Most Americans find it hard to retire comfortably amid economy downtrend. Some have close to nothing going into retirement, my question is, will you pay off mortgage as a near-retiree, or spread money for cashflow, to afford lifestyle after retiring?
Agreed the role of advisors can only be overlooked, but not denied. I remember in early 2020, during covid-outbreak, my portfolio worth around $300k took a slight fall, apparently due to the pandemic crash, at once I consulted an advisor in order to avoid panic-selling. As of today, my account has yielded big fat yields, & leverages on 7-figure, only cos I delegate my excesses right.
this is huge! mind if I look up the consultant that guides you please? only invest in my 401k through my employer for now, instead enthused about diversifying my investments for a prosperous financial future
I work with Sonya Lee Mitchell as my fiduciary advisor. Simply look up the name. You would discover the information you needed to schedule an appointment.
Thank you for this tip. It was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her resume.
Pete, your 'tutorials' aren't "helpful", they are pure gold every single time. Thank you so much for the 'explanations' (as of course you cannot give advice 😉) you so generously provide. Love them all ❤
@@MeaningfulMoney Hi Pete be great if you could do a video on where to store cash in a sipp for 1 year or 2 . Have heard of sipp deposit accounts ? James
I’m 23 and have had private and workplace pensions since 19, and two big changes have happened between then and now, and in 2028 the drawdown age is going up and will most likely go up again. While investing in an ISA for retirement makes less sense financially, it’s definitely much easier to plan for.
Easy access for a ISA when you are younger and the withdrawal tax benefits make it good. If you can do both and switch to almost all Pensions as you get older, then you are in a great place. Assuming Tax relief is still around. ISA millionaires will probably get hit by Labour. Don't trust them.
Which is exactly why I and many in the pensions industry have long wished for government ministers to stop meddling with pensions! They need long term stability of rules and regulations to allow people to properly plan. Most Chancellors can’t seem to resist them though.
I am not sure how much taxes they can raise on pensions… but they shouldn’t. Full State pension is peanuts. We have to thunderdome it ourselves already. They should give us more flexibility higher thresholds and more tax benefits. Self funded retirement is no joke!
I think you’re right with how they will tax through probate. It mustn’t be forgotten that due to most of the population having a lack of savings for retirement and the state pension reducing in real terms and starting at a later age, any government needs to encourage private pension contributions
I agree. They don't seem to take into account inflation. The tax free lump sum will be worth much less in 10 years. I can't see it being increased though.
Really good video Pete. I think you are right that any government will want to explore this idea. Easy win like you say. Read a few articles yesterday about possible Labour amendments to CGT and changing (or scrapping) reliefs on transfer of business assets and agricultural land but by going after pensions, you cast the net much wider.
Thanks, Pete. This is really pertinent for me. I've just turned 60 and have built up a large DC pension pot. I was thinking of retiring this year due to changes at work but will probably stay another year or two unless Im made redundant. I'm still paying into my pension quite heavily, as much as anything to avoid paying so much tax, but I also wonder how much tax I'll eventually end up paying when I do take my pension. FWIW, I don't have any children unfortunately so the inheritance aspect is less important for me than supporting myself in old age, especially after what has happened to my (divorced) parents and grandmother in later life with their care. Dealing with this, and finding adequate care (and funding arrangements) has been a nightmare. If any goverment looks at inheritance tax, they also need to fully address care home fees and capping contributions for this. The present government pledged to do this but failed to do so I'm also concerned that the tax-free element of the pension may be looked at, though that would also affect people with smaller pots, which would be an extremely unhelpful thing for any government to do.
Pete, you are the only person who speaks so intuitively and clearly without any bells and whistles in your video! As always, fantastic video. Thanks again.
I think limiting the IHT benefit and PCLS threshold are two very easy mechanisms that a future government could employ to grab some tax revenue from private pensions. Hence ive crystallised mine, put everything into drawdown and intend to enjoy it whilst I can.
Our taxes are already at record highs, and still the government want more. As a country we need to rethink why we are spending so much, and if that is appropriate.
@terenceperera3156 rich people are clued up all can avoid inheritance tax if above 350 thousand pounds, sign of your estate to your children several years before death if you survive I believe you do not pay ,but your family have passed down to the next generation. trouble is the world is full of bitter people and attack the rich for being rich.Even if they paid 50 percent more it would never be enough to solve anything .The royals we pay but king Charles does make as well and gives to charity, the royals have so many people that have jobs all over the world who do pay tax .People like Bill Gates Elon musk all massively richer and even they are hounded by Liberal lefties in America to pay tax but yet both of these have created many many jobs that no government would be capable and all these jobs pay tax into the system .I am no royalists or total defender but love them or hate them the rich create wealth .one percent own most of the wealth and they say if you shared it out between everyone it would all end back up with the one percent .
I'm fiscally very central, and socially left of centre. I don't believe there should be a lifetime allowance, HOWEVER, I think there should be a limit of what can be inherited tax free.
Took a lump sum early and receive a reduced rate p.m reason being not fit to work my old job and DWP infor me they take my monthly pension off whatever benefits I receive so what was the point of the plan ?🎉😅
Hi Pete could you do a video on pension recycling limits as pension recycling is part of financial planning so long as you don’t trigger any HMRC tax penalties
Helo there, I’m in the fire service pension scheme. 2006 & 2015 could you give any advice on additional pension contributions? Or any general advice for people on government DB schemes. Great videos by the way, thank you 👍🏻
I'm surprised you made no mention of National Insurance Contributions. These amount to almost 24% between employers and employees and greatly affect the tax landscape for small businesses and self employed people thereby how much can go into their pension, no?
Hi Pete, whats your view on the government limiting the tax free allowance either as a percentage or a specific value? I am hearing that some people are taking all of their tax free allowance now ahead of any announcement of governments plan and filling up their ISAs and other tax efficient investments (what ever they are). I'm with you on the likelihood of the inclusion of SIPPs in the value of estates - my only question would be the passing on to spouses at nil rate. I would also be interested to see if there will be changes to gifting rules - maybe a lifetime allowance. All the best M
The simplest solution would be to bring pensions inside the scope of inheritance tax. It's an obvious loop hole designed for the rich that pensions are inheritance tax efficient, that's not supposed to be their purpose. Make an exception for spouses so that they still receive it tax free, otherwise it's part of your estate.
@@elliotjack6999you know taxes are necessary to a functioning society right? I mean, my neighbour consistently moans about driving through potholes in his porsche, but also avoids paying any tax through various schemes. No sympathy.
@@alan_davis Taxes being necessary is another argument, but for this conversation we agree they are. The level of services provided for the amount of tax taken does not add up, governments are corrupt and inefficient, the level of tax they propose for the citizens in my opinion is ridiculous. We are being used as a slave class to fund the corruption On your note about your neighbour with a porche, even with every "scheme" , most people affording such a car are still paying vast amounts more tax per year than many people even do in a lifetime, has every right to moan about the roads and as does everyone else, they take enough money off us for them. What do you think is a fair limit of net tax for an individual? I am curious to know
Genuine question. What was the reason / rationale behind the Pension Commencement Lump Sum ? I have Googled it and while I got 101 articles detailing how it works none said why it is there. Was it introduced back in the days when people like Policemen lived in Police houses and drove a "company" car so had a load of expenses at retirement ? I know exactly why we had MIRAS but look what happened to that.
I am not sure how such changes to pension taxes at death would be phased in. For example, if your savings are already above an introduced threshold, suddenly all your planing could be out the window because of new tax implications (providing for those left behind). Would a government really really be prepared to shake peoples trust in the pension mechanism further, by pulling the rug out from underneath them? Remember the alternatives to private pensions are either an enforced workplace, or more state pension. The former potentially suppresses corporate investment in the UK, due to labour costs and red tape, and the latter requires much higher levels of taxation (unsustainable levels). Whilst pensions may seem like a ripe coffer to target for taxation, there are many reasons why this probably makes little sense.
I liked this Pete. I also think you speak at a good pace. Not too fast, not too slow. I agree new legislation will be passed under Lab, could be removal of age 75 as no longer a relevant BCE, so why have it at all? Off piste but CGT will be aligned to income tax thresholds by looks of it.
And they wont do any of this, just pull a surprise from left field. In 97 first budget an obscure tax change to share dividends tax credits hammered pension funds and cost pension savers an absolute fortune. They probably have something similar lined up to tax pension fund growth.
Agreed. However, looking at it from their point of view, in 1997 companies were taking pension holidays because pension funds were awash with cash. I keep having to hear from someone who worked for the same company as me how, because they volunteered, they were allowed to retire at 50 with only a 10% penalty on their final salary pension.
Personally I think that so long as there is still a spousal exception for tax on pension pots, such that a spousal annuity/ drawdown or DB pension benefit is not broken by any changes, then I’m not sure why a pension pot should be exempt from inheritance tax. Surely my pension is for my retirement, i think that the concept of thinking of it as an investment vehicle for avoiding inheritance tax for children is the wrong outcome from the law change that allowed it. Also I don’t see that a lot of people would be impacted by this as generally pension pots will decline in value in payment.
I agree. Of all the options put forward here as possible ways of taxing pensions, removing the protection from inheritance tax seems the most reasonable.
I couldn't have put it better myself. A pension should be a pension and not an inheritance tax loophole to give to children IHT free. I worked alongside persons who were building up sizeable DC pension pots due to annual input and generous tax relief and who had no need to access them with the intention pass the pot onto children. The lifetime allowance pension tax charge was unnecessary and effectively penalised those who had over many years managed to build up their pension. I hope that it never comes back. Far better to tax pension pots for increased taxation under IHT rules with spousal exception as per current estate rules including ISA's.
