Pensions, Purpose and the Reality of Retirement

Episode description - In this first episode of the Adeptli Podcast, Jamie and Julia are joined by Andrew Stokes, who spent over 40 years in retirement planning, including around three decades as Head of Pensions at St. James’s Place.
 
Andrew has recently retired himself, giving him a rare view of retirement planning from both sides: as a technical expert and as a retiree.
 
The conversation explores the human and technical realities of retirement, including identity, purpose, tax free cash, drawdown, ISAs, DB pensions, state pension assumptions, client engagement and the importance of holistic planning.
 
An honest and practical discussion on why good retirement planning is about far more than pensions alone.

Transcript

SPEAKER_00 0:09

And welcome to the Adeptly Podcast. 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. 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. Clear thinking, real experience, and honest conversation. Let's get into it.

SPEAKER_01 0:38

Today I'm joined by my fellow co-founder Julia and also by Andrew Stokes. Andrew has spent over 40 years in retirement planning, including around three decades as head of pensions at St. James's Place. He is someone many advisors and technical experts turn to and know and respect. What makes today particularly interesting is Andrew himself has also recently retired. Yep. That gives him a really unique insight into how pensions work, but also how they work in practice. So today we're going to talk about retirement planning, what it means for client, what it's actually like going through it, alongside reflections on his career and everything he's seen change over those many, many years. So, Andrew, after a career helping people retire, how did it actually feel when it was your turn?

SPEAKER_03 1:31

I guess there's two bits to it. One of them is a relief of stopping work because been on a journey to get there. So it's at what point do I decide to pull the trigger to stop? And that's then to do with thinking about the numbers and do my numbers work to enable me to do so. But for me, a lot of the key was what am I going to do when I stop work? Because so much of what I perceive myself as was tied up in work. If you lose that work, then there's a danger that you're you're anchorless. What have you become? And the more you sort of identify with your title, the harder that becomes. There was a lot of disinvesting to get my head in a space where yes, I'm ready to retire, I'm secure enough in myself that I can do this. And also my my journey wasn't an immediate stop working today, stop tomorrow. So four years ago, I dropped my days from five down to three, and that then meant that I've got two days basically of retirement. So it's that journey gradually to retirement rather than a one-off or one-off. I don't think I'd have been able to cope with at all. Um absolutely not. My head would not have been in that space. Perhaps I would have thought about it for longer, maybe, but in terms of my journey to stop tomorrow wasn't going to work. I I needed to know what I was going to do to fill my days.

SPEAKER_04 2:54

And how long after that, you know, the first day that you retired, how long was it before you actually woke up, got up, and thought, actually not, this isn't a holiday, this is this is now, this is what I'm doing.

SPEAKER_03 3:05

I I think it's interesting because the initially, whether it is a holiday or not, the feeling in my head was it's not real. It hasn't got there yet. Um in terms of being a holiday being places that are exotic, home isn't so clearly it wasn't. So from that point of view, it it it clearly was different. Um I think the big changes to do with different routines. Yeah. Not in absence of routines, you don't have to get up at a certain time. You also don't have to do this task today. You can do it tomorrow, so it's totally different from work. Doesn't make any difference whether I chop down the hedge this week or next week. Not really. The hedge just has to be chopped. So that was freedom. I think it in in many ways it hasn't sunk in that I've retired. Maybe I've done a year, I'll be will, so it's July when I when I stop work. But uh it's yeah, I'm I'm not on holiday now, but yeah, three months I said when I was.

SPEAKER_04 4:08

How about the actual switching off from the work site and colour CED stuff and then thinking, oh, I don't really need to know that now.

SPEAKER_03 4:16

So at the point that I decided that I was going to retire, I made a conscious discussion with myself as to what I was going to do. So was I going to remain engaged or was I going to retire? And if you're going to retire, although from a personal perspective, a lot of legislative changes and pension changes are important, they are important in a different way. Yeah, from a different angle. Yeah. So you don't I don't need to know what's going on in the weeds. I just need to know the headlines. Whereas before it's it's what's going on in the weeds and more to the point, what's the impact on everybody else? No, I'm totally selfish. What's the impact on me? I don't care about anybody else.

SPEAKER_04 5:00

Can you switch that off though, as a technician? Can you genuinely switch that off?

SPEAKER_03 5:03

No, but what you can what I did do was to take steps to make that journey easier. So I canned a lot of um the subscriptions to the free newspapers, so things like New Model Advisor, those sorts of things. So you're not getting then the alerts of stuff coming through. And that then makes it easier to swap. But then my design.

SPEAKER_04 5:40

Oh, that was stupid.

SPEAKER_03 5:44

But uh what that then meant, what I didn't do though, was answer all phone calls. Yes. So I would only answer phone calls from the names I'd stored in my phone, and also I tended not to and still tend not to answer them immediately. Yeah. Which then gives me that distance between what I was and what I am.

SPEAKER_01 6:07

Yeah. And do you do you still feel the urge to help those people when you do get back to them and feel able to help them if you're not in my self-education?

SPEAKER_03 6:17

Um As you said, I've been had a pension for 30 years. Some of these people I've known since 1990. That's a long time to say fooled you. But the relevancy question is one that I'm conscious of. So I had a question last week, which was in two parts. One was to do with old legislation, one was to do with new. I haven't looked in the weeds. Um, and to be fair, the people who know me well have known what I'm doing, so they're happy with that.

SPEAKER_01 7:07

So if we go right back to the very beginning, then what I was a boy in short trousers, yeah. Not quite that fine. First first job.

SPEAKER_03 7:14

So what was your my first job was interesting because I was thrown on an investment helpline. So um the company I work for did a lot of direct mail, they were running campaigns for a particular type of insurance bond, and I'm on the helpline answering questions about things I know nothing about, which didn't really change for the next 30 years. Um but genuine didn't, so you you've got a really steep learning curve to go from that, and that was customer facing. And then it starts to morph into advisor-facing, and then so I started in in 86, which was about the was which was when personal pensions were being introduced. And so in 87 I moved from doing investments into a technical services role dealing with pensions. Now, from my point of view, that was quite good because I felt that I was coming in new with everybody else who was new. So you're not behind the curve because there was a big change when personal pensions were introduced, and the company I worked for was predominantly in the personal pension space, not in the occupational space. So then it was it was good to make that change at that point. And then you then staying with that, then it's just change after change after change. So nothing has remained static. Uh any thoughts I had when I was at first started that pensions were boring and static, and I could get an expert really quickly, and it would stay there, would remove fairly quickly because the pace of change has been quite quick since. And even though nothing massive has changed since 2006 at one level, every year there's another tweak, another tweak, another tweak. And it's those tweaks that keep it interesting, and those tweaks which create confusion to to um advisors, um, particularly advisors who aren't um spending their whole time in the retirement planning space, whose time is spent elsewhere and they do retirement planning at a bit. And then providing they know that something's changed, then it's fine because they ask, but it's it's I don't know there's a change, then you're in trouble.

SPEAKER_01 9:08

And thinking across those 40 years, what what would you say the biggest tweak or change has been from your perspective? So is it as easy to say a day or is it?

SPEAKER_03 9:17

Well, I think so, because it threw everything out, and then you start afresh, but very quickly it all starts to morph again. And in some ways that was it was the biggest change. It it it there was a lot of time for it to come through, two years from 2004 to 2006, so you were aware of where the changes were going. So a lot of preparation time. I think what was disappointing about it was that the changes to that happened almost immediately. So that all the way through you're having a change, a change, a change, a change. I think the if I pick one of them up, although that leads probably into the next discussion that we're having, was when drawdown was introduced as part of A-Day, you could do both before and after age 75. So prior to that, although drawdown had existed, at 75 you had to annuitize. So you had the first change at that point to alternatively secure pensions. Alternatively secure pensions were subject to IHT. But they hadn't been, and then they suddenly became so. They became an unauthorised payment because they were originally introduced because various uh bodies said that um going for an annuity was against the principles of the Plymouth Brethren. So the government listened and it made measures so that the Plymouth Brethren weren't prejudiced against to introduce ASP and then it said, Oh, but it's only for Plymouth Brethren, which is a bit silly. Um to protect it, they made it an unauthorised payment and subject to IHT. So can you remember that time in the industry, Julia?

