How to get ready for the retirement you want

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Hello?

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Hello. Can you see me? I'm in a different position today.

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I'm not on the stage of being kicked off,

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and I'm joined by Rachel.

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How are you? How are

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You doing? Thanks. Being

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made in my space

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Again. I'm, I'm getting told off

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when I get put here,

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but anyway, we're on the hot desk

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where all the questions are gonna be firing,

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um, to us from you.

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But anyway, before we get started, hello everyone.

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I'm Johnny. This is Rachel. Hello.

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We're from Pension Geeks, so creators

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of the Official Pension awareness, um, campaign.

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And today we've got a great show for you how to get ready

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for the retirement you want hosted by Royal London.

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But before we get started, there's a few things

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that I wanted to tell you about, show the, uh, brilliant,

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um, we've got a brilliant website.

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So a website that you're on now, we've created just

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for you pension awareness day.com.

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So if you're not booked onto the shows later on today,

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we've got a show with with Aon.

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We've got shows again tomorrow with Royal London.

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If you're not booked onto them,

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make sure you get booked onto them.

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You can do it via this website.

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There's a timetable

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and a booking form where you can go and register.

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Also, if you've missed any shows,

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if you've missed a previous show with Royal London,

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is it a good idea to transfer a pension?

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You can go to this website as well

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and you can watch it in the catch up

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area, which is fantastic.

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So, um, make sure you have, I've got some great articles on

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there, some really useful links, everything basically

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that we're talking about in these shows.

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We have the resources

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and everything that you need in this website.

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It's gonna be there for the next 12 months,

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so make sure you use it

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as your go-to place when you're talking

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or thinking about pensions and pension questions.

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Right? That is everything here, Rachel, isn't it?

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Oh, I think would like to give an announcement actually

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to our partner this year, Royal London.

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Okay. Of partnering with us.

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I think we can have a graphic on screen

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to show Royal London as well.

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Can, can we see that full screen? Yeah. Oh, we can, we can.

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No, they are Royal London.

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Um, so, and we're very grateful for them partnering with us

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and we're having some great fun, aren't we?

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Some great fun we have and helping lots of people.

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Yeah. How many sessions we done so far?

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Four, isn't it? This is

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The fifth, yeah, four. And we're

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seeing record breaking numbers with thousands

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of you come into the shows, which is fantastic.

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So, um, we're gonna go into the studio now

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and see Sarah and Claire.

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Hello, Sarah and Claire. How are you doing?

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Hi Johnny. Really good, thank you. How are you?

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Very well, very well. I'm doing good.

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I'm excited about this show. Take it away.

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Tell us what we'll be learning today

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and tell us all about it.

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Thank you very much. Well, yeah. I'm Sarah.

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I'm Sarah Pens, and I'm a consumer finance

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specialist at Rowland.

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And, and I'm joined today by Claire.

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Claire, just tell us what your job is.

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Tell us a bit about what you, what you do,

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and also what we'll be covering in today's session.

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So I'm Claire Moffitt

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and I'm Royal London's pensions expert.

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And today we're going to be talking about how to get ready

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for the retirement you want.

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So we'll be thinking about how you find out

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how much you'll need in retirement, how you can add

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to your pension before you retire, um,

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and also the rules about how to take money out

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of your pension and tax free cash.

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And we'll also be talking about where you

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might get help from,

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But we'll start by talking about the kind

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of pension that you have.

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So there are two main types of pension.

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The first is a defined contribution pension.

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So jargon alert, sorry about that.

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What it means is that when you are working,

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you build up a pot of money and you pay into that

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and maybe your employer as well.

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And then when you retire, you can either take lump sums out

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of it or use it to give you an income once you stop working.

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Now, the other type of pension is a defined benefit pension.

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Now you might have heard this described

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as a final salary pension or a career average pension.

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They're both types of defined benefit pensions.

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Now with a defined benefit pension,

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you get a regular income once you stop working

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and that lasts for the rest of your life.

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Now in this session,

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we're gonna be focusing on defined contribution pensions.

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Now the reason is that's the pension

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that you are most likely to be paying into today.

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In fact, we've carried out some research

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into workplace pensions with 4,000 UK adults

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who are under retirement age who have a pension.

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And what we found is that over twice as many people

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have a defined contribution pension that they're saving into

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compared to the number who are saving into a

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defined benefit pension.

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So if you've got one of these defined contribution

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pensions, you need to think about

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how much you need in retirement to have that,

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that retirement that you want.

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Now that's going to depend on several factors,

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but the two main ones are when you want to retire,

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and we're going to come onto that in a few moments.

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And the standard of living that you want in retirement.

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Now, picturing retirement, well, it can feel quite tricky,

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especially if you're further away from retirement,

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but as you get closer, then it's probably a bit easier.

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And it might also be easier if you've got a budget

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that you already have and that you currently stick to.

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Um, and that's

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because you can kind of see the money that you spend now

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and you can think about the money

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that you'll spend in retirement,

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but perhaps the things that you won't need

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to spend money on.

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And our research found about half

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of people have a budget in retirement,

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but whether you have a budget

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or you don't have a budget, hopefully you will have the

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full new state pension.

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Now that's currently two and 2120 a week, or just over 11

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and half thousand pounds a year if you get the full amount.

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Now we analyse some data from the department, um,

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for working pensions,

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and we found that over half of people, um,

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who receive the new state.

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So that means that they reach state pension age

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after the 5th of April, 2016.

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Well over half of them aren't receiving the

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full new state pension.

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Quite a surprise, I think, wasn't it?

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It it was really surprising.

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So it's really important

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to check your state pension forecast.

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Now you can do that on gov uk, um,

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and that means you can check your national insurance record,

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see if you've got any gaps,

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and you might possibly be able to fill those gaps.

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Now, we've also got lots

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of information on state pension on our Royal london.com

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website, but let's assume you are going

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to get the full new state pension even.

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So the earliest age at which you can get it is currently 66.

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So if you're about to reach state pension age, you have

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to be 66.

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And right now, state pension age is going to increase to 67

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by 2028,

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and there's planned increases to 68 later on as well.

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So if you want to retire before state pension age,

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and our research finds that the most popular ages

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to retire are 60

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and 65, then you're going to need some money, um, for

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that retirement to fill that gap.

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And our research found that quite a few people in their

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fifties and sixties, actually 60% of people

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didn't know whether they were saving

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enough for their retirement.

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Now, as Claire said, it can be quite hard

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to picture your life in retirement

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and what that's gonna cost,

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but there's a really useful website called retirement living

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standards.org.uk that can help you with that.

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Now what this website has is different income amounts

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that you need for different standards of living.

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Now these, these, um,

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figures have been calculated using independent research,

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and they do assume that you don't have a rent

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or mortgage to pay,

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and it's any pension income that you receive

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has already been taxed.

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Now let's just have a look at these in detail.

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So let's, can we have the first slide please, James?

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Let's assume talking a moment ago

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about the full state pension.

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So let's assume you get the full amount Now

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that's just over 11 and a half thousand pounds a year.

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Now, according to the retirement living standards,

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if you want what they call a minimum lifestyle in retirement

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and you live on your own, you'll need

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14,400 pounds in income a year.

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Now, if you have this lifestyle, it will not be high living.

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In fact, you'll have to make some fairly tough

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decisions about your spending.

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So weekly meals out that they're, they're off.

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You can't afford those. But you can pay your basic bills

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and you can spend, for example, 50 pounds a week on food.

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You could have a week long holiday in the UK by coach, um,

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assuming as we said earlier on,

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that there's no rental or mortgage to pay.

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Now if you have 31,300 pounds

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a year including your state pension, then you could be able

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to afford what's called a moderate standard

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of living in retirement.

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Now, for this, you could have a two week holiday, a abroad

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as well as a weekend in the uk.

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Now can we have the slide just back up for a second, James?

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Sorry. You can have a two week holiday abroad

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and you would also be able to have a 3-year-old car,

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which you could replace every seven years.

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Finally, if you've saved enough to get an income

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of 43,100 pounds a year, you'll be able to push the boat out

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and have a more expensive 14 night holiday abroad.

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Replace your car every five years, weekly meals out,

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spend more on your food, on clothes and things like that.

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Okay, let's have the next slide please, James.

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Now if you are part of a couple, then it costs more,

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but the costs don't double and that's

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because it costs less

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for a couple living together than it does

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for two people living on their own.

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So again, for this minimum standard of living,

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you need 22,400 pounds a year.

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For a moderate, it's 43,100.

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And for a comfortable lifestyle,

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then you'll need 59,000 pounds a year between you.

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Uh, thanks very much James.

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So once you've checked the retirement living standards,

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the next step is to look at

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how much pension you've built up built up

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and what that might give you at retirement.

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Now there are different ways

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that you can do this at your first stop might be your own,

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uh, pension provider.

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They'll normally have tools and calculators to help you,

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but if you have several pensions, an alternative is to go

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to the government backed Money Helper website

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and they've got a pension calculator there that you can use.

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So what if you've done a budget,

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you've looked at the retirement living standards

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and you've worked out that you've,

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your pension pot isn't going

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to give you the retirement that you would like.

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Is it too late or is there anything you can do?

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Well, yes, there are. There is,

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there are things that you can do.

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There are steps you can take

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as you're approaching retirement maybe, um, instead

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00:10:23.805 --> 00:10:25.405
of retiring at a certain age, you'd plans,

258
00:10:25.465 --> 00:10:26.965
you might retire a little bit later.

259
00:10:27.345 --> 00:10:29.685
Or perhaps instead of stopping work completely,

260
00:10:29.785 --> 00:10:31.445
you might think about working part-time

261
00:10:32.185 --> 00:10:34.485
or perhaps you might want to add to your pension.

262
00:10:35.825 --> 00:10:37.565
You could be in the fortunate position

263
00:10:37.575 --> 00:10:39.525
where you've paid off your mortgage or,

264
00:10:39.525 --> 00:10:40.565
or maybe you're about to.

265
00:10:40.865 --> 00:10:43.405
So say you've been paying 1300 pounds a month.

266
00:10:43.405 --> 00:10:45.445
Now that's actually the average monthly

267
00:10:46.005 --> 00:10:47.565
mortgage repayment in the uk.

268
00:10:48.275 --> 00:10:49.885
Well, it's about to come to an end.

269
00:10:49.945 --> 00:10:52.925
So what's the first thing you do? Happy days. Happy days.

270
00:10:53.045 --> 00:10:55.485
I can't wait. Well, you crack open the champagne, of course.

271
00:10:56.025 --> 00:10:59.925
Um, but after that, could you actually use that money

272
00:10:59.985 --> 00:11:01.565
and pay it into a pension instead?

273
00:11:02.105 --> 00:11:04.485
Not only will that help your retirement income,

274
00:11:04.785 --> 00:11:07.325
but it could also help you save tax.

275
00:11:07.705 --> 00:11:10.165
So James, if we can have a look at the next slide,

276
00:11:10.165 --> 00:11:12.765
we're going to look at the example of Raphael.

277
00:11:13.225 --> 00:11:16.405
Now Raphael is 55, he lives in England.