I would be broadly in favour of flat rate tax relief on pension contributions at 30%. Bet they offer 25%. I would accept a cap on tax free cash from pensions. Bet they go low. I object to changing the tax treatment of pensions on death, for me in later years, my pension pot is a bet on care fees versus giving my kids a leg up. I'm frustrated (pissed off) with governments changing the rules, many years ago I accepted the rules that I could draw from my pension at age 50, a twenty five year agreement, three months before the deadline it moved to 55 years! I didn't need or want to draw down my pension but I felt cheated. I encourage my kids to save and invest and contribute to pensions but worry those pots of money are easy targets for politicians.
"I would be broadly in favour of flat rate tax relief on pension contributions at 30%" - That would mean you take away from higher tax payers and give to lower tax payers. You might then ask, what was the point of working hard for progressing my career and getting that expensive degree.
The most equitable solution is to simply apply a flat basic rate (20%) tax relief for all contributions. I doubt if any future government could afford to give away another 10% for all of the basic rate taxpayers pension contributions. Why did you pay for your expensive degree and work hard to develop your career? Because you were capable of it and, since you are raising the question you must be into the higher rate (40%) tax bracket, so that your taxable earnings are probably already at least double average (median) earnings. Let's understand the real impact on your income - if you currently contribute 15% of gross income and benefit from 40% tax relief, then the impact would be just 20% of 15%, i.e. 3% of income. Try turning your question around: why should pension savings for basic rate taxpayers be penalised relative to higher earners?
@@davem.4003 how 40% relief for higher tax payer penalise basic tax payer? Everyone get relief on the tax they have factually paid. If you've have paid 20% you get 20% relief, if you've paid 40% you get 40% relief. As a higher tax payer I will be reducing my hours as much as I can if the system were I can get less relief then my tax contributions is implemented. Also to answer your question: why should pension savings for basic rate taxpayers be penalised relative to higher earners? Becuase basic tax payers did not put enough effort to progress their careers and get that expensive degree?
Hopefully your student loan is because of a worthwhile higher education degree that has improved your earnings potential due to having skills valuable to an employer. Compound investment return over a 30+ yr period has a huge impact on what you end up with so don't limit your pension contributions to match your employer % and if you can afford to do so start to increase your % contributions.
I think you have missed the most obvious which is reducing the 25% tax free draw down you can take from a pension. They could easily reduce that to 20%, then 15% and probably down to 10%. It would hit those with the largest pots hardest (the ‘rich’) and would be easy to implement
Would also be a complete disgrace and essentially stealing from anyone who ever made the choice to contribute to a pension in the knowledge of that being the benefit.
I was covering the ones I think likely, in reverse order of likelihood. I just don’t think they’re going to attack tax-free cash because it would affect everybody, including core voters.
I agree. Makes you think about getting the money out now (if you are over 55). That’s the trouble with pensions, as attractive as they are; you never know when they will change the rules of the game. There should be a law that nothing can be changed retrospectively.
@MPD90 I don’t disagree it would be terrible and a disgrace but since when has that bothered them? They have to get money somewhere having pledged they will not raise taxes for ‘working’ people. Retired are not working (in general).
It might also encourage people to work a bit longer as well. Loads of younger colleagues at work are retiring and I get the impression that having three or four years salary tax free is a big incentive. The most sensible use I have heard of is as a house deposit for the retirees son.
Successive governments don't seem to grasp that people want certainty in pension savings. Several of my colleagues have cited the expectation that the goal posts will move as a reason not to increase their contributions.
Yup…. I am a retired fund manager, I could have put way more into my SIPP …..but didn’t because every bloomin governemnt changes the rules and if we had a very lefty government they could even do what they announced in Hungary…. seize your pension and give you a measily state pension in exchange.
British women lost 78,000 in pension contributions they paid in by having to work 7 yrs longer at 67yrs !! In countries like Japan , they look after thier seniors and can retire at 55 yrs and get lots of freebies too and tax breaks . Pension money shouldn't be taxed at all as we have already lost enough !!!
So glad you were right on this one Pete. Great video as always. I hope that the pension allowance stays at £60K PA but have not heard or seen any mention of that in Labour’s manifesto. They should also not be allowed to change the rules for anything you have accumulated to date - Any changes they implement should be based on new contribution’s only, that way you can make an informed decision before deciding to pay more into you pension.
The pension input allowance was increased to £60K/yr to try and stop high earners (consultants) in the NHS from retiring early. This is necessary in addition to abolishing the pension lifetime allowance. Lowering the pension annual input limit back to £40K will likely result in more higher earners in the NHS taking early retirement.
The madness of no allowance has destroyed the stability of pensions. I am near the old lifetime allowance but I thought getting rid was stupid. Any pension changes should be thought through long-term and not used like sunak did for short-term political gain
The concept of being able to pass a pension pot tax free on death is ridiculous and I say this as someone who doesn’t even expect to have to touch my own pension. Our tax system is inequitable and antiquated. Firstly we should have one rate of tax allowance on pension saving, that in itself means earners of all levels have a similar benefit and we don’t prioritise high earners. As a high rate tax payer I find it laughable that I benefited more than the people I employed. The system is so wrong. Secondly if you choose not to, or are rich enough to not have to, take your pension then it should be taxed on death, it is then up to you as an individual to pass it down before you die. If you are too greedy not to then your beneficiaries suffer the cost. If you are generous enough to do so then they pay no tax. Simples 😊
Interesting idea on the inheritance tax change, not great personally, but I think you are right as it would be seen as not penalising the retired person. Of course the unintended consequences could be varied, spending down your pension, taking the lower tax penalty and then putting into a trust or such like. To me it seems that governments are very bad at anticipating what we might do when they do X.
An other pension option is to turn Civil Service and Public pensions into DC schemes. That would help those employees to appreciate the situation that the rest of us "enjoy".
Totally agree, these gold plated defined benefit schemes have an effective employer % contribution rate over 20% that the taxpayer simply can no longer afford. Its the big elephant in the room, and isn't tackled due to the potential for strikes. All new public service pensions ought to be DC type from an agreed date and then people can decide whether or not to pursue employment accordingly.
They could switch to a system similar to ISAs where the pension contribution is made after tax and is tax free thereafter. This would bring in more upfront tax for the current government. New Zealand uses this method.
Fascinating video (though my head was hurting by the end!). Unless I missed it, you didn't mention the 25% TFLS. Do you think any government would dare to take that away? I have often thought of taking mine and putting it into my S&S ISA (I realise there are IHT implications), before a Labour government snatches it from under our noses.
The TFLSA has fixed the amount that can be taken tax free from a pension. Inflation will over many years reduce this fixed TFLS amount in real terms. Therefore, if already at or above the TFLSA amount now it is probably worthwhile drawing down the TFLS as much as possible each year into an ISA (£20K), with an extra amount from the lump sum to supplement pension income per year and then take drawdown pension income at the tax free max of £12570/yr so as to utilise the additional £5000/yr tax free savings allowance in order to place £100K in an ordinary savings account (5% interest) and minimise tax.
Love the content Pete, this is a little political rather than financial but i think a major problem is that nothing seems to be improving with all these higher taxes, healthcare is strained public services too police are increasingly over stretched housing isnt being sorted. Alot of people wouldn't mind higher taxes if we were as efficient as the nordics but it seems we are just getting higher taxes, lower benefits from them. Im 30 and i hate to think what life will be like in this country for my future children.
In the 1990s I sold pensions on the strenght that the tax free lump sum would pay off most if not all of the mortgage and leave the investor with a pension for life. Most were over a 40 year term plus, I was not alone
The approach of selling pensions with the promise that a tax-free lump sum would pay off mortgages and provide a lifelong pension was common in the 1990s. However, many factors can affect the outcome, including changes in the housing market and interest rates. It's crucial for investors to seek personalized advice and consider diversified financial strategies to ensure long-term financial stability
it's vital for investors to seek personalized advice and adopt diversified financial strategies. Working with a knowledgeable financial adviser is crucial for achieving long-term financial stability and freedom.
I've experimented with a few over the past years, but I've stuck with ‘’Angela Lynn Schilling” for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look her up.
The advice I received reference IHT is take out a big loan on your residential home, invest in assets via an SPV which keeps your IHT to a minimum 🎉 I haven’t seen anything contrary to this
Oh, Special Purpose Vehicle? Seems a bit drastic to mortgage your home and invest in risky assets to save tax, but I imagine that it works technically. Hardly anyone would agree to such a scheme on the basis that it would be complex and costly to set up, as well as the interest payments would be high. Presumably the SPV would have a mechanism to pay the loan interest? Unless you did an equity release loan where the interest rolls up?
@@MeaningfulMoney I'd love to think the very brightest would be thinking about how to leave pension pots alone and save money by not funding wars instead. Many other countries do that - it's not without precedent.
I think if they want to raise more from pensions ita more likely they will get rid of salary sacrefice schemenes. This has always been a bit of an unfair system as it is not available to everyone and would increase the tax take whilst making the system fairer for everyone. I cant see them introducing a standard 30% tax relief on contributions as this would cost too much however removing the higher rate relief could be an oprion with everyone getting 20% relief.
