In the latest WealthTalk episode, Kevin and Christian discuss the big pension changes in the recent UK Budget. Tune in to hear how changes in pension contributions, the lifetime allowance and the money purchase annual allowance will impact different groups; including the top 1% of earners, NHS doctors and business owners. If you are a business owner looking to build your wealth, you will definitely want to listen to the episode to find out how these changes can get you a 25% discount on the price of the stock market, gold or property.
In the latest WealthTalk episode, Kevin and Christian discuss the big pension changes in the recent UK Budget.
Tune in to hear how changes in pension contributions, the lifetime allowance and the money purchase annual allowance will impact different groups; including the top 1% of earners, NHS doctors and business owners.
If you are a business owner looking to build your wealth, you will definitely want to listen to the episode to find out how these changes can get you a 25% discount on the price of the stock market, gold or property.
Next Steps On Your Wealth Building Journey:
>> Join the WealthBuilders Community
>> Join the WealthBuilders Academy
>> REGISTER HERE FOR ACCESS TO FREE RESOURCES
If you have been enjoying listening to WealthTalk - Please Leave Us A Review!
Unknown Speaker 0:01
The purpose of wealth talk is to educate, inform, and hopefully entertain you on the subject of building your wealth. Wealth builders recommends you should always take independent financial tax or legal advice before making any decisions around your finances.
Christian Rodwell 0:19
Welcome to Episode 186 of wealth talk. My name is Christian Rodwell, the membership director for wealth builders joined today by our founder, Mr. Kevin Whelan. Hello, Kevin.
Unknown Speaker 0:29
Cruz, good to be with you again. What a week it's been? Well,
Christian Rodwell 0:33
indeed. And you weren't around with us last week. So Paul stepped in and did a grand job. And we were talking about pensions. But boy, has there been some news in last week's budget.
Unknown Speaker 0:43
Oh, my goodness me has there been? I suppose you want me to tell you all about it and who's affected? And
Christian Rodwell 0:49
I'm sure everyone's heard. But we should probably recap with what those big pension changes were.
Unknown Speaker 0:55
Yeah, then massive changes. So definitely worth the recap. I'll talk about the, I think four key areas that people would need to think about, and then maybe identify, you know, like sevens. So why don't we identify seven types of people that might be affected, and what they might need to do what they might need to consider to take advantage of this absolutely stupendous news. That kind of came out of the blue a bit really, we knew there was some tinkering, government's like to tinker down there. We've seen them Tinker before, we thought there'd be some changes in terms of what you could contribute. So there has been some changes in what you're allowed to contribute, to build up your pension benefits, in other words, to get tax relief on. And that's the real key, right? So it's not about on computing, that's the key. It's the fact that if you make a contribution into a pension, which a pension is, obviously designed as a future income vehicle, so building up a pot for you to, I suppose tap into at a later date. And you know, if we get chance, we can talk about why I think that's a really, really bad idea. Because it's, it's actually counterintuitive to the whole principle of wealth building, which is, why would you need to build up a pot for later when you can access money today. But most people rely on pensions. So let's go with that, you know, there's been a change in contributions and effects in two different ways. One is the maximum contribution, you can pay into a pension and get tax relief on was 40,000 pounds a year as a maximum. And we've seen a 50% increase to 60 grand. Now, that's, that's pretty big. I mean, if you're able to, and of course, not everybody is able to do that. You can build up a very sizable pot very quickly. And we'll talk about who might be interested in doing that in a moment. And just just to
Christian Rodwell 3:06
clarify on that, Kevin, that that amount is payments from yourself, your employer, and any third party.
