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Pensions & IHT in 2027: Why There Isn't a Right Answer · Adeptli's Podcast

• 0:09
  SPEAKER_00: Hi, and welcome to the Adeptly Podcast.
• 0:12
  SPEAKER_00: At Adeptly, we work alongside advisors and advice firms, providing hands-on technical, operational, and strategic support to help them deliver good advice and run stronger businesses.
• 0:22
  SPEAKER_00: In this series, we explore the trends, challenges, and questions impacting financial advisors and advice firms across the UK with practical insight from people working at the heart of the industry.
• 0:34
  SPEAKER_00: Clear thinking, real experience, and honest conversation.
• 0:38
  SPEAKER_00: Let's get into it.
• 0:39
  SPEAKER_02: Today, we're joined again by Andrew Stloates following his first appearance on the podcast.
• 0:45
  SPEAKER_02: Andrew, as you might remember, has over 40 years' experience in retirement planning and supporting the advisors through some of the most complex and high stakes pension queries the industry has faced during that time.
• 0:56
  SPEAKER_02: Alongside Andrew today is one of my fellow Adeptly co-founders, Dave, who is joining the conversation to bring his knowledge around inheritance tax, advice, and compliance.
• 1:10
  SPEAKER_02: Our focus today will very much be on the coming changes in April 2027 when unused pension funds and death benefits will begin to form part of an individual's estate for inheritance tax purposes.
• 1:22
  SPEAKER_02: This is a significant shift and one that many advisors and firms are still getting to grips with, despite there having been over a year since the changes were beginning to be announced.
• 1:33
  SPEAKER_02: So we wanted to explore what's really changing, what it means for clients, and how the industry should be responding.
• 1:39
  SPEAKER_02: So if I pass over to you first, Dave, could you in simple terms explain what the changes actually are?
• 1:46
  SPEAKER_03: Yeah, so from April 2027, the rules are changing that unused pensions are going to be part of your estate for inheritance tax purposes.
• 1:57
  SPEAKER_03: So that will bring in, if you, depending on what pressure you read, tens of thousands of additional clients into the IHT net or increase the liability of those people with existing IHT problems.
• 2:10
  SPEAKER_03: It means that in essence your pension, which might have been used by some people as a tool to offer intergenerational planning and to avoid IHT, is now almost a refocused of it's there for your retirement provision, and the government changes are such that it shouldn't be used for that purpose.
• 2:30
  SPEAKER_03: So there'll be a lot of clients that have put lots of money into pensions for all the tax benefits and merits that have been in existence, that will now be starting to think, should I have done that?
• 2:41
  SPEAKER_03: What does that mean?
• 2:42
  SPEAKER_03: What should I do in terms of my strategy?
• 2:45
  SPEAKER_03: And that obviously warrants a lot of discussions with advisors in terms of okay, do I need to advise my client differently with existing pensions?
• 2:53
  SPEAKER_03: Did I now not say put any in a pension because that's terrible, that's going to be bad for IHT?
• 2:58
  SPEAKER_03: Um, so yeah, it opens up an enormous discussion point for advisors, for firms, for their policy, for their direction, for their advisors.
• 3:07
  SPEAKER_03: It's a lot of pressure from clients asking what this means, what this means for me, what does it change what I do?
• 3:14
  SPEAKER_03: Um, so yeah, and an interesting, exciting, dubious, depending on your view, um, changes coming that will that will definitely warrant a lot more discussion.
• 3:26
  SPEAKER_02: Andrew, anything to add from a return of planning perspective?
• 3:30
  SPEAKER_05: I think that summarizes it.
• 3:31
  SPEAKER_05: It's just a um confirmation that deaf and service benefits are now exempt.
• 3:36
  SPEAKER_05: When it was originally proposed deaf and service was going to be included in the regime.
• 3:42
  SPEAKER_05: Um DB pensions that continue for a spouse are outside.
• 3:45
  SPEAKER_05: And if you bought an annuity that had provision for a spouse, it's outside.
• 3:49
  SPEAKER_05: It's to do with unused funds, not other stuff.
• 3:53
  SPEAKER_05: That's caught here.
• 3:54
  SPEAKER_03: One of the key points that I think has been clarified as well, which most people overlook, is that it applies even if you're not of age where you could take your pension.
• 4:01
  SPEAKER_05: And I think in terms of in terms of the iniquities, that's probably the one that's most iniquitous.
• 4:05
  SPEAKER_05: Um if there was going to be revision, could it be there?
• 4:08
  SPEAKER_05: That would be to me the sensible thing to go for.
• 4:10
  SPEAKER_05: So I think it's problematic though, as I've been thinking about this, that if I go for the ages of 50 or 35, how do you know if you've got a protected retirement age?
• 4:19
  SPEAKER_05: So it's not quite as simple as it may seem, because I could have an unused fund earlier, I could have been able to access it earlier.
• 4:27
  SPEAKER_05: True.
• 4:28
  SPEAKER_05: But you you could go for and just say before 57, let it go.
• 4:32
  SPEAKER_05: And in most cases, the numbers that you're catching are tiny because the chances are the funds are smaller.
• 4:38
  SPEAKER_05: And what we're really looking at now isn't so much between now and 75, it's after 75 where the big changes happen, I think.
• 4:44
  SPEAKER_05: Yeah.
• 4:45
  SPEAKER_02: And whose responsibility is it to pay for the report?
• 4:49
  SPEAKER_05: Personal representatives.
• 4:52
  SPEAKER_05: Personal representatives.
• 4:53
  SPEAKER_05: Because that's whose responsibility is for IHT at the moment.
• 4:56
  SPEAKER_05: There's no change.
• 4:58
  SPEAKER_05: This is at its most simplistic, it's another chunk of money.
• 5:02
  SPEAKER_05: It's as though your your your estate has increased by an amount.
• 5:05
  SPEAKER_05: You'd run the lottery two days before and then you unfortunately died.
• 5:08
  SPEAKER_05: It's it's just another chunk of money.
• 5:09
  SPEAKER_05: So the same processes, same as it was before.
• 5:12
  SPEAKER_05: I think that that one of the to go back to my longevity, the period when it hasn't been subject to IHT is small, and there was a massive period when you couldn't take it anyway.
• 5:26
  SPEAKER_05: So historically, most people weren't using their pension as a inheritance tax.
• 5:32
  SPEAKER_05: Sorry, not an inheritance tax, as an inheritance vehicle because you couldn't.
• 5:36
  SPEAKER_05: You had to buy an annuity at 75.
• 5:38
  SPEAKER_05: So it wasn't not anything.
• 5:39
  SPEAKER_03: Yeah, like you said, it it's probably more the last sort of decade where more people have used pensions as a vehicle to save for retirement, but having the benefit of it being outside the thing, right?
• 5:51
  SPEAKER_05: I think that's the key.
• 5:53
  SPEAKER_05: Within that there's two bits.
• 5:54
  SPEAKER_05: There's the prompting to accumulate, which I think is neutral because you need to plan for your retirement anyway.
• 6:00
  SPEAKER_05: Yeah.
• 6:01
  SPEAKER_05: And then there's the where do I de where do I decumulate from when I've already built up my fund, which is different.
• 6:08
  SPEAKER_05: So I think that when the pension flexibilities came through 2016, when the tax-free nature of pensions, or I guess actually is a bit tricky because prior after 75 it's been taxed anyway.
• 6:23
  SPEAKER_05: Yeah.
• 6:23
  SPEAKER_05: It's the double tax, it's the IHT treatment that's different.
• 6:26
  SPEAKER_05: And that may or may not spark where you take your money from.
• 6:30
  SPEAKER_05: It's leaving it to do nothing may well be fine.
• 6:34
  SPEAKER_05: You just need to understand what the situation's like.
• 6:37
  SPEAKER_03: And I guess touching on the age 75 point, that's a lot of the the point of concern for people is the so now from April 27, my pot is added into my wider estate, it's assessed for IHT.
• 6:49
  SPEAKER_03: I die beyond 75, so now it's not only subject to 40% risk of IHD, my beneficiary still pays income tax, exactly, or might still pay income tax.
• 7:00
  SPEAKER_03: It's accessible.
• 7:01
  SPEAKER_03: So it's there's a risk of without further work and potentially get 67% with a 40% and 45% on that.
• 7:08
  SPEAKER_05: But remember that between 2006 and 2011 it was 82%.
• 7:13
  SPEAKER_05: So with an oil price payment and inheritance tax, it's a really narrow window that we've been in this position.
• 7:21
  SPEAKER_05: People don't remember that long ago.
• 7:24
  SPEAKER_05: And it's not actually that long ago.
• 7:27
  SPEAKER_05: It just feels because you can't.
• 7:29
  SPEAKER_05: When you're 100 years old.
• 7:30
  SPEAKER_05: Yeah, that's true.
• 7:31
  SPEAKER_05: In percentage terms, it's a lot, it's a lot less for me than it is for you, percentage.
• 7:35
  SPEAKER_05: That is indeed true.
• 7:35
  SPEAKER_05: Thanks for that.
• 7:37
  SPEAKER_05: But it it it's uh short-term memory, it's it's people don't remember because you get used to the status quo.
• 7:43
  SPEAKER_05: And the status quo is this.
• 7:44
  SPEAKER_05: So you're you're you're thinking an advisor's thinking may have changed for a short period.
• 7:49
  SPEAKER_03: Yeah, but if you're an advisor New in the industry, been in for the yeah.
• 7:52
  SPEAKER_03: That's all you've known.
• 7:53
  SPEAKER_03: That's all you know, isn't it?
• 7:54
  SPEAKER_03: If you've been an advisor in the industry for 30 years, you've experienced, seen those changes, thought about what that means.
• 8:00
  SPEAKER_03: And you've got some experience dealing with the we've been through some of these cycles.
• 8:05
  SPEAKER_03: I've advised clients through some of these sorts of legislative changes.
• 8:08
  SPEAKER_02: I suppose the the other thing you've got is if your proactive advisory has been regularly engaging with your clients as things have changed, you've probably spent the last ten years saying pension last, pension last, pension last.
• 8:21
  SPEAKER_02: Definitely.
• 8:21
  SPEAKER_05: Pension loss has has has been the the position.
• 8:24
  SPEAKER_05: It's I think that the if I look at it slightly different way, that I've always paid my spouse has always had to pay income tax after age 75 anyway, so whether it was an annuity or under the new rules.
• 8:40
  SPEAKER_05: So that's neutral.
• 8:41
  SPEAKER_05: And if I run down my pension, so going back to myself with with two pots, half in in pensions, half in ISA, if my drawer is the same, I'm not changing my IHT position.
• 8:53
  SPEAKER_05: I'm just putting the IHT position somewhere different.
• 8:55
  SPEAKER_05: Yeah.
• 8:56
  SPEAKER_05: So I run down my pension, woohoo, I've saved IHT, but I've my ISOPO is still there.
• 9:00
  SPEAKER_05: So I run down my ISO pot, my pension's still there.
• 9:03
  SPEAKER_05: What have I done here?
• 9:05
  SPEAKER_05: Now I accept that what I've done is is odd to begin with because of that two pots.
• 9:08
  SPEAKER_05: But if I'm looking at people who've got a pension pot and other assets, and generally people have got one thing that's big have got lots of things that's big.
• 9:15
  SPEAKER_05: It's a different question.
• 9:16
  SPEAKER_05: And they therefore you're not going to run yourself down to zero unless you do some really bizarre things.
• 9:22
  SPEAKER_05: So it's it's thinking about what have you actually done here?
• 9:26
  SPEAKER_05: Yeah.
