really. Product design thinking at the outset because it saves a lot of money in engineering cost in the long run. 

[00:18:07] Scott: Yeah. And it is a, it's a bit of a chicken and egg isn't it as well, that, you have to get the product into people's hands to really understand how they use it.

[00:18:15] Scott: You can sit people in workshops and say, would you use this product? And they go, yeah they're drinking a nice cup of coffee you've given them. And that's never realistic to. Rubber on the road, so to speak, where you actually get it in the hands and they're dealing with life and, oh, you're asking me to part with some money.

[00:18:28] Scott: Do I trust you? Do I, all those kind of challenges. 

[00:18:30] Chris: I think the, we had our initial product was actually try to, probably try to do too much. It tried to solve, opening an account very easily, but also educating customers about pensions, helping them decide how much they need in the long run and today, and do all of that as part of getting them into a pension.

[00:18:51] Chris: And actually what we realized is we needed to solve the first problem first, which was making, opening an account very and actually adding those other bits, we're adding friction and complexity to that problem and stopping solve, stopping us solving that problem for people around. I just wanna open an account and start paying into it.

[00:19:09] Chris: There was a lot of winding back and making it simpler. So I suppose that's the other piece of advice. Start very simple. And Bill from there, rather than getting too deep in terms of solving multiple problems at once with the first iteration. Yeah. Great. 

[00:19:23] Scott: What does the next few years look like for you, the business and maybe pensions as a whole in terms of where you think the might the industry's going and where everyone's finding themselves.

[00:19:34] Scott: Other than it sounds a bit chaotic that people are gonna get a big shock when they retire. It sounds quite scary, 

[00:19:39] Chris: both in terms of, I I'll give a little bit of backstory of the last five years of what we've been through. Cause that'll explain where we're going and how. The industry. So ultimately we're trying to solve this big societal problem we've talked about around people not saving enough for NATO life.

[00:19:56] Chris: And we want to get a product in the hands of, as most people as possible that educates them about pensions and helps change their behavior. We started by going direct to end customers particularly working in the self-employed market because there were 5 million self-employed people and only 14% saving into a pension.

[00:20:16] Chris: That was where the problem was at its worst. And it allowed us to build a product directly for that end customer and get that direct feedback around what it takes to create a delightful pension saving experience for an individual. But it was always in our mind that actually the self employed market is a, is a really important one and one that we still serve today.

[00:20:36] Chris: But to reach everyone, most people get their pension through their. And most workplace pensioners that people have at their workplace arts, they don't engage with. They find it hard to interact with and log on. They don't pay attention to it. So we wanted to move. It was always our goal to take our product into the workplace.

[00:20:56] Chris: So after a couple of years of building out the end user experience and building the infrastructure behind the scenes, that allowed us. Give people better customer service and faster response times and easy actions that weren't existing in the pension industry. We took that package and came to employers and said, your most expensive employee benefit is your pension, and yet your staff aren't appreciating it.

[00:21:24] Chris: And actually it's because of. The product that you've got in place at the moment isn't, yet, isn't really fit for purpose. So we've been helping businesses switch to a, a more modern platform that helps in employees at businesses interact with, understand, appreciate their pension, safety, employer time and money.

[00:21:42] Chris: And really that's our, that's what the next few years looks like for us. It's getting the word out there and preaching as many businesses as we. Helping them switch to a more modern pension scheme and then helping their employees change their, change their pathway, change their trajectory towards their retirement savings, helping them understand pensions and helping 'em save more.

[00:22:02] Chris: So there's a lot of work we are doing around working with employers directly, working with people who manage pensions for employers like accountancy firms and financial advice firms and payroll firms. Building a product for them to help them manage their pen, their clients' pension schemes better.

[00:22:21] Chris: Next three years more of the same. More building out a better workplace pension and pension saving experience for individuals in the UK and beyond. And there's so much that we can do to make that sort of end customer experience better for people help. Help them really understand, particularly for their circumstances, what they need to be doing, what they can do to get on track with saving for NATO life.