SPEAKER_04 10:41

I can, but I remember the IHT changes from 2006 more.

unknown 10:45

Yeah.

SPEAKER_04 10:46

But every year, as a budget, and when you watch a budget, there will always be one drop-in moment.

SPEAKER_03 10:51

Yeah, and I think initially the lot of them were just small. Yeah. And small and annoying rather than significant. But yeah, so unauthorized payment and IHT, so potentially you had an 82% tax charge on deaf up to 75. So that was nasty. And then you have other changes where retreats from that. So when the coalition came through, they removed the unauthorised payment and IHT, and they didn't just made it um income tax. Um then you have um changes to bring in uh flexi access drawdown. That was then the next big game changer. And then they brought in the change at that point also to do with taxation of death benefits, so you have changes. There's um but you've got a whole history of no change, and then changes happen. So that's how do you react to those changes? Because the today's environment, whatever that looks like, will be different tomorrow, will be different tomorrow. The problem is to guess how it'll be different. Because the move to flexi access was a surprise. And the move to taxation of death benefits was a surprise and that they came from nowhere. Um that's that's why it's been interesting over that period. Because and things haven't sort of happened.

SPEAKER_01 12:05

Yeah. And how how do you how do you feel advisors have reacted in that with all of this change and things? Do you think it's harder being an advisor now than it was when you first joined the industry?

SPEAKER_03 12:17

Or I think it depends where you are. The when I started there was a massive split between occupational pensions and personal pensions. They were radically different. Yeah. The legislation, the way they behave was totally different. So even if you had a money purchase scheme, money purchase occupational scheme, the rules on contributions, the rules on benefits are dramatically different. And massively complicated in occupational. In addition, way back when you had interaction with contracting out and GMP, all of those things were complicated. Now they've gone. So in a lot of ways, things are simpler. Not simple, simpler because that that distinction has gone. For most people, uh pensions are now simple because they're not affected by the things that are difficult. For some people, for higher earners, people with bigger pots, things are complicated. And so I I think it's it's a mixture. I I you know going way back when, where depending on your age, the percentage you could put in was different. You had a different age, you had different rules. Now it's the same for everybody. So in some ways it it's simpler for most, but for those at the margins, I think it's more complicated or as complicated anyway.

SPEAKER_01 13:29

And from a client perspective, do you think that so advisors are one thing, clients are another. Do you think all of the changes have led to more people engaging with their pensions, being aware of the pension?

SPEAKER_03 13:42

Because I think No, I I don't. I think that that people are still as ignorant as they were before. Um It's if I look at my daughter, for example, who's been working now for two years, when the changes came in in the last budget about salary sacrifice, she thought that she was affected. On the one level, she's not because she doesn't earn enough or contributions aren't big enough, but she also thought that her scheme was a relief at source scheme. And I knew it was salary sacrifice, she thought it was relief at source, so she wasn't really engaging in that way. And the reason she thought it was relief at source, she she works for payroll, and a lot of the people they do pay for through are relief at source, so she's seen the contributions grossed up, so she thought it was that and not. So there's one example of someone who doesn't know. All she's doing is putting in her contributions or and through auto-enrollment no knowledge. I think for most people that's where they are. The difficulty that that creates is that they think that they're putting in enough because it must be right, because that's the auto-enrollment contribution limits. Government must know what it's doing. It doesn't, but they must know what they're doing, therefore it's it's set at those levels. So I think there's a danger for complacency. If you don't engage with uh an advice, then it's just then is of course you have the conflicting priorities, which is jam today or jam tomorrow. That's really difficult because I my daughter knows she ought to be saving for retirement, was actually more concerned about saving for a house. So what do you do? You can't do both.

SPEAKER_04 15:11

So do you think the same applies to all the um self-select s sips that are available on the internet stuff and people just kind of putting their money in without taking advice, not knowing the contributions and then not thinking about the underlying investments?

SPEAKER_03 15:25

I think there's two different things there. So the fact that I've got a SIP means that I'm engaged to a certain extent and I'm doing more beyond auto-enrollment. And that's good. Yeah. Whether I've thought about the level of contributions I'm making, is it enough for whatever retirement means to me? I doubt, but some of them have got quite good models. How many of the use of I wouldn't know? Yeah. I think the danger with the SIPs is then to do with your investment choices. I don't think it's the retirement planning piece. And that's then to do with the tendency to either be massively uh risky or massively conservative. Yeah. Because a lot of people who are doing SIPS don't know what they're doing with investments and will go there for a fad or will will they're a lot more commonplace than they used to be, aren't they?

SPEAKER_04 16:14

Obviously, because the intuition is a very good thing.

SPEAKER_03 16:15

Yeah, I think that's they are, but how many of them are I think the SIP is a really broad term and covers a load of very different beasts. So the online SIPs are effectively no different from a one level from an insured scheme, except you've got thousands of funds. Yeah. So when I was a youth many years ago, um Scandia had a personal pension scheme, which was an insured scheme, but it had thousands and thousands and thousands of funds in it, but it was an insured scheme. Scandia don't exist, and what do world mutual do? They have a platform with thousands and thousands of s of funds in a scheme, they're just not their funds. So it's not different in many ways, it just feels different for those self-select SIBs. So then you go for the complicated SIBs where you're putting in things and stuff and the weirds. Yeah. So I think you have to be careful with the language that you're using for them.

SPEAKER_01 17:09

And I think like you said, there is a benefit of younger generation coming through, a bit more tech native, the ease at which you can set some of these things up online, and that means they are engaging, which is better than I think so, and also seeing some of the things that sweep money from here into my pension account or into a GIA and then into a pension account, those help for if you are engaged.

SPEAKER_05 17:31

Yeah.

SPEAKER_03 17:31

I what's difficult for me to get a feel of is how many people are engaged. I suspect you have a lot of a small number of very noisy people rather than a large number of people who are doing things. Um other than fun choice, in accumulation, there's not a great deal that can go wrong because they're all fairly simple. You're just putting money into a pot. And it doesn't really matter, other than cash, which is a different thing, how you're investing for your retirement matters is that you do. So I don't think the vehicle matters. I I think the arguments about SIPs versus personal pensions are academic. A personal pension is a SIP, it's just you may have a wider investment choice. And a wider investment choice is only useful if you know what you're doing, and most people don't. And so there's a tendency to chase last year's trend as opposed to thinking about the future is. So how diverse portfolios are, I don't know. I I don't have a feel for it, but I fear that people don't behave sensibly.

SPEAKER_04 18:35

Yeah.

SPEAKER_03 18:36

And and will be doing last year's things. So that's where the value of an advisor comes through to help people diversify to think about whether your funds reflect what you're doing, have you thought about it? There's also something that I'm guilty of that going into a fund 100 years ago and never changing, never switching. I've just stayed in that fund. So um when I was born, my father started up a tiny little unit trust and I've switched it once. 60 years old.

SPEAKER_04 19:03

Sentimental reasons you feel like you can't switch it.

SPEAKER_03 19:09

But to be fair, it hasn't performed badly. It's it's the the reason for doing that was because pick a fund any fund. I it it's it's not being engaged with it in that way. And uh I think that the challenge one has with a lot of the auto-enrollment schemes and default funds is how good is that default fund? Because people don't aren't engaged. Some of the changes that are being made to to look at value for money, which we'll look more at how those default funds are doing, will be helpful because now you can see. I don't think a default fund by itself is is a bad thing. It's just do you know what that default fund does? And when a Nest originally started, originally it was started off at low risk and then increased risk, low risk for young people, because the fear was that people were more concerned about losing money rather than thinking of the long-term so behavioral um um science comes through into what people have done.