• 9:27
  SPEAKER_05: And if Claire pushes me downstairs before 70, then it's all tax-free anyway.
• 9:32
  SPEAKER_05: And so again you should mention that now.
• 9:34
  SPEAKER_05: Yeah, 75, I mean.
• 9:36
  SPEAKER_05: But it it's uh it's uh um perhaps a different dynamic to 75 because it's still free of income tax.
• 9:43
  SPEAKER_05: And if it goes to Claire, there's no HT anyway.
• 9:45
  SPEAKER_05: Yeah.
• 9:46
  SPEAKER_02: And it's a different dynamic.
• 9:48
  SPEAKER_02: And I think with with these changes, they've they've been around for a while now.
• 9:53
  SPEAKER_02: Not necessarily the detail and not necessarily confirmed in legislation, but there we are now at the point where we know Broadly.
• 10:01
  SPEAKER_02: Broadly, what is going to happen April next year.
• 10:05
  SPEAKER_02: One thing I don't think we've seen much of in our engagements with advisors and networks is actually seeing anybody starting to do anything about it.
• 10:15
  SPEAKER_02: What what why do you think that is?
• 10:19
  SPEAKER_05: I think the danger is until you know what legislation actually is, you you can't plan because there could be a twist that changes it.
• 10:25
  SPEAKER_05: So if you go back to the original when the registration came out, defence service was in the net, now it's out.
• 10:31
  SPEAKER_05: So that might have prompted people to change their pension defence service schemes through to accepted group life schemes.
• 10:37
  SPEAKER_05: Now, to be fair, that's only a one-year renewal, so it's not a big issue, but that sort of change might have been done.
• 10:42
  SPEAKER_05: And people were talking about dashing into SASEs and SIPs to fill the scheme up with agricultural or business relief assets.
• 10:52
  SPEAKER_05: And although those have chopped, they were still going to be advantageous, and then that got stopped.
• 10:56
  SPEAKER_05: And so I think people are waiting until they know what the legislation is, or any advice is that's been given is to not do something that's not reversible.
• 11:07
  SPEAKER_05: So, in theory, if you dashed out and you bought an annuity that had a massive guarantee period, you could avoid this, but then you're stuck in an annuity with a massive guarantee period, and it's conceivable that suddenly that gets bought into the net, and now you're stuck.
• 11:20
  SPEAKER_05: So I'm not surprised that that companies haven't given out formal guidance, but that doesn't stop conversations happening.
• 11:27
  SPEAKER_05: And I think those conversations need to happen, and one also needs to think about what would happen if a client was to die before April 2027, because you've still got that planning to do.
• 11:40
  SPEAKER_05: So I had a conversation, in fact, on the way in here, about a client who's term leal, they've only got a few weeks to go.
• 11:46
  SPEAKER_05: What should they do?
• 11:47
  SPEAKER_05: No, they're before 75.
• 11:49
  SPEAKER_05: That's a different position to if they're after 75.
• 11:52
  SPEAKER_03: Yeah, I think like you said, there's there's a lot of discussion at the moment for the advisor to think I don't want to break cover, take action, tell my client this is the right thing to do.
• 12:02
  SPEAKER_03: Legislation has another tweak in it.
• 12:04
  SPEAKER_03: Yeah.
• 12:05
  SPEAKER_03: Or actually, like you said, a lot of this can be around what happens if, what happens when.
• 12:11
  SPEAKER_03: So I did this in the belief this would be the right thing to do, because you expected this would be what happens for you and your family.
• 12:18
  SPEAKER_03: Oh, and now this has happened, then in hindsight I wouldn't have done that.
• 12:22
  SPEAKER_05: I don't think that validates the planning.
• 12:23
  SPEAKER_05: No.
• 12:24
  SPEAKER_05: I I think it's to me the pension has still been about retirement planning.
• 12:31
  SPEAKER_05: All of those tax really still have validity.
• 12:33
  SPEAKER_05: It just changes.
• 12:34
  SPEAKER_05: I think that what one has effectively had is had two years as part of your annual review for people who are decumulating, because it doesn't really matter to accumulation because the fact it was going to be RHT free is minor and you couldn't stop that.
• 12:45
  SPEAKER_05: So far away we don't yet.
• 12:46
  SPEAKER_05: Um so there's no reason why those conversations couldn't and shouldn't have started.
• 12:51
  SPEAKER_05: It's I'm not going to tell you what we should do, but I'm we're going to start those conversations now.
• 12:57
  SPEAKER_02: And making you aware there's something that's going to be different.
• 13:00
  SPEAKER_05: Part of that to me is there isn't a right answer.
• 13:02
  SPEAKER_05: This isn't a flowchart which says da da da da da, here is the answer.
• 13:05
  SPEAKER_05: So advice is needed and it's personal circumstances that are going to drive where you go.
• 13:10
  SPEAKER_05: And the longer you have that conversation, the better, because this is it is a change.
• 13:15
  SPEAKER_05: It does mean things are different, but not necessarily.
• 13:19
  SPEAKER_05: For most people, these are non-issues.
• 13:22
  SPEAKER_05: Because for most people, this is what they have.
• 13:25
  SPEAKER_05: So you don't have much option.
• 13:27
  SPEAKER_05: It's just changed.
• 13:28
  SPEAKER_05: It doesn't change what you do because you haven't got the ability to switch.
• 13:31
  SPEAKER_05: As I said, I'm lucky I've got the ability to take from my ISA from my pension.
• 13:35
  SPEAKER_02: Not everyone has.
• 13:37
  SPEAKER_02: And you've obviously someone who've been in the industry for a long time, where where do you feel this ranks in terms of significant change over the last one Well, it is a significant change, but as I said, it was the change back to the status quo, ish in it before between tw 2006 and and and 2011 and then 2011 through to 2016.
• 13:59
  SPEAKER_05: It's it's a change.
• 14:00
  SPEAKER_05: It makes things different.
• 14:03
  SPEAKER_05: Um It's significant in the last decade.
• 14:06
  SPEAKER_05: It's a significant change.
• 14:07
  SPEAKER_05: Yeah.
• 14:07
  SPEAKER_05: But it doesn't invalidate retirement planning for pensions.
• 14:10
  SPEAKER_05: It's just a change.
• 14:11
  SPEAKER_05: It's just reverting to status quo.
• 14:13
  SPEAKER_05: And as Ivan helpfully said, it's a mere 67 if your beneficiaries are 45% taxpayers, as opposed to 82% between 2006-2011.
• 14:20
  SPEAKER_05: Stop whinging.
• 14:22
  SPEAKER_05: It's not very helpful.
• 14:23
  SPEAKER_05: It's not very helpful as it's not very helpful as a presentation.
• 14:26
  SPEAKER_05: But ultimately, people have got short memories.
• 14:28
  SPEAKER_05: Yeah.
• 14:28
  SPEAKER_05: Yeah.
• 14:29
  SPEAKER_05: And I think that's the problem here.
• 14:31
  SPEAKER_05: It's a massive change, but only if short memory time.
• 14:36
  SPEAKER_02: So that's why I think it affects the older, really.
• 14:38
  SPEAKER_02: Yeah, and I think that's where I was actually going to go next.
• 14:41
  SPEAKER_02: Is this a change where the significance of the impact is going to vary throughout your client groups, isn't it?
• 14:48
  SPEAKER_02: Or it's not a one size fits all from an advisor.
• 14:51
  SPEAKER_02: So if we take one of those groups to say somebody already retired, they've already got an inheritance tax problem, and they've got this pension pot there now, what what's the impact for them and what should advisors be thinking about in terms of those conversations?
• 15:08
  SPEAKER_02: The impact's all over the place.
• 15:09
  SPEAKER_05: So I think that the the that's another helpful comment.
• 15:12
  SPEAKER_05: So the first question is do you lose your your your residential nail rate band?
• 15:17
  SPEAKER_05: Because then your effective rate is quite high, despite my scathing.
• 15:20
  SPEAKER_05: It's only 67.
• 15:22
  SPEAKER_05: That's not true.
• 15:23
  SPEAKER_02: Because now my estate has gone such a size that's a very good thing.
• 15:27
  SPEAKER_05: If I was above, that's a non-issue because I'm where I was before.
• 15:30
  SPEAKER_05: Yes.
• 15:31
  SPEAKER_05: So all the way through, it's where does it get me to?
• 15:34
  SPEAKER_05: Now ultimately, what does it mean?
• 15:36
  SPEAKER_05: It just means that the family get less.
• 15:40
  SPEAKER_05: That's what it means.
• 15:41
  SPEAKER_05: The family get less.
• 15:43
  SPEAKER_05: So what do I do to avoid that is potentially run out of money.
• 15:49
  SPEAKER_05: Because I just take it all down and spend it.
• 15:51
  SPEAKER_05: So is that a good answer?
• 15:53
  SPEAKER_05: You've run out of money.
• 15:55
  SPEAKER_05: I don't think that's necessarily a good answer.
• 15:57
  SPEAKER_05: I think it's a lot of things.
• 15:58
  SPEAKER_03: Or you might at least see an increase in terms of the drawdown rate that you might pay.
• 16:03
  SPEAKER_05: And I think that's true.
• 16:04
  SPEAKER_05: I've got to think about that.
• 16:05
  SPEAKER_05: And so the question I think that one has for this is the people who were using it as an inheritance tax vehicle fundamentally had enough assets to not need it.
• 16:14
  SPEAKER_02: Yes.
• 16:15
  SPEAKER_02: Not that's not.
• 16:16
  SPEAKER_02: They're not reliant on it.
• 16:24
  SPEAKER_05: I can't do anything about, I don't have choices.
• 16:28
  SPEAKER_05: Most people don't have choices.
• 16:29
  SPEAKER_05: They can't mitigate.
• 16:31
  SPEAKER_05: And ultimately, if you do have choices, it it's it's there are three really.
• 16:36
  SPEAKER_05: You do nothing, it's not my problem, it's my daughter's.
• 16:38
  SPEAKER_05: Yeah.
• 16:39
  SPEAKER_05: Option one.
• 16:40
  SPEAKER_05: So option two is I take money out and I give it away.
• 16:42
  SPEAKER_05: But if I'm not careful, I'm switching one tax for another.
• 16:45
  SPEAKER_05: So I've incurred an income tax charge higher than it would otherwise would have been to avoid a different tax charge later.
• 16:52
  SPEAKER_05: If I don't spend it or give it away, it's in my estate.
• 16:54
  SPEAKER_05: So what have I done?
• 16:55
  SPEAKER_05: So I have to give it away.
• 16:56
  SPEAKER_05: Now it should be okay, because um it should be if it's income, clearly it'll it as opposed to tax-free cash, it's normal expenditure out of income.
• 17:05
  SPEAKER_05: So it should be IHT free to do that.
• 17:07
  SPEAKER_05: Or I insure against it.
• 17:08
  SPEAKER_05: So I take out a life plan.
• 17:11
  SPEAKER_05: Pardon?
• 17:11
  SPEAKER_05: Hold of life.
• 17:12
  SPEAKER_05: Yes, exactly.
• 17:13
  SPEAKER_05: But that depends on me having enough money to do that.
• 17:17
  SPEAKER_05: Enough surplus to do it.
• 17:18
  SPEAKER_05: But those are my choices, ultimately.
• 17:23
  SPEAKER_02: And then let's look at another group then.
• 17:26
  SPEAKER_02: So someone who's approaching retirement.
• 17:29
  SPEAKER_02: So that that group we've just said, they're already at retirement got an issue.