[00:22:44] Chris: So that's what we're, staying super focused on building out the best pension saving experience for employers and employees in the uk. Beyond that, the problem of people not saving for later life is a problem for many countries around the world. So whether we, take some of the lessons learned into different, to different markets, that might be the next step.

[00:23:03] Scott: Brilliant. Yeah. And the problem for, I'm just thinking the problem for later life is cause people are living longer as well, so they need, they're gonna need to sustain themselves financially for even longer. Yeah. Interesting times. Just to wrap up, you mentioned it earlier, and I only learned about it properly a few years ago with a previous guest actually about the power of compounding.

[00:23:23] Scott: And you said that felt, that was really key for you when you understood it. Could you, I know you did briefly explain, if you start younger, can I ask if you can try and explain without visuals for people how powerful and how important compound. 

[00:23:37] Chris: Visuals are very important for something like this, but I will do my fairbank.

[00:23:41] Chris: I suppose you can think of it like a snowball gathering momentum of rolling down a hill. The numbers of it are that someone with a pension, that pension money is invested in a, in the stock market. You might expect that those investments to, to generate a return. So if you have a hundred pounds, it might grow by 5% in a year.

[00:24:03] Chris: And so your money grows to 105 pounds. The next year, if it grows to five, 5%, again, it's 5% on 105. So the amount that it grows by increases a little bit. And that sounds like something quite small. But when you do that for 30. It starts to look exponential and that's and that slope starts to steepen where, your money can double every 10 years.

[00:24:26] Chris: There's a couple of ways to think about this. And I gave that example earlier where saving for 10 years by starting early gets you more than if you say for 40 years, if you started. Another example I could give is talking about how much should people save of their earnings into their pension each year.

[00:24:44] Chris: There's a rule of thumb that take the age that you start saving and divide that by two, and that's the percentage you should be saving into your pension to, to earn enough for later life. So if you start saving into your pension at age 20, 10% of your earnings for throughout your career should give you enough.

[00:25:02] Chris: But if you start at age 40, you would need to save 20% every year until the end of your career. So a much bigger financial commitment to get you the same result at the end as if you had started earlier. Very powerful. Very powerful lever that you have in terms of saving enough.

[00:25:20] Chris: 10,000 pounds that you put into your pension. Age 20 could be hundreds of thousands of pounds at retirement. Which would obviously cost a lot more to pay in if you had be doing it in your fifties 

[00:25:30] Scott: yeah. I'm terrible at math, but even I understood that 

[00:25:32] Scott: So if anyone has been inspired, I'm sure many people have and they want to start getting their pension sorted out.

[00:25:38] Scott: How do they go about doing that and getting your help? 

[00:25:41] Chris: Yeah, absolutely. So yeah, very happy for anyone to get in touch with me on LinkedIn if you want to learn more about workplace pensions. What if you're an employer or work in HR and you're thinking about how to make the most out of your workplace you can get in touch with me.

[00:25:58] Chris: Search Chris Easter on LinkedIn or our website, get tenfold.com where there's lots more information there. And you can request a call to speak to one of our team. If you are just an individual looking to open an account, go to our website again, say get enfold.com, play, get started in the corner and it should give you all the information you need to start saving.

[00:26:19] Chris: And. There's a cus little intercom in the corner of it and people are in touch with our customer service team to help as well. So getpenfold.com or add me on LinkedIn 

[00:26:28] Scott: thanks. I'll put those links in the show notes as well. Chris. It has been great. Have on the show. 

[00:26:32] Scott: Absolute pleasure. Thanks so much for inviting me. It's been great to chat with you today. 

[00:26:35] Scott: A big, thank you for listening to the Rebel Diaries show your time is precious, so it is appreciated. If you enjoyed this episode, be sure to hit that subscribe button in your podcast app of choice so you don't miss the next one. There's a new episode every Monday morning, ideal for your commute to work or early morning walk. 

[00:26:53] Scott: Until next time, take care be a rebel and deliver work with impact.