John, you brought it upon yourself. As for your example, that’s easy to answer: if there was an adverse tax change to a direct investment there is typically the possibility to switch to another type of investment to avoid it (case in point tax changes to buy to let, so switch out to equities or something else). A pension is a tax wrapper and if they change the rules of the wrapper you cannot necessarily exit the wrapper. Hope that wasn’t too patronising for you.😂
I can't see any reasonable way of changing thr pension system, if there's significant change and it starts costing highly skilled people, most of will just opt to retire as we have been seeing. It's a bit wrong that some of these politicians have 1m pension funds with special tax deals but the general public's pension savings are easy tax pickings for quick fixes. Remember what Gordon Brown did with the dividends relief reduction on final salary pension schemes he destroyed them for the majority private schemes. Hence, the huge issues we have now with most average workers with little pension savings for old age.
@@alan_davis Many of these highly skilled people have enough money to retire. If you mess with them. they will simply retire earlier. I am waiting for Labour to introduce the 25% tax free scrapping and I'm out.
My concern is the pension commencement lump sum or tax free cash. My plan was to take out enough to pay off my mortgage when my fixed rate ends at the end of 2026. The soonest I can get my hands on this pot is August 2025. My concern is that they reduce the amount you can take tax free or scrap it. Do you think they could do this, I need £130,000 tax free to pay my mortgage I can do that if the amount is still the same at 25% of pot value but this labour government has me concerned and they might scupper my plans entirely. I am not employed and full time carer for mom and dad as an only child right now and coming up to my 54th birthday.
@@khiburgess5848 Pity sure there has to be consultations and it has to be debated a number of times in commons and lords to get royal assent it’s how long that process takes, hopefully gets blocked and not until end of 2025/26
As someone in their 30's who has started maxing out pension allowance each year i don't mind a death tax. Will incentivise me to enjoy the pension in my retirement which is probably a good thing. Removing the 40% tax relief, lowering the tax free annual allowance or introducing a lifetime allowance (already confirmed not doing the later) are what would hit me hard and make me reconsider the value of a pension
@@Robot-T1 Better to pass your earnings on while you are living rather than waiting until you die; they'll get more benefit from it and you can enjoy seeing them using it.
@@MoonBrainLondon true, but won't know how long you will have to live during retirement and you will want enough in your pension for it to grow and still provide for yourself comfortably For you to have an income below the higher tax band at 40% you would need at least £1m in the pension pot drawing down 4% a year (£40k). If you die with £1m in your pot, government is going to want a slice of that!
@@MoonBrainLondon I suspect many people get their inheritance just when they least need it. In my case it was less than a year after I had paid off my mortgage.
Hang on, hang on, you say something _very_ important at 04:42: "If you have accessed taxable benefits _from a money purchase pension_. That is called the Money Purchase Annual Allowance (MPAA)". Now I knew of the drop to £10K max contribution, but have not seen and GOV.UK etc. does not make clear that this applies only to money purchase schemes. Do I presume from the fact it's actually called the MPAA that if you have drawn taxable benefits from a DB scheme, thne the MPAA does _not_ kick-in as you have not drawn from an MP/DC pension??
Death of a parent is stressful and having to sell off assets whilst mourning is an issue. I would be more in favour of an IHT free threshold on defined contribution pensions than one on property. I have seen a few times situations where the inheritor is very reluctantly forced to sell an inherited property. Where property is split between several kin, the problems seem worse. I am not against the property tax free inheritance allowance completely, but a period of bereavement grace would be seem fairer if this was possible to administer. An executor having the authority to sell shares to pay IHT would be a lot less stressful. Perhaps 20-30 years down the line people will tend to have more liquid assets in their estates and will be less inclined to feel they need to pass the house on to their kin. Better incentives to reverse mortgages in the later years of life would probably help this.
So when all those highly paid doctors, lawyers, judges etc. etc decide they might as well retire early becasue their pension fund is getting too big then how is that going to help the NHS, legal establishment etc etc. Or maybe the government will decide they have to row back - as the current government had to do when they realsied there were't enough highly qualified doctors to go around.
@@BaileyMxX I know they have committed but I was answering the comment above. And also I would not trust labour as far as I could throw them on LTA for the normal workers.
money is a zero sum game. when banks print new money for rich to buy assets. money we own becomes worth less. our wages and savings lose the equivalent, equal and opposite value. zero sum game. theft and slavery of us by inflation. if ppl understood this. they would be 🗡️ the rich bankers and rich oligarchs for enslaving them 💱🏦🇮🇱🇪🇺🇺🇸🇬🇧🇫🇷🇦🇺🇨🇦🇩🇪🇮🇹🇬🇷 inflation is a desired inevitability by the boe and bankers in that they want to keep printing money for themselves to buy our lives from us. but they don't want us to become aware enough to notice it is happening. uk won't cut rates as they can't. fed can't cut rates as there's a global de-dollarisation going on. so to save the dollar they are increasing rates. uk can't cut rates because it is a giant bank. and if it does, there will be massive capital flight of money out of the UK banking system into the usa one. so wherever the fed goes, uk goes. the uk elite would rather throw all 60million brits to the wolves of siberia, than abandon the banks and banking families of the uk. we are sheep. they are the shepherd, and the uk government is their shepherd boy employee. and they eat us and our children's future for dinner, like wolves. they aren't interested in helping or growing the economy. they are interested in keeping us poor by stealing everything from us. British banking oligarchs, house of lords and their friends are parasites. the job of house of commons is to scam us into accepting them stealing all our money and our life, without us waking up violently.
One other thing they could tinker with is the retirement age, no? Since they're not re-introducing a lifetime allowance, they could make it more difficult for you to access the pension in your lifetime... 🤦♂
@@MadBerks-nk4yq Thanks. But is there any advantage then of contributing to the pension when you could just put it into a dealing account? I guess returns are tax free in the pension (until you take them out) but you then subject the contributed monies to the whims of whichever chancellor happens to be in power.
@@Nousmourronsseuls25% tax free lump sum and exemption from IHT are the reasons additional rate taxpayers might use a pension. However most people seem to put excess into trading accounts as there is more flexibilty.
VAT adds no value too any goods or service. Buying a house taxed. So another grab by the Goverment. I suggest that 5 % tax is likely to begin with. Once its in place you can easily step it up.
@@MeaningfulMoney Earlier this week I decided that I will (in a couple of instalments - I’ve just instructed £400,000 out of my SIPP into £300,000 drawdown and £100,000 tax free lump sum) take the max tax free cash and put in a General Investment Account. I’ll buy the same funds back that I sold from my SIPP, but the Distribution classes rather than the Accumulation. The dividend income will be taxable (no problem) and I can gradually sell my GIA holdings down (for spending), paying Capital Gains Tax on the amount that their value has increased by at time of sale. So I’d be paying tax on all my subsequent gains and income, but none on the original amount taken out of my pension, saving me £100,000 tax if tax free lump sums are banned. I expect Labour to increase dividend tax and CGT rates to match income tax rates and I can’t really argue against that. Another great video Pete, thanks for your wise words
The problem with changing the tax relief on pension contributions is with salary sacrifice/direct from employer pension payments. The tax is not paid on these in the first place so unless they also outlaw salary sacrifice/direct payments then whatever changes they make wont work.
@pataleno you can put your taxed income into your pension, and then do a tax return to reclaim the tax paid on the contribution. Works out the same, but a bit more effort.
I'm looking forward to a Labour government personally if we are going to be taxed let's see something for the money as it is we are being hammered for tax and the country is falling apart nothing work's that leads to the question were has all the money gone?
You'll get massive taxes with the same poor results - just chucking money at things is no guarantee of success. The country is governed by incompetent politicians and and equally incompetent civil service - nothing will change until there is competent leadership.
Taxes on death are such an emotive thing; look at IHT and how many people are against it even though the % of the populace that pays it is absolutely tiny… that said, better that than messing with the incentives to use pensions in the first place… I guess… or they (all parties) could stop fcukin the economy and get real economists in charge of the country’s finances
The state pension should not cap at 35 years NI contributions. Those who worked longer should get more. Someone who goes straight into work at 18 would have 50 years of contributions by age 68, those last 15 doing nothing for them.
You could always plan to retire on reaching 35yrs NI contributions. This would over the same 35yrs require reasonable SIPP contributions and an ISA to bridge those years until SIPP can be accessed.
All possible but surely all just tinkering around the edge, including CGT, and a bit like VAT on school fees - we know to raise a significant amount of tax need a penny on income tax but the aspiring middle class with a few assets will get hammered by labour in the process
Not true, you can tax wealth, financial transactions, inheritance (remove ability to put assets in trust) etc. The key to successful tax policy is to encourage productive work (i.e. lower income tax), encourage spending (i.e. economic activity that drives businesses) and discourage hoarding of cash and assets beyond comfortable retirement expectations.
Prove it - it will rise more than putting a penny on income tax which is about £5.5b - study the laffer curve. It would be a tax on entrepreneurs and doctors but you assume earning via PAYE is productive - just look at the council who allow their employers to work 4 days per week!
Mhh, you also get currently NI back so that £100 put into your pension has actually only cost you £68. If you are enjoying Child Benefit claw back, with two child allowances being taken back..... it only cost you £32...... 40% tax, 2% NI and 28% claw back. NO brainer. 😇
I think it is barking mad that pensions are inheritance tax free (and I stand to benefit from that). The dislike of inheritance tax has always confused me if I am honest. I’d rather that being taxed than my income!
As you get older (and maybe wiser, James), you may decide that your labours and your achievements aren't all about you. But you will wish to strive for your family in the first instance, rather than those whom you may see as somewhat undeserving?