• 17:32
  SPEAKER_02: If I'm someone who's approaching retirement, my pension pot's coming in, that may start causing me some IHT concerns.
• 17:40
  SPEAKER_05: Do do you think it impacts them?
• 17:42
  SPEAKER_05: It's the same, it's the same issues.
• 17:43
  SPEAKER_05: It's it's there's no difference.
• 17:45
  SPEAKER_05: It's just as you get older, it's more immediate.
• 17:47
  SPEAKER_05: I think that the the challenge, so again, going looking at what I'm going to do, how am I going to draw down where's it going to come from?
• 17:53
  SPEAKER_05: So if I foolishly die before age 75, and it goes to Claire to go to my wife, there's no IHT because there's exemption.
• 18:07
  SPEAKER_05: Correct.
• 18:08
  SPEAKER_05: So why do I want to change for that?
• 18:12
  SPEAKER_05: I just don't know I'm going to get to 75.
• 18:13
  SPEAKER_05: So when I get a 75, that may well mean a change.
• 18:17
  SPEAKER_05: So that I switch where I'm taking my assets from.
• 18:20
  SPEAKER_05: And then does that mean I get more pay more income tax?
• 18:22
  SPEAKER_05: It may do, but then that's what what taxes am I more fearful of?
• 18:25
  SPEAKER_05: Yeah.
• 18:26
  SPEAKER_03: But your person who's approaching retirement who looks at that and says, right, from 2027, it's now in my estate.
• 18:33
  SPEAKER_03: I don't want that to be an issue.
• 18:34
  SPEAKER_03: I should now take something from the pension.
• 18:36
  SPEAKER_03: What's the strategy in reality?
• 18:39
  SPEAKER_03: You take it from the pension.
• 18:40
  SPEAKER_03: But you're your It's now in anyway.
• 18:43
  SPEAKER_03: It it's in your estate.
• 18:44
  SPEAKER_05: What have you done with it?
• 18:44
  SPEAKER_05: Have you spent it?
• 18:45
  SPEAKER_05: And if you had those choice of assets, you haven't done anything with that other asset.
• 18:48
  SPEAKER_05: What have you done?
• 18:49
  SPEAKER_05: Yeah.
• 18:50
  SPEAKER_05: So I've had a whole my my The solutions that I would advise to a client who's got an IHT problem don't change.
• 19:01
  SPEAKER_05: The number has just got bigger.
• 19:03
  SPEAKER_05: The problem is bigger.
• 19:04
  SPEAKER_05: My solutions aren't any different to what they were before, I don't think.
• 19:08
  SPEAKER_03: Yeah, I think if you were you know, you've talked previously about, you know, head of pensions versus retirement planning.
• 19:16
  SPEAKER_03: And I probably in this in the space from an IHT point of view talk more about estate planning than I do IHT planning because it's broader than just saving tax.
• 19:25
  SPEAKER_03: Like you said, if I take that money out of my pension, what I've actually done here is okay, my estate on paper hasn't changed.
• 19:33
  SPEAKER_03: Just the portion is now subject to IHT will change.
• 19:37
  SPEAKER_03: If I now take it, because I don't want that to happen, I have to have a strategy.
• 19:41
  SPEAKER_03: That strategy is gonna employ a lot of the same things I would have done with the things that weren't in my pension in the first place.
• 19:48
  SPEAKER_03: But it is about helping the client understand, and that's the advisor challenge, isn't it?
• 19:52
  SPEAKER_03: I've got to help the client understand, you know, this thing that was out, now it's gonna be in.
• 19:56
  SPEAKER_03: Does that impact you?
• 19:57
  SPEAKER_03: How does it impact you?
• 19:58
  SPEAKER_03: What's the scale of the impact?
• 20:00
  SPEAKER_03: How do you feel about that?
• 20:01
  SPEAKER_03: Because it isn't as simple as this is now a problem, we should now strip your pension.
• 20:06
  SPEAKER_03: No, I don't think so.
• 20:06
  SPEAKER_03: And that's the danger in this space, isn't it?
• 20:08
  SPEAKER_03: It's the assumption you talked about it before with the press that you end up in a scenario that it's noise and it's negative, so therefore the immediate thing is there are some people that would now say, Well, pensions are bad and there's no point in a pension.
• 20:20
  SPEAKER_03: Hold on, the the pension purpose hasn't changed because of this.
• 20:25
  SPEAKER_03: But some people's mindset is pension's bad now because that gets taxed, isn't it?
• 20:29
  SPEAKER_05: It's reactions, it it's I'm going to take all of my tax-free cash now because I've taken that out from my pension.
• 20:35
  SPEAKER_05: Yeah, but what are you going to do with it?
• 20:37
  SPEAKER_05: Yes.
• 20:37
  SPEAKER_05: So you're going to give it away.
• 20:38
  SPEAKER_05: Okay, so what impact does that have on your your your retirement plans?
• 20:42
  SPEAKER_05: Because now you've taken a big chunk out from that pot.
• 20:45
  SPEAKER_05: Do your numbers still work?
• 20:47
  SPEAKER_05: They may do, they may not.
• 20:49
  SPEAKER_03: Or worse, you you make a gift, you don't live the seven years, it's neutral, and now you have less money anyway, and now you can't leave it for your wife who needed it.
• 20:56
  SPEAKER_03: Well, that was okay.
• 20:57
  SPEAKER_05: And then it depends on whether I'm over 75 or not.
• 20:58
  SPEAKER_05: And I think that's that that 75 change of taxation.
• 21:01
  SPEAKER_05: Is a key point.
• 21:03
  SPEAKER_05: And in terms of risk, although what could they do in the future is they could make it taxable.
• 21:08
  SPEAKER_05: Because it used to be.
• 21:09
  SPEAKER_05: Correct.
• 21:10
  SPEAKER_05: So that's where the loss to the the exchequer feels small because most people don't die before 75 statistically.
• 21:20
  SPEAKER_05: And most of those who do were going to get had die younger, so their pots aren't going to be.
• 21:24
  SPEAKER_05: So the loss isn't huge.
• 21:26
  SPEAKER_01: Yeah.
• 21:27
  SPEAKER_05: The game wasn't.
• 21:27
  SPEAKER_05: A lot of it was just noise.
• 21:29
  SPEAKER_05: It makes it sound so much better.
• 21:31
  SPEAKER_05: Yeah.
• 21:32
  SPEAKER_02: And then I suppose the third group, and we've touched on them already, and I think I know the answer to this, but uh someone young in their 30s.
• 21:38
  SPEAKER_02: Someone, someone, someone young in their 30s.
• 21:41
  SPEAKER_02: Don't know if we know anyone like that.
• 21:44
  SPEAKER_02: Who is saving for their retirement, but this change doesn't really impact them.
• 21:48
  SPEAKER_05: It doesn't, because you still need to save your retirement.
• 21:51
  SPEAKER_05: So if you save your retirement for an ICE instead, yes, you haven't got the tax relief on the way in.
• 21:58
  SPEAKER_05: And because you haven't got the tax relief on the way, In your tax at the back.
• 22:01
  SPEAKER_05: So if you are a higher rate taxpayer, you paid higher rate tax, and at the end you've effectively paid that all the way through.
• 22:06
  SPEAKER_05: Whereas the pension, you might have got higher rate relief and then only pay basic rate in retirement, so you've got to turn and you've got an element that's tax-free cash.
• 22:12
  SPEAKER_05: And it's still the IHT position is the same.
• 22:14
  SPEAKER_05: The difference between the pension and the other asset is not IHT, I don't think, because it's IHT neutral, it's income tax after it's 75.
• 22:22
  SPEAKER_03: Or it's an accessibility point, isn't it?
• 22:23
  SPEAKER_03: But you talked about before about your plan to have half cash, half pension, half ISA.
• 22:30
  SPEAKER_03: If you are trying to save for your retirement and you're looking at and saying, well, that's when I want to retire when I'm 50, pension doesn't work.
• 22:36
  SPEAKER_03: I can't get to it at 50.
• 22:38
  SPEAKER_03: Now that's not you're not using you're not not using the pension because of the IHT rule.
• 22:42
  SPEAKER_03: You're not using the pension because it doesn't give you the accessibility that you want.
• 22:45
  SPEAKER_05: And then you're playing that that all I need in my ICE is actually the seven years of wait.
• 22:49
  SPEAKER_05: Yes.
• 22:50
  SPEAKER_05: Because you're on 68?
• 22:51
  SPEAKER_05: Yeah.
• 22:51
  SPEAKER_05: To to bridge that gap.
• 22:53
  SPEAKER_05: Yeah.
• 22:54
  SPEAKER_05: It's what it does is it makes things more complicated because there's no right answers.
• 22:59
  SPEAKER_05: And it it's a massively personal decision as to what do you do?
• 23:05
  SPEAKER_05: So again, looking back at me, do I change the balance from what I was going to do, 50-50 ISA pension, to increase myself up to basic rate tax?
• 23:13
  SPEAKER_05: Because why do I want to pay higher rate tax from my pension to then take the rest from the ICER?
• 23:18
  SPEAKER_05: So that's just changes that balance.
• 23:20
  SPEAKER_05: So what I'm then doing is I'm running down my pension fund quicker.
• 23:24
  SPEAKER_05: I'm running down my pension fund quicker because of tax anyway.
• 23:27
  SPEAKER_05: So I'm happy to take more out.
• 23:29
  SPEAKER_05: But it's 20, it's it's different taxes.
• 23:31
  SPEAKER_03: You're not doing you wouldn't be extracting from the pension in priority over the ISA because of the IHT.
• 23:36
  SPEAKER_03: It's because you might want to use the taxes.
• 23:37
  SPEAKER_05: But I think that's but I think that part of it is is the reason I'm taking the reason I'm paying more tax, because I could pay less by changing that split, is because of the IHT implication further down the road.
• 23:50
  SPEAKER_03: Yes, you're you're hedging your bets.
• 23:52
  SPEAKER_03: 20 is better than 40.
• 23:53
  SPEAKER_03: So the more I take, the more I spend, the less.
• 23:57
  SPEAKER_05: I'm not building my my state is diminishing slightly faster by doing that rate because of income tax.
• 24:02
  SPEAKER_05: Only slightly so that's marginal, not that's not the reason.
• 24:05
  SPEAKER_05: But what I am doing is avoiding the double taxation potentially.
• 24:08
  SPEAKER_03: Yes, you're you're reducing the risk of that.
• 24:10
  SPEAKER_05: I'm reducing that number.
• 24:11
  SPEAKER_05: I'm not changing the IHT.
• 24:13
  SPEAKER_05: Yes.
• 24:13
  SPEAKER_05: That's not what I'm changing.
• 24:14
  SPEAKER_05: What I'm changing is the impact of income tax on the on the income.
• 24:18
  SPEAKER_05: But as I said, that that for most of my life, there's always been income tax on dependence pensions.
• 24:25
  SPEAKER_02: So we've started talking around there are things people could do, may not do, might want to do.
• 24:31
  SPEAKER_02: If I'm an advisor not coming in until April 2027, one of the big things I hear when talking to people are do I get ahead of the game and do something?
• 24:39
  SPEAKER_02: Or do I wait until April 2027?
• 24:42
  SPEAKER_02: What what are your views on that question?
• 24:47
  SPEAKER_05: I would say discussion, but don't take action.
• 24:50
  SPEAKER_05: So Finance Act 2004 introduced a pension simplification A-day.
• 24:58
  SPEAKER_05: Finance Act 2026 was 2006 is when it came in, sorry.
• 25:01
  SPEAKER_05: I don't know how many statutory instruments there were between 2004 and 2006 that changed things.