278
00:11:16.405 --> 00:11:18.165
It makes the tax sums a little bit easier.

279
00:11:18.865 --> 00:11:20.565
Um, and his mortgage is about to come

280
00:11:20.565 --> 00:11:23.485
to an end here in 60,000 pounds a year.

281
00:11:23.505 --> 00:11:25.845
And he's currently paying 250 pounds

282
00:11:26.195 --> 00:11:27.405
into his workplace pension.

283
00:11:27.865 --> 00:11:29.605
He gets 20% tax relief.

284
00:11:29.625 --> 00:11:31.725
Now that's that top up you get from the government,

285
00:11:31.815 --> 00:11:35.325
which means there's 312 pounds 50 going into his pension.

286
00:11:37.425 --> 00:11:40.645
Now he's paying 800 pounds a month into his mortgage

287
00:11:40.645 --> 00:11:45.365
currently, but Raphael is going to think about paying

288
00:11:45.365 --> 00:11:47.965
that 800 pounds into his pension.

289
00:11:48.905 --> 00:11:50.085
So if he does that,

290
00:11:50.135 --> 00:11:53.405
he'll automatically get a 200 pound top up in the form

291
00:11:53.405 --> 00:11:56.565
of tax relief, meaning there'd be a thousand pounds plus the

292
00:11:56.725 --> 00:11:58.325
previous 312 50.

293
00:11:58.425 --> 00:12:03.365
So with 1,312 pounds 50 going into his pension, now that's

294
00:12:03.365 --> 00:12:04.965
before an employer contribution.

295
00:12:05.705 --> 00:12:08.045
Now the extra pension contribution is actually going

296
00:12:08.045 --> 00:12:10.085
to reduce his taxable income,

297
00:12:10.455 --> 00:12:13.965
which means he'll become a basic rate taxpayer If we

298
00:12:13.965 --> 00:12:15.045
move on to the next slide.

299
00:12:16.225 --> 00:12:18.365
So in the next slide we can see actually

300
00:12:18.365 --> 00:12:20.365
what happens in terms in terms of tax.

301
00:12:21.105 --> 00:12:24.485
So he, before he had a salary of 60,000 pounds

302
00:12:24.545 --> 00:12:26.805
and you get to take off his pension contributions.

303
00:12:27.265 --> 00:12:31.725
So his taxable income then is 56,250 pounds.

304
00:12:32.345 --> 00:12:36.965
Now anything over 50,270 pounds is taxed at higher rate

305
00:12:37.025 --> 00:12:38.165
tax in England and Wales.

306
00:12:38.185 --> 00:12:40.125
So that would be 40% tax paid.

307
00:12:41.305 --> 00:12:44.165
But once he pays that larger amount, so it's a total

308
00:12:44.165 --> 00:12:48.365
of 15,750 pounds into his pension,

309
00:12:49.275 --> 00:12:54.085
then his taxable income becomes 44,250 pounds,

310
00:12:54.335 --> 00:12:57.325
which then means he only pays basic rate tax.

311
00:12:58.465 --> 00:13:00.325
And there's an additional benefit as well.

312
00:13:01.025 --> 00:13:04.925
Now because Raphael was a higher rate taxpayer when he paid

313
00:13:04.925 --> 00:13:06.205
the pension contributions,

314
00:13:06.595 --> 00:13:08.885
then he can also claim high rate tax relief.

315
00:13:08.895 --> 00:13:10.325
James, can we lose this slide please?

316
00:13:11.065 --> 00:13:14.685
Now he can claim this additional 20% in tax relief from the

317
00:13:14.685 --> 00:13:16.365
government on his pension contributions,

318
00:13:16.945 --> 00:13:18.205
but he might have to do

319
00:13:18.205 --> 00:13:20.565
that using her self-assessment tax return.

320
00:13:21.185 --> 00:13:23.445
So that's the tax benefit of money going in.

321
00:13:23.985 --> 00:13:26.165
But what about money coming out now

322
00:13:26.165 --> 00:13:29.725
because Raphael is 55, he can take that money out

323
00:13:29.725 --> 00:13:33.205
of his pension, 25% of it will be tax free

324
00:13:33.305 --> 00:13:35.845
and 75% will be taxable.

325
00:13:36.505 --> 00:13:38.205
Now, it's important to say that just

326
00:13:38.205 --> 00:13:40.045
because you can take money out

327
00:13:40.045 --> 00:13:42.605
of your pension when you are 55 does not mean

328
00:13:42.605 --> 00:13:43.685
you should necessarily do it.

329
00:13:43.705 --> 00:13:46.885
But if Raphael was in a situation where he needed

330
00:13:46.885 --> 00:13:49.165
that money straight away, then the rules would

331
00:13:49.165 --> 00:13:50.245
let him take that money out.

332
00:13:51.305 --> 00:13:52.885
Now talking about money going into your pension,

333
00:13:52.885 --> 00:13:55.165
there are other situations where it might be a good idea

334
00:13:55.225 --> 00:13:57.045
to pay extra money into your pension,

335
00:13:57.365 --> 00:13:59.645
particularly if you are approaching retirement

336
00:13:59.745 --> 00:14:01.805
and you feel you haven't saved enough to give you

337
00:14:01.805 --> 00:14:03.285
that lifestyle that you want.

338
00:14:04.105 --> 00:14:06.365
But let's just remind ourselves of the rules on

339
00:14:06.365 --> 00:14:07.765
what they can say about how much

340
00:14:07.765 --> 00:14:08.845
you can pay into your pension.

341
00:14:09.705 --> 00:14:11.045
Now again, there's gonna be some figures here,

342
00:14:11.105 --> 00:14:12.325
so uh, bear with me.

343
00:14:12.865 --> 00:14:15.605
The rules say that the maximum you can pay into your pension

344
00:14:16.015 --> 00:14:18.965
every year and get tax relief on your pension contributions

345
00:14:19.585 --> 00:14:21.565
are the equivalent to your salary.

346
00:14:22.345 --> 00:14:25.565
Now if you don't have any earnings, then you can pay up

347
00:14:25.565 --> 00:14:28.565
to 2,880 pounds into your pension every year

348
00:14:29.025 --> 00:14:31.365
and you'll get basic rate tax relief at 20%.

349
00:14:31.585 --> 00:14:33.885
Now, that will actually bring up the amount

350
00:14:33.885 --> 00:14:37.805
that goes into your pension to 3,600 pounds a year.

351
00:14:38.825 --> 00:14:39.965
So let's just assume

352
00:14:40.085 --> 00:14:42.405
that you are earning 40,000 pounds a year

353
00:14:42.545 --> 00:14:45.445
and you are in the frankly unusual situation of being able

354
00:14:45.445 --> 00:14:47.485
to tip your entire salary into your pension.

355
00:14:48.305 --> 00:14:50.605
So then you'd pay that 40,000 pounds in

356
00:14:51.105 --> 00:14:53.965
and you'd get tax relief on those pension contributions.

357
00:14:54.785 --> 00:14:56.765
Now that is admittedly an unusual scenario,

358
00:14:56.825 --> 00:14:59.445
but often people, well, they might get an inheritance

359
00:14:59.445 --> 00:15:00.885
and want to pay some

360
00:15:00.885 --> 00:15:02.765
or all of that money into their pension.

361
00:15:03.665 --> 00:15:06.765
So let's assume now you get a 50,000 pound inheritance

362
00:15:06.765 --> 00:15:08.405
and you want to pay it all into your pension.

363
00:15:09.475 --> 00:15:12.325
Well under the rules because your salary is 40,000 pounds.

364
00:15:12.625 --> 00:15:15.205
That's the maximum that you could pay in

365
00:15:15.665 --> 00:15:17.965
and get tax relief on those contributions.

366
00:15:18.625 --> 00:15:21.445
But Claire, it's as if that was simple,

367
00:15:21.505 --> 00:15:22.685
but it's not that simple, is it?

368
00:15:22.915 --> 00:15:24.845
Yeah, it is a bit more complicated than that.

369
00:15:24.905 --> 00:15:26.765
So if you're in the fortunate position

370
00:15:26.825 --> 00:15:28.525
of being a higher earner,

371
00:15:28.705 --> 00:15:30.845
so earning over 60,000 pounds a year,

372
00:15:30.845 --> 00:15:33.725
then something called the annual allowance might kick in.

373
00:15:34.185 --> 00:15:37.205
Now that limits the amount you can pay into pensions without

374
00:15:37.205 --> 00:15:38.565
facing a tax charge.

375
00:15:39.145 --> 00:15:41.405
The annual allowance is 60,000 pounds a year.

376
00:15:41.585 --> 00:15:43.965
So for most people it won't be an issue.

377
00:15:44.545 --> 00:15:48.005
But if you do earn more than 60,000 pounds a year

378
00:15:48.225 --> 00:15:50.045
and you're in the fortunate position of being able

379
00:15:50.045 --> 00:15:51.645
to pay it all into your pension,

380
00:15:52.305 --> 00:15:55.365
or perhaps more likely, as Sarah mentioned,

381
00:15:55.365 --> 00:15:58.925
you've maybe inherited some money, you could be limited, um,

382
00:15:58.925 --> 00:16:01.445
to the amount you can pay in pension contributions to

383
00:16:01.445 --> 00:16:03.885
that annual allowance of 60,000 pounds.

384
00:16:04.585 --> 00:16:08.365
Now, if you paid in more than 60,000 pounds, you might have

385
00:16:08.365 --> 00:16:09.445
to pay a tax charge.

386
00:16:10.305 --> 00:16:13.005
So we've been talking about paying money into pensions,

387
00:16:13.265 --> 00:16:15.525
but Sarah, tell us about the rules in taking

388
00:16:15.525 --> 00:16:16.845
money out of pensions.

389
00:16:17.475 --> 00:16:18.765
Well, firstly, as you mentioned earlier on,

390
00:16:18.765 --> 00:16:19.925
you normally have to be 55

391
00:16:20.025 --> 00:16:22.485
before you can take any money outta your pension.

392
00:16:23.225 --> 00:16:26.685
Now that minimum age is rising to 57 in a few years time.

393
00:16:26.745 --> 00:16:30.205
So from April, 2028, you will have to be 57

394
00:16:30.225 --> 00:16:31.485
before you can take money out.

395
00:16:31.825 --> 00:16:34.205
Now with defined contribution pensions,

396
00:16:34.205 --> 00:16:37.325
you can normally take up to 25% tax free

397
00:16:37.325 --> 00:16:38.565
and the rest will be taxable.

398
00:16:39.385 --> 00:16:42.085
Now that means just to make it really clear,

399
00:16:42.085 --> 00:16:44.965
that means it doesn't matter how much income you have

400
00:16:45.065 --> 00:16:47.845
or indeed where you get your other income from,

401
00:16:47.875 --> 00:16:52.445
that 25% tax free cash lump sum is not liable to tax.

402
00:16:53.265 --> 00:16:56.245
Now, one question that we get asked very regularly is,

403
00:16:56.245 --> 00:16:57.685
if you have several pension pots,

404
00:16:58.065 --> 00:17:01.005
can you take your tax free cash from each pension?