@@geofflancaster8542 Agree my kids won't have the same opportunities, Cheap mortgage, or job for life I had. I would like to leave them something that supports them and their kids. The thought of labour wanting it makes my blood boil.
It doesn't really make sense that pensions which were originally intended to support ourselves during our retirement suddenly became an inheritance tax planning tool. The tax system is a mess and each government of whatever colour adds to the complexity. Unfortunately nobody has the bottle to genuinely simplify it. E.g. Drop national insurance and just accept that it is part income tax, and make it progressive rather than higher earners paying a lower percentage and the starting rate could then be brought down (unlikely I know).
Exactly this. I can potentially save more in to my pension but won't knowing that the goalposts are very likely to be moved with a change in government.
How can we move to a flat rate tax relief. Surely this can be worked around using salary sacrifice arrangements. With these the employee doesn’t pay anything into the Pension - all contributions come from the employer. What else might happen if we get a Labour government? The MPAA may revert back to £4k from the current £10k. There will be some Fiddling for sure.
Labour are getting in, they like other peoples money so I have no doubt that people who have saved for their retirement are a valid target for the far left. I'm just disappointed I plan to retire within the year, fingers crossed I don't have to retire to Portugal.
Yep, they'll go after anything they can, because they are thieves. Can't have people investing for their future and creating liquidity to grow companies now can we.
It would definitely put people off having a pension in the first place as this is a problem already and eventually the state pension will fizzle out could mean in years to come the benefit bill explodes.
@@Robot-T1 I would rather pay higher taxes if it solved the problem of crumbling public services such as health care both at National and Local level. Local Government Services are on their knees as out of every £1 raised in revenue 85p gets spent on Social Care.
Maxing out annual allowance myself and death tax is the lesser evil if you ask me as long as it means lower taxes for working people and incentivise work as opposed to being squandered on benefits etc! My hopefully future kids will benefit from the wealth whilst I'm alive (private school etc) but I will expect them to work for a living and benefit society as opposed to depend on an inheritance of course which they will get a nice sum.
I’m no labour fan but remember the last decade of lies, mispent money with their mates, Brexit, parties while peoples parents were dying, highest tax take in memory, terrible services and generally just being a miserable place to live. I’d rather pay a bit more to see some positive change
Brexit has been totally mismanaged and we are billions worse off. A pivot to a softer Brexit and back into the lucrative EU Single Market as promised by Leave would be a good way forward under Labour. The Tory hard Brexit was the wrong Brexit model.
@@MrTinkx Brexit? Giving the vote was always a huge risk and it was denied many times because it was recognised a leave vote could win, and then Cameron came along. I thought the whole things was just incredibly complex and would take years and years to resolve and that is what is happening, unpicking decades of previous agreements, there is that and we haven’t got the politicians we need they are so used to being coached by the EU that they don’t really know how to run an independent country anymore. I think there seems to be a notion that the Labour party have a magic wand and will bring the change,I I am dubious. Still, the future isn’t written yet, we are due some good luck.
I think you've hit the nail on the head, there's no way I think any party is going to let this IHT free pension thing run much longer, if they do it's not inconceivable that you would have multi million pound pots outside IHT zone, it's already a bit of a no brainer atm. I also believe that a standard tax relief on pension contributions would be such a vote winner, as HR taxpayer take so much into pension pot cost wise, yet there's less votes there, than giving a Brucie bonus to basic rate taxpayers (who can't afford to pay much into their pensions anyway, but it looks good) A way around the problems you describe is simply keep things as they are (as HR taxpayers have to claim that bit back with self assessment...so basically they're not allowed to do that anymore, so everyone stays at 20% full stop) The government could simply set up an ISA style pension option where every £1 gets a 40% initial uplift (pretty close to the 30% relief that's always mentioned) Big vote winner, same pension rules and limits would apply employers pensions would stay as they are initially. It may be called unfortunately a PISA, answers on a postcard maybe for a new name...Great content btw
Well you can take 25% tax free and build up an isa generating tax free income flows. Also the first band if you draw £12750 odd you pay zero tax. So there are ways to reduce tax
My pensions exceeded the lifetime allowance before the allowance was abolished and i paid tax on the excess do the changes allow you to get this tax payment back?
Thats a very poor underatanding of the situation. Even if you were 100% correct that you pay the tax anyway (you aren't) youd still be deferring tax payments for your entire working life - which is an investors dream.
@@alan_davis I do not understand how it works, get a private pension you pay tax on the money you have paid into the pension, then when you retire you pay tax on the money you draw down on your pension, everything seems to get taxed and then taxed again, i suppose a financial adviser would explain it, but then it would cost more money for the financial adviser, i hope i have not come over as too thick for you.
Labour are more likely to just do away with the ability for 40% tax payers to reclaim the 20% above the 20% that gets added as Tax Relief to the pension scheme imho.
Aren't most significant employers using Salary Sacrifice for pension contributions nowadays? Certainly all the companies I've worked for do. In that case, there's no "reclaim" to be done because the tax was never paid in the first place.
They might be offering but it’s never a default option as it requires a contractual salary reduction. You’re right about there being no need for reclaim though…
Title is misleading given the number of times you say that any Chancellor could take these actions in future, it makes this video seem to be a dig at Labour. Oh, and don’t give that Chancellor ideas 😮
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Most Americans find it hard to retire comfortably amid economy downtrend. Some have close to nothing going into retirement, my question is, will you pay off mortgage as a near-retiree, or spread money for cashflow, to afford lifestyle after retiring?
Just as most investing-related questions, the answer is, it depends.. my best suggestion is to consider advisory management
Agreed the role of advisors can only be overlooked, but not denied. I remember in early 2020, during covid-outbreak, my portfolio worth around $300k took a slight fall, apparently due to the pandemic crash, at once I consulted an advisor in order to avoid panic-selling. As of today, my account has yielded big fat yields, & leverages on 7-figure, only cos I delegate my excesses right.
this is huge! mind if I look up the consultant that guides you please? only invest in my 401k through my employer for now, instead enthused about diversifying my investments for a prosperous financial future
I work with Sonya Lee Mitchell as my fiduciary advisor. Simply look up the name. You would discover the information you needed to schedule an appointment.
Thank you for this tip. It was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her resume.
Removal of the ability to put large estates in trust would bring in billions.
Pete, your 'tutorials' aren't "helpful", they are pure gold every single time. Thank you so much for the 'explanations' (as of course you cannot give advice 😉) you so generously provide. Love them all ❤
Very kind, Iain, thank you. It’s great to have you with us! 👍🏻👊🏻🙏🏻
@@MeaningfulMoney Hi Pete be great if you could do a video on where to store cash in a sipp for 1 year or 2 . Have heard of sipp deposit accounts ? James
I’m 23 and have had private and workplace pensions since 19, and two big changes have happened between then and now, and in 2028 the drawdown age is going up and will most likely go up again. While investing in an ISA for retirement makes less sense financially, it’s definitely much easier to plan for.
Easy access for a ISA when you are younger and the withdrawal tax benefits make it good. If you can do both and switch to almost all Pensions as you get older, then you are in a great place.
Assuming Tax relief is still around. ISA millionaires will probably get hit by Labour. Don't trust them.
Depends if you get work place matching which makes pension way better. Also labour probably going to fuck both.
Which is exactly why I and many in the pensions industry have long wished for government ministers to stop meddling with pensions! They need long term stability of rules and regulations to allow people to properly plan. Most Chancellors can’t seem to resist them though.
Recently found the podcast, definitely recommend it to everyone. Thanks to you and Roger.
@@RandomUser-100 The Meaningful Money personal finance podcast.
I am not sure how much taxes they can raise on pensions… but they shouldn’t.
Full State pension is peanuts. We have to thunderdome it ourselves already.
They should give us more flexibility higher thresholds and more tax benefits.
Self funded retirement is no joke!
I think you’re right with how they will tax through probate. It mustn’t be forgotten that due to most of the population having a lack of savings for retirement and the state pension reducing in real terms and starting at a later age, any government needs to encourage private pension contributions
I agree. They don't seem to take into account inflation. The tax free lump sum will be worth much less in 10 years. I can't see it being increased though.
I absolutely agree!
Pete Flat rate tax relief admin is simple: you may all pension payments out of post tax salary and the pension company claim the tax relief.
Really good video Pete. I think you are right that any government will want to explore this idea. Easy win like you say. Read a few articles yesterday about possible Labour amendments to CGT and changing (or scrapping) reliefs on transfer of business assets and agricultural land but by going after pensions, you cast the net much wider.
Thanks, Pete. This is really pertinent for me. I've just turned 60 and have built up a large DC pension pot. I was thinking of retiring this year due to changes at work but will probably stay another year or two unless Im made redundant. I'm still paying into my pension quite heavily, as much as anything to avoid paying so much tax, but I also wonder how much tax I'll eventually end up paying when I do take my pension. FWIW, I don't have any children unfortunately so the inheritance aspect is less important for me than supporting myself in old age, especially after what has happened to my (divorced) parents and grandmother in later life with their care. Dealing with this, and finding adequate care (and funding arrangements) has been a nightmare. If any goverment looks at inheritance tax, they also need to fully address care home fees and capping contributions for this. The present government pledged to do this but failed to do so
I'm also concerned that the tax-free element of the pension may be looked at, though that would also affect people with smaller pots, which would be an extremely unhelpful thing for any government to do.
I’d prefer to pay tax when I’m dead than when I’m alive, given the option! 😅
Exactly, the kids will only spend it on stuff we disapprove of. Such as divorces, world travel, stupidly expensive cars, etc.