Unknown Speaker 3:13
Yes, I need to caveat this, though, that the maximum contribution is 60,000. But there's a an implied maximum, depending on who pays. So if you pay, the maximum is your income, or 60, grand, whichever is the lower. Now that gets really important. We think about business owners, because what the business owners often do, Chris, they often pay themselves small amounts of salary, and take their money in other ways, like dividends and so forth. So if you pay a contribution personally, and let's say you're earning 12,000 quid as a salary, but your big, big income coming from other sources 12,000 maximum. However, if you pay for it through your business, it's 60. So there's a real big win on that one for business owners. And I'll come back to that. The the other kind of tweaky thing going on there, which doesn't affect very many people, there's something called the annual allowance, something called a tapered annual allowance. In other words, it's restricted, because the government thinks you weren't too much. And so, you know, that has changed a tweak that's gone up to, you know, from 240 to 260. But in addition, instead of it being the maximum you can pay in is 4000 or 10,000. So it's kind of useful to know that because some high rate taxpayers boss you know, additional rate taxpayers and a switched off for pensions, and we've met some of those over the over the years, the contributions are changing. And I think that's for the better. But it still puzzles me. And perplexes me putting aside allowances that so few of our young people are joining in with their employer scheme yet with workplace, pensions being pretty much universal now, in other words, the government saying, you have to pay, your company has to pay, people are opting out, you can opt out. And some of our younger people increasingly are opting out preferring not to, because they don't want to buy into this deferred payment when I'm 60. I'd rather get access to my money now. And you can understand that, though, not least, because is the state pension valuable anymore in terms of its date, it's increasingly getting pushed back and back and back. As the holes in the economy reveal themselves and the government. At some point, we'll move them further back. I think that's inevitable as we live longer. And of course, the big demographic issue from a macro perspective. And the big picture perspective, is there are less people supporting the workers in the future. So historically, that's getting a dependency ratio, as we call it. And there's now so few young people who will be supporting through their tax bills, US oldies. And the fact that most of us who are baby boomer generation, have accumulated property, wealth and other wealth, they probably don't need it, but the younger people to come are going to really struggle. So I think the demographic is going to change. But we're digressing. But nonetheless, it's an important subject, because those of us who are parents are obviously concerned about where's the future of our own children gonna come from to ensure that they are financially independent as they get older? And that's going to be increasingly
Christian Rodwell 6:58
a matter of education, isn't it? Because I guess and you know, unless you really understand this, when you're younger, you're shown the power of compounding. And of course, when you're young, you might think, Oh, it's so far away. I don't need to worry about it now. But you know, some people just simply haven't been shown it.
Unknown Speaker 7:13
Yeah, absolutely. And the the, we can get onto another debate about whether there's reality is there compounding in the stock market when nothing is really added. It's added and taken away in the ebbs and flows of the market. Compound Interest, of course, we know through the often misquoted. Albert Einstein the eighth wonder of the world, it's okay if it's interest on top of interest that's locked in on top of interest that's locked in on top of interest that compounds. But if you're writing a stock market wave, and it's increasingly more volatile than it's ever been, then it's more difficult to compound. But certainly our younger people have got time on their side, where the long term track for investing in the stock market is always up. If you'd like inflation, it's always on the up. And the best time to take advantage of it is when you're young. So getting free money is a good thing. I remember doing a favour for one of my business owner clients and he was lamenting the lack of participation with the younger member of staff and I said, Well, I'll do something for you. And here's what I did. Chris, I got 20 quid now a roomful about I don't know 4050 Younger people 20 quid now said, Right? Who will give me a tenner, for this 20 quid and they can looking at each other. What's this fool? Garcia what was he about as he lost his marbles? You know, he's lost his hair, but has he lost his marbles as well? And is that eventually somebody, you know, some whippersnapper, just jumped up. I gave him my 20 quid, he gave me 10 quid. And they were laughing and so on. And the guy who did it was feeling smug. And I said, Well, you know that that's just free money, right? You, I'm giving you a huge return on your money. Well, that's what your company is offering you, you know, you pay in your 3% They'll pay in their percent to their matching your money, and that money is free. So why wouldn't you take advantage of it now, I didn't get a chance to find out whether that materially impacted on it. But But I think it's