• 25:07
  SPEAKER_05: So even if the legislation is finalized in this parliamentary session, there's a year of statute instruments potentially to tweak.
• 25:15
  SPEAKER_05: When people find out, oh, here's a wizard wheeze to escape this and foolishly tell a journalist who foolishly publishes it, the government are going to say, yep, that's okay, or they're going to do something about it.
• 25:25
  SPEAKER_05: This to me is discussions or actions that aren't reversible.
• 25:28
  SPEAKER_05: So if I extract more income this year from my pension than my ISA, next year there's no reason why I can't change the balance back.
• 25:37
  SPEAKER_05: I haven't committed to an irreversible action.
• 25:40
  SPEAKER_05: I've taken a short-term tactic position that I'm not fixed on.
• 25:46
  SPEAKER_05: I haven't lost anything.
• 25:47
  SPEAKER_03: But fully crystallising and buying an annuity for the rest of your life.
• 25:50
  SPEAKER_05: That feels a step too far.
• 25:52
  SPEAKER_05: Yeah, absolutely.
• 25:54
  SPEAKER_05: Because I can't change my mind.
• 25:55
  SPEAKER_03: But all stuff now.
• 25:56
  SPEAKER_03: In the same vein.
• 25:57
  SPEAKER_03: Someone who says, My IHT problem's already this, add the pension in, oh my god, it's Armageddon.
• 26:02
  SPEAKER_03: I need to do a load of capital gifts.
• 26:04
  SPEAKER_03: You can't reverse the capital gifts, and then you can't get that back.
• 26:07
  SPEAKER_03: Correct.
• 26:08
  SPEAKER_03: And so that's more dangerous or more restrictive than perhaps the I suppose the client's argument there might be but if I do it now, I mean you're ahead of the phone.
• 26:19
  SPEAKER_02: Oh, that's true.
• 26:19
  SPEAKER_05: But I think it's to do it's to understand the consequence.
• 26:22
  SPEAKER_05: So if I'm going to give it away anyway, why not now?
• 26:25
  SPEAKER_03: Yeah, it becomes purpose and consequence, doesn't it?
• 26:28
  SPEAKER_03: If that was my intention, then I was doing that anyway, the pension has made me speed up my decision, and therefore that makes some sense.
• 26:37
  SPEAKER_03: If I'm only doing it for that, I might be in your place, which is discuss, maybe delay.
• 26:43
  SPEAKER_05: Yeah, I I I'm not I'm not convinced.
• 26:44
  SPEAKER_03: I I think But it might it might depend if you took the pension out of the equation in that calculation, the IHT is so big that you're always going to still need to do something, then it makes some sense.
• 26:53
  SPEAKER_05: I think so, but and it's with all of this, it's a number and income need.
• 26:58
  SPEAKER_05: It's the the risk of doing something irreversible and then running out of money.
• 27:02
  SPEAKER_01: Yeah.
• 27:03
  SPEAKER_05: And the bigger your estate is, the generally the less of a problem it is.
• 27:08
  SPEAKER_05: You don't have to you don't you can live quite happily without having£500,000 a year in retirement.
• 27:15
  SPEAKER_05: So how much of a dint is it's a number?
• 27:18
  SPEAKER_05: I know, but it it's the there's the point where the numbers become silly.
• 27:20
  SPEAKER_01: Yeah.
• 27:21
  SPEAKER_05: They they don't matter anymore.
• 27:23
  SPEAKER_05: And there's a point where the numbers are really essential because you're if you do this, you have a problem then.
• 27:28
  SPEAKER_05: Now I accept that as I get older and greyer and more and more decrepit, I won't be able to do what I want to do.
• 27:34
  SPEAKER_05: So I'm off skiing next week, I'm going for another one in in a month's time.
• 27:37
  SPEAKER_05: As I get older, I probably won't be in a position to have two skiing holidays.
• 27:41
  SPEAKER_05: I might still go to the Alps and just treat myself to stupidity.
• 27:44
  SPEAKER_05: That's a different thing altogether.
• 27:45
  SPEAKER_05: I'm improving what's left.
• 27:47
  SPEAKER_05: It's it's there are things that I I suspect there are things I'm going to be able to do.
• 27:53
  SPEAKER_05: Less things I'm going to be able to do as I get older.
• 27:55
  SPEAKER_05: Yeah.
• 27:55
  SPEAKER_05: Because I just become more decrepit.
• 27:56
  SPEAKER_02: Yeah.
• 27:56
  SPEAKER_02: The reality is the active lifestyle you live at 70 will not be the same as if you're fortunate enough to get to 90.
• 28:04
  SPEAKER_05: For an awful lot of people it won't be because it it's so your spending pattern changes.
• 28:09
  SPEAKER_05: But that risk of running out of money uh is to me the thing that stops me giving everything away now.
• 28:16
  SPEAKER_05: It doesn't seem a sensible thing to do.
• 28:19
  SPEAKER_05: Take my tax because give it away, doesn't seem a sensible thing to do now.
• 28:22
  SPEAKER_03: But you've talked about this before, haven't you, in terms of the know your client and the fact finding.
• 28:26
  SPEAKER_03: And one of the things you know you said before, isn't it?
• 28:28
  SPEAKER_03: One of the biggest changes was fact-finding.
• 28:30
  SPEAKER_03: Yes.
• 28:31
  SPEAKER_03: That is about priorities, isn't it?
• 28:33
  SPEAKER_03: That is about having that conversation with a client and saying, Yeah, look, if IHT is what's worrying you, these are all the things we could do.
• 28:39
  SPEAKER_03: But then you might not have enough money.
• 28:41
  SPEAKER_03: No.
• 28:41
  SPEAKER_03: So for you, that logic is I'm first, yes, daughter second.
• 28:45
  SPEAKER_03: Well, absolutely.
• 28:46
  SPEAKER_03: I So my gifting strategy can come ahead of my lifestyle that I want to live.
• 28:51
  SPEAKER_03: No.
• 28:51
  SPEAKER_03: But that comes back to fact-finding, that comes back to knowing the client's goals, aspirations, priorities.
• 28:58
  SPEAKER_05: And also documentation.
• 28:59
  SPEAKER_05: I think the the fact finding is part of it, but because I don't think there's a right answer, any recommendation I make needs to explain why I've taken this route rather than another route.
• 29:12
  SPEAKER_05: Yeah.
• 29:12
  SPEAKER_05: Um because potentially any advice you give is wrong with the benefit of hindsight.
• 29:19
  SPEAKER_05: And so documentation is key.
• 29:22
  SPEAKER_05: Why have you done this?
• 29:23
  SPEAKER_05: Yeah.
• 29:24
  SPEAKER_05: So so in my case, what I've I said to you was I was more fearful of running out of money.
• 29:29
  SPEAKER_05: And because I was more fearful of running out of money, I didn't do that.
• 29:33
  SPEAKER_03: So you don't want later on there a how come we died with a big IT library.
• 29:38
  SPEAKER_03: Correct.
• 29:38
  SPEAKER_03: Well, because he could have done those things, yes, but he didn't want to because exactly.
• 29:42
  SPEAKER_03: But he never ran out of money.
• 29:43
  SPEAKER_02: That's your old reasons why letter.
• 29:45
  SPEAKER_05: It is, but it it's it's all that that my the recommendation, the way that it's worded becomes I think becomes more important because there isn't a right answer.
• 29:54
  SPEAKER_05: Yeah.
• 29:55
  SPEAKER_02: So I think what what I'm hearing is typically you probably don't need to take any action at the moment, but you should be discussing it with your clients.
• 30:04
  SPEAKER_05: Yeah, and I think that's there's no reason not to be discussing this.
• 30:07
  SPEAKER_05: Where you take action, I think, is when people die.
• 30:10
  SPEAKER_05: And so if I die between now and April 27 and I'm under 75, I think it's really complicated as to what do you do.
• 30:22
  SPEAKER_05: Yeah.
• 30:22
  SPEAKER_05: How do you settle that death claim is is complicated.
• 30:26
  SPEAKER_05: So if you take all of the money out now and you put it into bypass trusts now, it isn't going to be in your estate when your spouse dies, your partner dies.
• 30:38
  SPEAKER_05: It's outside now.
• 30:40
  SPEAKER_05: But that's not without tax implications because there's going to be tax on the growth, you've got periodic charges, you've got exit charges.
• 30:45
  SPEAKER_05: So it's not a nil sum gain.
• 30:47
  SPEAKER_05: You've avoided IHT because you've done it now.
• 30:50
  SPEAKER_05: You've also potentially avoided that double income tax, because if I give it to Claire, there's no income tax, there's no IHT, nor is any income tax because I'm under.
• 30:58
  SPEAKER_05: But when she passes it to Eloise to my daughter, hopefully after 75, there's both.
• 31:02
  SPEAKER_05: So is there an argument for moving it now into a trust?
• 31:06
  SPEAKER_03: I think that the challenge, which I think is where the the advisers are struggling, and probably clients.
• 31:14
  SPEAKER_03: So if the advisor can't articulate and give a clear answer, the client probably is in the so does it affect me?
• 31:19
  SPEAKER_03: Does it not affect me?
• 31:19
  SPEAKER_03: I don't I'm not quite sure whether I should be worried or not be worried.
• 31:22
  SPEAKER_03: The challenge there is that analysis.
• 31:24
  SPEAKER_03: And like you said, you touched on the I take it out of there, I put it in there.
• 31:28
  SPEAKER_03: Oh, I'm much better.
• 31:28
  SPEAKER_03: If I live the seven years, it's better.
• 31:30
  SPEAKER_03: But is it?
• 31:31
  SPEAKER_03: Have you done the analysis to I don't need to worry about the seven years because it's a good thing?
• 31:34
  SPEAKER_05: I don't need to worry about the seven years because it comes straight to the floor.
• 31:36
  SPEAKER_05: Correct.
• 31:36
  SPEAKER_05: In that example.
• 31:37
  SPEAKER_05: Yeah.
• 31:37
  SPEAKER_05: But it's it's it's it's your your your Do you understand all the implications of of doing this for that?
• 31:42
  SPEAKER_05: But there's a similar one at what you do if if you die just before 75.
• 31:47
  SPEAKER_05: Because if I die just before 75 and I give it to Claire, there's no IHT.
• 31:52
  SPEAKER_05: But because she's the same age as me, she does after 75, now we've still got that income tax.
• 31:56
  SPEAKER_05: Is that was there an argument that rather than giving it to Claire as a dependence drawdown, we move it into a trust there?
• 32:01
  SPEAKER_05: Now sure it triggers IHT, because that movement into a trust will trigger IHT.
• 32:06
  SPEAKER_05: But what I've then saved is the income tax.
• 32:08
  SPEAKER_05: So is my income tax saving offset by the difference in taxation in the fund in that intervening period?
• 32:13
  SPEAKER_05: This is masses of numbers to analyze.
• 32:16
  unknown: Again.
• 32:17
  SPEAKER_03: Which, like you said, are not a simple it looks like this for this client's profile.
• 32:22
  SPEAKER_03: It looks like this because of value, sizes, ages, tax status.
• 32:27
  SPEAKER_05: Masses of assumptions in that, because it's how does the fund grow, and and and and and and also the risk of of something changing later.
• 32:32
  SPEAKER_05: So if you go back to to 2006 to 2011, when there was IHT, that 82% tax, in 2011 that changed.
• 32:40
  SPEAKER_05: So you did all that planning followed by Fool Ju because things were bad.
• 32:43
  SPEAKER_03: Yeah.
