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How To Protect Your Pension From a New Government · Merryn Talks Money

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  Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
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  Speaker 2: Hello and welcome to the special edition of the Merin
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  Speaker 2: Talks Money podcast. Now, we did have something else planned
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  Speaker 2: for today, something very exciting, all about longevity, how to
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  Speaker 2: live your best life as you age financially, but events
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  Speaker 2: have intervened, so today we are going to be talking elections, elections,
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  Speaker 2: elections and how we have been very right but not
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  Speaker 2: us actually what one of our guests completely right on
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  Speaker 2: when the election would be. So with me today I
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  Speaker 2: have John Steppeck as usual, Thank you, John. Hello, Also
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  Speaker 2: Helen Thomas, CEO of Blonde Money and a macroeconomic consultancy.
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  Speaker 2: Helen has been with us on this podcast very recently
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  Speaker 2: where she predicted that there would be an election on
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  Speaker 2: July the fourth, So we've got her back on to
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  Speaker 2: explain why she was right and what she expects it
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  Speaker 2: happened now because we are now completely reliant on Helen's forecast.
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  Speaker 2: Also with us today Tom McPhail, who was director of
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  Speaker 2: public Affairs at the Langkat and is going to talk
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  Speaker 2: to us a little bit about what might happen to
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  Speaker 2: your personal finances over the coming years.
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  Speaker 3: Right.
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  Speaker 2: Welcome everybody, and thank you. Helen Can I start with
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  Speaker 2: you and ask you you were right? You were mostly right.
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  Speaker 2: I mean another part of your prediction was that Richie
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  Speaker 2: would have to give up, that he would be gone
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  Speaker 2: and he would be replaced by the charming Penny Mordant
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  Speaker 2: and she would be the one who would lead the
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  Speaker 2: country into the next election. That didn't happen, but you
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  Speaker 2: did get the date absolutely bang on. So what do
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  Speaker 2: you think happened here?
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  Speaker 4: Thank you very much, Maren, and thanks for asking me
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  Speaker 4: to come back to chat further. I mean, I think
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  Speaker 4: the key here was the updated information that we got
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  Speaker 4: in terms of the data on the morning of this
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  Speaker 4: election announcement, because we got not only that inflation figure,
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  Speaker 4: but we got a public sector net borrowing requirement figure,
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  Speaker 4: which is all about the budget deficit.
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  Speaker 5: And the whole point here with this is.
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  Speaker 4: Those pieces of information show that Richard s NAC's spreadsheet
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  Speaker 4: wasn't going to add up. It wasn't going to allow
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  Speaker 4: any kind of fiscal giveaway. I mean, frankly that was
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  Speaker 4: likely anyway, but it's just sort of the nail in
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  Speaker 4: the coffin because the budget deficit figures were bigger than expected,
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  Speaker 4: and although information had come down, it wasn't by quite
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  Speaker 4: as much as expected. That was going to delay Bank
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  Speaker 4: of England rate carts. It was all turning into a
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  Speaker 4: situation where time it was all going to get worse
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  Speaker 4: with time and not better. And that was sort of
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  Speaker 4: the central thesis of our analysis of why we thought
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  Speaker 4: this election was coming sooner rather than later.
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  Speaker 2: Okay, So the idea that things can only get better
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  Speaker 2: from here and therefore it's worth waiting until they get
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  Speaker 2: better and better is gone. It's not going to get better.
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  Speaker 2: He isn't going to see better numbers, so it might
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  Speaker 2: as well be now there isn't going to be a
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  Speaker 2: better time.
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  Speaker 4: Yeah, that's the upshot. He couldn't get legislation passed. I mean,
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  Speaker 4: there's all these little things that were going on like
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  Speaker 4: he couldn't. You know. He faced a rebellion on criminalizing homelessness,
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  Speaker 4: he faced rebellion on student visa cuts and all of
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  Speaker 4: these things. He's got defections, he's got by election losses.
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  Speaker 4: Time wasn't on his side, and then the data was
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  Speaker 4: the final nail in the coffin.
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  Speaker 2: Yeah, and he hasn't got the support that he needs.
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  Speaker 2: And as you said last time, he's not entirely sure
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  Speaker 2: who his enemies are and how many of them there are.
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  Speaker 4: Well, yeah, and the other thing that you know, events,
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  Speaker 4: dear boy, events we've seen you know, Coxin's in the water,
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  Speaker 4: There's scandals left, right and center. You know, over time
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  Speaker 4: you just get more and more chance of bad news
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  Speaker 4: stories not good news ones as well.
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  Speaker 2: So is there any risk that there won't be a
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  Speaker 2: clear Labor majority? Of course there's some risk, But do
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  Speaker 2: we need to take it seriously?
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  Speaker 4: I mean, things can happen in campaigns as we've seen. However,
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  Speaker 4: the lead is so large for the Labor Party and
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  Speaker 4: so consistent. I think that's the really key thing about
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  Speaker 4: this election campaign is there's been a campaign for well
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  Speaker 4: over a year, and voters made their minds up a
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  Speaker 4: long time ago, so so you know we're in the
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  Speaker 4: it's all been shadow boxing, really and so that's why
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  Speaker 4: it makes it more unlikely. So I would put it
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  Speaker 4: like this, which is the Labor Party have a large
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  Speaker 4: mountain to climb because the last time around they were
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  Speaker 4: on their worst results at ninety thirty five.
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  Speaker 5: You know, they're on a low number of seats, but
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  Speaker 5: all of.
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  Speaker 4: The data and everything they're doing suggests that they can
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  Speaker 4: easily scale the mountain and get to the peak.
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  Speaker 5: So I think the thing that you know, course scenario
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  Speaker 5: we're looking at.
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  Speaker 4: I mean we're still running the numbers and analysis on this,
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  Speaker 4: but you know, Labor having a majority of at least
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  Speaker 4: thirty or forty and of course going into it, Kiss
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  Speaker 4: Starmer is suddenly just going to look like he's got
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  Speaker 4: so much power. So that first few months he's going
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  Speaker 4: to have a lot of power and be able to
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  Speaker 4: do a lot of things.