SPEAKER_01 20:01

And that's where this question is also as relevant to those approaching retirement as those beginning, because we've been working with a firm recently, and they're a lot of their clients are clients who are maybe 65, um, get into retirement, they've got this notional age of 65 in their head, they've never engaged with their pensions, they might have started out with a DB scheme, that got shut, they've got some cows, state, their state pensions they've never engaged, and now they come into retirement and they feel, well, I've got to retire on 65 now, and they've never really engaged with it. Have you come across those?

SPEAKER_03 20:36

Yes, I think there are two there's a number of challenges with it. The first is, although it's not quite the same as the Wossby women not knowing that retirement age had changed from 64 to 65, it's to know that it's 65 is rubbish. It's 67 when your state pension comes through. Still an awful lot of people with gaps in their state pension history, haven't filled it, have have have your clients um um done their state pension forecasts, gone through the self-assessment gateway to see what their entitlement is and where the gaps are. For some, the gaps are in the wrong place, they're too far away. But if you've got gaps uh that are there, then fill them in. So particularly that's 60 going 60 through to 67, where you've got gaps at the end, if you haven't got your full 40 years in, put those gaps in. If you've been contracted out in the past, which is possible through a DB scheme, you may not be the full entitlement, even though you've done your your your number of years.

SPEAKER_01 21:25

If you're an advisor in that scenario and you get that client, it's new client, never engage with what what are the key things as an advisor you should think about if that you get that individual coming saying, I want to I'm 65, I want to retire.

SPEAKER_03 21:38

I guess the first thing is to find out what you've got. And then also what does retirement mean to you? Because um at 65, your ability to put loads in in most cases won't be there because there won't be a big cash pot. It's possible that some people have got to 65 with big pots, but most won't because behavior. So I now have the the whole tension between what I want to do in retirement is this and the amount of money that you've got means that's not even remotely achievable. And uh I fear for people in that position because they haven't engaged. Pension dashboards may help, but not necessarily because all that then means is you know what you've got, you don't know what it means. And and that's tricky. I mean, when we started, so Claire's the same age as me, and wife's the same age as me. Her state pension was originally going to be at 60, then it's moved through to 65, then it's gone to 67. So looking at our plans to go, if they have been to go at 65, I'm not 65, I may look old, I'm not that old. That then means that the you've got to now find more money. So effectively from 65 to 67, so that's two lots of state pensions that we haven't got. So that's um 2550 grand that's gone for those two years for twice of us. What are we gonna do about that to make that gap up? Yeah, and I suppose if you think about that, it's tomorrow I'm in trouble. It's you're not gonna get that. And again, that's to do with how much have you been paying attention. Government have uh sent me something to tell me that my pension age is 67, which is good, but I've had to engage to to do that, and it it's pensions it's boring delete. Is the danger with so much of this? They're not they're not exciting. Uh they build up funds, and I think that the life expectancy is probably the thing that's m misunderstood most. Um, particularly if your parents have been unlucky and died young. Um my mother died young, my father didn't. My father did the right thing, died average life expectancy well done him. My mother foolishly didn't, but it it's it's knowing that money may have to last a long time. And average is average, that means you've got half as much chance of living beyond it. So, have you got enough money to enable you to do these things? And and and if you don't realize until late, you're in trouble. Now, I think that to be fair to most of the people who are listening, they will be engaging with their clients. So, hopefully, other than new ones, this isn't a problem. Because if you're engaging sooner, then you have the possibility of making changes to get there. And uh to understand that that the younger I am, the the harder it is to say what does retirement mean to me, because you have what a clue. And then it it seems to me that the answer is to put in as much as in as you can afford for retirement, and we'll come back to what that means separately. As you get older, then retirement means more to you, and now your your goals become more achievable. Uh I used to joke that um what Claire wanted to do in retirement was to go on cruises, and when we look at our pension fund, it's not the cruises she thinks about, it's a day trip across the channel. It's what does this mean to you as to what's achievable here? And the earlier the conversation starts, then it has two effects. First of all, your aspirations in retirement are realistic because they're based on your fund, or alternatively, yes, you can do what you want to do, free cheers. And that's what hopefully advisors are getting in there. But some of it's just not achievable because the the whole the problem of retirement planning is jammed today versus jam tomorrow. The average life expectancy means you're you're going to be retired potentially for 20 years. You work for potentially 40 years, so every year you work, you've got to save for six months when you're retired, ignoring state pensions. And that's a problem. Because that's a lot of money to get there. For sure, compound growth makes a massive difference without to come back to investments again. But it it it's it's it's difficult, I think. But average life expectancy isn't isn't really understood.

SPEAKER_04 25:38

The other um the other side of it we see is when we're supporting advisors with high net worth individuals, that's almost the opposite. It's yeah, you haven't got the struggle of no have you got enough money or not. You've definitely got enough, but the challenge then is I'm retiring, so I need to take my pension. And it's quite a challenging conversation to say, no, no, we need to look up your whole asset base, and it's not necessarily your pension. But I've always paid into it because that's for my retirement.

SPEAKER_03 26:05

I think that's true. I think it's particularly true with occupational pensions, where quite often they kick you out anyway. Yes. So, and then you also have the the the issue which is that even if they don't kick you out at an age, don't start paying. Are they giving late retirement increases or are they just increasing as they would have done in payment? So by deferring for five years, or whatever the time is, you don't gain, you've just lost five years of money. So I think there's a mixture in occupation and personal. Absolutely. It doesn't matter in the same way.

SPEAKER_04 26:36

And that's quite a challenge.

SPEAKER_03 26:37

Yeah. And it's I think the the other challenge, which is you've got so much money you don't need to worry about it, which is persuade you to spend more. That's a good one. That's which it is, but it's a that's a psychologically difficult one for people to get with. I I yeah, uh within that, the I've hit my planned age, or indeed I've stopped work, I need to take all my tax-free cash now. Yes. Why do you need to take all your tax-free cash now? Ignoring worries about what government might do. Why do you need to do that? Because I can't. No, no, no. But why do you need to? Yeah. What are you going to be spending that on? So why do you need that much? It's not because I need it, I want it, but why? And what are you going to do with it?

SPEAKER_01 27:19

And I think that comes back as well about there's certain preconceived ideas, isn't there? Because I think about my dad, who's 69, I think now, so four years ago, got to 65, he was like, I'm having my tax-free cash. Yes. Why? Why? Well, because I've worked for the last 40 years and everyone told me when I retire I get a lump sum at the end of it.

SPEAKER_03 27:40

But why? And I think that there's there's an awful lot of the perception as to to what were you told, what have you remembered? Um, I don't think the speculation about tax-free cash being removed has helped in that conversation. Definitely recently. Yep. And it's interesting, you've got definitely recently, because being old and grey, I remember a thousand years that this is going to be removed. And it it has changed by limits changing. It's really difficult to remove it completely for what's been achieved. It's really difficult when you think about the position for older public sector workers, where the old scheme design, so pre-20 um 2008, 2015 really, scheme design was you've got tax-free cash in addition to your pension automatically. So if you've got a long-serving, so fairly old um NHS worker who's who's earns a decent whack, who's got his tax-free cash of three times his pension built in in legislation, not just he thinks he can have it, it's really hard to remove that. And so now you get to, well, okay, how do you remove it? Keep it for him, but not for someone on a personal pension. So I I don't see that change happening, but doesn't stop the speculation, doesn't stop the fear. And that fear then drives behaviour. So I take it because. But what are you gonna do with it? So you've taken it all out, where are you gonna invest it? Or are you gonna invest it? You're gonna keep it in cash. So how does that make sense? Where are you going to invest it? You're going to put it into a unit trust into a GIA. So you move somewhere that's tax growing tax-free into somewhere where you're going to get capital gains potentially on that. How does that make sense? Why are you doing this? I except there are arguments when you hit the the um what was the old lifetime allowance, the 268-275, you're not getting any more. That's a slightly different argument. But for most people, that's that's a non-problem. Yeah. Why are you doing this? And that that's because I can.

SPEAKER_04 29:37

Do you think that's a conversation that advisors need to have with their clients? Or do you is that a conversation that you were having with advisors when you were on a help desk? Almost like that.