• 32:44
  SPEAKER_05: And there is there is a risk that things could get better.
• 32:47
  SPEAKER_05: Yes.
• 32:48
  SPEAKER_05: So again, have you done things that are irreversible?
• 32:50
  SPEAKER_05: Yeah.
• 32:51
  SPEAKER_05: I'm not sure how big that risk is, but that risk is there.
• 32:54
  SPEAKER_02: And I suppose, you know, talking there about all of these number crunching analyses of one tax compared to another, for some advisors clients will be clients will be being brought into a regime, a state plan, who when they've never dealt in that market because their typical client demographic has been something very different.
• 33:16
  SPEAKER_02: Yes.
• 33:16
  SPEAKER_02: And they're now what what can those advisors be doing to make sure they know what they need to know for dealing with these clients moving forward?
• 33:26
  SPEAKER_02: Or does the smoke say actually hand them off to a it was two things.
• 33:30
  SPEAKER_05: One is to come out of your silo.
• 33:31
  SPEAKER_02: Okay.
• 33:32
  SPEAKER_05: So the problem that you have there is all you've been is in silo.
• 33:36
  SPEAKER_05: Now, that may have been fine because it may not have been an issue.
• 33:39
  SPEAKER_05: So now that it becomes an issue, you need to upskill.
• 33:42
  SPEAKER_05: So you you either upskill or you hand off.
• 33:44
  SPEAKER_05: So handing off is is tricky in in lots of reasons.
• 33:48
  SPEAKER_05: Exactly.
• 33:49
  SPEAKER_05: But the the the upskill, I think, is to me the the right thing to do.
• 33:53
  SPEAKER_02: But it's also equally tricky because some of the complexities we're talking around, you're not going to learn them overnight.
• 33:59
  SPEAKER_02: But then again, I suppose we've got a bit of time to upskill as well.
• 34:03
  SPEAKER_05: Well, I guess I I've got two periods, haven't I?
• 34:07
  SPEAKER_05: I've got between now and the the time it happens, which one year is a year, I don't have to get myself totally upskilled in the year.
• 34:14
  SPEAKER_05: I just need to be aware of change.
• 34:15
  SPEAKER_05: Yeah.
• 34:15
  SPEAKER_05: And then I can talk to people like you to help me to upskill for this client.
• 34:21
  SPEAKER_05: What do I need to know here?
• 34:22
  SPEAKER_05: This is new to me.
• 34:23
  SPEAKER_05: I it comes there in a slightly different way, that that my client base has hitherto been young and they haven't died, I haven't had an IHT problem.
• 34:33
  SPEAKER_05: Now I have, because it's now become a something that wasn't there before.
• 34:37
  SPEAKER_05: And again, for a lot, it's it's second-deaf.
• 34:39
  SPEAKER_05: Because in most cases, where's it going to go to the surviving spouse?
• 34:43
  SPEAKER_05: So the surviving partner.
• 34:44
  SPEAKER_05: So you're you're you're it's a second-death problem, but again, not always.
• 34:48
  SPEAKER_05: I I I talked earlier on about insuring.
• 34:51
  SPEAKER_05: So if I insure, do I go for uh joint life?
• 34:54
  SPEAKER_05: Do I do joint life second?
• 34:56
  SPEAKER_05: Do I do joint life first?
• 34:57
  SPEAKER_05: Do I do single life first?
• 34:58
  SPEAKER_05: And the reason I'm thinking of that is that if I die before um 75, doesn't it make more sense to take it out there and pay the IHT rather than having the double tax?
• 35:09
  SPEAKER_05: I don't know.
• 35:11
  SPEAKER_05: I guess the truth is.
• 35:12
  SPEAKER_05: Because it because it I don't think it has a right answer to your point around that piece in terms of development for the advisor.
• 35:21
  SPEAKER_03: Obviously, me and Andrew have worked together for a long time.
• 35:24
  SPEAKER_03: And I think the challenge there is they are two quite niche areas and they overlap massively now.
• 35:30
  SPEAKER_03: And I think that is a niche.
• 35:33
  SPEAKER_03: They're complicated, they're complicated.
• 35:34
  SPEAKER_03: Yeah, so I do not profess to understand pensions anywhere near like Andrew does.
• 35:39
  SPEAKER_03: And then in terms of my space, it's more the estate planning.
• 35:42
  SPEAKER_03: And we've had many of those complex conversations about this client, this scenario, what do you do, how do you do it, why would you?
• 35:48
  SPEAKER_03: So, like you talk about the life cover one.
• 35:51
  SPEAKER_03: That's something a lot of people are talking about.
• 35:53
  SPEAKER_03: The challenge with it that certainly with advisors that I speak to and help, it's often overlooking the how are you funding it.
• 36:00
  SPEAKER_03: It's the well, I just need a life policy.
• 36:03
  SPEAKER_03: And that's easy because my client doesn't have to worry about what they're gifting, how much they're gifting, what trust, all that noise that's too complicated.
• 36:10
  SPEAKER_03: I'll just do a life policy.
• 36:12
  SPEAKER_03: Just do a life policy.
• 36:13
  SPEAKER_03: Well, now you're into what's the cover, the type of cover, the type of trust, reporting, not reporting, is it reviewable, funding, reviewable, guaranteed?
• 36:22
  SPEAKER_03: And then you're into the okay, but am I paying that out of income?
• 36:26
  SPEAKER_03: If I'm not paying out of income, is that a gift in itself?
• 36:29
  SPEAKER_03: Am I now affecting my broader estate planning?
• 36:32
  SPEAKER_03: Because actually my clients accidentally made a series of transfers that I thought didn't make a difference.
• 36:37
  SPEAKER_03: So when you get into what looks simple in a world that you've not really dealt with before, that's quite a common pitfall that we see.
• 36:47
  SPEAKER_05: I think so.
• 36:47
  SPEAKER_05: I I think some people are talking about doing um back-to-back arrangements where you purchase an annuity so you've got the guaranteed income to pay that off.
• 36:54
  SPEAKER_01: Right.
• 36:55
  SPEAKER_05: But your fund needs to be big enough for you to hive off that for the annuity.
• 36:59
  SPEAKER_05: Because what the annuity avoids is the the risk of you running out of money later.
• 37:03
  SPEAKER_05: So free cheers, I've got my life policy.
• 37:05
  SPEAKER_05: Yeah, I've got no money.
• 37:07
  SPEAKER_02: Yeah, yeah.
• 37:07
  SPEAKER_02: So I can't live with the return.
• 37:09
  SPEAKER_05: Now I've paid my life policy forever.
• 37:10
  SPEAKER_05: Yeah, I'm now canning it to the point that I need it.
• 37:13
  SPEAKER_05: Yeah.
• 37:14
  SPEAKER_03: Or, and I guess that's another example of you see the discussions when I'm joint life, second death, that's the right thing.
• 37:20
  SPEAKER_03: The IHT liabilities kick down the road, that's when I need the cover.
• 37:24
  SPEAKER_03: And what people overlook is you have a married couple, you're a really high earner, low earner, first death occurs, survivor doesn't have the funds to keep that policy up.
• 37:33
  SPEAKER_03: So now you've spent a policy for years, and now it's not affordable.
• 37:37
  SPEAKER_03: So, what do you do then?
• 37:38
  SPEAKER_03: So the life I think a lot of these conversations are ending up in the we don't really need to worry at the moment, and what we could do is just a big life policy.
• 37:47
  SPEAKER_03: There's a lot of that.
• 37:48
  SPEAKER_02: The other one I'm hearing you hope you're insurable also.
• 37:52
  SPEAKER_02: The other one I'm hearing that people talk about a lot is potentially taking excess income from the pension to deplete the fund, and the excess income isn't a it's a gift out of normal um expenditure.
• 38:06
  SPEAKER_02: Expenditure expenditure, thank you.
• 38:08
  SPEAKER_02: And therefore, really quick, easy way of getting some money out from an IHT perspective.
• 38:13
  SPEAKER_02: Which is a principle from the stakeholder.
• 38:16
  SPEAKER_03: Yeah.
• 38:16
  SPEAKER_03: I I think the challenge is a bit like Andrew's saying there, well, what you're doing there is I need to turn the tap on, so I need to tax that tap in most people's scenarios.
• 38:26
  SPEAKER_03: So now I've got to analyse, I'll take from pension, pay tax on that, use that to pay this.
• 38:32
  SPEAKER_03: That's a much better outcome than leaving it in a pension, I won't pay IHT.
• 38:36
  SPEAKER_03: It's not that simple because, like you said, you're now into what's the level you're taking, what's the income tax effects, what's your record keeping, how does that work on after first death?
• 38:46
  SPEAKER_03: What sort of policy did you do?
• 38:49
  SPEAKER_03: And in a lot of cases that we probably speak to advisors, you have got a lot of clients who have also got investment bonds, and they've got withdrawals coming off those investment bonds, and there is probably a general lack of understanding that if you look at those rules in terms of surplus income, you need to effectively ignore those bonds.
• 39:09
  SPEAKER_03: So you have got scenarios where people think I can take that from the pension and use that to the life policy because that is excess to my needs.
• 39:17
  SPEAKER_03: But over on the left hand side, they're drawing on five grand a month from a bond because that's their lifestyle funding.
• 39:22
  SPEAKER_02: And and I suppose But you also have to make sure we don't run out of money.
• 39:25
  SPEAKER_02: Uh uh that was exactly what I was saying.
• 39:27
  SPEAKER_02: It's fine.
• 39:28
  SPEAKER_05: It's fine.
• 39:29
  SPEAKER_05: All the it it it's if your estate is big enough that you're not going to run out of money.
• 39:35
  SPEAKER_01: Yeah.
• 39:35
  SPEAKER_05: It can be a big thing.
• 39:36
  SPEAKER_05: Or your income is variable enough so that you you don't have your 50 quid bottle of wine you can make do with a 10 quid bottle of wine or something silly like that, then it's not gonna make a great deal of difference.
• 39:48
  SPEAKER_05: It it's but most people aren't there.
• 39:51
  SPEAKER_01: Yeah.
• 39:51
  SPEAKER_02: I suppose, yeah.
• 39:52
  SPEAKER_02: Those people where that excess income strategy is going to be your high net worth, ultra net worth who aren't gonna get caught up with the point you consistently reinforcing is you still need to live in retirement.
• 40:03
  SPEAKER_02: Yes.
• 40:04
  SPEAKER_02: Yeah, it's it's it works.
• 40:06
  SPEAKER_03: Yeah.
• 40:07
  SPEAKER_03: It doesn't take you know, if you take a look at the rules, it doesn't take a really wealthy person to have an IHT problem.
• 40:13
  SPEAKER_03: No.
• 40:14
  SPEAKER_03: I do it used to be, right?
• 40:16
  SPEAKER_03: It used to be the it's a wealth tax.
• 40:18
  SPEAKER_03: It's not okay tax.
• 40:20
  SPEAKER_03: So property property gets you there.
• 40:21
  SPEAKER_03: Let's be sensible, right?
• 40:23
  SPEAKER_03: For most couples, you're talking as a general rule, anything over a million, you're gonna be paying IHT.
• 40:29
  SPEAKER_03: And if you ask your average person, if you had a million quid, would you think you're rich?
• 40:33
  SPEAKER_03: Yeah, a lot of people would think if you've got a million pounds, you're rich.
• 40:37
  SPEAKER_03: But property alone.
• 40:38
  SPEAKER_03: But for yeah, for a lot of people.
• 40:42
  SPEAKER_05: Property in the south is a is a big problem.
• 40:44
  SPEAKER_05: Yeah.