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  Speaker 2: Okay, So here we have Kirs Darmer arriving entertained Downing
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  Speaker 2: Street with a huge majority behind him, six months in
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  Speaker 2: which he can basically do whatever he wants anything at all.
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  Speaker 2: What's it going to be?
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  Speaker 5: Well, not exactly by the way.
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  Speaker 4: I think we've talked about this before on the last
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  Speaker 4: one there, in which is that you know, the shadow
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  Speaker 4: of Liz Truss and the guilt market crisis looms very large,
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  Speaker 4: very large over everybody, and the financial markets have you know,
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  Speaker 4: came back with an absolute bang in terms of their impact.
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  Speaker 5: On politics and not just the Conservative Party.
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  Speaker 4: So it's quite an interesting point that because you know,
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  Speaker 4: I just said to you that the numbers show wech
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  Speaker 4: she's CINAX spreadsheet wasn't going to add up to a
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  Speaker 4: fiscal giveaway. Well, it's going to be the same numbers
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  Speaker 4: when Rachel Reeves opens up the books.
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  Speaker 5: Then you get into.
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  Speaker 4: The politics of it, which is do you then come
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  Speaker 4: in and say, let's you know, got to bury it
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  Speaker 4: all on the previous administration. It's far worse than we thought.
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  Speaker 4: You know, the numbers are horrendous. We're going to have
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  Speaker 4: to do some really you know, tricky things up front,
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  Speaker 4: and then in a year's time it looks like, oh,
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  Speaker 4: look the numbers are better.
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  Speaker 5: We you know, buried all the bad news. Now now
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  Speaker 5: we can start to do some more stuff.
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  Speaker 4: So that's actually the key sort of political judgment in
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  Speaker 4: those first few months is how how much does the
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  Speaker 4: market constraint bind them? And I think what's going to
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  Speaker 4: be interesting here is that budget's going to be coming
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  Speaker 4: in the autumn. We're going to have that US election
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  Speaker 4: coming up as well. You know where interest rate's going
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  Speaker 4: to be. We've already priced out loads of rate cuts
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  Speaker 4: in the G three world. It's going to be fascinating
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  Speaker 4: to see if they can be bold in the face
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  Speaker 4: of quite a binding constraint, because politically they can be,
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  Speaker 4: but economically is that the reality.
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  Speaker 2: Okay, so interesting, So those first six months he might
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  Speaker 2: not get to use the political power that he has
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  Speaker 2: and we might find that none of the things that
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  Speaker 2: some of us might find frightening financially won't happen.
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  Speaker 4: Yeah, I mean one other things to look at when
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  Speaker 4: I was running the numbers on this with the potential
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  Speaker 4: for this, what's going to look like this Labor government.
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  Speaker 4: So one of the other important thing that Kirs Starmer
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  Speaker 4: and Morgan McSweeney his chiefest staff or the guy who's
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  Speaker 4: run his campaign, have done is made sure that the
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  Speaker 4: candidates selected for Labor seats have been extremely loyal to
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  Speaker 4: Starmer and you know, really support the project.
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  Speaker 5: If you run the numbers, if Labor win as.
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  Speaker 4: Many seats as Tony Blair did in terms of a
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  Speaker 4: net game, then half of the Labor Parliamentary Party will
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  Speaker 4: be new MPs, completely new MPs.
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  Speaker 5: And so that's by the way, that's good and bad.
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  Speaker 4: So great they came in on they owe this to
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  Speaker 4: kar Starmer. That show you know they're going to be
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  Speaker 4: loyal and supportive. But a lot of them have not
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  Speaker 4: got any experience and have had careers in other things
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  Speaker 4: and might want to stand up and call out their
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  Speaker 4: big pet project for how to solve the world, and.
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  Speaker 2: Having careers in other things in advance. That can't be
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  Speaker 2: considered to be a bad thing. But one of the
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  Speaker 2: things that I've experienced, one of the things we've seen
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  Speaker 2: in Scotland is that when you have a parliament jammed
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  Speaker 2: full of people with no political experience, it doesn't always
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  Speaker 2: work out how well.
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  Speaker 4: Well now and of course any this new parliament, as
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  Speaker 4: you've discussed many times, is i mean probably the biggest
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  Speaker 4: political and economic challenges for well well over a decade,
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  Speaker 4: if not several decades, given where inflation is.
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  Speaker 6: De my mind, this this constraint is actually not real.
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  Speaker 6: It's something that has become a nice story. But really
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  Speaker 6: the guilt market fell over because defined benefit pension funds
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  Speaker 6: were over leveraged, and now that that's been unwound, Britain
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  Speaker 6: has got exactly the same constraints as any other developed economy. Really,
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  Speaker 6: we can't go as far with the credit card as
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  Speaker 6: the US does, but we've definitely got room. So I'm
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  Speaker 6: just wondering at what point does labor, having got into power,
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  Speaker 6: start to walk back that idea that you know, we
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  Speaker 6: need to be really careful because markets will mess us about,
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  Speaker 6: or alternatively, do they use that as an excuse to say, well,
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  Speaker 6: actually we need to raise taxes because otherwise the market's
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  Speaker 6: going to you know, batters over the head because we've
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  Speaker 6: got such a big you know, deficit and debt built up.
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  Speaker 5: I think you've picked the two points there.
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  Speaker 4: On a second one that would be potentially politically expedient path,
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  Speaker 4: as you say, you could use that constraint, whether well
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  Speaker 4: indeed imaginary or otherwise to prosecute a path that you
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  Speaker 4: want to go on anyway. But in terms of this
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  Speaker 4: sort of bigger question about about you know, can they.
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  Speaker 5: Basically just let's just forget about it?
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  Speaker 4: Like you say, in many ways, it was a narrative
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  Speaker 4: that built up, and you know, maybe in a whole
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  Speaker 4: new world come what will it be July the ninth,
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  Speaker 4: not that far away when Parliament will reopen.
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  Speaker 5: No, because a couple of things.