really important to encourage our younger people to know that there is free money there. And it's always good when these lessons come from the parents if they know it, and that's, I suppose just hints again, Chris it the good work we're doing in the background to prepare for the wealth builders for families programme, but anyway, so number one, the contributions. Number two, is there's been a massive change in something called a lifetime allowance. Now, you You think that the government would want people to contribute as much as possible to have the biggest pots possible. But historically, governments have intervened with that saying, Well, we think a certain amount of money is enough on which to give you tax relief on because you get tax relief on the way in. In other words, if you pay in personally, you get personal income tax back. And if you paid from a company, you get your corporation tax back. Now, it's really quite important. Because corporation tax rates are going up. Anyway, the lifetime allowance, which was at the time, we went into the budget, just a shade over a million pounds. And we could debate whether a million pounds is what a million pound used to be. You think about what can a million pounds by you today, as an income in most annuity rates would be saved 4%. If you're drawing money out, as often people now know, this concept of drawdown brought in in 2015. When you can simply if you'd like tap into the value of your pot, and draw money out every month or every quarter, or every whatever, periodically, then most advisors advocate a drawdown rate about 4%. So if you think about that, well, what you're going to get for a million quid 40 grand a year. And by the time you paid the tax on that is somewhere in the twos a month, it's not really going to make anybody fabulously wealthy, certainly good. But and most people don't get anywhere near the million. But anyway, which is part of the issue I raised with my fourth point. But the lifetime allowance, shock horror, I mean, not horror, actually. But shock, surprise, abolished Kena, which means so many things I've written, so many things I've recorded, I'm gonna have to change or because we've always talked about the lifetime allowance in our SAS programme and the lifetime allowance, minimum, IFA division and so on. And yeah, that's gone. So it means all the problems of being tested for lifetime allowance and tax charges of 55%. For money you had in the pot over a million. I have to just make a point here, Chris, that some people think the lifetime allowance is as an allowance of contributions. It's not. It's not you can only pay in a million. It's the value of the fund. And it was tested whenever you drew money out, and it's automatically tested at 75. But by test one planning, they've sneakily kept one thing back cheeky things. In that, I think that was an afterthought. I can imagine myself being a fly on the wall, in a room somewhere in Whitehall. And, you know, they said, What do we think about this lifetime allowance? Let's abolish it, right. So you can build as much money as you want. And your pension doesn't have to be a million could be 2 million, 3 million, 4 million. You can build your pot up as big as you want. And they go, Yeah, that's great. That's going to be eye catching, that's going to be great for Tory voters, because they're all going to be in favour of that. And then somebody's come up at the last minute, I think and said, but if somebody builds a pot 4 million and takes their 25% tax free, that's going to be a million quid tax free, we won't get tax on. On all that change that then let's make it 25% of the current lifetime allowance, which will tune in 68 grand give or take. So that's what they've done, this would have stuck that home as opposed to no to say, well, you can have as much money as you want, but we're not gonna let you take out more than 268 grand tax free. I don't know. It's a bit bizarre, but that's what it is. So the rest of the money you have is taxed at your normal income rate. So it's a bit like having a giant ATM. You know, you got a few million quid in your ATM, you go in, take money out, you pay tax on it. No National Insurance, just tax. But the tax free cash bit is limited to the 268. The third issue is the something called the money purchase annual lands. It's complicated language. I know, with these things, Chris, but there are some people you know, because we got to think about pensions affect everybody young people building up their pot, but also there are a significant number of people who are already drawing money from the pension. And this money purchase annual allowance said if you would draw money out of the pension, not the tax free cash piece, but the income you actually went in and you tapped and drew income. Then to avoid you just taking the money out putting it back in getting the tax relief, taking the money out, put it back and get tax relief and recycling as they called it. They they put a ceiling of 4000 pounds you could pay in well that's now In line with the paper to balance the kind of higher rate people. It's now 10 grand. Yeah. So again, those those people draw money out and don't need all of that money they can they can put up to 10,000 a year in. Yeah, so quite quite valuable and useful things to be aware of, because so many people in retirement are kind of switched off. And they can build their money up again.
Christian Rodwell 15:27
Yeah. And that might be particularly useful for people who were forced to dip into it during the pandemic, or with cost rising.