• 40:44
  SPEAKER_05: And particularly if you're older because you bought your property a while ago and you've done nothing, and now it's worth a lot.
• 40:51
  SPEAKER_05: Yeah.
• 40:51
  SPEAKER_05: And so you're not the sort of person who had a um an IHT problem.
• 40:55
  SPEAKER_05: My father's next door neighbour was a um a widow who got widowed really early.
• 41:01
  SPEAKER_05: She had a house in a leafy suburb of London that was worth a small fortune.
• 41:06
  SPEAKER_05: Her problem was she had no income.
• 41:08
  unknown: Yeah.
• 41:08
  SPEAKER_05: Yeah, so she couldn't.
• 41:10
  SPEAKER_05: She couldn't do anything.
• 41:11
  SPEAKER_05: Yeah.
• 41:11
  SPEAKER_05: She had no income, but she she had it all.
• 41:13
  SPEAKER_05: She had a tax position.
• 41:14
  SPEAKER_05: But a tax problem.
• 41:15
  SPEAKER_05: She couldn't.
• 41:16
  SPEAKER_05: Um but she'd done nothing because she'd bought that, she and her husband bought that house ages ago that house.
• 41:21
  SPEAKER_05: And they bought it for a silly amount of money.
• 41:24
  SPEAKER_05: Yeah.
• 41:24
  SPEAKER_05: And it'd just gone ridiculous.
• 41:25
  SPEAKER_05: And she had a tax problem.
• 41:27
  SPEAKER_03: She could sell and downsize and release the problem.
• 41:30
  SPEAKER_05: Why would she want to lost all your friends and all the all the problems with downsizing?
• 41:33
  SPEAKER_05: The same challenges with with with equity release.
• 41:36
  SPEAKER_05: That you you you've solved one problem.
• 41:39
  SPEAKER_05: But potentially create another one.
• 41:40
  SPEAKER_05: So equity release is fine, but but if you do need to downsize, you need to move.
• 41:43
  SPEAKER_05: How's that going to work?
• 41:44
  SPEAKER_05: Because it ain't yours anymore.
• 41:45
  SPEAKER_05: Your your numbers have changed.
• 41:47
  SPEAKER_05: Equity release can work and it can help people in this situation.
• 41:50
  SPEAKER_05: It I I don't personally like it.
• 41:52
  SPEAKER_05: I it feels a last resort, but absolutely it can work.
• 41:55
  SPEAKER_05: I I it's tensions.
• 41:57
  SPEAKER_05: It it's if you do this, what it can will mean is that, or what it could mean is that.
• 42:03
  SPEAKER_05: And and sequencing risk and all of those things change, and suddenly you've got a problem.
• 42:09
  SPEAKER_05: That's that that doesn't feel like a nice problem to have.
• 42:12
  SPEAKER_03: Yeah, I think you I think the ad the advising community at the moment are looking at this and saying, right, there should be an easy way of having a binary, it's that switch, or it's that switch.
• 42:22
  SPEAKER_03: But effectively, if you were to look at it as a circuit board, each bit can have an effect on the wider safety, and it isn't as simple as that button for this client.
• 42:31
  SPEAKER_03: No, no, yeah.
• 42:32
  SPEAKER_03: If you're 30s, it's this, if you're 40s, it's this.
• 42:34
  SPEAKER_03: If you're 72, it's this.
• 42:35
  SPEAKER_02: Which has always been the case, hasn't it?
• 42:37
  SPEAKER_02: I suppose what this change is going to do is bring more clients and advisors into a space where that's always been the case than there has been before.
• 42:47
  SPEAKER_05: It means that what it means is from an advisor's point of position, that their job is more important than it ever was before.
• 42:52
  SPEAKER_05: You now have a you have a more complicated task where where the benefit that you bring to your clients is more valuable than it was before, providing you know what you're doing, providing the client knows what he's doing.
• 43:04
  SPEAKER_05: And that that's then a again a slightly different discussion.
• 43:07
  SPEAKER_05: That in theory, I sort of know what I'm doing.
• 43:09
  SPEAKER_05: As I said, Claire hasn't got a clue.
• 43:11
  SPEAKER_05: And my problem is to make sure that Claire does know why we're doing these things.
• 43:16
  SPEAKER_05: We both have to be party to this conversation, even though it may be my money that we're extracting from.
• 43:22
  SPEAKER_05: Yeah.
• 43:22
  SPEAKER_05: We we can't afford to do that anymore.
• 43:25
  SPEAKER_05: It's been fine for her to not understand, not know.
• 43:27
  SPEAKER_05: She hasn't needed to.
• 43:28
  SPEAKER_05: Now she does.
• 43:29
  SPEAKER_03: But I said from an advice point of view, it's a it's a wonderful opportunity to deliver some value, understand your client.
• 43:38
  SPEAKER_03: If you look at the intergenerational side, how many times have advisors struggled to build their relationships with the next generation?
• 43:46
  SPEAKER_03: All of a sudden, that generation has a far bigger vested interest in what's happening.
• 43:52
  SPEAKER_03: So it does depend on families, doesn't it?
• 43:54
  SPEAKER_03: You know, you're really open with your parents, I am with mine, but other families struggle to talk about money.
• 43:59
  SPEAKER_03: So it's hard.
• 44:00
  SPEAKER_03: Harder for them to have those engaging conversations.
• 44:02
  SPEAKER_03: All the way through.
• 44:09
  SPEAKER_05: But the price of that is that I don't have enough to do what I want to do.
• 44:14
  SPEAKER_05: That feels very sad.
• 44:15
  SPEAKER_01: Yeah.
• 44:16
  SPEAKER_05: Yeah.
• 44:17
  SPEAKER_05: And and uh in many ways, I t is her problem.
• 44:21
  SPEAKER_05: So if she wants to do something about it, so can't we go for life of another plan instead?
• 44:25
  SPEAKER_05: If you want to do it, you go life of another.
• 44:27
  SPEAKER_05: Your problem, not mine.
• 44:28
  SPEAKER_03: But I think you will see you will see more of that.
• 44:31
  SPEAKER_03: Yeah.
• 44:31
  SPEAKER_03: You will see more of you will have parents.
• 44:34
  SPEAKER_03: You take that client, the the your your late father's neighbour.
• 44:38
  SPEAKER_03: Maybe she had a very large estate, very illiquid, but her children were quite wealthy and were able to be part of that conversation to start to look at, well, hold on, mum count, but what can we do?
• 44:52
  SPEAKER_03: Yes.
• 44:53
  SPEAKER_03: Because we're the ones that benefit, correct?
• 44:54
  SPEAKER_03: Right?
• 44:54
  SPEAKER_03: So that's where this opens up all the pensions part does is to encourage more of those conversations.
• 45:02
  SPEAKER_03: Yes.
• 45:02
  SPEAKER_03: Because it's made the problem bigger.
• 45:04
  SPEAKER_03: Has it changed the solutions?
• 45:05
  SPEAKER_03: Has it changed what you need to do around fact-finding, engagement, know your client?
• 45:10
  SPEAKER_03: Not really.
• 45:11
  SPEAKER_03: It is offered you a really good opportunity to have some of those broader discussions, but it hasn't changed a lot of what you would do.
• 45:20
  SPEAKER_02: Do um do you envisage there being new products or propositions start flooding the market to try and do because you always get some smart firm who think they've come up with some brilliant solution which is going to solve the problem is Do you get the sense of that here?
• 45:36
  SPEAKER_05: I think more Well in days of you when I was young, back-to-back arrangements where you had um life policies that were priced because you bought the annuity were deemed to be from the IHT estate anyway.
• 45:51
  SPEAKER_05: Yeah.
• 45:52
  SPEAKER_05: So that's not a change there.
• 45:54
  SPEAKER_05: So not necessarily as a product, more packaging, perhaps.
• 45:57
  SPEAKER_03: Yeah, I would have thought that I think at the moment there's still There's certainty but some uncertainty, so people are a bit unsure.
• 46:05
  SPEAKER_03: I think you will see some firms look to develop solutions, but I'm not sure they will be entirely new ideas, but more packaging about how you utilize a series of concepts.
• 46:18
  SPEAKER_03: This in conjunction with that.
• 46:19
  SPEAKER_03: Correct.
• 46:20
  SPEAKER_03: That's what I would expect.
• 46:21
  SPEAKER_02: And on the flip side, do you anticipate anything currently used, maybe being used less in the future?
• 46:27
  SPEAKER_02: I know we spoke briefly about spousal bypass trust.
• 46:31
  SPEAKER_02: Do you think they still I think they do?
• 46:33
  SPEAKER_05: I yeah.
• 46:34
  SPEAKER_05: So my spy spousal bypass trust was being used to at one level the reason it was packaged in that language was an IHT reason.
• 46:43
  SPEAKER_05: There are other reasons for putting money into trust.
• 46:46
  SPEAKER_05: So I want to give money to to let's say I ignore my daughter.
• 46:50
  SPEAKER_05: Ignoring her, I'm gonna give it to my nephews.
• 46:53
  SPEAKER_05: One of my nephews is really good with money.
• 46:54
  SPEAKER_05: One of them is pants, yeah.
• 46:56
  SPEAKER_05: And it's his money.
• 46:57
  SPEAKER_01: Yeah.
• 46:58
  SPEAKER_05: I don't want to give it to him.
• 46:59
  SPEAKER_05: Certainly, my daughter is married, I don't trust her husband.
• 47:02
  SPEAKER_01: Yeah.
• 47:02
  SPEAKER_05: I don't want to give her husband money that he can get if she divorces him.
• 47:07
  SPEAKER_01: Yeah.
• 47:07
  SPEAKER_05: I don't want to do that.
• 47:09
  SPEAKER_05: So my reason for the the the the spouse of bypass trust is not tax.
• 47:13
  SPEAKER_01: Yeah.
• 47:13
  SPEAKER_01: It's a protection entirely different alternative.
• 47:15
  SPEAKER_01: Yeah.
• 47:16
  SPEAKER_01: So it's which hasn't changed the results of the trust.
• 47:18
  SPEAKER_01: It hasn't changed the results.
• 47:19
  SPEAKER_05: Because that problem is is the same.
• 47:21
  SPEAKER_05: It so I've got a spouse of bypass trust, I'm going to keep the spouse of bypass trust.
• 47:26
  SPEAKER_05: It to go back to my comment about if I die before 75, I think there is an argument for putting into the spouse of bypass trust on my deaf to avoid the second tax on Claire's death.
• 47:37
  SPEAKER_05: What I haven't yet done is done all the number crunching to see analysing what the trust would do with the money.
• 47:41
  SPEAKER_05: Yeah, yeah, yeah.
• 47:42
  SPEAKER_05: And to think about exit charges and those sorts of things because I can't do multiple trust planning, I can only have the one.
• 47:47
  SPEAKER_05: Yes.
• 47:47
  SPEAKER_05: How does it work?
• 47:48
  SPEAKER_05: Yeah.
• 47:49
  SPEAKER_03: Because I've stupidly got one pension scheme.
• 47:52
  SPEAKER_03: But like you said, they haven't they haven't fallen away in terms of benefit to a client, to a family.
• 47:58
  SPEAKER_03: Their purpose, their use may have adapted slightly, but the point is if I don't have one, I have no options.
• 48:03
  SPEAKER_03: No, correct.
• 48:04
  SPEAKER_03: If I have one, I have options.
• 48:06
  SPEAKER_03: So typically see that it's still beneficial.
• 48:09
  SPEAKER_03: To me, everyone should have one.
• 48:10
  SPEAKER_03: And then choose later.