SPEAKER_03 29:48

It's definitely a conversation they were having on help desk with advisors. How much of that is is is being driven by the advisor, how much is that being driven by the by the client? Really difficult to tell. A lot of them is my client wants to do this. Um why? And but some were were if he doesn't think he's gonna lose it. I think within that, there's old advisors who are perhaps less in the retirement planning space than others, are still in the perception that if you don't take it at 75, you've lost it. So there's still a misunderstanding of rules changing. Yes. That that I've lost it if I don't take it by that. Now then we get into a different argument, which is when you get to 75, should you take it? Yeah. As opposed to do you need to take it. And I think that that where I get to is if I ignore 75 as a cross point, there's an argument that says that yes, when you get too close to that, you should think about taking it. Not because you lose the right to, because of the change in taxation on death. That's a different reason for doing it. Because then you've got a reason for doing it as opposed to because. But there are still some advisors who don't know that you have to you have the ability to leave it beyond. That's probably just a reflection of constant change in legislation, not being allowed to it is, it's it's constant change and and it's not my main market. Yes. So I'm not totally O favour of everything else. But if you're aware of something that is something changed, then that that helps. But yeah, there's a lot of I I think I should do this same to do with taking maximum income. What are you gonna do with that? Why are you going to do that?

SPEAKER_04 31:23

You almost sound like you're back on a help desk. Yes.

SPEAKER_03 31:27

Right, it it's the it's the same sort of personal. So, what's my income need? My income need is X. How am I gonna take my income? Where's it gonna come from? And it so going back again to history, when I started and the amount you could put into personal pensions was more limited, the cap drawdown potentially meant that if interest rates fell and the same time that funds fell, the GAD review meant that your maximum income was reduced below the level that you needed. So then you get too stuck. It's nothing I've done wrong. I can't control it, but I can't have that level of income because at this moment in time the fund isn't big enough. So made a conscious decision a long, long time ago. Um what I should say is that most of my life I've been in money purchase schemes. I've had a tiny amount in DB schemes, so most of my life's been in money purchase schemes, was to then start to build up funds in in ICES. So um, as you said to begin with, my title was head of pensions. I hated header pensions, I'd much rather be head of retirement planning. I could have changed the title by quite like being head of pensions because it meant I could make a crack about it because pensions are really boring and retirement planning is quite interesting. And the point about retirement planning it's not just pensions. So I don't think it really matters what you do as long as you're coherent. So in my case, about 50% of our pot is in ISIS across Claire and I, and 50% of our pot is in pensions. So now we have the debate as to which pot do we take money from, thinking about the different tax implications of each. I I don't I'm not wedded to one over the other. What matters is you're investing for your retirement. I think the vehicle has different tax breaks, different tax reasons for doing things, but what matters is the commitment to save.

SPEAKER_01 33:13

Yeah, and obviously different limits.

SPEAKER_03 33:15

Oh, different limits. Oh yeah, the limits are are different for sure. I I it it's it's also supplements of those limits.

SPEAKER_04 33:21

I think that's uh that is like a key area, isn't it, where financial advice is definitely required. Because as you said, as you start to sort of step back from the technical side of it, would you feel in retirement capable and have enough knowledge to work out should I be taking it from there there in what proportion? I think in whose when you've got a married couple as well.

SPEAKER_03 33:40

You've got two tax statuses to there's a lot of thinking about tax and where the money comes from to make the most of um allowances and limits and nil rate personal allowances, sorry, to make sure that you you you do the right thing. And on one hand, I could run my pension down to nothing to leave the two isopods, but I've just incurred a heck of a lot of income tax. So what's the point? Uh what have I achieved? And that's where thinking about what you're doing, modelling and taking advice helps. So although I sort of know and I sort of know what I'm going to do, yes, I'm taking advice to that. I I what's much more important for me is that my wife Claire knows what she's doing and why we're doing it, because ultimately, uh says Mr. Pessimist, I'm going to croak first. Although statistically love expecting to suggest that's the case.

SPEAKER_04 34:31

It's the old joke, isn't it? Why do men die first? Because the women tell them to.

SPEAKER_03 34:37

But it it it's the advice to make sure that that my ideas make sense to to check them, to validate them, to argue about them is helpful. There isn't a right answer. There's no right answers here. I think that the idea that AI can replace that, I don't think is real. Because everyone's situations and and motivations are different, and it's your motivation for doing this rather than that. Should I run my ISA down now and leave my pension to later? Should I run my pension down now and leave my ISA to later? Arguments both ways. At the end of the day, more or less, we're gonna have the same fund number. That fund is going to be the same, all things being equal, but the tax is different at different times. Different issues of I croak at before 75 to I croak after. Yeah. Really different issues of God forbid I died between now and next year. But it it's it's thinking about giving yourself most flexibility, I think, Julia. Yeah, definitely. And and because things change, um would I have done anything different knowing what I do now? I don't think so. I think that the reason for doing it was to to have that flexibility. Yeah, and I think that that still stands. What's important is discipline to know that that's my retirement pot, it's not my um going out for a night on town pot. Or Claire's Cruise Pot. Or Claire's Cruise Pot, that's a whole different thing, yeah. Um the so the great thing about the pension is you can't get it to 55 to 57. The bad thing about a pension is you can't get it to 55 to 57. That it cuts both ways. Yeah. Yeah, you can and that's where discipline is there. It's there was this advisor I knew who said he never sold an ISO. I beg your pardon he never sold an ISO. Because he didn't. What he sold was a retirement pot. And so that it was earmarked in the client's head, is that's my retirement pot. It wasn't in the client's head as an ISO. And by putting that label on it, so the same sort of thing where you go to bank accounts, we have lots of pots. By putting that label on it, this is your retirement pot to try to try and psychologically change it to this isn't a pot I can dip into, it's for my retirement.

SPEAKER_01 36:45

That's interesting. And then from a from an advisor point of view, I think it I've been in the industry a lot less than age 12. Even in the time I've seen if I late 2000s when I first got in the industry, it was very much advisors seem to focus on POC. So I'm an investment specialist, I'm a pension specialist. Everything you're talking about is actually you now, as an advisor, it with current legislation, current client challenges, you need to have a much broader approach, more holistic planning. Have you well that's what it seems like for me? Have you felt a shift like that or seen an evolution?

SPEAKER_03 37:33

I think there's there's two bits to it. A lot is to do with what your the age of your client base. Okay. So a pension is essentially investment with tax breaks. So you can't disassociate pensions from investments. But there are an awful lot of advisors who specialise in a demographic that's old. And so for them, retirement planning, pension planning isn't so much of an issue because it's been done. So there are still some people who are in that space, fewer, because most realize that they die and then you've got no money. So you have to think about going lower. So now things are more holistic. I think that the people do build up different pods. It it it's it's hard to separate out, I think, the investment from the pension. I think I'll say inheritance tax from pension historically has been fairly easy to do, not so now. Um and so that change has to come through for people who are doing that. I can still specialise in accumulation, decumulation, because that's really where a lot of the the problems are coming from. I've got so again going back to my daughter, so she's saving short-term for house. Once we've done that bit, then what are you what are you saving for? Yes, you're saving putting money aside for things. You may be putting us aside for school fees, or maybe not anymore, the schools start to close. But um what are you going to do? What's it for? What's the purpose for that? So I think r retirement planning is is to me and always has been really important for advisors to do. It would be a shame if people aren't and just focusing in silos as they used to.

SPEAKER_04 39:12

Yeah.

SPEAKER_03 39:15

I don't think people do in that way. Historically, definitely, Jamie, but less so now.

SPEAKER_01 39:22

Um then coming round maybe a bit more to you and your and your journey. Was there a single point where you made the decision I am now entering retirement? I know you've already talked about that being phase, but was did something change to make you do that? Was it always part of a plan?

SPEAKER_04 39:44

So was it the particular call that came through on the help desk?