405
00:17:01.185 --> 00:17:04.285
So again, just to be really clear, the answer is yes.

406
00:17:04.705 --> 00:17:07.165
You can take your tax free cash from

407
00:17:07.225 --> 00:17:08.525
as many pensions as you have.

408
00:17:09.225 --> 00:17:11.365
Now I've talked about a tax free cash lump sum,

409
00:17:11.385 --> 00:17:14.685
but actually you don't have to take your tax free cash

410
00:17:14.705 --> 00:17:16.125
as one sort of wa of money.

411
00:17:16.505 --> 00:17:19.245
You can take it out as several payments if you want to.

412
00:17:19.325 --> 00:17:21.005
And again, we're often asked, which is better?

413
00:17:21.105 --> 00:17:23.725
One amount of money, a lump sum or several payments,

414
00:17:23.785 --> 00:17:25.685
and it really depends on your situation.

415
00:17:25.785 --> 00:17:28.405
So you might want to take your tax free cash

416
00:17:28.425 --> 00:17:31.965
as several payments to give you a tax free income while you

417
00:17:31.965 --> 00:17:34.165
wait for your state pension to kick in, for example.

418
00:17:34.705 --> 00:17:36.645
Or perhaps you're working what part-time

419
00:17:36.745 --> 00:17:39.125
and you want that tax free cash to boost your income

420
00:17:39.585 --> 00:17:41.605
or you have several planned expenses.

421
00:17:41.745 --> 00:17:44.325
And again, you'd rather receive your tax free cash

422
00:17:44.785 --> 00:17:47.205
as several payments than one payment.

423
00:17:48.225 --> 00:17:52.805
Now it is worth knowing, being frankly gloomy for a moment

424
00:17:53.275 --> 00:17:57.125
that if you took out your 25% tax free cash plunked it into,

425
00:17:57.275 --> 00:17:58.805
well, for example, a savings account,

426
00:17:59.505 --> 00:18:02.445
and then you were to die, then that could become liable

427
00:18:02.445 --> 00:18:03.445
to inheritance tax.

428
00:18:04.385 --> 00:18:06.125
Now, it used to be the case that you had

429
00:18:06.125 --> 00:18:08.405
to take your tax free cash outta your pension

430
00:18:08.825 --> 00:18:10.805
before you reach the age of 75.

431
00:18:10.945 --> 00:18:12.485
Now that rule doesn't exist anymore,

432
00:18:13.225 --> 00:18:15.485
but many people still do take their tax free cash

433
00:18:15.505 --> 00:18:17.005
before they hit 75.

434
00:18:17.105 --> 00:18:21.045
And the reason is that the tax treatment changes

435
00:18:21.305 --> 00:18:24.165
for those people, those beneficiaries who inherit

436
00:18:24.675 --> 00:18:27.765
your defined contribution pension if you were

437
00:18:27.765 --> 00:18:30.245
to die when you are 75 or over.

438
00:18:30.865 --> 00:18:33.645
Now, Claire, I've talked there about tax free cash lump sums

439
00:18:33.645 --> 00:18:35.845
or actually taking your tax free cash out

440
00:18:35.845 --> 00:18:37.165
as a series of payments.

441
00:18:37.225 --> 00:18:40.365
Now if you want to do this, is this something firstly

442
00:18:40.365 --> 00:18:41.685
that all pension providers offer

443
00:18:41.705 --> 00:18:44.645
and secondly, do just use an app or go online

444
00:18:44.645 --> 00:18:47.765
and fill in a form or is it, dare I say, more complicated?

445
00:18:48.075 --> 00:18:50.485
Well, as with many things to do with pensions,

446
00:18:50.505 --> 00:18:52.525
the answer is it, it depends.

447
00:18:52.985 --> 00:18:56.365
So most pension providers will offer this opportunity,

448
00:18:56.905 --> 00:18:58.605
but if you've got an older style pension

449
00:18:58.925 --> 00:18:59.965
contract, it might not.

450
00:19:00.075 --> 00:19:03.085
However, normally when you can access your pension benefits,

451
00:19:03.105 --> 00:19:04.645
you might be able to move that money

452
00:19:04.745 --> 00:19:06.685
to a new style of contract.

453
00:19:07.425 --> 00:19:09.645
I'd say, you know, the most important thing to do is

454
00:19:09.645 --> 00:19:12.125
to get in touch with your financial advisor if you have one

455
00:19:12.425 --> 00:19:15.285
or your pension company, and ask them what you can do.

456
00:19:16.185 --> 00:19:17.405
So that's tax free cash,

457
00:19:18.145 --> 00:19:20.885
but how else can you take your money out of pensions?

458
00:19:21.995 --> 00:19:24.365
Well, the three most, um, common ways

459
00:19:24.365 --> 00:19:27.725
to take money outta pensions are annuities draw down

460
00:19:27.945 --> 00:19:29.285
and cash lump sums.

461
00:19:29.545 --> 00:19:33.685
So firstly, annuities, well, if you take out an annuity,

462
00:19:33.685 --> 00:19:35.645
basically you're swapping your pension pot

463
00:19:35.785 --> 00:19:37.765
for a guaranteed secure income.

464
00:19:38.785 --> 00:19:42.005
Now, it can be paid monthly, it can be paid, um, annually,

465
00:19:42.005 --> 00:19:44.125
it can be paid six monthly, whatever you want.

466
00:19:44.665 --> 00:19:48.805
And what most people do is take their 25% tax free cash

467
00:19:49.105 --> 00:19:52.445
and then with the other 75% they purchase the annuity.

468
00:19:53.145 --> 00:19:55.845
But you could also use, you know, all of your pension pot

469
00:19:55.845 --> 00:19:57.005
to buy an annuity too.

470
00:19:58.265 --> 00:19:59.845
Now, the benefit of annuities is

471
00:19:59.845 --> 00:20:02.925
that it's a guaranteed secure income that pays out

472
00:20:02.925 --> 00:20:05.725
for the rest of your life no matter how long you live.

473
00:20:06.105 --> 00:20:08.845
And if you pay extra, it will cover your husband, wife,

474
00:20:08.845 --> 00:20:10.725
or um, partner's life too.

475
00:20:11.745 --> 00:20:15.005
Um, it can increase again if you pay extra,

476
00:20:15.225 --> 00:20:17.445
but it can increase in line with inflation, um,

477
00:20:17.445 --> 00:20:18.605
or a set amount.

478
00:20:19.555 --> 00:20:21.285
However, the disadvantage

479
00:20:21.905 --> 00:20:23.725
or the disadvantages of annuities are

480
00:20:23.725 --> 00:20:24.965
that they're very inflexible.

481
00:20:25.105 --> 00:20:28.445
So you can't just decide to take extra out one month.

482
00:20:28.755 --> 00:20:31.925
It's a set amount you're going to receive, you know,

483
00:20:31.945 --> 00:20:33.845
and the other thing is that, um,

484
00:20:33.865 --> 00:20:38.045
unless you have paid extra for your spouse, uh, partner, um,

485
00:20:38.105 --> 00:20:39.765
to receive money on your death

486
00:20:39.865 --> 00:20:42.525
or there's a guaranteed amount, then when you die,

487
00:20:42.955 --> 00:20:44.565
that money is gone.

488
00:20:46.025 --> 00:20:48.365
Now next. And what's the now become?

489
00:20:48.365 --> 00:20:50.885
The most common way of taking money outta your pensions is

490
00:20:50.885 --> 00:20:53.125
something called income draw down or draw down.

491
00:20:53.945 --> 00:20:55.045
Now what happens here is

492
00:20:55.045 --> 00:20:57.645
that your money is invested in a similar way

493
00:20:57.825 --> 00:21:00.645
as it is invested in the pension fund that you build up.

494
00:21:00.745 --> 00:21:02.205
So it'll be a range of investments.

495
00:21:03.025 --> 00:21:05.925
And again, many people will take some tax free cash

496
00:21:06.105 --> 00:21:09.205
and then move the rest of their pension into drawdown.

497
00:21:10.065 --> 00:21:13.085
Now, what drawdown lets you do is you can take as much

498
00:21:13.085 --> 00:21:14.245
or as little money as you want.

499
00:21:14.305 --> 00:21:17.045
Now you can set it up so you have a regular income payment

500
00:21:17.745 --> 00:21:19.645
or you can just take ad hoc lump

501
00:21:19.755 --> 00:21:20.805
sums if that's what you need.

502
00:21:21.785 --> 00:21:25.805
Now the important thing is that it's up to you to make sure

503
00:21:25.805 --> 00:21:27.605
that it lasts for the rest of your life

504
00:21:28.385 --> 00:21:30.765
unless you have other savings or investments.

505
00:21:31.825 --> 00:21:35.485
Now, you can't pay directly into a drawdown fund,

506
00:21:36.065 --> 00:21:38.645
but if you have a pension, you know you've been paying into

507
00:21:38.645 --> 00:21:40.605
that pension and then you move your money into drawdown,

508
00:21:40.945 --> 00:21:43.525
you can still carry on paying into that pension

509
00:21:43.905 --> 00:21:46.605
and then transfer that into draw down later.

510
00:21:46.825 --> 00:21:50.165
Now, as I mentioned, the money in your draw down pot is

511
00:21:50.645 --> 00:21:52.765
invested, so that should mean that it grows over time.

512
00:21:53.545 --> 00:21:56.165
But as with all investments, there's no guarantee

513
00:21:56.165 --> 00:21:58.165
that will happen and the value could fall.

514
00:21:58.185 --> 00:22:00.925
And indeed you could get back less than you

515
00:22:01.005 --> 00:22:02.205
transferred into drawdown.

516
00:22:03.145 --> 00:22:05.525
Now, some people really like the fact

517
00:22:05.525 --> 00:22:07.365
that drawdown means they can choose

518
00:22:07.695 --> 00:22:08.885
where their money's invested,

519
00:22:08.885 --> 00:22:10.365
but for some people that's not right at all.

520
00:22:10.675 --> 00:22:12.445
They maybe don't have the confidence to do that.

521
00:22:12.865 --> 00:22:14.885
And in that case, there's something called investment

522
00:22:15.365 --> 00:22:16.885
pathways, which will do this for you.

523
00:22:17.665 --> 00:22:21.085
Now, you can find information about investment pathways on

524
00:22:21.085 --> 00:22:22.805
your own pension provider's website,

525
00:22:23.185 --> 00:22:25.805
or there's also information on the independent

526
00:22:25.805 --> 00:22:27.765
and government backed money helper website.

527
00:22:28.785 --> 00:22:30.005
Now the third option is

528
00:22:30.005 --> 00:22:31.885
to take cash lump sums directly from

529
00:22:31.885 --> 00:22:32.925
your payment from your pension.

530
00:22:33.025 --> 00:22:36.245
Now in this case, 25% will be tax free

531
00:22:36.265 --> 00:22:38.765
and the other 75% will be taxable.

532
00:22:39.385 --> 00:22:41.005
But crucially, you have

533
00:22:41.005 --> 00:22:43.725
to take both payments at the same time.

534
00:22:43.905 --> 00:22:46.045
Now, you don't have to choose one or the other.