You will. It’s called inheritance tax
@@TheSilvercueyou don’t pay inheritance tax on pensions, they are not included in your estate. At least for now.
@@kieron8051 yes, I am talking about everything else. You still get taxed when you are dead
Means tested pensions and private healthcare.
It's difficult to plan effectively for the future when the goalposts move every six months.
Pete, you are the only person who speaks so intuitively and clearly without any bells and whistles in your video! As always, fantastic video. Thanks again.
Wow, thank you!
I think limiting the IHT benefit and PCLS threshold are two very easy mechanisms that a future government could employ to grab some tax revenue from private pensions.
Hence ive crystallised mine, put everything into drawdown and intend to enjoy it whilst I can.
Same here, was always the plan, we are very comfortable in retirement
Our taxes are already at record highs, and still the government want more. As a country we need to rethink why we are spending so much, and if that is appropriate.
Ukraine.
We do not need to think about it ,it stares you in the face , corruption everywhere..
@@drouu The UK shouldn't even be involved! Mate!
Tax evasion by the very rich, including the Royal family. How much inheritance tax did Charles pay?
@terenceperera3156 rich people are clued up all can avoid inheritance tax if above 350 thousand pounds, sign of your estate to your children several years before death if you survive I believe you do not pay ,but your family have passed down to the next generation. trouble is the world is full of bitter people and attack the rich for being rich.Even if they paid 50 percent more it would never be enough to solve anything .The royals we pay but king Charles does make as well and gives to charity, the royals have so many people that have jobs all over the world who do pay tax .People like Bill Gates Elon musk all massively richer and even they are hounded by Liberal lefties in America to pay tax but yet both of these have created many many jobs that no government would be capable and all these jobs pay tax into the system .I am no royalists or total defender but love them or hate them the rich create wealth .one percent own most of the wealth and they say if you shared it out between everyone it would all end back up with the one percent .
Great video Pete. I agree. LTA probably gone for good but replaced by death tax or IHT. Let's see!
I should have placed a bet. But you can get in trouble for that these days!
Haha! Love your channel. 3 years to go for me. Great work.
Subscribed! Been following for a while.
Great to have you with us, Paul! 👍🏻👊🏻🙏🏻
I'm fiscally very central, and socially left of centre. I don't believe there should be a lifetime allowance, HOWEVER, I think there should be a limit of what can be inherited tax free.
I've just got to the part of the video where you suggested something similar. Great minds, and all that.
Very much so - I couldn’t agree more. Like I’m looking in a mirror!
Took a lump sum early and receive a reduced rate p.m reason being not fit to work my old job and DWP infor me they take my monthly pension off whatever benefits I receive so what was the point of the plan ?🎉😅
I always enjoy your videos, thanks 🎉
How would a flat rate relief be squared with things like salary sacrifice?
Hi Pete could you do a video on pension recycling limits as pension recycling is part of financial planning so long as you don’t trigger any HMRC tax penalties
You can recycle taxed income to your heart's content. Recycled tax free cash has strict limits
Helo there, I’m in the fire service pension scheme. 2006 & 2015 could you give any advice on additional pension contributions? Or any general advice for people on government DB schemes. Great videos by the way, thank you 👍🏻
I'm surprised you made no mention of National Insurance Contributions. These amount to almost 24% between employers and employees and greatly affect the tax landscape for small businesses and self employed people thereby how much can go into their pension, no?
Hi Pete, whats your view on the government limiting the tax free allowance either as a percentage or a specific value? I am hearing that some people are taking all of their tax free allowance now ahead of any announcement of governments plan and filling up their ISAs and other tax efficient investments (what ever they are).
I'm with you on the likelihood of the inclusion of SIPPs in the value of estates - my only question would be the passing on to spouses at nil rate.
I would also be interested to see if there will be changes to gifting rules - maybe a lifetime allowance.
All the best M
The simplest solution would be to bring pensions inside the scope of inheritance tax. It's an obvious loop hole designed for the rich that pensions are inheritance tax efficient, that's not supposed to be their purpose. Make an exception for spouses so that they still receive it tax free, otherwise it's part of your estate.
Tax tax tax tax tax....why don't you just admit that you want to be a medieval serf at this point?
@@elliotjack6999you know taxes are necessary to a functioning society right?
I mean, my neighbour consistently moans about driving through potholes in his porsche, but also avoids paying any tax through various schemes.
No sympathy.
@@alan_davis Taxes being necessary is another argument, but for this conversation we agree they are.
The level of services provided for the amount of tax taken does not add up, governments are corrupt and inefficient, the level of tax they propose for the citizens in my opinion is ridiculous. We are being used as a slave class to fund the corruption
On your note about your neighbour with a porche, even with every "scheme" , most people affording such a car are still paying vast amounts more tax per year than many people even do in a lifetime, has every right to moan about the roads and as does everyone else, they take enough money off us for them.
What do you think is a fair limit of net tax for an individual? I am curious to know
... spouses and dependents who cannot earn enough to even buy a house , especially in the South East, and other areas.
I guess he could swap his porche for a cybertruck - can accommodate pot holes and still retains it's 'pulling' power
Genuine question. What was the reason / rationale behind the Pension Commencement Lump Sum ? I have Googled it and while I got 101 articles detailing how it works none said why it is there. Was it introduced back in the days when people like Policemen lived in Police houses and drove a "company" car so had a load of expenses at retirement ? I know exactly why we had MIRAS but look what happened to that.
I am not sure how such changes to pension taxes at death would be phased in. For example, if your savings are already above an introduced threshold, suddenly all your planing could be out the window because of new tax implications (providing for those left behind). Would a government really really be prepared to shake peoples trust in the pension mechanism further, by pulling the rug out from underneath them? Remember the alternatives to private pensions are either an enforced workplace, or more state pension. The former potentially suppresses corporate investment in the UK, due to labour costs and red tape, and the latter requires much higher levels of taxation (unsustainable levels). Whilst pensions may seem like a ripe coffer to target for taxation, there are many reasons why this probably makes little sense.
I liked this Pete. I also think you speak at a good pace. Not too fast, not too slow.
I agree new legislation will be passed under Lab, could be removal of age 75 as no longer a relevant BCE, so why have it at all?
Off piste but CGT will be aligned to income tax thresholds by looks of it.
And they wont do any of this, just pull a surprise from left field. In 97 first budget an obscure tax change to share dividends tax credits hammered pension funds and cost pension savers an absolute fortune. They probably have something similar lined up to tax pension fund growth.
Agreed. However, looking at it from their point of view, in 1997 companies were taking pension holidays because pension funds were awash with cash. I keep having to hear from someone who worked for the same company as me how, because they volunteered, they were allowed to retire at 50 with only a 10% penalty on their final salary pension.
Personally I think that so long as there is still a spousal exception for tax on pension pots, such that a spousal annuity/ drawdown or DB pension benefit is not broken by any changes, then I’m not sure why a pension pot should be exempt from inheritance tax. Surely my pension is for my retirement, i think that the concept of thinking of it as an investment vehicle for avoiding inheritance tax for children is the wrong outcome from the law change that allowed it. Also I don’t see that a lot of people would be impacted by this as generally pension pots will decline in value in payment.
I agree. Of all the options put forward here as possible ways of taxing pensions, removing the protection from inheritance tax seems the most reasonable.
I couldn't have put it better myself.
A pension should be a pension and not an inheritance tax loophole to give to children IHT free.
I worked alongside persons who were building up sizeable DC pension pots due to annual input and generous tax relief and who had no need to access them with the intention pass the pot onto children.
The lifetime allowance pension tax charge was unnecessary and effectively penalised those who had over many years managed to build up their pension. I hope that it never comes back. Far better to tax pension pots for increased taxation under IHT rules with spousal exception as per current estate rules including ISA's.
I would be broadly in favour of flat rate tax relief on pension contributions at 30%. Bet they offer 25%.
I would accept a cap on tax free cash from pensions. Bet they go low.
I object to changing the tax treatment of pensions on death, for me in later years, my pension pot is a bet on care fees versus giving my kids a leg up.
I'm frustrated (pissed off) with governments changing the rules, many years ago I accepted the rules that I could draw from my pension at age 50, a twenty five year agreement, three months before the deadline it moved to 55 years! I didn't need or want to draw down my pension but I felt cheated.
I encourage my kids to save and invest and contribute to pensions but worry those pots of money are easy targets for politicians.
Surprisingly you never hear MP's talking about their own gold plated pensions.
"I would be broadly in favour of flat rate tax relief on pension contributions at 30%" - That would mean you take away from higher tax payers and give to lower tax payers. You might then ask, what was the point of working hard for progressing my career and getting that expensive degree.
But they then tax you when you draw it down. It’s double tax.
The most equitable solution is to simply apply a flat basic rate (20%) tax relief for all contributions. I doubt if any future government could afford to give away another 10% for all of the basic rate taxpayers pension contributions. Why did you pay for your expensive degree and work hard to develop your career? Because you were capable of it and, since you are raising the question you must be into the higher rate (40%) tax bracket, so that your taxable earnings are probably already at least double average (median) earnings. Let's understand the real impact on your income - if you currently contribute 15% of gross income and benefit from 40% tax relief, then the impact would be just 20% of 15%, i.e. 3% of income. Try turning your question around: why should pension savings for basic rate taxpayers be penalised relative to higher earners?