SPEAKER_03 39:48

That was because that got you leaving in July, yes. Um, way back when 100 years ago, um I set a number of my retirement plans to age 50, which was nonsense. Because at that time you could. So you just set it for there because you can, and then you think this is just stupid. Grow up, mate. Where are you gonna go to from then? So what started to change things. So my father died in December 2019. Um he was a person who hadn't spent money that he should have spent, and so gave us a problem of inheritance spill, which is a nice problem to have. But what that then meant is that then meant I had a chunk of money that was largely unexpected, and that then gave me a position to start to say, okay, let's look at your numbers. Now your numbers are in touching distance. And because your numbers are in touching distance, now it it's thing, okay, so this is now a possibility. And so then I said I drop down, and then you get to a when do you when do you stop? And so originally I one of the plans I had was stopping uh when I'd done 30 years at SJP, why? Because it's just a random date. Then it's at a birthday, why? Because it's a random date. Then when it's done, you've done so many years work, why? Because it's just a random date. They're all just random dates, or they can be random dates. Unless your employer is going to pull the trigger and they can't now because of age discrimination, it's a random date. So it was, I don't know, I say six months before I stopped to start to seriously think about this. Why am I doing this? I'm not getting the same enjoyment, same satisfaction I was doing it before. I don't need to do it.

unknown 41:27

Okay.

SPEAKER_01 41:27

So how am I going to do it for? And we we've spoken a lot about numbers today. Do you have you always had a cash flow which is sort of so I knew more or less what I was spending.

SPEAKER_03 41:40

So um as a family, what we do is put everything on the credit card and pay at once from the bank account. Okay. Everything goes on the credit card. So the the question is what is your essential and what is your discretionary expenditure? It's tricky because it's all on the credit card. But I know what the credit card bill is every month, so I know what we're spending every month. So then you go. So that's the number that you're aiming for. Ignoring for the moment tax gross nets, but that's the number that you're aiming for. And then for ages, you may remember the whole uh much your magic number. Yeah. And the magic number, effectively, a 4% yield, you multiply your income by 25 to give you that fund. Yeah. So having spouted that to advisors for a hundred years. Yes, I knew what my target number was. And then Zip Father Dying that accelerated that.

SPEAKER_01 42:27

And was it as simple as you hit your magic number?

SPEAKER_03 42:29

No, I I think it it's the magic number is hit. So the Which starts to give you a bit of reassurance, yes. It's there, then it's to think about tax, it's then to think about the whole retirement planning piece, not retirement planning and accumulating, but what does retirement mean to me? And then that was the the eek moment. And and then that that that decision to to to uh decision to change the words, that movement from full-time through to part-time free to stop. That that transition.

SPEAKER_01 43:03

And you know, the magic number is something we all know about, but one of the things I think advisors, going back to them for a minute, struggle with with discussing with clients is trying to articulate that element and get from a client around what is it you actually want. Have you, in your time dealing with pensions and advisors, have you ever seen a particularly good way of an advisor being able to elicit from that client what is it you want in the I think there's a lot to do with what you want to do in retirement.

SPEAKER_03 43:32

So there's the there's the basics. And what's your lucky bill, what's your phone bill, what's your car insurance, what's your house insurance, stuff. So that giving you a a a base of things. And then you've got, well, what do you normally spend? And how many of those things aren't you going to do? And so you you start to say, Well, I'm not gonna do this anymore. Well, why? Or what do you want to do? I want to do this. Well, if you want to do this, then have you built that into what your income need is. In retirement. So once I've got my income need hit in retirement, that's quite hard to get to. Now you've got, well, what have you got? And what's your age? So here's your state pension there because I need to worry about it. Because I've got if I've got two lots of state pensioners, we will have with me. That's a big chunk that's come out. So now my fund becomes smaller. When I get to 67, I've just got to get to 67. Um I'd I no, I think the answer to your question is no, because I haven't really been involved in the presentation stage, much more in the talking stage. When I've been doing presentations to talk about it to individuals, most people grasp 25 to 1, which is basically 4% yield. Talking about 4% yield is is tricky because I don't understand that. I've heard a different presentation, which is 300 times your monthly income, which is the same as 25 to 1 annualized. It's maybe easier to understand. I think it depends on how good you are at maths. My 300 times table is poor. My 25 times table is better. Um I think it's fairly easy to grasp. I suspect that what it means is I'm gonna have loads of money at the end because I'd like to think I get slightly more than 4% return net each year. Um and that's where then the cash flow comes through. But when you're starting to say that's a number, I think that's quite easy for me to focus on. I need to get my pot to a million is something that's easy to focus on if you know what that is. Yeah. And also within that, there's the actually what you're saying is totally unrealistic, you ain't gonna get there. Something's got to change for you to hit that objective. Because at what you're doing now, it's never gonna get there.

SPEAKER_01 45:33

And I think well, another angle of that where we've been doing some work with a couple of firms actually recently is around there's that number, and then there's that number when one of you dies as well. Which you you've spoken a lot about clearing yourselves, having your plan in a lot of household, particularly of them, maybe an older age, there is maybe a lack of balance between the two, which when one when one of the individuals in the house ev everything's hunky-dory while you're both alive, but when one passes away, there's a challenge, and we see that being often a blind spot for advisors and something they're not comfortable. I think that's discussing that side of the yeah.

SPEAKER_03 46:15

I think it's not saying blind spot for advisors necessarily. It's definitely for individuals. Yeah. There's the presumption that my spouse's state pension will continue, which is wrong that it won't. Yeah. So you start off with a misconception in the client's head. Yeah. So they're in the wrong space. I think it's clearly I'm a greedy individual, so I eat this. How much of the expenditure drops when we go to council tax goes because there's fewer of us in the house? Um bills, well, heating, how much is that gonna change? Does insurance household insurance doesn't change? What changes is the fact that maybe we need one car, don't need two. Well, three. So um one less mobile phone.

SPEAKER_02 47:02

Yeah, all of that. So you've got you've got some reduction.

SPEAKER_01 47:06

I think that the it's normally not proportionate, is it?

SPEAKER_03 47:08

It's not half because it it doesn't unless you take radical steps. So but I think that the change to personal pensions, depending on your your pension provider, depending on what your your your your provider offers, the fact that you can go into dependence drawdown, I think mitigates that risk. Because the if the extraction rate worked for me, when you take me out of the equation, the extraction rate must work for Claire, other than the fact that I mean she's the same age, you've got a few more years, but fundamentally the extraction rate's gonna change. So what's gonna change within that extraction rate is the loss of one-state pension. Yeah. Okay, so does the loss of one-state pension e uh equate to what I spend on myself? I don't know. Yeah, as you can tell from my attire cleaning up the clothes.

SPEAKER_01 47:57

And then I suppose for some some households is exaggerated even further if there's a DB in place.

SPEAKER_03 48:02

Yeah, it's the DB where you where you're you're you're going to get only a 50% of spent pension. I think the DB is is interesting. Um particularly once the DB is in payment, and do you really understand that it's not necessarily 50% of what they're receiving, but it may be 50% of the pre-commutation pension? What the heck was the pre-commutation pension? Yeah. So it may well be closer to two-thirds of that pension rather than half, even though 50% is what's talked about. And for mine is also interesting because I've got a um a bridging pension from 60 to 65 in my tiny DB. Yeah. So when I get to 65, that tiny amount's gonna drop to an even smaller amount. But it it's has that been factored into the planning? It it's the more I know about my client's circumstances, the more the client knows about the circumstances, the more it can be drawn together, the greater the chance of success. I think it's quite easy to forget about small pots. And small pots can be quite big, particularly in DB world, and particularly in a in a scheme you left a long, long time ago where your pension was didddly squat, but you haven't thought about revaluation and deferment. And that revaluation to deferment may not make it a big number, but may make that number bigger than you thought about. So um in DB scheme for four years. It wasn't a big number because my salary wasn't big, but that that revaluation actually is not a bad number.

SPEAKER_01 49:32

Interesting. What I'd like to do now is move a bit on to your time helping advisors and uh trying to try and trying to. Yeah. How much is it seed is a different question. So if I was to ask you, what's your most memorable or comical query you've ever had from an advisor?