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  Speaker 4: There's still the shadow of Jeremy Corbyn and the concept
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  Speaker 4: of can labor be trusted with the economy. Yes, they're
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  Speaker 4: doing a lot better on that with the public, but
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  Speaker 4: that's only ast of recent history. They feel themselves as
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  Speaker 4: a party perhaps that they sort of have slightly more
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  Speaker 4: to prove. They may have won that credibility, but they've
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  Speaker 4: seen how easy it can be lost, so they need
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  Speaker 4: to keep it. And then you know the other part
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  Speaker 4: to it is, you know I said that obviously a lot.
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  Speaker 5: Of MPs would be new.
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  Speaker 4: Well look, I mean Kistarm has not been an MP
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  Speaker 4: for that long. You know, his previous job was a lawyer.
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  Speaker 4: I mean, Rachel Reeves has got some real world experience
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  Speaker 4: and of course Bank of England experience, but that just
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  Speaker 4: means that they're more aware of of those kinds of constraints.
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  Speaker 4: Here's the thing I always say, business is about what works.
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  Speaker 4: Politics is about what sells. And those that first sort
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  Speaker 4: of three months of that labor government is going to
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  Speaker 4: be we've said starwly powerful. We've said there's an imaginary
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  Speaker 4: narrative you could bust. What we don't know is how
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  Speaker 4: bold is he genuinely prepared to be right now? Because
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  Speaker 4: I you know, we do say what the analysis suggests.
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  Speaker 4: I don't think he will be that bold. I think
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  Speaker 4: that that constraint is still very live for this generation
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  Speaker 4: of labor politicians.
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  Speaker 2: All this rather suggests that there are tax riserss coming
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  Speaker 2: tom When you look at an incoming labor government.
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  Speaker 5: What do you see is happening?
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  Speaker 2: First, what's going to happen to the personal finances of
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  Speaker 2: people in the UK? First, we're going to see reversals
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  Speaker 2: of the assurance scouts rises and income tax? Where do
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  Speaker 2: we go?
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  Speaker 3: Yeah, there are all really good questions, and I think,
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  Speaker 3: just building on Helen's point, I think the size of
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  Speaker 3: the labor majority is critical. You know, if you want
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  Speaker 3: to push through change, you need one of three things.
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  Speaker 3: You need either a crisis like we had in twenty ten,
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  Speaker 3: you need lots of political capital like Tony Blair had
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  Speaker 3: in nineteen ninety seven, or you need a consensus around
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  Speaker 3: what the path forwards. Already agrees that this is a
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  Speaker 3: good policy, then it's quite simple to push it through.
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  Speaker 3: So the size of the majority, in the amount of
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  Speaker 3: political capital that Sir Kirs Starmer has to work with
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  Speaker 3: is critical in shaping how bold he can be with
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  Speaker 3: his plans, which kind of the point that Helen was making.
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  Speaker 3: So in terms of our taxes, Rachel Reeves has been
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  Speaker 3: studiously avoiding any hints of any tax rises because she
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  Speaker 3: doesn't want to get beaten around the head with that
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  Speaker 3: during an election campaign. So so the public position is
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  Speaker 3: we're not going to raise any taxes. Everything is fine,
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  Speaker 3: You're safe with the Labor Party, everything will be, you know,
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  Speaker 3: business as usual. In fact, look at these nasty Tories
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  Speaker 3: who've been raising all these thresholds and fiscal drag and
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  Speaker 3: in many ways life will be better under a labor government,
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  Speaker 3: I think is their starting point. But you know the
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  Speaker 3: points that have already been made. Financial position of the
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  Speaker 3: country isn't great. I think there's some ideology starting to
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  Speaker 3: come into this. I want to pick out one thing,
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  Speaker 3: which is the lifetime allowance, the amount of the maximum
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  Speaker 3: amount you're allowed to build up in your pension pot
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  Speaker 3: one of the few areas where Labor have publicly spoken
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  Speaker 3: about what their personal tax policies might be. Jeremy Hunt
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  Speaker 3: announced a year ago he was going to get rid
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  Speaker 3: of the lifetime allowance, and as an aside, the HMRC
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  Speaker 3: have made an awful mess of executing that plan. It's
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  Speaker 3: a nightmare and that now creates pitfalls for anyone who's
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  Speaker 3: thinking of taking money out of their pensions, and that
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  Speaker 3: is important. Rachel Reeves has publicly said we will bring
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  Speaker 3: back this ceiling on the amount you can build up
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  Speaker 3: in your pension pots. So immediately there we're faced with
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  Speaker 3: the dilemma of you know, should I should I wedge
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  Speaker 3: more money into my pension now before a labor government arrives,
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  Speaker 3: so that I've built up this money in a safe
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  Speaker 3: part that they will then have to put text because
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  Speaker 3: you can't make taxation retrospective or is the risk that
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  Speaker 3: they'll just bring back that limit anyway and the money
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  Speaker 3: I've been putting putting into my pension pot will then
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  Speaker 3: get taxed more punitively.
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  Speaker 6: Because there is this very small window at the moment
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  Speaker 6: if someone is in a possession where they are you know,
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  Speaker 6: thinking of it, iirre then should they be looking to say,
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  Speaker 6: I know, take their full twenty five percent tax very
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  Speaker 6: lumps on now, or you know, line it up before
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  Speaker 6: the autumn budget. I realized that these are the kinds
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  Speaker 6: of things that you can't say anything definitively on, but
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  Speaker 6: in terms of preparing for a potentially more hostile because
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  Speaker 6: we know the pensions are very they're setting duck, aren't
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  Speaker 6: they for politicians because people don't pay attention to them
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  Speaker 6: until they've got them.