• 48:11
  SPEAKER_05: Yes, because there's no downside in having one.
• 48:13
  SPEAKER_05: You lose nothing by by by by having one.
• 48:16
  SPEAKER_02: And they're typically free as well, right?
• 48:18
  SPEAKER_02: You're not it depends.
• 48:20
  SPEAKER_05: Depends who's drawing them up.
• 48:21
  SPEAKER_05: But yeah, you you would have a lot of providers.
• 48:23
  SPEAKER_05: Yeah.
• 48:25
  SPEAKER_05: All the way through what I think your planning should be doing is to give your your clients the maximum flexibility.
• 48:34
  SPEAKER_01: Yeah.
• 48:34
  SPEAKER_05: And so all of that is is understanding what options the provider offers through their pensions.
• 48:41
  SPEAKER_05: So do they all offer flexi access drawdown?
• 48:43
  SPEAKER_05: Or have you only got the option of a return of fund?
• 48:46
  SPEAKER_01: Yeah.
• 48:46
  SPEAKER_05: Because if you only got the option of return of fund, things are different.
• 48:49
  SPEAKER_05: Now you could ask why you've got the only option of return of fund who's still there.
• 48:53
  SPEAKER_05: Whole different question.
• 48:54
  SPEAKER_05: But do you know what's available?
• 48:56
  SPEAKER_05: Do you know that they offer flexi access drawdown for the dependents?
• 49:00
  SPEAKER_03: But like you said, when you talk about spies or bypass, you're talking about understanding broader objectives and feelings that the client has.
• 49:08
  SPEAKER_03: So the question of, you know, if if you go into that conversation and the advisor's knowledge or experience or or process is limited to would you like one?
• 49:18
  SPEAKER_03: Very closed question, or let me talk through my understanding of your family, who you see as your beneficiaries, how you feel about their management of money, those sorts of open questions are going to help you direct the client accordingly with I think this would be of merit.
• 49:34
  SPEAKER_03: And even if we don't need to use it, it would still be beneficial.
• 49:37
  SPEAKER_03: So you're back to your fact-finding, you're back to knowing your client.
• 49:39
  SPEAKER_05: So although the the IHT position has changed, you haven't changed the fact that they're not binding nominations in most schemes.
• 49:46
  SPEAKER_05: Yes.
• 49:47
  SPEAKER_02: Yeah.
• 49:48
  SPEAKER_02: Okay.
• 49:49
  SPEAKER_02: So then I'll focus to firms a bit then.
• 49:52
  SPEAKER_02: So if I'm an advice firm at the moment, what should I be doing now?
• 49:56
  SPEAKER_02: Or some of the things I could be doing to get myself ready for this in April 2027 and my advisors and my clients.
• 50:06
  SPEAKER_05: I think it's quite difficult.
• 50:08
  SPEAKER_05: Part of it is to know which of your clients didn't have an IHT problem before and now do.
• 50:16
  SPEAKER_05: Because if they had an IHT problem before, presumably you've already started having IHT discussions.
• 50:21
  SPEAKER_05: All that's happened is the numbers got bigger.
• 50:22
  SPEAKER_01: Yeah.
• 50:23
  SPEAKER_05: So your your problematic clients, if I put it that way, are those who didn't have an IHT problem and now do.
• 50:32
  SPEAKER_02: So there's there's an analysis piece there to try and work out what you see in the thing.
• 50:36
  SPEAKER_05: It feels as though there is.
• 50:39
  SPEAKER_05: But again, you don't know because it's driven by when you die.
• 50:43
  SPEAKER_05: And so I might have a problem today, but depending on my extraction rate, actually I haven't got a problem when I die.
• 50:52
  SPEAKER_03: And it's funny because your starting point was client and mine would be advisor.
• 50:56
  SPEAKER_03: So mine would be the having a close look at whether the knowledge and experience in the advice team aligns with this world.
• 51:06
  SPEAKER_05: And I think that's true.
• 51:07
  SPEAKER_05: And then that depends to go back to your point before about silos and passing between different members of the practice.
• 51:13
  SPEAKER_03: Yes.
• 51:13
  SPEAKER_03: Yeah, if you if you were focused, if you were typically advising an accumulation, you didn't do much estate planning, you didn't do anything beyond some life policy recommendations, this is a world that now collides from 207, where I think you have to have a greater understanding of pension legislation and tax, and you have to have a greater understanding of what IHT and estate planning and mitigation looks like.
• 51:39
  SPEAKER_03: And to marry the two together is probably the first starting point, which is you have to be quite, I think you have to look quite closely at the team and say, fine, the legislation's changing, this is what we're gonna have to do, and we're now gonna advise these clients.
• 51:53
  SPEAKER_03: Does our team get estate planning?
• 51:56
  SPEAKER_03: Do we deliver it at the moment?
• 51:57
  SPEAKER_03: What would our approach be?
• 51:59
  SPEAKER_03: How do we identify those clients?
• 52:01
  SPEAKER_03: How do we identify?
• 52:02
  SPEAKER_03: Do we want to train every advisor to be brilliant at this?
• 52:05
  SPEAKER_03: Do we think that our target market and client audience is such that only 10% of our clients are likely to be caught by IHT, therefore we don't need 100% of our team capable of delivering advice?
• 52:15
  SPEAKER_03: You're suddenly again analysing.
• 52:17
  SPEAKER_03: Yeah.
• 52:18
  SPEAKER_02: So that's why it feels like there's a client piece here, there's an advisor piece around upskilling, and probably the third to me feels a bit like okay, you mentioning target markers, a bit of a segue into this, but firms will have what they've done in response to consumer duty.
• 52:38
  SPEAKER_02: Does that still all marry up in his right?
• 52:40
  SPEAKER_02: Do we need to look at some of that?
• 52:42
  SPEAKER_02: But equally, advice policies, frameworks, whatever the firm calls them, there are probably a lot of frameworks out there which say when you're doing estate planning, always leave your pension till last.
• 52:54
  SPEAKER_02: And there's probably firms need to review some of that in the light of the changes to work out actually to all the points you have both articulated very well, around there's no right answer now.
• 53:06
  SPEAKER_02: So actually that policy forcing our advisors to leave pensions till last may no longer be the right.
• 53:14
  SPEAKER_02: I think frameworks are tricky here.
• 53:17
  SPEAKER_02: I think it's because frameworks that funnel.
• 53:20
  SPEAKER_02: Yes.
• 53:20
  SPEAKER_02: Yeah, like you said, it's not an A to B process just isn't gonna work.
• 53:24
  SPEAKER_05: So I think that you can have frameworks that say if if this then this and if that then that.
• 53:30
  SPEAKER_03: But I don't think you can funnel to But you need the ability to be able to recognise client nuances and gate out.
• 53:35
  SPEAKER_02: It's gonna need to be more principle-based and recognizing the types of things you will need to look at and invest in.
• 53:41
  SPEAKER_03: I think the other thing you'll be really careful of is you you need to create a scenario, or you need to avoid a scenario where, depending which advisor that you speak to, what the client outcome looks like.
• 53:52
  SPEAKER_03: So that could be quite tricky if you've got some people who have a really strong view on, you know, we've worked in this industry for a long time.
• 54:00
  SPEAKER_03: There will be some clients that don't care about IHT.
• 54:02
  SPEAKER_03: They they have the view that is, well, I started with nothing, it's my money, my kids will get whatever I'm left with, they should be bloody grateful.
• 54:08
  SPEAKER_03: That is a very typical response.
• 54:11
  SPEAKER_03: And it's not unreasonable, but it but that might be because you focus so much on IHT planning, you haven't had the conversation about protection and and all the other things that come into estate planning, so that can skew a logical view.
• 54:24
  SPEAKER_03: But also at an advisor level, you you do absolutely have a risk that says, Well, one advisor, I have a really strong view on mitigating IHT, and my recommendation is draw from the pension, give away excess income.
• 54:34
  SPEAKER_03: And another advisor, slightly less experienced or slightly safer, or kind of a different view, is no, I wouldn't tell them to do that at the moment.
• 54:43
  SPEAKER_03: So your point of discuss but take no action, but you've got another advisor is discuss and take action, and you should do it straight away because the seven year clock would start.
• 54:51
  SPEAKER_03: So why wouldn't you do that?
• 54:53
  SPEAKER_02: I think for me, my immediate thing to that would be twofold.
• 54:56
  SPEAKER_02: One is comes back to client objectives and being able to articulate them really well, yeah.
• 55:01
  SPEAKER_02: And the second thing comes back to the documentation, the point you made earlier, Andrew, around why did I why did you do those things?
• 55:09
  SPEAKER_02: Because in reality, I'm sure if you put something in front of all three of us, same bit of information, we would all come up with a slightly different outcome.
• 55:18
  SPEAKER_02: It doesn't mean any of us are right or wrong, or I'd like to hope none of us would make a fundamental mistake.
• 55:24
  SPEAKER_05: But then that's not a mistake, it's just that you could have done this instead.
• 55:27
  SPEAKER_05: Yeah.
• 55:28
  SPEAKER_05: And so you risk the accusation that what you've done is wrong, because had you done something different, the outcome would have been better.
• 55:35
  SPEAKER_01: Yeah.
• 55:36
  SPEAKER_05: And unless you've dismissed that outcome because we talked about it, that risk is always going to be there.
• 55:43
  SPEAKER_05: That's funny.
• 55:43
  SPEAKER_02: It comes down to the discussion on the alternatives imaginable.
• 55:47
  SPEAKER_05: It's not that it was wrong.
• 55:48
  SPEAKER_05: Yeah.
• 55:49
  SPEAKER_05: It's just that in this set of circumstances which were different to what you talked about, something's happened.
• 55:53
  SPEAKER_03: You don't hear the phrase very often, but you touched on it before, is the reasons why letter.
• 55:57
  SPEAKER_03: Now you hear a lot about suitability reports, but not reasons why letters.
• 56:02
  SPEAKER_03: Because I think it's almost become a I record what I did and why I did that.
• 56:07
  SPEAKER_03: I have a little bit less content on why I didn't do something else.
• 56:10
  SPEAKER_03: And in this space, it might be that your alternatives and what you didn't do is more helpful to justify or explain or quantify what it is you did.
• 56:22
  SPEAKER_05: I think the the challenge you have is the person who knew why you did what you did is dead.
• 56:26
  SPEAKER_05: Yeah.
• 56:27
  SPEAKER_05: That means that they can't say I knew this.
• 56:30
  SPEAKER_05: So what are you going to do in the event that someone says that what you've done is wrong?
• 56:34
  SPEAKER_05: And some of them will be wrong because the situation, the circumstances.
• 56:38
  SPEAKER_05: So I was making all the planning on the presumption I was going to die after 75.
• 56:41
  SPEAKER_05: Everything was based on that presumption.
• 56:43
  SPEAKER_05: I stupidly died when I was 70.
• 56:45
  SPEAKER_01: Yeah.
• 56:45
  SPEAKER_05: And that means what you've done is is in inverted commas wrong.
• 56:48
  SPEAKER_05: Yeah.
• 56:48
  SPEAKER_05: Yeah, but we talked about that.
• 56:49
  SPEAKER_05: Yeah.
• 56:50
  SPEAKER_05: And statistically, you were beyond and you felt that that was what you were going to do.
• 56:54
  SPEAKER_05: It doesn't mean it was wrong.
• 56:55
  SPEAKER_03: It's just situations.
• 56:56
  SPEAKER_03: Your client's sentiment, your client views, they're part, they're a big part of it.
• 56:59
  SPEAKER_03: But they're rationale.