Unknown Speaker 15:34
Very good point. And I think a lot of people did and got caught out because they didn't know the rules. And all of a sudden, you know, oops, I can't top it back up again, even though it was a temporary thing. They didn't realise that it triggered that we had restriction. Well, while I'm excited by all of these things, Chris, there's definitely been some rabbits set off or running here. Political rabbits going off in all different directions. Currently, my wife says I'm the only one in favour of it that she knows why that would be. But but I'm in favour of it, because I think you shouldn't be restricted to how much pension you build up that that should be up to each individual. So why would somebody tell me how much property I could buy? Anyway, the point there is, I think there are dangers that this could be undone. I think there are already objections to it. And I think they are running run. I don't think Jeremy hunters for changing those. But of course, we know that not too long now is that a couple of years away, there'll be an election, the flavour get in now they will draw it in. So it's difficult to plan. So it in a way, in a bizarre way, I'm happy where things are stable, that you can plan and plan well than if they're completely reversed. And it's rare for financial legislation to be retrospective, you know, they completely undo something, there's a danger this could happen. So I think some people will have put their 60 grands in and do what they can. And others will be hesitant, because there'll be fearing, well, if I build it up significantly over the lifetime allowance, I could get caught by some kind of political vault PFASs a turn around a U turn, and find that they, they're now affected again. So it's a worrying time for many people. So both exciting and worrying all at the same time, which is, which is unnerving. And so in some ways,
Christian Rodwell 17:38
yeah, I guess we would welcome any questions that people have inside of our Facebook community, which is free to join, if you're listening now. And you're looking for a safe space with like minded people, where you can have a conversation about this and, you know, head to wealth builders.co.uk forward slash Facebook, you can join the group there. And we can answer any questions that might be posed.
Unknown Speaker 18:02
Yeah, and we run a SAS mastermind for those who in order to sasses, sort of much more flexible pension for business owners. We do a mastermind every last Thursday in the month. And I think one or two this year, particularly as a result of this, because we might open up to non members to give them an opportunity to see what we do and ask those questions because I'm sure there are people who are perplexed by this not knowing whether to jump for joy or or just sit in glumly think I don't know, I'm kind of one of those, although I'll always be finding the maximum necess console part of this problem anyway, as I'll cover when I talk about families. So touch on who's who's affected? I mean, we've already hinted at one or two. What one of the causes? Well, there are many people question, this is a particularly targeted group, which is the NHS doctors, there was a big concern that for many doctors, really, there was no reason for them to stay employed. Because each year, you get an increase in your pension that could potentially be punitively taxed. There's a complex calculation, I won't go into it here. But there's a formula that says, you know, the amount of money you've got the beginning of the year, from the amount you've got at the end of the year in benefits. And for many your longest standing doctors, it was just what didn't make sense, understand ployed You know, because it was actually costing them money to be in work from a punitive pension point of view. So I think that's gone and I think that will help retain some doctors so they won't be taxed on the benefit because there will be no lifetime allowance on that increase and benefit. So But I think that will play out well. And I hope it plays out well for the long term. So we retain good doctors who would like to remain helping the NHS, it's surely easier to keep the good older, well established experienced doctors than to, to consciously and deliberately up to find younger ones that take seven years to go through their education, you know, with all the student debt that goes with that, which is another subject. But I think that's an interesting group. And I think it'll be really fascinating in the coming months to see how the NHS doctors respond to that. And there'll be others affected by that military and others because as we know, the only final salary or defined benefit, pensions now are pretty much the domain of the public sector in the banks and financial institutions. I wonder why that is, anyway, that we'll talk about that. So that's one group, the high earners, we touched on the significant high earners, then you know, that that, that change for the table leaf will be useful, because so many of them did switch off. But there is one point about the kind of, let's say, the well paid, but not say the, you know, the top 1%, but certainly in the top 5%, those who are earning more than 100,000. So I often ask people, What do you think the highest rate of income tax is in the UK, and people go, Well, it's 19%, or 40%, or it's 45%. And then they forget that there's this little terrible little Bachmeier, between 100 and 125 grand a year that anybody learns in that level, they're losing their personal allowance on a two for one. So for each two pounder, and they're losing their allowance, and the marginal rate of tax on that, between 100 and 125, is 60%. So if you're paying a whacking 60% on your money, but now you can make a healthier contribution into your pension scheme, you can bring your income below that 100 or 200. And you can wipe out that 60% tax