SPEAKER_03 49:53

Comical is tricky because I wouldn't want to hope, you know, the risk of the person who who's on the call calling. There are people who uh really I'm one of my many problems is that I'm not good with waffle. And for goodness sake, just get to the point. And there are some advisors who their nature is to be more garrulous and to not get to the point. Oh, for goodness sake, just tell me what the question is. So people who say, I've I've I've been to see this client, he's a really nice client. I've known him for 20 years, and what he does is this and that. I don't care. What's the question that you actually want to ask?

SPEAKER_04 50:30

Um that just Is that your tip for people phoning help desk? Is just get to the point.

SPEAKER_03 50:36

I don't know. I think it's quite nice to be nice, which is where I fail miserably.

SPEAKER_04 50:39

You would like it to be, you know, phone a friend, you've got 30 seconds of the game.

SPEAKER_03 50:43

Exactly. And and yeah, it's those those wheels of whatever they are, I'm in the red box to stop messing around. And the advisors tend to be more amiable, so we have a mismatch. And I yeah, it it helps. I think that there's a danger you can get lots of random facts rather than straight to the point. I think within that, although it's not comical, one of the more frustrating ones is uh sort of question which starts at my client's self-employed. He answers lots of questions about self-employed. He says, Oh, yeah, but he wants his limited company to make the contributions. So wouldn't I just take the lots of he's not self-employed? Yeah, it's that type of question. Annoying questions are questions not so much in writing because they're doable, but on the phone where you get lots of numbers. I'm throwing loads and loads of numbers. But he's got five pots, bit, bit, bit, numbers. Slow down. And then what's the question? Because let's go back to the question then to the facts. I and that's the essentially what you're trying to do with your client. He's got a problem, you're going to solve the problem, and you're you're saying this is what the solution is. That's my solution, that's my question. What question am I answering in that solution? And then there's the facts behind it that mean that the solution is right. But when you've got lots of facts and no idea what the question is, it's really quite difficult to answer them.

SPEAKER_04 51:59

I guess that's the the same experience that an advisor gets with a client, though, because you ask the client, what have you got, they give you all this information, you've got to scile out what you need, and then the advisor would phone the product provider to help desk, and they you've got to do the same.

SPEAKER_03 52:15

I would quite like the uh questioner to have filtered before giving me absolutely everything. I it it's it's it's people approach situations in different ways, you know. It's not everyone's in that red box.

SPEAKER_04 52:29

Yeah, I think some people get nervous when they phone the help desk and they're not quite sure what is the important information, so they think I'll give you everything and then you can work out what's important.

SPEAKER_03 52:38

Um I think that that's quite frustrating. Because uh I there's a danger that you don't actually know what the question is. Yeah. Um I think other other ones are I forgot to tell you. That was quite a key piece of information to have been told, and that's as you start to ask questions. One of the things we used to say was that the the skill of someone who was good on the help desk was knowing the question that you've been asked was wrong. Yes. So why have you asked that? That's a really bizarre question. I can answer it, but it it it's it's so random. Can you just help me get there so that I can make sure that I'm answering the correct question, not the question that you've asked? So to go to my self-employed bit, I've given you all this stuff. And until you feel that bit at the end, what I've given you is rubbish. Yeah, yeah.

SPEAKER_04 53:28

Do you think do you think automated help desk or QA kind of sessions will help that or exacerbate it? Because if the person doesn't know what they're asking to start with.

SPEAKER_03 53:40

They they they know what they're asking, they're just asking it in the wrong way. So it doesn't change that. Because I I think that the the problem with the automate the automated is it doesn't know that the question is weird.

SPEAKER_04 53:50

Yes.

SPEAKER_03 53:51

And uh and unless it's been well trained and their AI's getting better at being trained, it it's not going to know to ask a check question.

SPEAKER_04 54:03

But that's the same as human beings want to help, does it? So if someone asked someone with 30 years experience, you would think that's a weird question. Ask someone with three months' experience, they'll answer the question of the question.

SPEAKER_03 54:14

And and that's and the and the the machine d doesn't know nuance. Yeah. All the machine can answer is the question that's been asked. And that's the same too with AI, when you ask it to do things unless you pose your question properly. It's the prompts you give it. Yes, exactly. It's the same the same thing. The more prompts you give, the better. And with any chatbot, the more you ask it, the more focused you are. But if you're the more if you're more random, there's a greater chance of wrong. I think that the trouble with AI is your ability to determine that what it's given you is chaff. Yes. I think that one of the other frustrating questions I used to get is that my client's uh seen something in the paper, he's phoned me up and basically what he's seen in the paper just said everything you've told me up until the last 20 years is wrong. That's frustrating. So you you're you your client has read this thing, he's told you you haven't seen the article, so you don't know what your client's read and what he's relaying to you is true, but what you're saying is that I've I'm wrong. Well, hold on. Oh, the fact that just makes me annoyed. It's not helpful as a conversation. Um what the papers say, particularly if it's not papers, it's chats, can be rubbish, so you've got to filter free to do that. And also when the com when the comment is taken out of context, doesn't make sense. So that comment may be right, but the situation that you've got to get you to there to make it right isn't necessarily relayed properly in the conversation. So I don't know which right or wrong. Um a silly one, which is what's the maximum contribution that an employer can put into my client's pension? Well, on one level, there's no limit because there isn't a limit. So the answer to the question is there is no limit. Yeah. But you it's that it's then how do you deal from that? So I have had that where the client's accountant has said, well, there's no limits on what goes in. Yeah, but so then you have questions to do with, well, has your client put anything in in previous years? No. Okay, so you've only got one year to play with, because then if you're using carry forward, you've got a different answer to if you're looking at one year in isolation. It's all to do with how clever is the machine to know to think about carry forward? Don't know. And what information have you given it to enable it to think about carry forward? And it it's it's what can my client put in this year at one level is the annual allowance. Then you've got the whole question to be taper, then you've got questions here, carry forward, you've got lots of questions to answer that question properly. Yeah. And that's the same too with the client. Do you understand everything? Do you know that your client has triggered the MPAA, money purchase annual allowance, because he took a small UFPLS payment ages ago. Do clients know the difference between a UFPLS payment and a small pot? Of course they don't. Whereas if you take a money out as a small pot, it's not going to affect the MPAA, but if you take it as a UFPLS payment, it does. So I got a tiny pension with now, when I came to take the pension, it didn't ask me about small pots. All it gave me a choice of was UFPLS. And that was one month's payment, so I took it one month's payment as UFPLS. But if you don't know, you don't know it's been triggered. And your real problem is that the advisor may not know that you've done it because you did it a long time ago. You may have forgotten that you did it a long time ago. There's an argument. No, you don't you definitely don't understand the nuances. Yeah.

SPEAKER_04 57:18

Bearing in mind you've lots of people forget they even paid into the pension in the first place and are surprised when the insurance company tracks them down.

SPEAKER_03 57:26

So I might as well just take it. So I'll take the whole put out without knowing about the implications, particularly not knowing that you could take it a different way to have a different outcome. For most people, this is a non-issue. Because for most people, the size of the MPIA doesn't trigger because they're not putting in more. But for some, it's a problem. You don't ask the questions you don't know.

SPEAKER_01 57:45

And have you often found that when dealing with careers that actually the advisors haven't managed to get all the information you might need to do?

SPEAKER_03 57:54

Unfortunately, yes. Um I think that that one thing that was quite interesting when moving away from the lifetime balance to LSA, LSDBA to extract that information about LSA usage was quite hard in in some circumstances to find out what had the client done. To be able to do that. It it's it's difficult. It's you're I I think advisors are cuter about asking questions than they used to be. I think clients may forget things. I think that UFPLS particularly, because you're it may have happened a long time ago, maybe in a small amount.

SPEAKER_05 58:38

Yeah.

SPEAKER_03 58:38

It needs to be taken into account. Um Will HMRC ever find out? They should, because they've got all the information to find out. I think the problem with HMRC is it's inefficient. Yeah. And what we have been seeing, or what I was seeing before, a stock work was an increasing number of clients who'd had enhanced or fixed protection, where HMRC was writing to them to say you made a payment.

SPEAKER_01 59:00

Okay.