@@davem.4003 how 40% relief for higher tax payer penalise basic tax payer? Everyone get relief on the tax they have factually paid. If you've have paid 20% you get 20% relief, if you've paid 40% you get 40% relief. As a higher tax payer I will be reducing my hours as much as I can if the system were I can get less relief then my tax contributions is implemented.
Also to answer your question: why should pension savings for basic rate taxpayers be penalised relative to higher earners?
Becuase basic tax payers did not put enough effort to progress their careers and get that expensive degree?
Another timely video, Pete. Much appreciated.
Another great video cheers Pete
Thanks 👍
Thanks Pete, interesting times ahead me thinks. know what you know and not what you don't know is the motto from now on.
What's a pension lifetime allowance?
With salary sacrifice I also save on NI (8%) and student loan (9%) towards pension.
Hopefully your student loan is because of a worthwhile higher education degree that has improved your earnings potential due to having skills valuable to an employer.
Compound investment return over a 30+ yr period has a huge impact on what you end up with so don't limit your pension contributions to match your employer % and if you can afford to do so start to increase your % contributions.
Well said.
If you have salary of £35K per year do you get tax relief on £35K or is it on £35K minus your tax free allowance of £12570 ie tax relief on £22430?
I think you have missed the most obvious which is reducing the 25% tax free draw down you can take from a pension. They could easily reduce that to 20%, then 15% and probably down to 10%. It would hit those with the largest pots hardest (the ‘rich’) and would be easy to implement
Would also be a complete disgrace and essentially stealing from anyone who ever made the choice to contribute to a pension in the knowledge of that being the benefit.
I was covering the ones I think likely, in reverse order of likelihood. I just don’t think they’re going to attack tax-free cash because it would affect everybody, including core voters.
I agree. Makes you think about getting the money out now (if you are over 55). That’s the trouble with pensions, as attractive as they are; you never know when they will change the rules of the game. There should be a law that nothing can be changed retrospectively.
@MPD90 I don’t disagree it would be terrible and a disgrace but since when has that bothered them? They have to get money somewhere having pledged they will not raise taxes for ‘working’ people. Retired are not working (in general).
It might also encourage people to work a bit longer as well. Loads of younger colleagues at work are retiring and I get the impression that having three or four years salary tax free is a big incentive. The most sensible use I have heard of is as a house deposit for the retirees son.
Successive governments don't seem to grasp that people want certainty in pension savings. Several of my colleagues have cited the expectation that the goal posts will move as a reason not to increase their contributions.
Yup…. I am a retired fund manager, I could have put way more into my SIPP …..but didn’t because every bloomin governemnt changes the rules and if we had a very lefty government they could even do what they announced in Hungary…. seize your pension and give you a measily state pension in exchange.
@@spivvoWhat?! You're joking?! I can't believe they would do that but never say never I suppose...
Some good ideas have been banded about here!
British women lost 78,000 in pension contributions they paid in by having to work 7 yrs longer at 67yrs !! In countries like Japan , they look after thier seniors and can retire at 55 yrs and get lots of freebies too and tax breaks . Pension money shouldn't be taxed at all as we have already lost enough !!!
Men had to work five years longer than women but no one mentions that
@@ianpurcell4445 Same age now for both
So glad you were right on this one Pete. Great video as always. I hope that the pension allowance stays at £60K PA but have not heard or seen any mention of that in Labour’s manifesto. They should also not be allowed to change the rules for anything you have accumulated to date - Any changes they implement should be based on new contribution’s only, that way you can make an informed decision before deciding to pay more into you pension.
The pension input allowance was increased to £60K/yr to try and stop high earners (consultants) in the NHS from retiring early. This is necessary in addition to abolishing the pension lifetime allowance.
Lowering the pension annual input limit back to £40K will likely result in more higher earners in the NHS taking early retirement.
The madness of no allowance has destroyed the stability of pensions. I am near the old lifetime allowance but I thought getting rid was stupid. Any pension changes should be thought through long-term and not used like sunak did for short-term political gain
The concept of being able to pass a pension pot tax free on death is ridiculous and I say this as someone who doesn’t even expect to have to touch my own pension.
Our tax system is inequitable and antiquated. Firstly we should have one rate of tax allowance on pension saving, that in itself means earners of all levels have a similar benefit and we don’t prioritise high earners. As a high rate tax payer I find it laughable that I benefited more than the people I employed. The system is so wrong.
Secondly if you choose not to, or are rich enough to not have to, take your pension then it should be taxed on death, it is then up to you as an individual to pass it down before you die. If you are too greedy not to then your beneficiaries suffer the cost. If you are generous enough to do so then they pay no tax. Simples 😊
Interesting idea on the inheritance tax change, not great personally, but I think you are right as it would be seen as not penalising the retired person. Of course the unintended consequences could be varied, spending down your pension, taking the lower tax penalty and then putting into a trust or such like. To me it seems that governments are very bad at anticipating what we might do when they do X.
Just cap pension relief to basic rate tax. Simple.
An other pension option is to turn Civil Service and Public pensions into DC schemes. That would help those employees to appreciate the situation that the rest of us "enjoy".
Probably the best option for the national finances but can you imagine the strikes that would follow 😮
Indeed, instead of going after those with a massive taxpayer funded contribution rate they will penalise those with a 3% employer rate instead.
And the MPs cushy pensions of course :)
Absolutely
Totally agree, these gold plated defined benefit schemes have an effective employer % contribution rate over 20% that the taxpayer simply can no longer afford. Its the big elephant in the room, and isn't tackled due to the potential for strikes. All new public service pensions ought to be DC type from an agreed date and then people can decide whether or not to pursue employment accordingly.
They have avoided the life time allowance, the reason for this is it mostly impact the public sector due to DB pension funds eg DOCTORS
Considering selling your ideas to the next chancellor😎 anyway I plan to spend hard when I retire in next 2-3 years 😂
They could switch to a system similar to ISAs where the pension contribution is made after tax and is tax free thereafter. This would bring in more upfront tax for the current government. New Zealand uses this method.
No-one will use a pension then
Fascinating video (though my head was hurting by the end!).
Unless I missed it, you didn't mention the 25% TFLS. Do you think any government would dare to take that away? I have often thought of taking mine and putting it into my S&S ISA (I realise there are IHT implications), before a Labour government snatches it from under our noses.
I’ve been doing my job so long that I’ve forgotten how many times removal of PCLS has been rumoured. No, I don’t think it will happen…
@@MeaningfulMoney thanks. I think it would be a very brave government that would make that move. (Or a Labour government with a super-majority?)
The TFLSA has fixed the amount that can be taken tax free from a pension.
Inflation will over many years reduce this fixed TFLS amount in real terms.
Therefore, if already at or above the TFLSA amount now it is probably worthwhile drawing down the TFLS as much as possible each year into an ISA (£20K), with an extra amount from the lump sum to supplement pension income per year and then take drawdown pension income at the tax free max of £12570/yr so as to utilise the additional £5000/yr tax free savings allowance in order to place £100K in an ordinary savings account (5% interest) and minimise tax.
Love the content Pete, this is a little political rather than financial but i think a major problem is that nothing seems to be improving with all these higher taxes, healthcare is strained public services too police are increasingly over stretched housing isnt being sorted. Alot of people wouldn't mind higher taxes if we were as efficient as the nordics but it seems we are just getting higher taxes, lower benefits from them. Im 30 and i hate to think what life will be like in this country for my future children.
I think one option you missed Pete is for Labour to charge National Insurance on pension payments.
Yes ,above...maybe £30,000 pa
When we retire we all should receive the same pension.
In the 1990s I sold pensions on the strenght that the tax free lump sum would pay off most if not all of the mortgage and leave the investor with a pension for life. Most were over a 40 year term plus, I was not alone
The approach of selling pensions with the promise that a tax-free lump sum would pay off mortgages and provide a lifelong pension was common in the 1990s. However, many factors can affect the outcome, including changes in the housing market and interest rates. It's crucial for investors to seek personalized advice and consider diversified financial strategies to ensure long-term financial stability
it's vital for investors to seek personalized advice and adopt diversified financial strategies. Working with a knowledgeable financial adviser is crucial for achieving long-term financial stability and freedom.
I've experimented with a few over the past years, but I've stuck with ‘’Angela Lynn Schilling” for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look her up.
The advice I received reference IHT is take out a big loan on your residential home, invest in assets via an SPV which keeps your IHT to a minimum 🎉 I haven’t seen anything contrary to this
SPV?
Oh, Special Purpose Vehicle? Seems a bit drastic to mortgage your home and invest in risky assets to save tax, but I imagine that it works technically. Hardly anyone would agree to such a scheme on the basis that it would be complex and costly to set up, as well as the interest payments would be high. Presumably the SPV would have a mechanism to pay the loan interest? Unless you did an equity release loan where the interest rolls up?
Investing in houses is hardly a risky asset, and the risk of not doing it is giving 40% to the government on death….
Thanks Peter, that's a great idea which I hadn't thought of. Yours sincerely Rachel Reeves.
Ha! I *highly* doubt that - there are plenty brighter people than me working this stuff out
@@MeaningfulMoney I'd love to think the very brightest would be thinking about how to leave pension pots alone and save money by not funding wars instead. Many other countries do that - it's not without precedent.
I think if they want to raise more from pensions ita more likely they will get rid of salary sacrefice schemenes. This has always been a bit of an unfair system as it is not available to everyone and would increase the tax take whilst making the system fairer for everyone. I cant see them introducing a standard 30% tax relief on contributions as this would cost too much however removing the higher rate relief could be an oprion with everyone getting 20% relief.
Thanks!