thing. So there'll be some people doing some maths to work that one out. And I would say if you're in that area, get in touch because we can we can help you do that calculation to see whether or not you can avoid that 60% punitive tax. Yeah, that's a biggie. So I think yeah, yeah. And now 60, grand or 40 grand, I think there's a, there's a big point there. The other group that I think probably would be well advised to consider what's going on now is business owners, you know, people who are running business owners making profit, and there are a few reasons for that. The first one is I meet a lot of business owners who have got significant retained profits, meaning the money just sitting in a business bank account, often not earning any money, but the owners don't want to take it out because it would pay a tax on. And I understand it, but it's another option to think about here. And when you couple that with Corporation, tax rates are going up. And when those rates go up to 25 P in the pound, there's another reason to be thinking about making pension contributions. Because a any contribution as I mentioned earlier on is not linked to what you earn is linked to the fact that you're a business owner, so you can pay in the full 60,000. The other benefit is you're getting that tax free for 25 P in the pound, not 19 P in the pound. There's quite chunky tax relief, really. And if you building that up, and then if you understand how a SAS works, which gives you access to the money, which you can then re lend to your business, or you can invest in other assets, then you're not pushing the benefits to when you're 60 or 65. The business can benefit today. And your own personal wealth can be growing today, which is why we're big advocates and fans and somewhat evangelistic, I suppose on the subject of least understanding how SAS works because it brings so many more things into play. What I quite like is the richness of the control over what investments you make. And for those who are doesn't matter what you preferences to build your assets, whether it's the stock market, whether it's gold, whether it's cryptocurrency, whether it's trading options, whether it's property, whether it's even shares in your own company, it doesn't matter what your interest is, you can pursue that. And if you're getting 25 P in the pound back, you're getting a discount on the price of all those things by 25% If rather than have your money sitting in a bank account, with no relief, put it into the pension, you can stick it in, let's say gold just for the purpose of it, would you like to get a 25% discount on the price of gold? So now, maybe in so if you can get a discount, and you can still lend the money back to your company, if you need to scale it or support in some way? Yeah, I think there's a big benefit for business owners. And I'm hoping that we can share that. And especially given that there are more benefits in terms of the maximum you can pay and beyond the 60,000. We won't get into that today. But there are options to pay up to half a million in a single year, then some businesses can make a serious dent in tax relief, and at the same time build a massive, tax free Trust Fund for themselves, their businesses and their families. So I think that one will be high on our to do list to share that knowledge and information. What do you think of that one?
Christian Rodwell 26:01
I like it. And it reminds me of the conversation with Paul last week where we're just talking about when people really get this. It's that circular personal economy of just, you know, put the money in the pension, claim the tax relief in, bar it back, use it and just Yeah, certainly around.
Unknown Speaker 26:16
It's a very virtuous circle rather than the traditional pension of delegating the money to a third party, then forgetting all about it until you get to retirement, and then you can look back and go What the hell happened. So it's not just about tax relief, it's about the ability to get involved, that return on intellect that we often speak about, and our ROI is that you get smarter as you get involved. And anybody who's building wealth is in the wealth management business. So you have to be involved. If you don't you get what you deserve, really, which is a delegated abdicated pot of money. And if you let a property, do that, you know, dilapidated in the end, because nobody's maintaining it. And there's so little work that's being done to help individuals maximise their income from the pension. Most of the institutions and the advisors are focused on just what's the value, but in the end, you've got to convert that value into income. So having more assets that you can own with cashflow is a much better way to build your wealth, whether it's inside or outside of a pension. So I'd love to deviate my thinking from that
Christian Rodwell 27:28
seems like a great moment for me to head on to Trustpilot actually, because we've had a review just come in from Jason. And Jason says, I reached a point in my life that there was a real burning desire to get to a position financially where I was not looking over my shoulder anymore. There was a real awareness that financial independence was within reach, but only if I engage with the right people, and undertook the right education, wealth builders was recommended to me by my business coach, and I organised a chat with Kevin Whelan, and we talked and he gave me excellent proactive advice and discussed the idea of me joining the wealth builders, Academy and community. This I have done, and I am now undertaking the nine steps, and I'm very excited about what the future holds. My early impressions are incredibly positive, and the overall support and the genuine advice you literally cannot put a price on the future is definitely bright. And the legacy I want to create for my family is within reach. And he says, Thank you.