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  Speaker 3: So yeah, I mean for two reasons. One, yes, because,
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  Speaker 3: as Marin says, that's where the money is. And they
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  Speaker 3: don't just want the pension run money because it can
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  Speaker 3: put money in the exchecker. Now that can raise taxes
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  Speaker 3: off pension pots. Since we saw in nineteen ninety seven
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  Speaker 3: with Golden Brown tax rate on pensions when they came
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  Speaker 3: into power back then, you know they'll be thinking in
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  Speaker 3: those kind of terms again. But also for the reason
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  Speaker 3: I touched on before. Ideologically, you know, this is about
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  Speaker 3: shifting the burden of taxation away from the workers and
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  Speaker 3: from income tax and more onto capital and to tax
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  Speaker 3: those baby boomers who built up vast amounts of wealth
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  Speaker 3: and are now hoarding their cash. So I think we
• 14:27
  Speaker 3: might hear more of that kind of mood music on
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  Speaker 3: the other side of the general election. And to your question,
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  Speaker 3: I think, yes, it's really difficult. I think in general principle,
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  Speaker 3: get your money and your tax shelters now if you can. So,
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  Speaker 3: the more money you can put into pensions now, the
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  Speaker 3: more money you can put into ices now. It makes sense,
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  Speaker 3: you know, because generally they don't make taxation retrospective. My
• 14:50
  Speaker 3: caveat with that is, yeah, this question of taking money
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  Speaker 3: out again. I'm also concerned that labor we're never that
• 14:57
  Speaker 3: keen on the pension freedoms that were introduced by George
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  Speaker 3: Osborne in twenty fifteen. The change to the rules that
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  Speaker 3: meant you could just dip into your pension pots and
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  Speaker 3: take all your money out whenever you liked. Rachel Reeves,
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  Speaker 3: who was working on this beat at the time, was
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  Speaker 3: never happy about that. She commissioned a review of the
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  Speaker 3: pension freedoms which was published in twenty sixteen, which said, look, basically,
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  Speaker 3: they've gone too far, and I think there's plenty of
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  Speaker 3: data to suggest that from many people. There are a
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  Speaker 3: lot of risks now in how they take their money
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  Speaker 3: out of their pension pots. So I think one thing
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  Speaker 3: we might see on the other side of the general
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  Speaker 3: election with the Labor government is more restrictions being reintroduced
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  Speaker 3: in terms of how and when you're allowed to take
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  Speaker 3: money out of your private savings, possibly edging up the
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  Speaker 3: minimum major which you're allowed to access your pension pot,
• 15:42
  Speaker 3: or bringing in some requirements you have to secure a
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  Speaker 3: minimum level of safe income before you're then allowed to
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  Speaker 3: take capital out as you are under the current rules.
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  Speaker 3: So to your question, again, there's perhaps an argument that says, well,
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  Speaker 3: if you're planning on do it, do it sooner rather
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  Speaker 3: than later. I've already mentioned the complications for the lifetime
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  Speaker 3: allowance that have been introduced as a result of the
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  Speaker 3: abolition of the lifetime allowance and the CAC handed way
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  Speaker 3: that was implemented by HMRC. So anyone thinking of doing
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  Speaker 3: anything in this space, I would absolutely encourage you to
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  Speaker 3: go and talk to a financial advisor because it is
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  Speaker 3: tortuously messy and full of pitfalls.
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  Speaker 6: We're almost looking at possibly going back to kind of
• 16:21
  Speaker 6: force the neuitization at a certain level potentially.
• 16:26
  Speaker 3: I think the system that pertained before twenty fifteen, where
• 16:31
  Speaker 3: it wasn't forced the neutization as such, but you had
• 16:34
  Speaker 3: to demonstrate a minimum level of secure income state pension,
• 16:37
  Speaker 3: define benefit pension annuities, and once you were I mean,
• 16:41
  Speaker 3: the whole argument here is make sure you're not a
• 16:43
  Speaker 3: liability on the welfare state, that you know you have
• 16:45
  Speaker 3: a secure income for the rest of your life, and
• 16:47
  Speaker 3: then and then fine, do what you like with the
• 16:49
  Speaker 3: rest of your capital. I think we could move back
• 16:52
  Speaker 3: in that direction a bit without going all the way
• 16:54
  Speaker 3: to force the neutization again. And the one other thing
• 16:57
  Speaker 3: that I think is a glaring outlier in terms of
• 17:00
  Speaker 3: pension to pension taxation generally. One is they're currently exempt
• 17:04
  Speaker 3: from inheritance tax, and the rules for anyone who dies
• 17:07
  Speaker 3: before the age of seventy five are ridiculously generous. It's
• 17:11
  Speaker 3: a very easy way to pass wealth on through the generation.
• 17:14
  Speaker 3: So I wouldn't be a tool surprise to see a
• 17:16
  Speaker 3: new Labor government introduced more in the way of death
• 17:20
  Speaker 3: taxes on people's accumulated pension pot, perhaps for example, by
• 17:24
  Speaker 3: making them liable to inheritance tax. The more nuclear option
• 17:28
  Speaker 3: is they look at pension tax relief more generally and
• 17:30
  Speaker 3: they said they're going to do a review of pension taxation. Look,
• 17:33
  Speaker 3: there's fifty pounds a year up for grabs there. This
• 17:36
  Speaker 3: is not chubb change, this is serious money. So there's
• 17:39
  Speaker 3: nothing to stop Labour saying look, I mean George Osborne
• 17:42
  Speaker 3: had a look at it in twenty fifteen and it's
• 17:43
  Speaker 3: difficult and complicated then and then he made a mess
• 17:46
  Speaker 3: of Brexit, so there was that, so they never carried
• 17:49
  Speaker 3: through with their plans. But I wouldn't be at all
• 17:51
  Speaker 3: surprised to see Labor government coming back and saying, hang on,
• 17:54
  Speaker 3: why are we giving all this generous tax relief to
• 17:57
  Speaker 3: high earners to the forty five and forty percent tax payer,
• 18:00
  Speaker 3: shouldn't we be redirecting a bit more of that money
• 18:02
  Speaker 3: towards the lower earning, more deserving workers amongst us? So
• 18:08
  Speaker 3: it would be a big thing to do, but it wouldn't.