SPEAKER_03 59:00

And they had. And some of them had made a payment, I hadn't really thought about it. They got auto-enrolled, hadn't thought about it. And so they got they'd lost protection. And particularly if the advisor has been has for advising the client hasn't known, benefits have been taken, too much cash for cash has been paid. That means they've got unauthorised payments. It it's really messy for people not thinking about what they've done. That they they paid in only for a couple of months before they stopped. Yeah. But you've still lost fixed protection.

SPEAKER_01 59:28

And what what would your advice be to an advisor who comes across a scenario like that where they've given some advice? The client didn't give them all the information. Now something's happened.

SPEAKER_03 59:39

I think it part of it is to make sure you you you've asked your questions properly to begin with. Are you sure you haven't had any other pensions? You haven't taken anything? Are you sure you haven't paid into anything afterward? So would a client know that they've got protection? They should. They should, because they've probably been advised before. You'd like to think they knew that. And I'd also think that you, as advisor, would would know that. So I know that my clients got protection, so that's a good start. I think then it's just to make sure absolutely sure that you haven't paid any. You haven't been a member of an auto-enrollment scheme, a small pension that you've forgotten about. Oh yeah. And some of them are tiny contributions, they're really frustrating when they're lost. But it it's revenue can have a massive impact on the remote whole retirement. Revenue is now only now asking. This this is now ten years plus since protection was applied for, that it's now starting to ask questions.

SPEAKER_04 1:00:34

I think that comes to one of the things I notice is it's the way that you phrase the questions because asking the client, have you ever been part of auto-enrolment? might not be the way to ask because they don't understand. So if you ask them, have you ever been um have you changed your jobs? What about employer schemes?

SPEAKER_03 1:00:51

Yeah, did you have a pension that employment? Yes, I was there for a small amount of time. It's I I don't the advisor can't be blamed for not for things that they can't hold.

SPEAKER_05 1:01:00

Yeah.

SPEAKER_03 1:01:01

It's just to do with asking the questions. It it's to understand that what where have you been? Have you got any gaps there? Well, what did happen in that period? I think with auto-enrollment now being so prevalent, where you start to have gaps and there's nothing there, that to me begs a question. Because it's there should be something in that space. But as you go further back, you may have been in spaces where you didn't have a scheme.

SPEAKER_04 1:01:20

But that comes back to what you were saying about an experienced person will think that's a bit weird. There's something missing, there's a whole of what happened in that period.

SPEAKER_03 1:01:27

Oh, absolutely. It's yeah, it's it's to it's to make sure and to ask questions. I I I think it uh it's interesting. On my tiny little pension, so I took two year of PLS payments for my tiny little pension, and I got a P45, and my P45 is wrong. So I phoned up the provider to say my P45 is wrong, and they're adamant it's right, but I'm saying I've had two payments, only it reflects one. No, no, no, we're right, you're wrong. Okay. Yeah. I've done what I can. I've done what I can. Yeah. The P45 isn't so much of an issue, but if if it was quoting the um lump sum allowance usage, that would be a problem. I've again had cases where the advisor has foolishly relied on what the provider has told him, and then the provider then wakes up and says, Oh, we forgot about. The advisor can't do anything about it. They've done all that they can do, they've gathered the evidence. Uh, lots of questions about do I need the evidence of LSA usage to depend on the provider, but I think that if you if you're doing your job properly, you should get that evidence. Because then you've got the number for for sure, you know what it is. There is a danger that because I don't need it, I haven't got it. And as time goes by, your ability to get that evidence becomes harder and harder and harder. Particularly if you've got clients who are chaotic with paperwork, it doesn't matter. Well, I've got the payments in the bin.

SPEAKER_01 1:02:40

Yeah.

SPEAKER_03 1:02:41

And with with drawdown, if you're the provider tells you every year what's been used, but with UFPLS it doesn't.

SPEAKER_01 1:02:49

And then as someone who's obviously spent a lot of time having to explain the complex in a way which people can understand. Do you have any tips for advisors when they've got complex subjects, they've got to explain to their client what's what's some of the things they can do to make sure that client really understands what they're being told? Not listen to me.

SPEAKER_03 1:03:12

The problem with being so one of the reasons why I could never be an advisor is I never know when to shut up. I don't notice under. Yeah, exactly. So there's there's that horrible tendency to end another thing, and another thing, and another thing. And in most cases, and another thing, is jolly exciting to a technician, but totally irrelevant to a client. And do does a client really need to know that the way he's taking benefits is UFPLS, uncrystalised fund, pension lump sum, or monthly crystallizations reflex access drawdown? Not really. It doesn't make a jot of difference to them because they're getting the same amount of money. It's of of importance to the provider so that they record it correctly. Um but it doesn't make any difference. So I think there's a danger to overcomplicate things. I think there's a danger with templated letters that force you to overcomplicate things because they're written by technicians, not by advisors. That's a different issue. I don't think necessarily the client needs to know all the the complexity.

SPEAKER_04 1:04:08

I think it needs to be filtered, doesn't it?

SPEAKER_03 1:04:10

Yes, it does. I it's you need to be able to know that you're doing it. The more I water on about UPLS, the more boring it becomes. It's we're taking this, it happens to be that this is what it's called. But yeah, it's it's there's a danger to overcomplicate. So unless you're very much in that red box and interested, it'll be switched off. And and I think historically one of the problems with retirement planning was it was perceived to be boring, and so there's a danger to switch off. It isn't, and that's a huge mistake that people make.

SPEAKER_01 1:04:42

Go in a bit more macro level now as we um start to wrap up, just get some of your views and opinions. Um if you could make one change to pension legislation, if you were the pensions minister today and you had complete autonomy, what what what would you do?

SPEAKER_03 1:05:01

So I think that the if I ignore what would I do, I think part of it's what wouldn't I do. And part of it one of the challenges that we have had is that pensions have been perceived to be uh giving money to the wrong people. And so giving money particularly to higher rate taxpayers rather than to basic rate taxpayers. But that's just a function of the fact that it's you're you're deferring tax until you take it out. So that's what happens with a pension rather than ice where you pay your tax up front. But it assumed as cash cows, and so you start to impose tax charges on things. What that then means is you don't have certainty. And so you then have a worry about the planning that I've done just doesn't work. And to go back to the thing I said earlier on, the good thing about a pension is you can't get it until you're fifty five, fifty seven. The bad thing about a pension is you can't get it till you're fifty five, fifty seven. You're stuck then in a regime that you thought looked like this and has now looked like that, and you can't. Can't do what you wanted to do. So it's that chopping and changing that's tricky. I think when A Day came through that pension simplification, because it essentially had cross-party support, we thought that it was going to remain static. And we are where we are, stupid boy. And and people were able to plan at that point. And you can talk masses about the limits. I think some of the things that have happened have been useful, but there's masses of complications, you know, the MPAA, the taper down the allowance, all of those things just make things massively complicated and hard to understand. For most people, they don't matter, but they hear the noise. Yeah. Most people hearing my tax free cash is going to be removed, they don't hear the talk about levels, and you're probably okay, mate, because your fund isn't big enough to get there. They just hear the noise. And then you your your perception is that I'm not going to save for my retirement via pension because something's going to happen and I won't be able to get it. Too much uncertainty. Yeah, so it it's a deterrent. So I think that it's a it's uh not what would I remove is all the chopping changing. Yeah. What would I try to do is to have a framework that was going to remain static for a longer period. I think it's right that things that you've done in the past are protected. So although all of the protection regimes that have come through make things complicated, at the margins, remember, at the margins, I think that's right, because that protects you from what you've done. So to go back to what I said about tax-free cash, if you do reduce it, that's fine, but protect what's there already. Because it's the removing of something you thought you had that's the problem.

SPEAKER_01 1:07:34

And I'm sure many advisors would vote for you as pensions minister than Andrew if you're saying keep things the same, because it would make their life easier.

SPEAKER_03 1:07:41

Yeah, but then it can be replaced by AI. So I think the complications are actually quite useful. I need a job.