535
00:22:46.045 --> 00:22:47.885
You can have a mixture of the different ways

536
00:22:47.905 --> 00:22:49.365
of taking money out of your pension.

537
00:22:49.905 --> 00:22:52.205
So for example, if you want to retire at 60

538
00:22:52.225 --> 00:22:56.165
or 65, maybe you want to move your pension into draw down,

539
00:22:56.585 --> 00:22:59.525
and then once you reach 75 with the rest of the money

540
00:22:59.525 --> 00:23:01.045
that's left over, buy an annuity.

541
00:23:01.205 --> 00:23:03.205
'cause that way you know that money will

542
00:23:03.205 --> 00:23:04.445
last for as long as you do.

543
00:23:04.825 --> 00:23:07.325
Or perhaps you want to buy an annuity

544
00:23:07.325 --> 00:23:09.805
to cover your ne you know, necessary bills,

545
00:23:09.805 --> 00:23:10.885
your household bills so

546
00:23:10.885 --> 00:23:12.405
that you know those are gonna get, get paid.

547
00:23:12.945 --> 00:23:15.885
And then for your spending money, you want to move them,

548
00:23:16.115 --> 00:23:17.605
your pension into draw down.

549
00:23:17.795 --> 00:23:18.885
It's entirely up to you.

550
00:23:19.985 --> 00:23:21.485
But there's a couple of things that you need

551
00:23:21.485 --> 00:23:23.645
to think about when you take money outta pensions.

552
00:23:23.945 --> 00:23:26.645
So the first is that it, it's not like a bank account,

553
00:23:26.745 --> 00:23:29.365
so you can't just phone up or go into your app

554
00:23:29.365 --> 00:23:30.805
and request money and that money will be

555
00:23:30.805 --> 00:23:31.965
in your account rapidly.

556
00:23:32.675 --> 00:23:34.765
Pension schemes and pension companies have

557
00:23:34.765 --> 00:23:37.765
to carry out a number of checks, um,

558
00:23:38.025 --> 00:23:39.885
before that your money can be paid out.

559
00:23:40.025 --> 00:23:42.925
So for example, say you're thinking of buying a new kitchen,

560
00:23:43.595 --> 00:23:47.205
make sure you leave enough money, um, for that pension money

561
00:23:47.305 --> 00:23:48.645
to come through before you have

562
00:23:48.645 --> 00:23:50.205
to pay the balance of your kitchen.

563
00:23:51.635 --> 00:23:53.085
Also, from a tax point of view,

564
00:23:53.245 --> 00:23:55.165
pensions work a little bit like salary.

565
00:23:55.825 --> 00:23:59.445
So this can be a bit of an issue if you take a lot

566
00:23:59.445 --> 00:24:00.805
of money in the first month

567
00:24:00.805 --> 00:24:02.405
that you're taking money out of a pension.

568
00:24:02.865 --> 00:24:05.645
So say you're taking a a larger cash lump sum

569
00:24:05.665 --> 00:24:07.365
or you're taking quite a large chunk

570
00:24:07.365 --> 00:24:12.045
of income from drawdown, well, HMRC think

571
00:24:12.235 --> 00:24:14.565
that you're going to receive that same large amount

572
00:24:14.565 --> 00:24:15.765
of money every month.

573
00:24:15.945 --> 00:24:18.685
So you'll pay a lot more tax than you should be paying.

574
00:24:19.985 --> 00:24:21.965
Now what happens is you can request

575
00:24:21.965 --> 00:24:24.085
that money back straight away, um,

576
00:24:24.265 --> 00:24:26.765
or you can wait for your tax code to sort itself out,

577
00:24:26.825 --> 00:24:28.205
but that emergency rate

578
00:24:28.205 --> 00:24:30.685
of tax will be applied in that situation.

579
00:24:32.545 --> 00:24:35.085
So that's how money can be taxed.

580
00:24:35.385 --> 00:24:37.285
But if you still want to pay into a pension

581
00:24:38.175 --> 00:24:41.765
after you've taken money outta a pension, so say, you know,

582
00:24:41.765 --> 00:24:44.325
Sarah, you spoke about someone who's maybe, um, decided

583
00:24:44.345 --> 00:24:47.685
to drop their hours work part-time kind of top up, um,

584
00:24:47.745 --> 00:24:49.885
but they still want to pay into their pension,

585
00:24:50.555 --> 00:24:51.845
then there's something else

586
00:24:51.875 --> 00:24:53.125
they need to think about as well.

587
00:24:53.385 --> 00:24:55.325
And that's the money purchase annual allowance

588
00:24:55.385 --> 00:24:57.845
or MPEE for short. I

589
00:24:57.845 --> 00:24:59.285
Did feel some more jargon Coming off.

590
00:24:59.365 --> 00:25:01.365
I know it's a lot of jargon. Sorry about that.

591
00:25:01.825 --> 00:25:05.045
So what the money purchase annual allowance is, is

592
00:25:05.155 --> 00:25:06.365
that it's the amount

593
00:25:06.395 --> 00:25:09.085
that can be paid into defined contribution pensions.

594
00:25:09.085 --> 00:25:10.885
So these pension pots we've been speaking about,

595
00:25:11.945 --> 00:25:14.205
if you've accessed pensions flexibly,

596
00:25:14.585 --> 00:25:16.485
now the money purchase annual allowance is

597
00:25:16.745 --> 00:25:18.045
10,000 pounds a year.

598
00:25:18.065 --> 00:25:20.445
So that's just over 800 pounds a month.

599
00:25:21.145 --> 00:25:23.725
Um, that sounds like a lot of money for for many people

600
00:25:23.915 --> 00:25:26.285
that you know, they'll never get to that amount.

601
00:25:27.025 --> 00:25:30.005
But I should say that that covers your contributions,

602
00:25:30.075 --> 00:25:32.805
your employer contributions, as well as tax relief.

603
00:25:33.345 --> 00:25:35.685
And as we've mentioned, there could be situations

604
00:25:35.695 --> 00:25:37.565
where you can afford to pay more.

605
00:25:37.665 --> 00:25:40.405
So, you know, the example of Raphael and his mortgage

606
00:25:40.545 --> 00:25:41.645
or, um, you know,

607
00:25:41.665 --> 00:25:44.045
the examples we spoke about about inheritances.

608
00:25:44.185 --> 00:25:46.165
So, so let's go back to Raphael.

609
00:25:46.225 --> 00:25:48.205
Um, James, if we can have the next slide please.

610
00:25:49.225 --> 00:25:54.005
So if Raphael wanted to take 20,000 pounds outta his pension

611
00:25:54.345 --> 00:25:56.125
and he decided to take it out as one

612
00:25:56.125 --> 00:25:59.485
of those cash lump sums, so that's where 25% is tax free

613
00:25:59.485 --> 00:26:02.405
and the other 75%, um, is taxed,

614
00:26:02.405 --> 00:26:03.805
but you get both at the same time.

615
00:26:04.595 --> 00:26:07.045
Well, he would get 5,000 pounds tax free

616
00:26:07.145 --> 00:26:09.965
and the other 15,000 pounds would be subject to tax.

617
00:26:10.705 --> 00:26:14.445
But Raphael has now triggered the money purchase annual

618
00:26:14.445 --> 00:26:17.525
allowance, and that means that he can't pay as much

619
00:26:17.865 --> 00:26:19.405
as he wanted to into his pension.

620
00:26:19.545 --> 00:26:20.805
So remember he was going to pay

621
00:26:20.805 --> 00:26:23.285
that mortgage payment into his men, into his pension.

622
00:26:23.465 --> 00:26:25.165
So, so he'd be restricted.

623
00:26:25.185 --> 00:26:27.125
If he did pay more than 10,000 pounds,

624
00:26:27.395 --> 00:26:28.925
then he would have a tax charge.

625
00:26:30.145 --> 00:26:32.685
Anyone who triggers the money purchased annual allowance,

626
00:26:32.955 --> 00:26:34.925
well, they'll get a letter from their provider

627
00:26:34.925 --> 00:26:36.405
telling them that they've done this.

628
00:26:37.505 --> 00:26:40.205
So when doesn't this MPAA apply?

629
00:26:40.355 --> 00:26:43.485
Well, it doesn't apply if you have a defined

630
00:26:43.485 --> 00:26:44.525
benefit pension.

631
00:26:44.785 --> 00:26:47.965
And in a similar way it doesn't apply if you have a defined

632
00:26:48.325 --> 00:26:51.525
contribution pension where you just take the tax free cash

633
00:26:51.525 --> 00:26:54.365
and then you use the rest to turn into a,

634
00:26:54.605 --> 00:26:56.245
a guaranteed income through an annuity.

635
00:26:56.665 --> 00:26:59.885
Now it also doesn't apply if you take your tax free cash

636
00:26:59.955 --> 00:27:01.565
from a defined contribution pension

637
00:27:01.985 --> 00:27:04.005
and then you move the rest into draw down,

638
00:27:04.005 --> 00:27:06.005
but you don't take any income

639
00:27:06.745 --> 00:27:09.165
and it also doesn't apply if you have up

640
00:27:09.165 --> 00:27:12.645
to three small pension pots worth less than 10,000 pounds.

641
00:27:12.745 --> 00:27:14.325
But now let's have our slide

642
00:27:14.325 --> 00:27:16.645
and go back to Raphael again please, James.

643
00:27:17.345 --> 00:27:22.285
So if Raphael were to take 5,000 pounds as tax free cash

644
00:27:22.745 --> 00:27:26.165
and then he moved the other 75% into draw down, so

645
00:27:26.165 --> 00:27:27.205
that's 15,000 pounds,

646
00:27:28.025 --> 00:27:32.925
he could then still carry on paying 15,000 700 570

647
00:27:32.955 --> 00:27:36.045
year into, sorry, 15,750 a year into his pension.

648
00:27:36.045 --> 00:27:38.765
Now that's the amount, uh, from his mortgage payments.

649
00:27:39.395 --> 00:27:43.485
Okay, thanks James. Now, the MPAA also does not apply

650
00:27:44.105 --> 00:27:46.525
if you, um, if you move your money into draw down,

651
00:27:46.525 --> 00:27:47.685
but you don't take anything from it.

652
00:27:47.705 --> 00:27:51.805
But it does apply if you take even a pound of income

653
00:27:52.355 --> 00:27:53.885
once you've moved it into draw down

654
00:27:54.105 --> 00:27:56.565
or if you take cash from your pension,

655
00:27:56.635 --> 00:27:57.885
even a really small amount.

656
00:27:59.025 --> 00:28:01.925
Now, we also wanted to cover what happens if you need

657
00:28:01.945 --> 00:28:03.245
to access your pensions.

658
00:28:03.345 --> 00:28:05.005
Um, earlier because of ill health.

659
00:28:05.505 --> 00:28:07.125
Now there's two different scenarios.

660
00:28:07.265 --> 00:28:10.045
So the first scenario is that of serious ill health,

661
00:28:10.425 --> 00:28:13.445
and that's where someone has a life expectancy, sadly,

662
00:28:13.445 --> 00:28:14.845
of less than 12 months.