Thank YOU, Steven! 🙏🏻👍🏻
John, you brought it upon yourself. As for your example, that’s easy to answer: if there was an adverse tax change to a direct investment there is typically the possibility to switch to another type of investment to avoid it (case in point tax changes to buy to let, so switch out to equities or something else). A pension is a tax wrapper and if they change the rules of the wrapper you cannot necessarily exit the wrapper. Hope that wasn’t too patronising for you.😂
I can't see any reasonable way of changing thr pension system, if there's significant change and it starts costing highly skilled people, most of will just opt to retire as we have been seeing. It's a bit wrong that some of these politicians have 1m pension funds with special tax deals but the general public's pension savings are easy tax pickings for quick fixes. Remember what Gordon Brown did with the dividends relief reduction on final salary pension schemes he destroyed them for the majority private schemes. Hence, the huge issues we have now with most average workers with little pension savings for old age.
Yeh. They don’t mention their Gold Plated MPs pensions in any legislation. It’s kept firmly quiet. 🤫
That doesnt make any sense. If people's pensions "cost more" then they'll need to work longer, not quit earlier.
@@alan_davis Many of these highly skilled people have enough money to retire. If you mess with them. they will simply retire earlier. I am waiting for Labour to introduce the 25% tax free scrapping and I'm out.
Love the thumbnail. Smug face 😂
My concern is the pension commencement lump sum or tax free cash. My plan was to take out enough to pay off my mortgage when my fixed rate ends at the end of 2026. The soonest I can get my hands on this pot is August 2025. My concern is that they reduce the amount you can take tax free or scrap it. Do you think they could do this, I need £130,000 tax free to pay my mortgage I can do that if the amount is still the same at 25% of pot value but this labour government has me concerned and they might scupper my plans entirely. I am not employed and full time carer for mom and dad as an only child right now and coming up to my 54th birthday.
Uou usually can apply for some protection, but they can pretty much do anything.
@@khiburgess5848 Pity sure there has to be consultations and it has to be debated a number of times in commons and lords to get royal assent it’s how long that process takes, hopefully gets blocked and not until end of 2025/26
As someone in their 30's who has started maxing out pension allowance each year i don't mind a death tax. Will incentivise me to enjoy the pension in my retirement which is probably a good thing.
Removing the 40% tax relief, lowering the tax free annual allowance or introducing a lifetime allowance (already confirmed not doing the later) are what would hit me hard and make me reconsider the value of a pension
We’ll see, eh?! Love your desire to enjoy your pension while you can - that’s the whole point, but too many people miss it!
you will mind it once you have your own family and want to pass on your hard earning savings to them
@@Robot-T1 Better to pass your earnings on while you are living rather than waiting until you die; they'll get more benefit from it and you can enjoy seeing them using it.
@@MoonBrainLondon true, but won't know how long you will have to live during retirement and you will want enough in your pension for it to grow and still provide for yourself comfortably
For you to have an income below the higher tax band at 40% you would need at least £1m in the pension pot drawing down 4% a year (£40k). If you die with £1m in your pot, government is going to want a slice of that!
@@MoonBrainLondon I suspect many people get their inheritance just when they least need it. In my case it was less than a year after I had paid off my mortgage.
Hang on, hang on, you say something _very_ important at 04:42: "If you have accessed taxable benefits _from a money purchase pension_. That is called the Money Purchase Annual Allowance (MPAA)". Now I knew of the drop to £10K max contribution, but have not seen and GOV.UK etc. does not make clear that this applies only to money purchase schemes. Do I presume from the fact it's actually called the MPAA that if you have drawn taxable benefits from a DB scheme, thne the MPAA does _not_ kick-in as you have not drawn from an MP/DC pension??
That’s absolutely correct. The MPAA only applies if you have accessed taxable benefits from a DC scheme, NOT a DB scheme.
@@MeaningfulMoney: Thank you _so_ much Pete. This is a real little gem of knowledge. Thank you again ❤
Death of a parent is stressful and having to sell off assets whilst mourning is an issue. I would be more in favour of an IHT free threshold on defined contribution pensions than one on property. I have seen a few times situations where the inheritor is very reluctantly forced to sell an inherited property. Where property is split between several kin, the problems seem worse. I am not against the property tax free inheritance allowance completely, but a period of bereavement grace would be seem fairer if this was possible to administer. An executor having the authority to sell shares to pay IHT would be a lot less stressful. Perhaps 20-30 years down the line people will tend to have more liquid assets in their estates and will be less inclined to feel they need to pass the house on to their kin. Better incentives to reverse mortgages in the later years of life would probably help this.
You dont have to pay IHT immediately. You have 6 months interest free and then you can still extend by paying interest.
So when all those highly paid doctors, lawyers, judges etc. etc decide they might as well retire early becasue their pension fund is getting too big then how is that going to help the NHS, legal establishment etc etc. Or maybe the government will decide they have to row back - as the current government had to do when they realsied there were't enough highly qualified doctors to go around.
They could always have special dispensation for doctors, Lawyers etc on Pension limit. The rest will be hit.
@@pataleno huh? They've agreed to continue to scrap the LTA? That's the whole message of what Pete's saying.
@@BaileyMxX I know they have committed but I was answering the comment above. And also I would not trust labour as far as I could throw them on LTA for the normal workers.
I don’t think doctors are highly paid these days
money is a zero sum game.
when banks print new money for rich to buy assets.
money we own becomes worth less.
our wages and savings lose the equivalent, equal and opposite value.
zero sum game.
theft and slavery of us by inflation.
if ppl understood this. they would be 🗡️ the rich bankers and rich oligarchs for enslaving them 💱🏦🇮🇱🇪🇺🇺🇸🇬🇧🇫🇷🇦🇺🇨🇦🇩🇪🇮🇹🇬🇷
inflation is a desired inevitability by the boe and bankers in that they want to keep printing money for themselves to buy our lives from us. but they don't want us to become aware enough to notice it is happening.
uk won't cut rates as they can't.
fed can't cut rates as there's a global de-dollarisation going on. so to save the dollar they are increasing rates.
uk can't cut rates because it is a giant bank. and if it does, there will be massive capital flight of money out of the UK banking system into the usa one.
so wherever the fed goes, uk goes.
the uk elite would rather throw all 60million brits to the wolves of siberia, than abandon the banks and banking families of the uk. we are sheep. they are the shepherd, and the uk government is their shepherd boy employee. and they eat us and our children's future for dinner, like wolves.
they aren't interested in helping or growing the economy. they are interested in keeping us poor by stealing everything from us.
British banking oligarchs, house of lords and their friends are parasites. the job of house of commons is to scam us into accepting them stealing all our money and our life, without us waking up violently.
A flat rate seems much fairer….
One other thing they could tinker with is the retirement age, no?
Since they're not re-introducing a lifetime allowance, they could make it more difficult for you to access the pension in your lifetime... 🤦♂
This is my worry. Save for 20 years plus and then get the goalposts moved at the last minute.
They probably will move it one more year, thats been on the cards for a long time.
Great News 😊
Why have an annual allowance of 10k for additional rate taxpayers? It just seems penal and blocks you from creating a decent pension.
I believe they can still add more into the pension, just cannot claim tax relief on more than that.
@@MadBerks-nk4yq Thanks. But is there any advantage then of contributing to the pension when you could just put it into a dealing account? I guess returns are tax free in the pension (until you take them out) but you then subject the contributed monies to the whims of whichever chancellor happens to be in power.
@@Nousmourronsseuls25% tax free lump sum and exemption from IHT are the reasons additional rate taxpayers might use a pension.
However most people seem to put excess into trading accounts as there is more flexibilty.
The U turn makes me happy as I tipped over the LTA in April!
VAT adds no value too any goods or service. Buying a house taxed. So another grab by the Goverment. I suggest that 5 % tax is likely to begin with. Once its in place you can easily step it up.
I think that there’s a fair chance that the tax-free lump sum limit will be reduced.
Possibly, yes,
And an even bigger chance that it won't be increased over the next five years.
My bet is that PCLS will be at £100K within 5 years......
@@MeaningfulMoney Earlier this week I decided that I will (in a couple of instalments - I’ve just instructed £400,000 out of my SIPP into £300,000 drawdown and £100,000 tax free lump sum) take the max tax free cash and put in a General Investment Account. I’ll buy the same funds back that I sold from my SIPP, but the Distribution classes rather than the Accumulation. The dividend income will be taxable (no problem) and I can gradually sell my GIA holdings down (for spending), paying Capital Gains Tax on the amount that their value has increased by at time of sale. So I’d be paying tax on all my subsequent gains and income, but none on the original amount taken out of my pension, saving me £100,000 tax if tax free lump sums are banned. I expect Labour to increase dividend tax and CGT rates to match income tax rates and I can’t really argue against that.
Another great video Pete, thanks for your wise words
No need. You can just keep it at the same level and it will reduce due to inflation
The problem with changing the tax relief on pension contributions is with salary sacrifice/direct from employer pension payments. The tax is not paid on these in the first place so unless they also outlaw salary sacrifice/direct payments then whatever changes they make wont work.
...thank goodness!
The company I work don't do Salary sacrifice as it's administratively a headache for them.. Sigh
@@pataleno
They don't want to save 13.8% Employer's NI? Find a new job - this one's going bust!
@pataleno you can put your taxed income into your pension, and then do a tax return to reclaim the tax paid on the contribution. Works out the same, but a bit more effort.
@Mudster250 No, it doesn't! You've paid National Insurance on the gross amount, too if you don't salary sacrifice! This is not difficult mathematics.