SPEAKER_01 1:07:50

And then one of the other things we've spoken a lot about today is engagement and maybe clients not engaging with their pensions the amount they could and should do. As an industry, is there one thing you think we could do to make retirement planning rather than pensions more engaging for clients?

SPEAKER_03 1:08:08

I think providers are getting better. I think that the providers are giving more information out with annual statements about what differences and putting more contributions in. I think that it's it's a long way away, so I don't need to worry about it. By the time I get to I need to think about it now, it's too late, it's tricky. I think the although I've got no idea what the content will be, talk about having more financial engagement apart as call curriculum begins to help because you become aware of things younger. But I think the 18 retirement's for dead people. It's not for me. I I don't need to worry about it. But engagement starting is is better. I think that the I see a lot more of financial education happening. I think that's really important. I think that if advisors can get in with companies with firms to educate employees, that helps. Unfortunately, I suspect that's only with big employers rather than with smaller employees, and ultimately the bigger employers tend to do more for their employees than smaller employers will. So again, you you you have a a mismatch. But it's education, it's education. I'm not sure a public service broadcast helps. So you may remember that vile purple animal that appeared on television talking about a moment. Do you remember that? Horrible furry thing. I don't know how much engagement it created. But I'm it annoyed me. Because I was interested to begin with. If I wasn't interested to begin with, would I have been interested? I think there is there is more stuff on television about retirement planning now, and and you do see more about it. And things like pension B, all those things that appear are are are helpful. I can argue about the argue the the adverts for ages. There's more that appears on on my social media feeds than did before. There's stuff that's there. Yeah. And and and that helps if you are willing to be engaged. But if it's so far away, it it doesn't. So trying to talk to my daughter about the intricacies of net pay versus relief at source was totally pointless. Yeah. Just not going to engage.

SPEAKER_01 1:10:08

And then if you were an advisor or an advice firm at the moment, what do you think the single thing they could do is which would improve their proposition from a retirement planning perspective?

SPEAKER_03 1:10:24

Are you talking product now or are you talking about fact-finding? I think it's fact-finding. I think it it in the whole range of things, where where would you go? I think it's fact-finding. I think that the Do I know what my client's got? Do I know what my clients my client wants? I think historically there's been an awful lot of transactional-based retirement planning, which is doing movements, pension transfers in isolation without looking at the position holistically. That was definitely what was happening in the past, that I was just doing transactions. How much that's changing, really difficult to tell. And but I think that there's a danger that I'm just doing a transaction. And I I think that's a missed opportunity. It's to engage in the round.

SPEAKER_01 1:11:13

Okay. Then to finish up, just a few quick fire questions. So a couple of options. Your your choice, which were pensions better pre-A-day or post-A Day? Post, definitely.

SPEAKER_03 1:11:28

So before they were massively complicated, really difficult. What sort of pension are you in? Are you in a freestanding ABC? Are you in a personal pension? District contribution limits, different rules on how you extract money, massively complicated. So post, definitely. Even though there's been more complications since, but massively better post.

SPEAKER_01 1:11:48

Were advisors better when you joined the industry or are advisors better now? Now. That was very definitive.

SPEAKER_03 1:11:53

Oh yeah, but then it was absolute transaction. It was all transactions. Now it isn't all transaction.

SPEAKER_04 1:11:59

No Tony joined the industry before fact finds were invented.

SPEAKER_03 1:12:04

But that drives that drives transactions. So in terms of outcomes, you you get better outcomes now than things are there. There's lots of stuff which is I mean it's it's interesting because to persuade a client who was young to put 50 quid a month or something into a pension, although it could be massively criticized, wasn't a bad thing. No, it was because of the effect of compound growth. So one has to be difficult uh clear about criticism, but from an advice perspective, much, much better now.

SPEAKER_04 1:12:29

Yeah.

SPEAKER_01 1:12:31

Use your spent use your pension to spend your own retirement and leave nothing, or use it as a vehicle to pass on wealth to the next generation.

SPEAKER_03 1:12:39

Well, this is where you run into masses of difficulty, because unfortunately I don't know when I'm going to die. And that creates a that's good news in one second. And I hope it's a long time, so I hope I'm gonna beat the odds. And that's what creates a problem. I think that the one of the reasons why governments that have attacked pensions is that perception you're just leaving it to go to the next generation. One of the criticisms of pensions as you go back was you couldn't leave it to the next generation and you had to annuitize, and that meant the money went to the greedy insurance company. And going to the greedy insurance company was a reason for not doing pensions. But then it comes back again to why did I do ICES? Because I didn't want to give everything to the greedy insurance company with an annuity. So the annuity isn't on the table. Now the annuity not being on the table means that you haven't got that guaranteed income for life, and so there's the risk of running out. And because you don't know when you croak, that going to croak most people don't, you're the chances are you're going to have a have a have a pod. I think that to uh deliberately build up money in a pension for the next generation as a concept didn't come through until pensions flexibility came through, 2015-16, so a long time after A-Day. So for the vast majority of my career, that's not been a thing. Yeah. It hasn't been a reason for saving for your retirement. I I I don't think it should be a reason for saving for your retirement. You're saving for your retirement. If there's anything left and it goes to to my daughter, that's a bobby bonus.

SPEAKER_01 1:14:10

Yeah.

SPEAKER_03 1:14:11

That shouldn't be the reason for doing it. I I think the danger with that, that you you because it's for my daughter, I don't spend it. So I just have a miserable time. Yeah. That's a bit silly. Yeah. So when I have got oodles of money in my pension, if I'm lucky enough to have that, why am I travelling at the back of the plane with no knee room? Why am I doing that? My knees have given up. I can't give them up.

SPEAKER_04 1:14:38

Just go on a cruise instead.

SPEAKER_01 1:14:44

But if you want a nice cover to get into Southampton.

SPEAKER_03 1:14:46

Yeah, but if you go with um who is it, Titan, they drive you.

SPEAKER_01 1:14:54

Other cruiser companies are available. State pension triple lock, here to stay or gone within the next five years? Gone.

SPEAKER_03 1:15:03

I think the the problem with the triple lock is is is why it came in and what it's trying to achieve and what it's done. So if you go back, state pension was low in comparison to average income. Yeah. It's still comparatively low, but the triple lock has made massive changes and also increases along the way to get there. The two pound or whatever the number is that increased was because one inflation gave it something like 50p, and everyone said that's just an insult. And so again, you you you have I've done something because, but then I've embedded it into legislation. I think linking to inflation of a CPI seems to me more sensible than linking it to earnings. I can understand why you've linked it why it's been linked to earnings by a thing before. It's giving you a percentage of of your final income. Um so it's massively expensive. Yeah. Um and are there better things to pay to pay money on? I think so. I think that that the problem with retirement income is there's a massive disparity between people at the bottom and people at the top. And is the state pension for people at the bottom the right way to address this? Probably not. But some of the other things, pensions, credit, those sorts of things, are better ways to to address it. There's a talk about state pension being means tested, and to a certain extent it is, because if you're big enough, you've got other income, you're gonna get taxed on it. Or or it uses up your personal allowance. So I think it uh it is means tested, but not directly in that way. I think to change it to being means tested would be really problematic, and again, just distrust of the system. I think that there's a a perception that you've paid into it that it's yours rather than a benefit. So yeah, I think triple lot to change. You're gonna be quite brave to do it as a government. So how does that work if you all agree? So if if you have consensus, then a government of whatever colour can do it. Without consensus, you you're gonna have the accusation of nastiness. Or you could say any people can do it at the Labour Party because if the Tories do it, it's evil Tories picking on the poor. That argument's different, but they've already flip-flopped on other benefits.

SPEAKER_01 1:17:14

Okay, and then final one stay in retirement or come out and keep helping some advisors. Aren't you paying me? Right. Um thank you very much for joining us today, Andrew. Um, hopefully that's been interesting for those of you listening, and please say we'll be having another podcast with Andrew again shortly, diving into the upcoming April 2027 changes. But for today, that's everything. Thank you for listening and goodbye. Thank you.

SPEAKER_04 1:17:50

Thank you.