663
00:28:15.225 --> 00:28:18.365
And in that situation, you can normally access, um,

664
00:28:18.395 --> 00:28:21.685
your whole pension pot as a tax free lump sum.

665
00:28:22.225 --> 00:28:25.405
The second scenario is someone who's, um, too ill to work

666
00:28:25.825 --> 00:28:27.805
and you would call that medical retirement

667
00:28:27.805 --> 00:28:29.765
or retirement on ill health grounds.

668
00:28:30.025 --> 00:28:33.365
And that means that they can access their pensions under the

669
00:28:33.365 --> 00:28:36.645
age of 55, but they would have the same choice of options.

670
00:28:36.875 --> 00:28:39.365
Draw down annuity, um, cash lump sum

671
00:28:39.385 --> 00:28:41.165
as someone who's over 55.

672
00:28:42.345 --> 00:28:46.325
Now if this is something, um, that you, you know, you rl,

673
00:28:46.745 --> 00:28:49.685
um, then the best thing to do is to speak

674
00:28:49.825 --> 00:28:51.605
to your financial advisor if you have one

675
00:28:51.905 --> 00:28:53.485
or to your pension company

676
00:28:53.485 --> 00:28:55.805
because you'll need supporting medical evidence

677
00:28:55.825 --> 00:28:58.445
and they can talk you through exactly what you'd need.

678
00:28:59.305 --> 00:29:02.205
So I think it's really important to kind of, to ask

679
00:29:02.225 --> 00:29:03.565
for help in that situation.

680
00:29:03.865 --> 00:29:06.365
Um, there's also help available on the government

681
00:29:06.365 --> 00:29:08.485
and independent, um, website,

682
00:29:08.535 --> 00:29:11.325
money Helper about ill health and retirement.

683
00:29:11.985 --> 00:29:13.365
So we've given you a lot

684
00:29:13.365 --> 00:29:15.125
of information today in the live show.

685
00:29:15.235 --> 00:29:16.765
Some of it has been quite complicated.

686
00:29:16.905 --> 00:29:19.365
So just before we finish, the last thing we want

687
00:29:19.365 --> 00:29:20.845
to say is, where can you go for help?

688
00:29:20.845 --> 00:29:22.885
Well, first of all, your own pension company,

689
00:29:22.885 --> 00:29:26.645
they'll often have guides, tools, articles, uh, information

690
00:29:26.645 --> 00:29:28.845
to help you particularly as you approach retirement.

691
00:29:28.845 --> 00:29:29.965
So that's a good place to start.

692
00:29:30.805 --> 00:29:32.565
Secondly, from the Money Helper service

693
00:29:32.565 --> 00:29:33.405
that we've been talking about,

694
00:29:33.405 --> 00:29:34.565
there's something called pension wise.

695
00:29:34.665 --> 00:29:36.445
Now if you're age 50 or over

696
00:29:36.505 --> 00:29:38.245
and you have a defined contribution pension,

697
00:29:38.635 --> 00:29:40.805
then you can get a 60 minute telephone appointment

698
00:29:41.015 --> 00:29:42.405
where now they won't give you advice,

699
00:29:42.425 --> 00:29:43.805
but what they'll do is they'll talk you

700
00:29:43.805 --> 00:29:45.525
through the different options, the different ways

701
00:29:45.545 --> 00:29:48.805
of taking money outta your pension, the tax implications,

702
00:29:48.945 --> 00:29:51.805
and also they'll alert you to scams.

703
00:29:52.385 --> 00:29:55.125
Now it doesn't matter how big or small your pension pot is,

704
00:29:55.125 --> 00:29:56.405
and you can access this

705
00:29:56.905 --> 00:29:58.685
before you hit the age of 50,

706
00:29:58.825 --> 00:30:01.165
if you inherit a defined contribution pension,

707
00:30:01.905 --> 00:30:04.605
or indeed if you qualify for Ill health retirement,

708
00:30:04.945 --> 00:30:06.605
now you can also go and see a financial advisor.

709
00:30:06.945 --> 00:30:08.645
Now they will give you advice, uh,

710
00:30:08.785 --> 00:30:10.245
and they will charge for this.

711
00:30:10.705 --> 00:30:12.045
It can be either an hourly rate

712
00:30:12.045 --> 00:30:14.525
or a fixed fee, a bit like a solicitor or an accountant,

713
00:30:15.105 --> 00:30:17.605
or they might charge you a percentage of the money

714
00:30:17.605 --> 00:30:20.365
that you have invested, you know, maybe 0.5%, 1%.

715
00:30:20.585 --> 00:30:22.765
So on a financial advisor,

716
00:30:22.765 --> 00:30:25.045
they will find out about your individual circumstances.

717
00:30:25.185 --> 00:30:27.765
So they'll look at your income, what you want in retirement,

718
00:30:27.865 --> 00:30:30.485
how much you have in your pension, the risk you're prepared

719
00:30:30.485 --> 00:30:31.965
to take, how you see your lifestyle.

720
00:30:32.545 --> 00:30:33.765
And if you have a husband, wife,

721
00:30:33.785 --> 00:30:36.525
or partner take their situation into account now,

722
00:30:37.115 --> 00:30:39.405
they won't come up with a one size fits all approach.

723
00:30:39.795 --> 00:30:41.485
They will take time to get to know you

724
00:30:41.505 --> 00:30:43.245
and they will make a recommendation

725
00:30:43.545 --> 00:30:45.645
of a solution based on your situation.

726
00:30:45.665 --> 00:30:46.925
So that really to help

727
00:30:46.925 --> 00:30:48.645
with your financial and retirement planning.

728
00:30:49.125 --> 00:30:50.245
I guess what leads from that is

729
00:30:50.245 --> 00:30:51.605
where do you find a financial advisor?

730
00:30:51.755 --> 00:30:54.085
Well, a couple of thoughts if you are looking for one

731
00:30:54.085 --> 00:30:55.365
to help you with retirement.

732
00:30:55.365 --> 00:30:56.965
Then Money Helper, which you mentioned

733
00:30:56.965 --> 00:30:59.725
before, has a retirement advisor directory,

734
00:30:59.725 --> 00:31:01.805
which will have a list of regulated

735
00:31:01.825 --> 00:31:03.485
and impartial financial advisors.

736
00:31:03.755 --> 00:31:05.685
There's also a website called Vouched

737
00:31:05.705 --> 00:31:08.805
for which has information on financial advisors

738
00:31:09.065 --> 00:31:11.645
and also reviews from existing clients.

739
00:31:11.745 --> 00:31:13.765
But many people find a financial advisor

740
00:31:14.155 --> 00:31:15.365
through family and friends.

741
00:31:15.665 --> 00:31:18.565
So well hopefully we've highlighted today the kind

742
00:31:18.565 --> 00:31:19.725
of things you need to think about so

743
00:31:19.725 --> 00:31:21.325
that you can really get ready for the kind

744
00:31:21.325 --> 00:31:22.765
of retirement that you want.

745
00:31:22.945 --> 00:31:26.325
Um, and Johnny, I can see there's questions coming in thick

746
00:31:26.325 --> 00:31:27.725
and fast, which is always great.

747
00:31:27.865 --> 00:31:30.205
So, uh, yeah, hello. Happy to answer them.

748
00:31:30.615 --> 00:31:33.965
Hello? Yeah. Um, if we could come back. Hello?

749
00:31:34.105 --> 00:31:35.525
Can you see me and Rachel here?

750
00:31:35.565 --> 00:31:37.525
I tell you what, we've had a lot.

751
00:31:37.635 --> 00:31:39.525
I've never really been at this end of the desk

752
00:31:39.525 --> 00:31:40.925
where I see all the questions coming,

753
00:31:41.065 --> 00:31:43.205
but there is a lot of questions. There's

754
00:31:43.205 --> 00:31:45.165
A lots, isn't there that, that's it with pensions,

755
00:31:45.275 --> 00:31:47.125
it's just, there's just so many questions.

756
00:31:47.225 --> 00:31:48.805
I'm, we're not gonna get through them all.

757
00:31:48.905 --> 00:31:50.765
We can't, we can't do that in this time,

758
00:31:50.905 --> 00:31:52.525
but yeah, there is, there is lots

759
00:31:52.525 --> 00:31:53.645
guys. So yeah, that's what we

760
00:31:53.825 --> 00:31:54.825
Get prepared. Exactly.

761
00:31:54.825 --> 00:31:56.005
So get prepared in a second,

762
00:31:56.065 --> 00:31:58.005
but I just wanna say great show again.

763
00:31:58.185 --> 00:32:01.005
Um, I always enjoy, um, the Royal London shows.

764
00:32:01.545 --> 00:32:03.925
Um, I very informative, very, very much so,

765
00:32:03.955 --> 00:32:05.645
very helpful while um, you were talking,

766
00:32:05.805 --> 00:32:07.205
I had a little girl on the Retirement

767
00:32:07.205 --> 00:32:08.645
Living standards website.

768
00:32:09.195 --> 00:32:13.085
Love it. Um, I think I'm on track for a moderate,

769
00:32:13.505 --> 00:32:14.645
um, retirement.

770
00:32:14.795 --> 00:32:16.725
Okay. Um, when I look at that, that's good.

771
00:32:16.925 --> 00:32:18.205
I think so that's good, isn't it?

772
00:32:18.385 --> 00:32:19.645
I'm happy, I'm happy with that.

773
00:32:19.705 --> 00:32:21.325
I'd like to try and do better,

774
00:32:21.545 --> 00:32:23.285
but yeah, I think I'm, I'm there,

775
00:32:23.285 --> 00:32:24.845
but I'm, I'm, I'm happy with that.

776
00:32:25.505 --> 00:32:27.285
Um, so yeah, really liked it.

777
00:32:27.495 --> 00:32:29.285
Loads of good information again.

778
00:32:29.585 --> 00:32:33.125
Um, I like, um, I don't think it's jargon what you say.

779
00:32:33.205 --> 00:32:35.565
I think you say it in a really, really uh,

780
00:32:35.585 --> 00:32:36.885
understandable way.

781
00:32:36.905 --> 00:32:39.285
So it's really good. So, um, let's get to the questions.

782
00:32:39.285 --> 00:32:41.125
So, um, Sarah

783
00:32:41.225 --> 00:32:43.445
and Claire, we, we we're gonna feed the questions to you

784
00:32:43.625 --> 00:32:45.925
so you may able to see them on the iPad now.

785
00:32:46.065 --> 00:32:48.565
So take it away, take it away. Well there's,

786
00:32:48.565 --> 00:32:49.765
There's a few questions we can see.

787
00:32:49.765 --> 00:32:52.565
Um, maybe start with the state pension one.

788
00:32:52.625 --> 00:32:53.965
So the question is one

789
00:32:53.965 --> 00:32:55.325
of the reasons why people wouldn't

790
00:32:55.325 --> 00:32:56.525
get their full state pension.

791
00:32:56.525 --> 00:32:58.085
Maybe Claire if I kick off with this one.

792
00:32:58.085 --> 00:32:59.605
And so there's a couple of reasons.