• 57:01
  SPEAKER_03: But yeah, like you said, they're a big part of it.
• 57:02
  SPEAKER_03: So if you don't get it down, no, it doesn't exist.
• 57:04
  SPEAKER_03: It doesn't exist.
• 57:06
  SPEAKER_02: Brilliant.
• 57:07
  SPEAKER_02: A few quick fire questions again to wrap up.
• 57:11
  SPEAKER_02: Do you think this is a good or bad change from a pensions perspective?
• 57:16
  SPEAKER_02: All changes are bad.
• 57:17
  SPEAKER_05: Um so it it's a change.
• 57:22
  SPEAKER_05: It it's neither good nor bad.
• 57:24
  SPEAKER_05: It it you can't do anything about it.
• 57:26
  SPEAKER_05: The fact that there is a bigger tax take means that it is bad.
• 57:29
  SPEAKER_05: The fact that it's come from less field means that it is bad.
• 57:32
  SPEAKER_05: Whether it's good or bad is irrelevant.
• 57:34
  SPEAKER_05: I still have to deal with it.
• 57:38
  SPEAKER_02: Would you have made this change?
• 57:40
  SPEAKER_02: Of course not.
• 57:43
  SPEAKER_05: So now you have a different thing.
• 57:44
  SPEAKER_05: So if you accept that there's a black hole in finances, you have to think where you're going to get it from.
• 57:53
  SPEAKER_05: And taxing the poor, whatever the poor means, isn't very sensible because they have no money.
• 57:59
  SPEAKER_05: Taxing the rich, whatever the rich means, makes more sense because you've got a chance of getting money.
• 58:04
  SPEAKER_05: So on the grounds that most people don't understand pensions and don't understand IHT, this seems to be a way that you can take money without people noticing.
• 58:15
  SPEAKER_05: Unfortunately, pensions don't have tractors, so you can't really blockade parliament in the same way that you could do agricultural life.
• 58:23
  SPEAKER_05: And so they're also not very interesting.
• 58:26
  SPEAKER_05: And so the the your ability to whip up a storm of of stuff against this is tricky.
• 58:32
  SPEAKER_05: Most of the noise against about it has been interesting.
• 58:35
  SPEAKER_05: It's been on the difficulties for the personal reps.
• 58:37
  SPEAKER_03: Yeah, there's been far more press on how would you achieve it, how would you facilitate not the we don't like it, it's the how does that actually work?
• 58:45
  SPEAKER_05: Yeah.
• 58:46
  SPEAKER_05: And I think that there was a number I think was published today as to how much tax relief would be given.
• 58:51
  SPEAKER_05: It's a big number.
• 58:53
  SPEAKER_05: And is it a way of getting it back?
• 58:54
  SPEAKER_05: Yes, because to go back to the beginning, what is the purpose of a pension?
• 58:57
  SPEAKER_05: The purpose of a pension is income in retirement.
• 59:01
  SPEAKER_05: That's what it's for.
• 59:02
  SPEAKER_05: Not to pass on to the next generation.
• 59:04
  SPEAKER_05: And as I've said repeatedly, it's only been a narrow window when you can, so it's just returning to a status quo.
• 59:10
  SPEAKER_05: It's it's annoying, it's frustrating, flip-flopping is unhelpful, but it it it's it's I'm not happy to say it, it's not unreasonable.
• 59:23
  SPEAKER_02: Do you think advisors will be ready for this change yes or not?
• 59:30
  SPEAKER_02: What does it ready mean?
• 59:32
  SPEAKER_02: Able to deliver good client outcomes.
• 59:36
  SPEAKER_04: I think that those who engage will be.
• 59:39
  SPEAKER_04: I think the risk is that people don't engage with it.
• 59:41
  SPEAKER_04: But that's the same with any change.
• 59:44
  SPEAKER_03: Yeah, there is a risk that it's been around for a while.
• 59:49
  SPEAKER_03: Oh there is there is a surprise in the April 27.
• 59:53
  SPEAKER_03: It came about so much quicker than I expected.
• 59:56
  SPEAKER_05: There is that risk.
• 59:57
  SPEAKER_05: I I don't you've got to be living on Mars, I think you'd not know it's coming.
• 1:00:05
  SPEAKER_05: There's been if you're in the industry.
• 1:00:06
  SPEAKER_05: If you're in the industry, for sure.
• 1:00:07
  SPEAKER_05: I and to go back to being a device, I I think it's it if you genuinely don't know, that's a big problem.
• 1:00:18
  SPEAKER_02: Yeah, this isn't your only problem if that's the case, is it?
• 1:00:21
  SPEAKER_03: Yeah.
• 1:00:21
  SPEAKER_03: I think I think do I know what to do about it?
• 1:00:24
  SPEAKER_03: Yeah, I was just gonna say the same.
• 1:00:26
  SPEAKER_03: Awareness that it's coming, I think is probably quite high.
• 1:00:29
  SPEAKER_03: Yes.
• 1:00:30
  SPEAKER_03: Awareness, what I would do as a result, how I would advise my clients, or how I upskill myself to do it.
• 1:00:38
  SPEAKER_05: I think that's like I think that's hard, but I I think that don't it it so much depends on on the advisor.
• 1:00:45
  SPEAKER_05: To to come back to the the point that we've made a couple of times is is how much you're in a silo.
• 1:00:51
  SPEAKER_05: The more that you're a holistic financial planner, the less of a problem this is.
• 1:00:55
  SPEAKER_05: Yeah.
• 1:00:56
  SPEAKER_05: The more that you've been in a silo, the more of a challenge this is.
• 1:01:02
  SPEAKER_02: Do you think this is the last big pension change we see under this government?
• 1:01:10
  SPEAKER_05: One of the many things I didn't bring with me was a crystal ball.
• 1:01:13
  SPEAKER_05: Um I don't know.
• 1:01:15
  SPEAKER_05: Pensions uh go back to beginning.
• 1:01:18
  SPEAKER_05: One of the problems with pensions and one of the problems with the whole way the governments, you know, whatever colour have behaved is they haven't been consistent.
• 1:01:25
  SPEAKER_05: And because they are poorly understood and because they're not exciting, they feel as though they're quite easy to attack.
• 1:01:35
  SPEAKER_05: And that therefore means it's quite hard to rule out another change.
• 1:01:39
  SPEAKER_05: It's difficult to know what that change would mean, but that's because I've got no imagination.
• 1:01:44
  SPEAKER_05: And uh they finished tinkering, I doubt it.
• 1:01:48
  SPEAKER_03: Yeah.
• 1:01:48
  SPEAKER_03: Whether they tinker on pensions or tinker on the estate planning side to offset the counteractions that they expect.
• 1:01:56
  SPEAKER_03: It would not be difficult for them to say I'm gonna change the rules around surplus income.
• 1:02:00
  SPEAKER_02: Because that's an obvious one.
• 1:02:02
  SPEAKER_02: Because that's an obvious problem.
• 1:02:04
  SPEAKER_05: You start to get more fundamental HT problems, so it's a bigger change.
• 1:02:06
  SPEAKER_05: Yes.
• 1:02:08
  SPEAKER_05: So if they were to fiddle in this space, one that they could do is bring back income tax on debt before 75.
• 1:02:14
  SPEAKER_05: Yes.
• 1:02:14
  SPEAKER_05: But that's a restoration to what was there before.
• 1:02:17
  SPEAKER_05: I think the problem with all of these measures and the question of all of these measures is how much revenue do they actually secure from this?
• 1:02:24
  SPEAKER_05: And that's really tricky to tell.
• 1:02:28
  SPEAKER_05: And then you have the other one, which is to go back to 2006 and 2011.
• 1:02:34
  SPEAKER_05: If there is a change of government, a change of policy, could this be reversed?
• 1:02:39
  SPEAKER_05: Yeah.
• 1:02:39
  SPEAKER_05: Don't know.
• 1:02:40
  SPEAKER_05: Yeah.
• 1:02:41
  SPEAKER_05: And past performance isn't a guarantee of the future, but we've seen what's happening in the past.
• 1:02:44
  SPEAKER_05: Yeah.
• 1:02:45
  SPEAKER_05: You don't know.
• 1:02:46
  SPEAKER_05: Um if the state of finances remains powerless, you're not going to want to take tax away, are you?
• 1:02:53
  SPEAKER_05: Yeah.
• 1:02:54
  SPEAKER_02: And final one, will you personally be doing anything different come April 2027?
• 1:03:04
  SPEAKER_05: I've been thinking about it.
• 1:03:06
  SPEAKER_05: Um so not by itself.
• 1:03:09
  SPEAKER_05: It it the difference is purely been to do with what pot does income does money come from.
• 1:03:17
  SPEAKER_05: So it's um if I ignore numbers for a moment, my plan was to take tax-free cash in phases so that my my income from my pension would be a mixture of tax-free cash and income.
• 1:03:29
  SPEAKER_05: So I might increase my income to the um high rate band.
• 1:03:37
  SPEAKER_05: So now I'm just saying how much income I wouldn't retirement have.
• 1:03:39
  SPEAKER_06: That's a different question.
• 1:03:40
  SPEAKER_05: But I might increase my income take and and decrease my ISO take.
• 1:03:46
  SPEAKER_05: I might not.
• 1:03:47
  SPEAKER_05: But if if I was going to make a change, that would be the change I would make, where the money comes from, rather than anything fundamental.
• 1:03:56
  SPEAKER_05: Yeah.
• 1:03:56
  SPEAKER_05: So although on the one hand I'm ancient, on the other hand, I'm not.
• 1:03:59
  SPEAKER_05: I've got I've got a long time.
• 1:04:02
  SPEAKER_05: So life cover might be a bit difficult.
• 1:04:05
  SPEAKER_05: To average life expectancy, I've got 25 years.
• 1:04:07
  SPEAKER_05: I don't want to do something now that now I'm I'm I'm in trouble with.
• 1:04:11
  SPEAKER_05: Restrict you later.
• 1:04:12
  SPEAKER_05: So to do big changes.
• 1:04:15
  SPEAKER_05: Now I would I do a life policy?
• 1:04:17
  SPEAKER_05: I've been thinking about it, again, trying to get costs for it, just to think, okay, so that's the cost.
• 1:04:21
  SPEAKER_05: What does that mean?
• 1:04:22
  SPEAKER_05: Yeah.
• 1:04:22
  SPEAKER_05: Okay, now to do that, that means we're now taking out money, more money here.
• 1:04:26
  SPEAKER_05: Yeah.
• 1:04:26
  SPEAKER_05: What does that mean to to to the plan?
• 1:04:29
  SPEAKER_01: Yeah.
• 1:04:30
  SPEAKER_05: And that that work I haven't done.
• 1:04:32
  SPEAKER_01: Yeah.
• 1:04:33
  SPEAKER_05: But again, it doesn't feel irreversible.
• 1:04:37
  unknown: Yeah.
• 1:04:38
  SPEAKER_03: Taking a lot of policy.
• 1:04:39
  SPEAKER_03: You could stop it.
• 1:04:40
  SPEAKER_03: You could stop, and the loss is the cost of the premiums and no payout in the short term.
• 1:04:44
  SPEAKER_03: But it it's it's uh that I don't think I go much beyond that.
• 1:04:50
  SPEAKER_02: Brilliant.
• 1:04:51
  SPEAKER_02: Well, uh, thank you once again, Andrew, for joining us.
• 1:04:55
  SPEAKER_02: It's been a pleasure to have you.
• 1:04:56
  SPEAKER_02: Thank you everyone for listening, and we will see you again soon.