• 18:10
  Speaker 3: And that I think comes back to Helen's points around
• 18:12
  Speaker 3: the side of the majority. But I wouldn't be surprised
• 18:15
  Speaker 3: to see labor bringing the whole pension tax system out
• 18:18
  Speaker 3: onto the table.
• 18:19
  Speaker 6: So Mike's amazing stage yield that there's nothing that you
• 18:23
  Speaker 6: can actually do above that.
• 18:25
  Speaker 3: There's no magic wand you can wave here now. Unfortunately
• 18:28
  Speaker 3: not and you know you've either got the money or
• 18:31
  Speaker 3: you haven't, And if you have, then think about how
• 18:33
  Speaker 3: you can apply it most effectively. Now, I think, you know,
• 18:37
  Speaker 3: talking to employers, I think the other thing we might
• 18:40
  Speaker 3: see is some some movement in the workplace pension rules,
• 18:44
  Speaker 3: perhaps a bit more pressure brought onto employers to increase
• 18:47
  Speaker 3: the amount of contribution they're obliged to make people's workplace pensions.
• 18:51
  Speaker 3: That seems to me a no brainer. But again, I mean,
• 18:54
  Speaker 3: that's not a personal tax issue. That's not something that
• 18:56
  Speaker 3: you can preempt as an individual.
• 18:58
  Speaker 6: Who do they squeal the suck with a defined benefit
• 19:02
  Speaker 6: say the things. Because another thing that's come up a
• 19:05
  Speaker 6: couple of times is the whole point is start in
• 19:07
  Speaker 6: the LTA or the political reason for doing it at
• 19:10
  Speaker 6: least was this top doctors from leaving the NHS because
• 19:14
  Speaker 6: you know, they were getting paid too much and being
• 19:15
  Speaker 6: there with tax charges on the dB pensions because the
• 19:19
  Speaker 6: dB patients were It's all generous really. So the question
• 19:25
  Speaker 6: then is how do the kalv that or what do
• 19:28
  Speaker 6: they do about that without creating a even more of
• 19:32
  Speaker 6: a two tier pension system.
• 19:33
  Speaker 3: Basically, yeah, really good question. I mean there's two things there.
• 19:36
  Speaker 3: One is they bumped up the annual allowance to sixty pounds,
• 19:41
  Speaker 3: which hardly addressed the problem of the taxation of doctors
• 19:44
  Speaker 3: and their pension benefits. I mean, the irony is last
• 19:47
  Speaker 3: year we still had the lifetime allowance, but the government
• 19:50
  Speaker 3: had just done an emergency measure of turning the tax
• 19:53
  Speaker 3: rate down to zero, right, so it still existed, but
• 19:56
  Speaker 3: it had no effect. What they've done now to completely
• 20:00
  Speaker 3: take the lifetime allowance off the statute book, to eliminate
• 20:03
  Speaker 3: it completely, has actually made the world a great deal worse.
• 20:05
  Speaker 3: So if we just stopped where we were last year,
• 20:07
  Speaker 3: life would have been a great deal better. And what
• 20:09
  Speaker 3: we had last year had solved the problem, so it
• 20:12
  Speaker 3: had eliminated the risk of doctors sort of leaving they were,
• 20:15
  Speaker 3: the tax punishment had been eliminated. If Labor were hell
• 20:20
  Speaker 3: bent on bringing back the lifetime allowance, the limit, they
• 20:22
  Speaker 3: could do it at a slightly high level they say
• 20:25
  Speaker 3: one and a half million one point eight million, which
• 20:27
  Speaker 3: is level had got up to under the previous Labor government.
• 20:30
  Speaker 3: They could do that and the problem would be solved
• 20:32
  Speaker 3: and the totemic reintroduction of the lifetime allowance would have
• 20:36
  Speaker 3: been achieved. It would have stopped the very large amount
• 20:39
  Speaker 3: of pension pots being accumulated tax free. So I'm not
• 20:43
  Speaker 3: sure at the moment whether they will actually bring it
• 20:46
  Speaker 3: back at all, and if they do, what level they'll
• 20:48
  Speaker 3: bring it back at. I think it might become part
• 20:51
  Speaker 3: of a broader pension tax review endeavor.
• 20:55
  Speaker 4: One of the things we haven't talked about which could
• 20:56
  Speaker 4: change the numbers is if we got some sort of
• 20:59
  Speaker 4: return to growth. And this is where actually Tom's point
• 21:03
  Speaker 4: about ideology is key, because if you look at Rachel
• 21:07
  Speaker 4: Reeves is May's lecture, which I think I mentioned on
• 21:09
  Speaker 4: the last podcast and her secure Anomics, the whole idea
• 21:13
  Speaker 4: is that capitalism itself breaks the whole system down, and
• 21:18
  Speaker 4: only if you take a more statist, socialist approach can
• 21:22
  Speaker 4: you get growth. Because you know, this point of secure
• 21:24
  Speaker 4: anomics is if everyone feels more secure, then everyone will
• 21:29
  Speaker 4: have a much better life and we'll have growth, etc.
• 21:32
  Speaker 4: And one of the things I think will be quite
• 21:34
  Speaker 4: interesting is in those first few months, simply because of
• 21:38
  Speaker 4: a new government with a stable majority or at least
• 21:41
  Speaker 4: what looks like one removal of uncertainty, we've got a
• 21:44
  Speaker 4: bit of growth coming back in Q one, inflation has
• 21:47
  Speaker 4: fallen back down towards banking his target. Could there actually
• 21:51
  Speaker 4: be those first few forecasts from the OBR may show
• 21:55
  Speaker 4: some you know, nascent signs of growth and that that
• 22:00
  Speaker 4: would slightly slightly change the sums because I don't think
• 22:05
  Speaker 4: it will be, of course, a life changing I don't
• 22:08
  Speaker 4: think we're going to't think we're coming into a roaring,
• 22:10
  Speaker 4: a roaring period of growth for the UK economy, but
• 22:14
  Speaker 4: that that could change the pitch quite dramatically, or at
• 22:17
  Speaker 4: least how Labour decides to approach the situation, because even
• 22:21
  Speaker 4: with growth, they might decide they want to do some
• 22:23
  Speaker 4: of these things Tom's talking about.