793
00:32:59.825 --> 00:33:02.685
Um, Claire mentioned about not having a full national

794
00:33:02.685 --> 00:33:04.365
insurance record and what that means.

795
00:33:05.065 --> 00:33:07.805
You may have had periods where for example, you were abroad,

796
00:33:07.865 --> 00:33:12.045
you were working abroad or for example, where you were out

797
00:33:12.045 --> 00:33:13.845
of work real, but not claiming benefits.

798
00:33:13.845 --> 00:33:16.325
Because if you were getting benefits then you would get sort

799
00:33:16.325 --> 00:33:18.365
of essentially national insurance kind of credits

800
00:33:18.985 --> 00:33:22.125
or perhaps you were caring for either children

801
00:33:22.345 --> 00:33:24.405
or for, um, an elderly relative

802
00:33:24.825 --> 00:33:26.765
and you didn't register for child benefit,

803
00:33:26.775 --> 00:33:29.125
which again would've protected your national insurance

804
00:33:29.125 --> 00:33:30.925
record or for carers credits.

805
00:33:31.225 --> 00:33:33.005
But there can be other reasons why people

806
00:33:33.855 --> 00:33:36.285
don't get the full amount of the state pension, can't

807
00:33:36.285 --> 00:33:37.285
They? Yeah, that's right.

808
00:33:37.285 --> 00:33:38.445
And um, you know, I said

809
00:33:38.445 --> 00:33:40.165
that we've got lots of information on this

810
00:33:40.165 --> 00:33:42.325
because we talk about state pension quite a lot.

811
00:33:42.865 --> 00:33:45.845
So it might be that you are something called contracted out,

812
00:33:45.865 --> 00:33:48.645
and again, it's one of these kinda, it's a bit jargon,

813
00:33:48.865 --> 00:33:52.045
it just means that you paid a bit less national insurance.

814
00:33:52.625 --> 00:33:55.165
Um, it was really common before 2016.

815
00:33:55.325 --> 00:33:57.845
A lot of people were contracted out and it was

816
00:33:57.845 --> 00:33:59.765
because you had a good workplace pension.

817
00:34:00.385 --> 00:34:03.045
Um, so that's one of the reasons you might have a,

818
00:34:03.285 --> 00:34:06.125
a little bit less now it will show in your national

819
00:34:06.125 --> 00:34:08.765
insurance, um, record your state pension forecast.

820
00:34:09.195 --> 00:34:11.805
It's called something called the contracted out pension

821
00:34:11.815 --> 00:34:14.365
equivalent, which again, is just, is not really easy.

822
00:34:14.595 --> 00:34:15.725
It's head Penalty, isn't it really? So

823
00:34:15.725 --> 00:34:18.645
that's why you might, you know, have a good, um, pension

824
00:34:19.185 --> 00:34:21.485
or you know, just simply you've, as you mentioned,

825
00:34:21.545 --> 00:34:24.045
you need 35 years of national insurance credit.

826
00:34:24.185 --> 00:34:26.165
So you could have stopped working perhaps kind

827
00:34:26.165 --> 00:34:28.525
of in your fifties before you had that 35 years.

828
00:34:29.265 --> 00:34:31.485
Um, one thing we always mention Sarah, is

829
00:34:31.485 --> 00:34:34.125
that if you stopped work to care for grandchildren,

830
00:34:34.385 --> 00:34:37.085
you know, and I think this is, um, increasing

831
00:34:37.085 --> 00:34:38.085
Is common, Isn't it? It's

832
00:34:38.085 --> 00:34:41.685
really common then it's a really good idea to apply

833
00:34:41.685 --> 00:34:44.125
for something called specified adult childcare credits.

834
00:34:44.425 --> 00:34:47.845
Um, so yeah, I think that would give you some extra years

835
00:34:47.845 --> 00:34:49.765
of national insurance contributions

836
00:34:49.785 --> 00:34:52.125
and help you towards that full state pension.

837
00:34:52.385 --> 00:34:53.965
And it's just worth saying that

838
00:34:54.135 --> 00:34:55.845
until April the fifth next year,

839
00:34:56.305 --> 00:34:59.685
it is actually potentially possible to go back 18 years so

840
00:34:59.685 --> 00:35:01.525
to till until 2006

841
00:35:01.985 --> 00:35:04.245
and fill in gaps in your national insurance record.

842
00:35:04.265 --> 00:35:05.965
Now after April the fifth next year,

843
00:35:06.545 --> 00:35:08.525
you can only go back over the last six years.

844
00:35:08.625 --> 00:35:11.045
Now it's a good idea to see if you qualify

845
00:35:11.185 --> 00:35:13.605
for these free national insurance credits in any way,

846
00:35:13.625 --> 00:35:15.805
but if you don't and you have gaps in your national

847
00:35:15.805 --> 00:35:18.485
insurance record, then sometimes it can be a really cost

848
00:35:18.485 --> 00:35:20.085
effective way of boosting your pension.

849
00:35:20.225 --> 00:35:23.165
So you can do this online on the Gov UK website if you

850
00:35:23.165 --> 00:35:24.245
just search for state pension.

851
00:35:24.795 --> 00:35:28.245
I've got a question to maybe add to to that.

852
00:35:28.385 --> 00:35:31.765
So, um, we've got, um, somewhere in the chat has asked, uh,

853
00:35:31.825 --> 00:35:33.525
the questions, can I buy

854
00:35:34.065 --> 00:35:36.565
ni years even if I wasn't in the country?

855
00:35:36.715 --> 00:35:38.645
Even if it wasn't in the UK at that time?

856
00:35:38.925 --> 00:35:39.965
I know you might not have to answer that,

857
00:35:40.025 --> 00:35:42.685
but, um, bit of a, uh, tricky.

858
00:35:42.865 --> 00:35:45.045
So I would say anytime you're working abroad,

859
00:35:45.145 --> 00:35:47.805
the Gov UK website is really good about kind

860
00:35:47.805 --> 00:35:49.885
of talking about the different points where it's actually,

861
00:35:50.185 --> 00:35:52.405
you know, you might, you might be able to,

862
00:35:52.745 --> 00:35:54.045
um, buy for certain years.

863
00:35:54.585 --> 00:35:56.885
Um, sometimes it depends on which country you're

864
00:35:56.885 --> 00:35:57.965
in, it's a bit trickier.

865
00:35:58.025 --> 00:36:00.765
So go onto gov UK um,

866
00:36:00.825 --> 00:36:02.765
and then you'll see the list of countries

867
00:36:02.865 --> 00:36:05.245
and you can probably work out if there's anything you can do

868
00:36:05.265 --> 00:36:06.445
for that point in time

869
00:36:06.515 --> 00:36:09.685
because you might have actually been able to build up years

870
00:36:10.145 --> 00:36:12.045
for the years even you were outside the uk.

871
00:36:12.465 --> 00:36:16.325
It just depends on where you are, what countries it's to do

872
00:36:16.325 --> 00:36:18.205
with kind of being in EEA

873
00:36:18.385 --> 00:36:19.925
or if you were in a country where they,

874
00:36:19.925 --> 00:36:21.805
we've got a social security agreement with them,

875
00:36:22.025 --> 00:36:23.845
but it's really clear on gov UK

876
00:36:24.025 --> 00:36:25.285
and it will help you out with that.

877
00:36:27.085 --> 00:36:28.725
Brilliant, thank you. So we've got,

878
00:36:28.845 --> 00:36:29.885
I can see loads more questions.

879
00:36:29.905 --> 00:36:33.245
So, um, wanna hear about the retirement living standards,

880
00:36:33.425 --> 00:36:37.005
um, Claire, which is, are the lifestyle incomes the sort

881
00:36:37.005 --> 00:36:39.405
of minimum moderate and comfortable quoted before

882
00:36:39.405 --> 00:36:41.365
or after income tax? So what's the answer?

883
00:36:41.555 --> 00:36:44.365
They're after income tax and they're also, um,

884
00:36:44.385 --> 00:36:45.725
and I think you mentioned that they're

885
00:36:45.725 --> 00:36:47.245
after, um, they presume

886
00:36:47.245 --> 00:36:49.325
that you won't have any living costs in retirement. So

887
00:36:49.555 --> 00:36:52.805
Rent, rent, housing costs, Rent or um, mortgage.

888
00:36:53.345 --> 00:36:55.685
Now for many people that is the case now

889
00:36:55.685 --> 00:36:57.085
because actually, you know,

890
00:36:57.085 --> 00:36:59.845
as people are retiring at this point in time, um,

891
00:36:59.875 --> 00:37:01.885
most people have paid off a mortgage for example.

892
00:37:01.985 --> 00:37:03.965
But actually we're going to be finding that, you know,

893
00:37:03.965 --> 00:37:05.445
as we kind of go years forward

894
00:37:05.675 --> 00:37:08.005
that people still might be paying rent in retirement.

895
00:37:08.025 --> 00:37:09.285
So we might see changes there,

896
00:37:09.365 --> 00:37:12.285
but currently the retirement living standards are based on

897
00:37:12.345 --> 00:37:15.885
having no housing costs and after, um, tax

898
00:37:15.905 --> 00:37:17.365
and your pension income has come off

899
00:37:18.145 --> 00:37:19.805
And there's another one, is it a good idea

900
00:37:19.865 --> 00:37:22.245
to access your flexi pension?

901
00:37:23.545 --> 00:37:25.005
Um, Claire, what's the answer to that?

902
00:37:25.545 --> 00:37:27.165
Ah, so this is an interesting one.

903
00:37:27.185 --> 00:37:30.725
So, um, kind of, again, it's a bit of an, it depends.

904
00:37:31.225 --> 00:37:34.405
So often, um, we might see, especially for someone

905
00:37:34.545 --> 00:37:38.605
who maybe has quite a lot of in the way of assets, um,

906
00:37:38.755 --> 00:37:41.205
that if you've got kind of, you know, um,

907
00:37:41.205 --> 00:37:43.485
other investments like ISAs, things like that,

908
00:37:43.485 --> 00:37:45.525
then it might be better to take some

909
00:37:45.525 --> 00:37:48.205
of your other investments before you access your pensions.

910
00:37:49.025 --> 00:37:51.445
Now you might think that sounds a little bit odds,

911
00:37:51.445 --> 00:37:54.845
but that's because pensions are normally inheritance tax

912
00:37:54.915 --> 00:37:57.405
free and currently they can be passed on

913
00:37:57.405 --> 00:38:00.045
to your beneficiaries if you die under 75

914
00:38:00.045 --> 00:38:03.965
and when you pass them on, um, then it's um, you know,

915
00:38:03.965 --> 00:38:06.085
they're free of um, income tax as well.

916
00:38:06.185 --> 00:38:09.085
So actually sometimes it's better to use some of your other,

917
00:38:09.545 --> 00:38:13.325
um, assets before you'd then use your pension assets.

918
00:38:14.935 --> 00:38:19.325
Sorry about that. I had to cough. Timing is everything.

919
00:38:19.755 --> 00:38:22.005
Okay, so we got another question, which is someone saying

920
00:38:22.815 --> 00:38:24.485
59,000 pounds a year,

921
00:38:25.375 --> 00:38:26.375
Carry on for that. Sorry.