I'm looking forward to a Labour government personally if we are going to be taxed let's see something for the money as it is we are being hammered for tax and the country is falling apart nothing work's that leads to the question were has all the money gone?
You'll get massive taxes with the same poor results - just chucking money at things is no guarantee of success. The country is governed by incompetent politicians and and equally incompetent civil service - nothing will change until there is competent leadership.
Taxes on death are such an emotive thing; look at IHT and how many people are against it even though the % of the populace that pays it is absolutely tiny… that said, better that than messing with the incentives to use pensions in the first place… I guess… or they (all parties) could stop fcukin the economy and get real economists in charge of the country’s finances
👍🏻
I don’t have a pension, winner!😂
The state pension should not cap at 35 years NI contributions. Those who worked longer should get more.
Someone who goes straight into work at 18 would have 50 years of contributions by age 68, those last 15 doing nothing for them.
You could always plan to retire on reaching 35yrs NI contributions. This would over the same 35yrs require reasonable SIPP contributions and an ISA to bridge those years until SIPP can be accessed.
Pete Matthew for Chancellor!
Dear God - May it NEVER happen!
Salary sacrifice cars is what they’ll target.
Politicians won't flat rate it as it hurts them as higher earners
All possible but surely all just tinkering around the edge, including CGT, and a bit like VAT on school fees - we know to raise a significant amount of tax need a penny on income tax but the aspiring middle class with a few assets will get hammered by labour in the process
Not true, you can tax wealth, financial transactions, inheritance (remove ability to put assets in trust) etc.
The key to successful tax policy is to encourage productive work (i.e. lower income tax), encourage spending (i.e. economic activity that drives businesses) and discourage hoarding of cash and assets beyond comfortable retirement expectations.
Prove it - it will rise more than putting a penny on income tax which is about £5.5b - study the laffer curve. It would be a tax on entrepreneurs and doctors but you assume earning via PAYE is productive - just look at the council who allow their employers to work 4 days per week!
Mhh, you also get currently NI back so that £100 put into your pension has actually only cost you £68. If you are enjoying Child Benefit claw back, with two child allowances being taken back..... it only cost you £32...... 40% tax, 2% NI and 28% claw back. NO brainer. 😇
I think it is barking mad that pensions are inheritance tax free (and I stand to benefit from that). The dislike of inheritance tax has always confused me if I am honest. I’d rather that being taxed than my income!
I know what you mean - I won’t be around to worry about it!
As you get older (and maybe wiser, James), you may decide that your labours and your achievements aren't all about you. But you will wish to strive for your family in the first instance, rather than those whom you may see as somewhat undeserving?
@@geofflancaster8542 Agree my kids won't have the same opportunities, Cheap mortgage, or job for life I had. I would like to leave them something that supports them and their kids. The thought of labour wanting it makes my blood boil.
It doesn't really make sense that pensions which were originally intended to support ourselves during our retirement suddenly became an inheritance tax planning tool. The tax system is a mess and each government of whatever colour adds to the complexity. Unfortunately nobody has the bottle to genuinely simplify it. E.g. Drop national insurance and just accept that it is part income tax, and make it progressive rather than higher earners paying a lower percentage and the starting rate could then be brought down (unlikely I know).
@@charlespope9342 Means testing state pensions will no doubt be a future legislation for well off people who saved for a decent retirement.
This is what puts the average man off from concentrating on his pension, the politicians cant stop messing with it.
Exactly this. I can potentially save more in to my pension but won't knowing that the goalposts are very likely to be moved with a change in government.
Yeah, let's hit the ones who've tried to make a better retirement for themselves 🤦
standard labour ideology
@@madgebishop5409 That's why I despise socialism.
Labour government incoming can't wait .
@madgebishop5409 you're acting like the Conservatives have improved life in the last 14 years for non multi millionaires
How can we move to a flat rate tax relief. Surely this can be worked around using salary sacrifice arrangements. With these the employee doesn’t pay anything into the Pension - all contributions come from the employer. What else might happen if we get a Labour government? The MPAA may revert back to £4k from the current £10k. There will be some Fiddling for sure.
Labour are getting in, they like other peoples money so I have no doubt that people who have saved for their retirement are a valid target for the far left.
I'm just disappointed I plan to retire within the year, fingers crossed I don't have to retire to Portugal.
Pensions tommorow but i think ISA is the first one to change
Yep, they'll go after anything they can, because they are thieves. Can't have people investing for their future and creating liquidity to grow companies now can we.
I keep saying Labour can't be as bad as this lot. I chuckle inside.
So, you don't recall the last time they were in power then? Rest assured, it was nothing wonderful.....
Yeah, Gordon Brown stole my pension, which is why I'm still working trying to build a little bit more so I can retire.
It would definitely put people off having a pension in the first place as this is a problem already and eventually the state pension will fizzle out could mean in years to come the benefit bill explodes.
death tax, something Labour would do, once again punishing the hard working families who has savings
disgusting
So are you saying low paid individuals are not hard working?
@@edtee8102 low paid individuals won't have a saving as much as a high paid individual would, so hits high paid individual's harder
@@Robot-T1 I would rather pay higher taxes if it solved the problem of crumbling public services such as health care both at National and Local level. Local Government Services are on their knees as out of every £1 raised in revenue 85p gets spent on Social Care.
@@edtee8102 we already pay high enough taxes, even compared to other county's yet our government continue finding ways of squandering it away.
Maxing out annual allowance myself and death tax is the lesser evil if you ask me as long as it means lower taxes for working people and incentivise work as opposed to being squandered on benefits etc! My hopefully future kids will benefit from the wealth whilst I'm alive (private school etc) but I will expect them to work for a living and benefit society as opposed to depend on an inheritance of course which they will get a nice sum.
Those voters wishing for change in the UK and voting for the Labour party, that seems to be like voting for the fire instead of the frying pan.
Tories were bad, but suspect Labour will be worse.
I’m no labour fan but remember the last decade of lies, mispent money with their mates, Brexit, parties while peoples parents were dying, highest tax take in memory, terrible services and generally just being a miserable place to live. I’d rather pay a bit more to see some positive change
Never trust a tory.
Brexit has been totally mismanaged and we are billions worse off. A pivot to a softer Brexit and back into the lucrative EU Single Market as promised by Leave would be a good way forward under Labour. The Tory hard Brexit was the wrong Brexit model.
@@MrTinkx Brexit? Giving the vote was always a huge risk and it was denied many times because it was recognised a leave vote could win, and then Cameron came along. I thought the whole things was just incredibly complex and would take years and years to resolve and that is what is happening, unpicking decades of previous agreements, there is that and we haven’t got the politicians we need they are so used to being coached by the EU that they don’t really know how to run an independent country anymore. I think there seems to be a notion that the Labour party have a magic wand and will bring the change,I I am dubious. Still, the future isn’t written yet, we are due some good luck.
I think you've hit the nail on the head, there's no way I think any party is going to let this IHT free pension thing run much longer, if they do it's not inconceivable that you would have multi million pound pots outside IHT zone, it's already a bit of a no brainer atm.
I also believe that a standard tax relief on pension contributions would be such a vote winner, as HR taxpayer take so much into pension pot cost wise, yet there's less votes there, than giving a Brucie bonus to basic rate taxpayers (who can't afford to pay much into their pensions anyway, but it looks good) A way around the problems you describe is simply keep things as they are (as HR taxpayers have to claim that bit back with self assessment...so basically they're not allowed to do that anymore, so everyone stays at 20% full stop) The government could simply set up an ISA style pension option where every £1 gets a 40% initial uplift (pretty close to the 30% relief that's always mentioned) Big vote winner, same pension rules and limits would apply employers pensions would stay as they are initially. It may be called unfortunately a PISA, answers on a postcard maybe for a new name...Great content btw
Not all have to claim it back, some use salary sacrifice so how will the cater for that ?
@@Desmond.TuTu. stop sal sacrifice, use PISA
The problem is when you draw your pension you pay tax again, so actually you are no better off.
Well you can take 25% tax free and build up an isa generating tax free income flows. Also the first band if you draw £12750 odd you pay zero tax. So there are ways to reduce tax
Depends how much you need.
Take withdrawals of £16,760 tax free (£4,190 tax-free cash and £12,570 income).
My pensions exceeded the lifetime allowance before the allowance was abolished and i paid tax on the excess do the changes allow you to get this tax payment back?
Thats a very poor underatanding of the situation.
Even if you were 100% correct that you pay the tax anyway (you aren't) youd still be deferring tax payments for your entire working life - which is an investors dream.
@@alan_davis I do not understand how it works, get a private pension you pay tax on the money you have paid into the pension, then when you retire you pay tax on the money you draw down on your pension, everything seems to get taxed and then taxed again, i suppose a financial adviser would explain it, but then it would cost more money for the financial adviser, i hope i have not come over as too thick for you.
👍
Labour are more likely to just do away with the ability for 40% tax payers to reclaim the 20% above the 20% that gets added as Tax Relief to the pension scheme imho.
Aren't most significant employers using Salary Sacrifice for pension contributions nowadays? Certainly all the companies I've worked for do. In that case, there's no "reclaim" to be done because the tax was never paid in the first place.
They might be offering but it’s never a default option as it requires a contractual salary reduction. You’re right about there being no need for reclaim though…
Title is misleading given the number of times you say that any Chancellor could take these actions in future, it makes this video seem to be a dig at Labour.
Oh, and don’t give that Chancellor ideas 😮