• 22:24
  Speaker 3: Only give them a bil riggle room. Yeah.
• 22:26
  Speaker 4: Well it would then mean they could, you know, rebalance
• 22:28
  Speaker 4: the economy in favor of, you know, certain elements they
• 22:32
  Speaker 4: find more deserving, or at least rebalanced from capital to labors.
• 22:37
  Speaker 6: As Tom was pointing out, we rebalanced it from capital
• 22:39
  Speaker 6: towards Leiba was not necessarily a bad thing, because obviously
• 22:44
  Speaker 6: the pentulum kind of had swung the other week quite
• 22:46
  Speaker 6: a lot. But it's partly about who you can go
• 22:50
  Speaker 6: about it.
• 22:50
  Speaker 5: I should say.
• 22:51
  Speaker 4: But either way that on one level, we haven't actually
• 22:53
  Speaker 4: had much capitalism for the last fourteen years on a
• 22:56
  Speaker 4: strict basis, you know, bailing out the banks, Hue all
• 22:59
  Speaker 4: the rest of it. So I mean that the direction
• 23:02
  Speaker 4: travel the Overton window of possible policy has shifted more
• 23:07
  Speaker 4: economically to the left anyway.
• 23:09
  Speaker 3: Well, and actually, just on that point, I find it
• 23:12
  Speaker 3: fascinating that when you look at the speeches from Jeremy
• 23:15
  Speaker 3: Hunt and Rachel Reeves around this question of directing pension
• 23:19
  Speaker 3: funt money to invest in UK economic growth, you'd be
• 23:23
  Speaker 3: hard pressed to tell who had delivered which speech. Right,
• 23:25
  Speaker 3: they're absolutely on the same page. You know, Helen's Overton
• 23:28
  Speaker 3: window is exactly in the same place there. So whatever
• 23:32
  Speaker 3: happens on the other side of the general election, I see,
• 23:34
  Speaker 3: I can't see an outcome where we don't get the
• 23:36
  Speaker 3: politicians leaning on the pension system generally to channel more
• 23:41
  Speaker 3: of its investment capital into British enterprises, British startups, venture capital,
• 23:46
  Speaker 3: infrastructure and list equities. You know that is going to happen.
• 23:50
  Speaker 3: It's just a question of how hard they get lent on.
• 23:52
  Speaker 6: That's a really good point. Who The other thing I
• 23:55
  Speaker 6: wanted to ask you about is the Polticezer. So obviously
• 23:58
  Speaker 6: the introduced the idea of this, but one of the
• 24:03
  Speaker 6: cannot face that a general election. Reazi says that it's
• 24:07
  Speaker 6: never going to happen. But that doesn't soum as if.
• 24:11
  Speaker 6: I mean, do you think it's still on the colt
• 24:12
  Speaker 6: tink we'll still get it.
• 24:16
  Speaker 3: I can tell you the whole industry hates it, certainly,
• 24:18
  Speaker 3: all the industry I've spoken to. I think it's an
• 24:19
  Speaker 3: absolutely daft idea. I love it, now do you love it? Well?
• 24:25
  Speaker 3: So I think it's just as likely. I mean, well,
• 24:28
  Speaker 3: I think I think that's part of it. How do
• 24:30
  Speaker 3: you define it? You know, is it on top of
• 24:32
  Speaker 3: the twenty thousand? Do you have to do the twenty
• 24:33
  Speaker 3: thousand before you can then do the five thousand? What
• 24:35
  Speaker 3: do we define as a British iSER?
• 24:37
  Speaker 1: You know?
• 24:38
  Speaker 3: Is it shares listed in the UK? Is it earning
• 24:40
  Speaker 3: in the UK? All that kind of.
• 24:41
  Speaker 2: Stuff implicated questions to answer. I mean, is it on
• 24:44
  Speaker 2: top of the twenty? Is it not on top of
• 24:45
  Speaker 2: the twenty? Someone tells you that, and that bit's done.
• 24:48
  Speaker 2: How do we define it? We define it as listed
• 24:50
  Speaker 2: in the UK, just like we used to do with PEPs.
• 24:51
  Speaker 2: What we're trying to do is is deeper and wider
• 24:54
  Speaker 2: UK capital markets, Right, That's it. It's it's not all
• 24:57
  Speaker 2: the precision of ir early earnings in the UK. It's hey,
• 25:00
  Speaker 2: come and listen here, be part of our capital markets
• 25:03
  Speaker 2: and let's get the infrastructure around those capital markets working again.
• 25:07
  Speaker 2: That's what it's about. It's not about you know, are
• 25:09
  Speaker 2: you Are you a machine maker in the Midlands? I
• 25:11
  Speaker 2: think you you you'll Well, the industry wants to make
• 25:14
  Speaker 2: this complicated because they don't want to have anything that's
• 25:18
  Speaker 2: so precise, right, But but I think these are all
• 25:21
  Speaker 2: very easily answerable questions anyway, that's not John's question.
• 25:25
  Speaker 3: Yeah, that's very fair, that's very fair pushback. And in
• 25:28
  Speaker 3: the context of everything I'd said about the pension system,
• 25:31
  Speaker 3: you know, maybe there is a logic, consistent logic there that, yes,
• 25:34
  Speaker 3: they become and we'll push your head with something that
• 25:36
  Speaker 3: looks like their version of the British Eyes. Obviously can't
• 25:38
  Speaker 3: be the British icer because that was the Conservative's idea,
• 25:41
  Speaker 3: so we'll do something that looks very like it, but
• 25:42
  Speaker 3: it's our idea. So yeah, perhaps they'll push your head
• 25:45
  Speaker 3: with that.
• 25:45
  Speaker 2: Particularly they do keep talking about listening to the radio
• 25:48
  Speaker 2: the morning after the election was announced, there's all this
• 25:50
  Speaker 2: talk about you know, nation before party and nation before party,
• 25:53
  Speaker 2: and a britt isak and slots nicely into that little
• 25:56
  Speaker 2: bit of ideology.