922
00:38:26.375 --> 00:38:28.845
So 59,000 pounds a year for a retired couple

923
00:38:28.905 --> 00:38:31.725
to be comfortable seems really high, doesn't it?

924
00:38:31.985 --> 00:38:34.645
Now? I think, um, it's useful to go on

925
00:38:34.645 --> 00:38:35.885
to the term, term living standards.

926
00:38:36.125 --> 00:38:38.285
I think they're great because you can really see everything

927
00:38:38.285 --> 00:38:39.445
that you could buy or spend.

928
00:38:39.505 --> 00:38:42.685
So even down to kind of the type of car, um, you know,

929
00:38:42.705 --> 00:38:45.245
or the age of car you could have the type of holidays,

930
00:38:45.245 --> 00:38:47.925
whether you can afford weekends away in the uk.

931
00:38:48.465 --> 00:38:51.005
Um, so yeah, it, it does seem quite a lot

932
00:38:51.185 --> 00:38:52.285
for, for a lot of people.

933
00:38:52.945 --> 00:38:55.125
Um, but it's worth kind of going on

934
00:38:55.125 --> 00:38:57.125
and seeing, well actually that's the type

935
00:38:57.125 --> 00:38:58.405
of retirement I would like

936
00:38:58.665 --> 00:39:00.965
or that's the type of retirement I actually kind

937
00:39:00.965 --> 00:39:02.285
of want to aim for.

938
00:39:02.825 --> 00:39:04.525
Um, but you know,

939
00:39:04.665 --> 00:39:06.925
you would be very comfortable on, um,

940
00:39:06.925 --> 00:39:07.965
comfortable. That's for sure.

941
00:39:08.285 --> 00:39:09.965
So the clues in the name, yes.

942
00:39:09.965 --> 00:39:13.405
Okay, so this is something that I covered a moment ago.

943
00:39:13.585 --> 00:39:15.285
Um, but it is a really common question.

944
00:39:15.435 --> 00:39:18.725
It's a good one to ask, which is some saying, um,

945
00:39:19.065 --> 00:39:20.565
Dan saying I have three pensions,

946
00:39:21.545 --> 00:39:25.205
can I withdraw my 25% tax free cash from each one?

947
00:39:25.305 --> 00:39:26.885
And the answer is yes, you can.

948
00:39:27.025 --> 00:39:31.485
So if you have several different pensions, then you can take

949
00:39:31.485 --> 00:39:33.405
that tax free amount from each one.

950
00:39:33.785 --> 00:39:34.925
And Johnny, I think, have you got

951
00:39:34.925 --> 00:39:35.965
some more questions coming through?

952
00:39:36.395 --> 00:39:38.245
Yeah, so we, we have one here.

953
00:39:38.305 --> 00:39:42.605
Um, can I donate my state pension, um, to my partner?

954
00:39:43.265 --> 00:39:48.005
So, um, if yeah, is that something that we can do if,

955
00:39:48.105 --> 00:39:49.645
if I want to?

956
00:39:50.905 --> 00:39:52.645
Um, I think that's what they're asking.

957
00:39:52.665 --> 00:39:54.325
Is that what they're asking Rachel? Can

958
00:39:54.325 --> 00:39:56.685
You, can you pass your state pension

959
00:39:57.285 --> 00:39:58.565
entitlement onto your partner?

960
00:39:58.765 --> 00:40:00.965
I think that, that, that's what the question is high.

961
00:40:01.185 --> 00:40:02.485
So sadly not you build

962
00:40:02.485 --> 00:40:03.765
up entitlement to the state pension.

963
00:40:04.305 --> 00:40:08.685
Um, you know, if you um, reach state pension age Yeah,

964
00:40:08.685 --> 00:40:12.405
after the 5th of April, 2016, then it's always on kind

965
00:40:12.405 --> 00:40:13.605
of your own rights.

966
00:40:13.635 --> 00:40:15.445
Yeah, you've built up your own contribution,

967
00:40:15.865 --> 00:40:19.005
but, um, on your death, that's it.

968
00:40:19.105 --> 00:40:21.405
You know, the kinda state pension has come to an end.

969
00:40:21.465 --> 00:40:24.085
Now if you're entitled to basic state pension,

970
00:40:24.095 --> 00:40:25.565
which was the system that was in

971
00:40:26.105 --> 00:40:29.085
before, um, the 6th of April, 2016,

972
00:40:29.675 --> 00:40:32.765
then you can increase your state pension, um,

973
00:40:33.135 --> 00:40:35.845
based on your partner's, your husband

974
00:40:35.905 --> 00:40:39.085
or wife's, um, national insurance record.

975
00:40:39.345 --> 00:40:41.685
So, um, but you would know about that.

976
00:40:41.785 --> 00:40:45.885
But again, gov.uk is really clear on, um, the differences

977
00:40:45.885 --> 00:40:47.125
between someone who'd reached it

978
00:40:47.125 --> 00:40:49.165
before the 6th of April, 2016

979
00:40:49.185 --> 00:40:50.885
and those who'd reached it afterwards.

980
00:40:55.085 --> 00:40:56.325
Brilliant, brilliant. Thank you. Thank you.

981
00:40:56.385 --> 00:40:58.405
That's really helpful. Well, that, that's fantastic.

982
00:40:58.685 --> 00:41:01.045
I mean, you had load loads of questions, so, um,

983
00:41:01.785 --> 00:41:05.965
Claire it is just, it isn't a, an easy subject to all

984
00:41:05.965 --> 00:41:09.245
of this, is it, it is quite a tricky understanding

985
00:41:09.245 --> 00:41:11.325
that the percentage of tax you take,

986
00:41:11.585 --> 00:41:14.965
but I'm, I'm hoping it is become a a lot, lot clearer.

987
00:41:14.965 --> 00:41:17.725
We've got loads of questions Claire come coming in on this.

988
00:41:18.345 --> 00:41:21.485
Um, yeah. Um, especially about the state pension.

989
00:41:21.825 --> 00:41:24.045
The state pension, we've got lots coming in, haven't we,

990
00:41:24.175 --> 00:41:25.605
about the state pension as

991
00:41:25.605 --> 00:41:26.605
Well. That's the state pension is a topic

992
00:41:26.605 --> 00:41:27.765
in itself, isn't it?

993
00:41:27.765 --> 00:41:29.725
So yeah, there is, there is lots on that.

994
00:41:29.785 --> 00:41:33.885
But I think one of the main themes I'm seeing is, um, a lot

995
00:41:33.885 --> 00:41:36.925
of people are, are questioning their, their record

996
00:41:37.265 --> 00:41:38.805
and wanting to know the national

997
00:41:39.325 --> 00:41:40.925
national insurance contributions they've made.

998
00:41:40.925 --> 00:41:43.205
So the best thing to do, I think all round is to go

999
00:41:43.225 --> 00:41:44.885
and get that, uh, forecast,

1000
00:41:44.885 --> 00:41:46.245
isn't it from the government site

1001
00:41:46.305 --> 00:41:48.405
and have a look, have a look for yourself. Yeah,

1002
00:41:49.325 --> 00:41:50.405
Actually I think getting

1003
00:41:50.405 --> 00:41:52.605
that state pension forecast is really important.

1004
00:41:53.185 --> 00:41:56.965
Um, and certainly, um, kind of as you're getting closer

1005
00:41:57.145 --> 00:41:59.565
to retirement, it's essential as Sarah said,

1006
00:41:59.565 --> 00:42:00.725
because you might be able

1007
00:42:00.725 --> 00:42:03.485
to top up your state pension record, um,

1008
00:42:03.505 --> 00:42:05.725
and you might be able to go back quite a lot of years.

1009
00:42:06.265 --> 00:42:08.805
Um, but there's that deadline of April next year.

1010
00:42:08.905 --> 00:42:10.685
So it's really crucial to get

1011
00:42:10.685 --> 00:42:13.605
that if you're younger then you probably are going

1012
00:42:13.605 --> 00:42:14.925
to make up the 35 years

1013
00:42:14.925 --> 00:42:16.885
of national insurance, um, contributions.

1014
00:42:16.985 --> 00:42:18.405
So it's not as crucial,

1015
00:42:18.545 --> 00:42:20.765
but I would say it's really worth looking at

1016
00:42:20.765 --> 00:42:22.525
that the closer you're getting to retirement.

1017
00:42:22.905 --> 00:42:25.285
And in fact, our research that we did uh, last year found

1018
00:42:25.285 --> 00:42:28.045
that I think less than, uh, only around half

1019
00:42:28.065 --> 00:42:30.805
of people had actually checked their state pension forecast

1020
00:42:30.825 --> 00:42:32.125
and then fewer people in

1021
00:42:32.125 --> 00:42:34.245
that had checked their national insurance record

1022
00:42:34.265 --> 00:42:35.365
to see if there are gaps there.

1023
00:42:35.465 --> 00:42:38.245
But you know, your state pension is gonna be the foundation

1024
00:42:38.265 --> 00:42:39.805
of your income in retirement.

1025
00:42:39.865 --> 00:42:41.125
So as Claire's saying,

1026
00:42:41.125 --> 00:42:42.365
and as you know, Johnny's making the point,

1027
00:42:42.365 --> 00:42:44.325
it is really important to find out what you don't want

1028
00:42:44.325 --> 00:42:46.405
to do is to get to state pension age

1029
00:42:46.465 --> 00:42:48.725
and then find that you are not getting the full state

1030
00:42:48.725 --> 00:42:50.685
pension or you're getting less than you thought you would

1031
00:42:51.025 --> 00:42:52.365
and it's all a bit of a nasty shock.

1032
00:42:52.465 --> 00:42:55.045
So once you've got hold of your state pension forecast,

1033
00:42:55.275 --> 00:42:57.245
then you've, that information is really powerful

1034
00:42:57.245 --> 00:42:59.085
and then you can work out what the next steps might be.

1035
00:42:59.635 --> 00:43:01.925
Yeah. Brilliant. Very well one.

1036
00:43:02.075 --> 00:43:03.925
Well, can I just clear up one thing? Yeah.

1037
00:43:03.925 --> 00:43:06.725
Because that, I see this a lot when we reference the, um,

1038
00:43:06.725 --> 00:43:09.885
retirement living standards guidelines and, and I know,

1039
00:43:10.705 --> 00:43:13.205
and it's always a lot of questions come out of this,

1040
00:43:13.345 --> 00:43:14.685
so I just want to clear this one up,

1041
00:43:14.685 --> 00:43:18.845
but the, the retirement living standards, uh, figures, um,

1042
00:43:19.345 --> 00:43:20.565
the income figures, does

1043
00:43:20.565 --> 00:43:23.045
that amount include the state pension

1044
00:43:23.045 --> 00:43:24.245
amount or is that separate?

1045
00:43:24.645 --> 00:43:26.365
'cause we, we always get this question. Mm-Hmm.