• 25:57
  Speaker 3: Doesn't it. Yeah, Yeah, agreed, Yeah, yeah, right, Tom.
• 26:01
  Speaker 2: Is there anything that we haven't talked about that you
• 26:05
  Speaker 2: feel we should in terms of things that we should
• 26:07
  Speaker 2: worry about or or let's biglar things we might be
• 26:10
  Speaker 2: excited about within your government.
• 26:13
  Speaker 3: So, without wishing to disappear too far down into the
• 26:16
  Speaker 3: weeds of it, I think there's quite a lot of
• 26:18
  Speaker 3: challenges for the pension system around the demographics around the
• 26:22
  Speaker 3: sustainability of the state pension. But these are all long
• 26:25
  Speaker 3: term stuff, so we're going to see a review from
• 26:27
  Speaker 3: Labor on pensions. We've touched on some of the things
• 26:30
  Speaker 3: that might get dragged into that review. I'm not sure
• 26:33
  Speaker 3: how broad it is. I actually really hope that they
• 26:36
  Speaker 3: will take the time to take a step back and say, Okay,
• 26:39
  Speaker 3: let's do what we did back in two thousand and
• 26:40
  Speaker 3: five with the Turner Commission. Let's take a proper look
• 26:43
  Speaker 3: at what the challenges are here, because there are some
• 26:45
  Speaker 3: really big challenges, such as the demographics, and let's think
• 26:48
  Speaker 3: about what we want the pension system to look like
• 26:50
  Speaker 3: in the future before then pushing ahead with all of
• 26:53
  Speaker 3: their plans. So maybe we'll see that. I think one
• 26:58
  Speaker 3: thing I'd look out for is I've mentioned and already
• 27:00
  Speaker 3: that they might look at bumping up the age at
• 27:02
  Speaker 3: which you can access your private pensions. I think that
• 27:05
  Speaker 3: some unfinished business on the state pension, and when that
• 27:08
  Speaker 3: gets paid, we know it's going up to sixty seven
• 27:10
  Speaker 3: by twenty twenty eight. This is not exciting stuff, by
• 27:12
  Speaker 3: the way. I'm just saying that these are things that
• 27:13
  Speaker 3: might come into play. The agent shape of the state
• 27:17
  Speaker 3: pension could be up for grabs I think in the
• 27:19
  Speaker 3: next parliament as well.
• 27:20
  Speaker 2: Okay that none of that, None of that suggested they're
• 27:22
  Speaker 2: particularly excited Tom about the prospect of in your government, Helen,
• 27:26
  Speaker 2: is there anything that you can think of that makes
• 27:28
  Speaker 2: you go, wow, this could be great. They've got a
• 27:30
  Speaker 2: policy here either that will be transformative to the country's
• 27:34
  Speaker 2: finances or are personal finances anything that you can say,
• 27:37
  Speaker 2: as Leyan, I'm pretty excited about that. I'm not a
• 27:41
  Speaker 2: trick question, by the way, not at all.
• 27:43
  Speaker 6: No.
• 27:43
  Speaker 4: I think it's I'm fascinated by some of these institutions
• 27:48
  Speaker 4: that Rachel Reeves has talked about creating. There's Great British Energy,
• 27:52
  Speaker 4: of course is one. I mean, clearly we need to
• 27:55
  Speaker 4: do something about our energy policy. I mean that has
• 27:58
  Speaker 4: been obvious for years, but at rammed home in these
• 28:00
  Speaker 4: last couple of years. So I'm quite interested in what
• 28:03
  Speaker 4: Great British Energy will actually do at the margin for
• 28:08
  Speaker 4: actually our energy security as much as anything, because that
• 28:11
  Speaker 4: threat isn't going away.
• 28:13
  Speaker 2: Okay, John, you're just not looking excited. It's one of
• 28:16
  Speaker 2: those podcasts where we've got video and I can see
• 28:18
  Speaker 2: that John is casting around for something exciting and then
• 28:21
  Speaker 2: you and then your government come it gotta be something,
• 28:23
  Speaker 2: gotta be something. No, there isn't.
• 28:28
  Speaker 6: I mean, I just I just wonder that we're going
• 28:32
  Speaker 6: to help like another late X using some weird kind
• 28:35
  Speaker 6: of stasis and an awful lot of fighting around the
• 28:39
  Speaker 6: fringes of things without getting anything done. And you know, yeah,
• 28:44
  Speaker 6: we make it a labeled landslap, but you know we
• 28:46
  Speaker 6: had a conservative landslade as well. And I mean, okay,
• 28:50
  Speaker 6: I mean three the we've got Brexit did get done
• 28:53
  Speaker 6: and that has been a big shovel with the stuff
• 28:55
  Speaker 6: to you get through. And maybe yeah, maybe a flavor
• 28:59
  Speaker 6: of getting and the actually sit down and think about
• 29:02
  Speaker 6: things rather than being as reactive as the last few
• 29:07
  Speaker 6: governments have been the headlines. Then actually maybe we could
• 29:10
  Speaker 6: get someone on the most substantive issues. But you know,
• 29:12
  Speaker 6: it's everything like house building planning reform, which partly ties
• 29:16
  Speaker 6: into the Create British Energy thing. I do think it's
• 29:19
  Speaker 6: important that they have a kind of business friendly atmosphere
• 29:23
  Speaker 6: because the foot seat is just finally getting going. It'd
• 29:26
  Speaker 6: be nice to see that continue. I mean a big
• 29:30
  Speaker 6: bed for.
• 29:31
  Speaker 2: Well, we have talked before, haven't we, jne about how
• 29:33
  Speaker 2: a solid majority from Labor would be incredibly positive for
• 29:36
  Speaker 2: the UK a creen market because regardless of people's expectations
• 29:40
  Speaker 2: around around Holicy, nonetheless they would see it as some
• 29:44
  Speaker 2: kind of stability and that's what the UK needs. And
• 29:46
  Speaker 2: of course a little bit of backtracking.
• 29:47
  Speaker 6: From Brexit stability and as you say, as sort of
• 29:51
  Speaker 6: like general continuation that can ease in of relationships with
• 29:56
  Speaker 6: Europe because to be fair, I mean basically soon Act
• 29:58
  Speaker 6: presided over a more hospital relationship with the EU. And
• 30:02
  Speaker 6: that's also part of because the EU itself is no
• 30:05
  Speaker 6: file bigger what is than just you know, it's a
• 30:08
  Speaker 6: relationship with bret and it's got the fact that all
• 30:10
  Speaker 6: of the media countries now have significant parties that are
• 30:17
  Speaker 6: they're not going to see they want to exit, but
• 30:19
  Speaker 6: they're certainly not crull EU parties.
• 30:22
  Speaker 4: Well, just to say July seventeenth is the going to
• 30:25
  Speaker 4: be the state opening of Parliament and July the eighteenth,
• 30:27
  Speaker 4: I believe is the conflab meeting of the new European
• 30:32
  Speaker 4: political community that Macron has been keen on in London.
• 30:35
  Speaker 4: So you could get a shift from the very start
• 30:40
  Speaker 4: in the relationship with Europe.
• 30:42
  Speaker 2: Okay, all right, now let's move on to we've talked
• 30:46
  Speaker 2: about this. I think we've covered pretty much, but I
• 30:48
  Speaker 2: haven't covered everything. We've covered an awful lot. How does
• 30:51
  Speaker 2: the ordinary person out there who's now totally panicking about
• 30:54
  Speaker 2: their pension? Thanks for that, Tom, how do they react
• 30:57
  Speaker 2: in terms of investiging? John, what do you think?
• 30:59
  Speaker 5: You go ahead and new are nice?
• 31:01
  Speaker 2: Fifty two fifty etf just in case, not a recommendation,
• 31:07
  Speaker 2: by the way, just looking for stuff.
• 31:08
  Speaker 6: The stuff your your pension and your eyes it as
• 31:12
  Speaker 6: much as you can use your allowances if you can
• 31:15
  Speaker 6: beyond that, I guess this is the other editating thing.
• 31:18
  Speaker 6: Your pension ends up being at the mercy of whoever
• 31:22
  Speaker 6: is in power, and you can use the you can
• 31:25
  Speaker 6: use the bets that are accessible to you. But from
• 31:28
  Speaker 6: a big picture point of view, there's not that much
• 31:30
  Speaker 6: you can do, and a lot it depends on your
• 31:32
  Speaker 6: financial possession right now. And really, you know, if you're
• 31:35
  Speaker 6: not already using your allowances, then it's probably because you
• 31:37
  Speaker 6: don't have the money to fill them up, rather than
• 31:39
  Speaker 6: because you've been, you know, sitting on your hands waiting
• 31:42
  Speaker 6: for something to happen. Yeah, but if you if you
• 31:44
  Speaker 6: have been, you know, back to.
• 31:46
  Speaker 2: Now, anything Tom, Helen to finish us off anything we've done,
• 31:50
  Speaker 2: We've done an attempt to be optimistic. Is there anything
• 31:52
  Speaker 2: that we can do right now that might be financially
• 31:55
  Speaker 2: advantageous over the coming years.
• 31:58
  Speaker 3: Well, I'm going to to go with your of optimism
• 32:00
  Speaker 3: and just add the you know, I think back to
• 32:02
  Speaker 3: ninety seven and I think Blair's common subsequently, he wishes
• 32:06
  Speaker 3: he'd been more bold in that first term given the
• 32:08
  Speaker 3: majority he had, so to echo the point has been made.
• 32:11
  Speaker 3: A big majority actually could be quite exciting. It could
• 32:14
  Speaker 3: help to get things done some of the things that
• 32:17
  Speaker 3: did the John touched on there. So so yeah, I mean,
• 32:20
  Speaker 3: I think I think that's great. I'd also echo John's
• 32:22
  Speaker 3: comment about using your allowances because I think there are
• 32:27
  Speaker 3: likely to be more capital taxes on their way. So
• 32:30
  Speaker 3: you know, you make hey, while the sun shines, I
• 32:32
  Speaker 3: think is the answer.
• 32:33
  Speaker 2: There, and hope it keeps shining.
• 32:36
  Speaker 5: Helen, I think I just want to throw in.
• 32:38
  Speaker 4: Last time I was talking to you, you know, I
• 32:39
  Speaker 4: liked US tech stocks, and that's the case. But here's
• 32:43
  Speaker 4: here's a thought now, which is what about the currency.
• 32:47
  Speaker 4: So we just talked about a situation where actually you know,
• 32:50
  Speaker 4: risk premium coming out of UK assets a little bit
• 32:53
  Speaker 4: in terms of a solid majority, and really uncertainty could
• 32:57
  Speaker 4: be a bit of a boost to the pound. So
• 32:59
  Speaker 4: if you are invest overseas, maybe think about currency hedging
• 33:03
  Speaker 4: back in two pounds.
• 33:04
  Speaker 2: Okay, useful information. Thank you very much, and thank you
• 33:08
  Speaker 2: all of you for being with us today at such
• 33:10
  Speaker 2: short notice. We really appreciate it. Thanks for listening to
• 33:13
  Speaker 2: this week's Meren Talks Money. We'll be back next week.
• 33:15
  Speaker 2: In the meantime, if you like us, show, rate, review
• 33:17
  Speaker 2: and subscribe wherever you listen to your podcast and keep
• 33:20
  Speaker 2: sending questions or comments to Merin Money at Bloomberg dot net.
• 33:23
  Speaker 2: Also thoughts on the election, thoughts on politics, thoughts on
• 33:25
  Speaker 2: what might happen next. All very welcome. This episode was
• 33:29
  Speaker 2: hosted by me Meren Sumset Web. Many thanks to Helen,
• 33:32
  Speaker 2: to Tom and for John for joining us. It was
• 33:34
  Speaker 2: produced by Samasadi. Additional editing by Blake Maples.