1046
00:43:26.365 --> 00:43:27.645
So it's like to clarify it

1047
00:43:28.265 --> 00:43:29.365
And it's a really good question

1048
00:43:29.585 --> 00:43:32.605
and basically what the retirement living standards do is

1049
00:43:32.605 --> 00:43:34.445
tell you the income that you would need

1050
00:43:34.465 --> 00:43:35.485
for certain lifestyle.

1051
00:43:35.585 --> 00:43:37.205
So it doesn't really tell you

1052
00:43:37.205 --> 00:43:38.445
where you get that income from.

1053
00:43:38.505 --> 00:43:41.165
But we assume even though our, our

1054
00:43:41.845 --> 00:43:45.165
research from these DW p fig DWP figures, we analyse shows

1055
00:43:45.165 --> 00:43:48.325
that actually only half of people get the full amount

1056
00:43:48.325 --> 00:43:50.085
of state pension at the moment of those

1057
00:43:50.085 --> 00:43:51.085
who get the new state pension.

1058
00:43:51.425 --> 00:43:53.845
But we're gonna assume that you get the full state pension.

1059
00:43:53.945 --> 00:43:56.045
So as Claire was saying, that's currently

1060
00:43:56.045 --> 00:43:59.085
around a smidge over 11 and a half thousand pounds a year.

1061
00:43:59.905 --> 00:44:01.285
But where you get the income from

1062
00:44:01.345 --> 00:44:02.525
is sort of really down to you.

1063
00:44:02.995 --> 00:44:05.445
What the retirement living standards do is show you

1064
00:44:06.065 --> 00:44:08.085
how much certain lifestyles cost.

1065
00:44:08.805 --> 00:44:11.125
Assuming as Claire said, you don't have rental

1066
00:44:11.125 --> 00:44:12.645
or mortgage to pay and assuming

1067
00:44:12.755 --> 00:44:15.005
that tax has already been paid on any

1068
00:44:15.025 --> 00:44:16.165
pen pension income you get.

1069
00:44:16.835 --> 00:44:18.085
Yeah, that's right. So it's just,

1070
00:44:18.085 --> 00:44:19.285
you're making up that difference.

1071
00:44:19.285 --> 00:44:21.965
You're going to have to work out is your pension pot added

1072
00:44:22.105 --> 00:44:24.165
to the state pension you'll receive going to be enough.

1073
00:44:24.665 --> 00:44:27.445
But as we also mentioned, lots of people want to retire

1074
00:44:27.705 --> 00:44:30.845
before state pension age, so they would have to fill

1075
00:44:30.845 --> 00:44:32.900
that whole amount without state pension.

1076
00:44:33.665 --> 00:44:35.485
So you might need to take a little bit more out

1077
00:44:35.485 --> 00:44:36.565
and draw down, for example.

1078
00:44:37.145 --> 00:44:39.045
Um, and then when you reach state pension age,

1079
00:44:39.045 --> 00:44:40.125
you could reduce that amount

1080
00:44:40.125 --> 00:44:41.365
you're taking out and draw down.

1081
00:44:41.745 --> 00:44:44.005
Um, so it just depends when you want to retire

1082
00:44:44.345 --> 00:44:45.925
and how much you want to retire on.

1083
00:44:47.135 --> 00:44:49.845
Great. Still. Thank You. Brilliant. Well, um, can I

1084
00:44:49.845 --> 00:44:51.445
Wrap up with one final question? Right?

1085
00:44:51.825 --> 00:44:54.965
Do you want me to and simple one stop? No, no more

1086
00:44:55.145 --> 00:44:56.525
Simple one, but I wanna try

1087
00:44:56.525 --> 00:44:57.645
and help the audience with this one.

1088
00:44:57.645 --> 00:45:01.085
So we mentioned this earlier, I think about, um, uh,

1089
00:45:01.155 --> 00:45:03.285
beneficiary forms, nomination forms,

1090
00:45:03.525 --> 00:45:05.325
I think the expression of wish to get called different things.

1091
00:45:05.705 --> 00:45:08.525
Um, how important is it to make sure

1092
00:45:08.525 --> 00:45:09.765
that this form is up to date?

1093
00:45:10.905 --> 00:45:13.005
So I would say it's always really important.

1094
00:45:13.195 --> 00:45:14.765
Make sure these forms, you know,

1095
00:45:14.865 --> 00:45:17.805
you look at 'em maybe every year, um,

1096
00:45:18.185 --> 00:45:20.685
it might not have changed, but just have a look

1097
00:45:20.685 --> 00:45:21.925
and make sure it's really clear.

1098
00:45:22.425 --> 00:45:25.725
Um, and you know, then you're letting the pension provider

1099
00:45:25.725 --> 00:45:28.125
or the pension scheme know who, who you would like

1100
00:45:28.125 --> 00:45:30.565
to receive your money because sometimes things change.

1101
00:45:31.305 --> 00:45:32.605
Um, and you know,

1102
00:45:32.605 --> 00:45:34.965
often people have filled them in when they started a new job

1103
00:45:35.465 --> 00:45:37.445
and then they never fill them in again.

1104
00:45:37.445 --> 00:45:39.525
And you know what, and I always tell the story of,

1105
00:45:39.545 --> 00:45:40.605
of a forum I saw

1106
00:45:40.605 --> 00:45:42.885
that was 20 years old when the gentleman was married

1107
00:45:42.885 --> 00:45:45.925
to his first wife by the time he died 20 years later,

1108
00:45:45.955 --> 00:45:47.325
he'd been married another four times

1109
00:45:47.785 --> 00:45:49.045
but never changed his form.

1110
00:45:49.105 --> 00:45:51.165
So I think that just kind of shows that, you know,

1111
00:45:51.165 --> 00:45:52.645
there was a lot of different children as well,

1112
00:45:52.645 --> 00:45:56.205
that it's very difficult as a, as a pension provider to try

1113
00:45:56.205 --> 00:45:58.205
and work out who should be receiving the money.

1114
00:45:58.205 --> 00:46:01.285
We get lots of evidence, um, from all different parties.

1115
00:46:01.545 --> 00:46:05.445
But actually the best evidence is you looking at your forum,

1116
00:46:05.445 --> 00:46:08.285
filling in who you would like to receive, um, your money.

1117
00:46:08.825 --> 00:46:10.365
And I dunno if it's just worth saying Claire

1118
00:46:10.545 --> 00:46:13.005
as a final thought because those are two ways

1119
00:46:13.005 --> 00:46:15.325
that you can sort of leave money in a way.

1120
00:46:15.325 --> 00:46:17.565
One is where you say, I want this person

1121
00:46:17.705 --> 00:46:19.485
or these people to get my pension money

1122
00:46:19.485 --> 00:46:21.965
and the other is I would like 'em to get the pension money.

1123
00:46:22.045 --> 00:46:23.685
But the final say goes to the pension company,

1124
00:46:23.705 --> 00:46:25.485
and again, this is one we get a lot of questions about

1125
00:46:25.485 --> 00:46:26.845
because it almost feels a bit like,

1126
00:46:27.235 --> 00:46:29.045
well if I do the second option

1127
00:46:29.585 --> 00:46:31.965
is the pension company gonna actually pay the money out?

1128
00:46:31.985 --> 00:46:34.325
But just explain what the advantage of that is.

1129
00:46:34.485 --> 00:46:35.445
'cause I think it's really important for

1130
00:46:35.445 --> 00:46:36.005
people to understand.

1131
00:46:36.315 --> 00:46:39.245
Yeah, so, so the advantage is that, um,

1132
00:46:39.595 --> 00:46:42.645
your pension money wouldn't be subject to inheritance tax.

1133
00:46:43.265 --> 00:46:45.805
And you might think, well actually I've, you know,

1134
00:46:46.205 --> 00:46:48.205
I don't have a massive amount of assets

1135
00:46:48.345 --> 00:46:51.805
so I wouldn't be subject to inheritance tax anyway.

1136
00:46:52.065 --> 00:46:54.645
But the other advantage is it's paid out much quicker

1137
00:46:54.875 --> 00:46:57.845
because if you have to wait on probate

1138
00:46:57.905 --> 00:46:59.205
or confirmation in Scotland,

1139
00:46:59.355 --> 00:47:00.965
that can take six to nine months.

1140
00:47:00.965 --> 00:47:03.085
Whereas the pension company can work out who

1141
00:47:03.085 --> 00:47:04.525
to pay your money to quite quickly.

1142
00:47:05.385 --> 00:47:08.645
And in complex situations where there's not an expression

1143
00:47:08.645 --> 00:47:10.005
of wish form or it's out of date,

1144
00:47:10.345 --> 00:47:11.885
the pension company can look at

1145
00:47:11.885 --> 00:47:14.205
who they think you would like to receive the money

1146
00:47:14.225 --> 00:47:16.965
by talking to family solicitors,

1147
00:47:16.965 --> 00:47:18.445
accountants, that kind of thing.

1148
00:47:18.545 --> 00:47:20.845
So there's a lot more flexibility

1149
00:47:21.515 --> 00:47:24.525
when it says exactly who is to be paid.

1150
00:47:25.165 --> 00:47:27.405
I have seen situations where it's had an ex-spouse

1151
00:47:27.465 --> 00:47:29.725
and that money has had to be paid to the ex spouse

1152
00:47:29.795 --> 00:47:31.725
because the form hasn't been changed.

1153
00:47:31.945 --> 00:47:36.165
So that's why it's, you would normally see it as it's,

1154
00:47:36.165 --> 00:47:37.645
you know, called an expression of wish.

1155
00:47:37.905 --> 00:47:39.765
And um, and it's, you know,

1156
00:47:40.065 --> 00:47:42.925
the pension company make the sort of ultimate decision,

1157
00:47:42.985 --> 00:47:45.165
but it is based on evidence of what you would want.

1158
00:47:47.765 --> 00:47:52.285
Brilliant. Well thank you so much to Sarah and Claire.

1159
00:47:52.475 --> 00:47:53.645
It's, it's been fantastic.

1160
00:47:53.775 --> 00:47:56.805
We've got another Royal London, um, show tomorrow.

1161
00:47:57.105 --> 00:48:00.685
It is actually, I'm gonna be joining Claire on the set at

1162
00:48:00.745 --> 00:48:02.805
um, ten four, uh, 10 to 10 45.

1163
00:48:03.045 --> 00:48:04.765
Tomorrow we're gonna talk about the Yeah, very good.

1164
00:48:04.905 --> 00:48:07.085
Um, how shrink the gender pensions gap.

1165
00:48:07.085 --> 00:48:09.525
So if you're not booked onto that show, make sure you do it.

1166
00:48:09.525 --> 00:48:12.005
It's gonna be a great show. Um, thank you to you both.

1167
00:48:12.005 --> 00:48:14.565
Thank you to um, Sarah, thank you to Claire.

1168
00:48:15.025 --> 00:48:17.085
Um, and Rachel, thank you to you for Thank you.

1169
00:48:17.085 --> 00:48:18.805
With all the thank thank you to you. Oh, thank you.

1170
00:48:18.805 --> 00:48:20.685
Thank to everyone. Thank you. Yeah, thanks everyone joining.

1171
00:48:20.855 --> 00:48:22.605
We'll see you later. Take care. Bye.