Unknown Speaker 28:27
Wow, you know, it never ceases to amaze me that people will put their own words, and so elegantly stated. I know it's early days for Jason. And in fact, we're very much hoping to collaborate with Jason at some point and his doctor's note to that effect. So we'll have a conversation with him in the coming weeks and months, to see where he's at and how, you know, we can we can help even further. But that's great, too, you know, thanks. Thanks, Jason, for that net. If that's come from a business coach, he's a business owner, and perfectly in that kind of model. Allah just mentioned there and the third group of people who are affected, which is business owners, the fourth group, Chris, very popular group. And in terms of accessing pensions these days is the property business owner. Not the same as a trading business owner where, you know, there might be manufacturing or they're providing a service or whatever. This is a, an organisation, a company that is using property as a way to build wealth. So the asset is property and they're either making capital gains from the sale of units, they convert and sell or they're making rental gains from the ownership of real property that puts money into their life. And what's what's great about the lifetime allowance changes, is it means that uniquely again, back to sass bigger projects can be done because people can pull them money together, families can pull their money together property, business owners can pull their money together. And there's no issue on the lifetime allowance. And with the contribution levels, going up, this whole idea of doing bigger, stronger, better, more profitable deals, looms much larger with pensions playing an important role. Because you just talked about the circle, in you that personal circle of your money going around to you, well, you can use money, to buy property to own property to refurbish property to develop property. And all the ways you can add value, the pension can be the source of the funds. And if it can do that, then you being your own bank, you're not having to go to a third party, to then send them interest where that interest leaves your life and goes to pay the wealth of another organisation. You bring creating that virtuous circle of being able to do that for yourself. And I think it may be, we might see successful property business owners, as they all pay corporation tax, they don't pay capital gains tax, it's it's corporation tax. So that corporation tax going up again, to that 25 B, we might actually start seeing property business owners recycling those profits, and building the pension pot to then borrow more money. So it's a very, very elegant and clever way to be able to recycle your own pension when you get your tax back on your own profits and use that money to buy and acquire more property. So I think that's going to be a big one for the remainder of 23 and 24.
Christian Rodwell 31:40
Excellent points. Yeah. And everything we're talking about here is summarised within our free membership, which is easily accessed by heading to wealth builders.co.uk, forward slash membership. And we give a summary of SAS pensions in there, we give a summary of all of our key IP because we're talking about the pension pillar today, which is just one of seven pillars of wealth that we focus on. And there's already so much within that one pillar that we've discussed today that, you know, if you can open your eyes to some of those others, and within our free resource area, we've got information around all of those as well.
Unknown Speaker 32:16
Yeah, and I suppose if you listening to this, thinking, well, for the most part, when people have pensions, they tend to be stuck on the stock market roller coaster, and you can pay more money, and that's fine, but it's still fundamentally a more difficult asset to get cash flow from. Whereas the pensions can routinely be pointed and redirected towards cash flowing assets, like property, like business like intellectual property, and joint ventures and collaborations together with other people. You know, plugging in playing money together, and everybody can eat actually fun, everybody. Winning, which I think is a great and powerful thing of having a community of people like minded, all sharing best practices and lessons and inspirations. I think that's really part of what we envision when we created wealth builders and created a community led organisation rather than you doing it on your own. So I think there's another valuable point there touching on some other groups, I suppose Chris, the older groups, so many people, as I mentioned, you've I mean, you've got three stages to a pension, haven't you really, you've got the building up the taking out and passing on. Alright, so the building up we've done, you can put more money in the lifetime allowance is bigger. The drawing out so many people are drawing the flexibility, what was called pensions freedoms, a bit of a misnomer, because you can only be free, if you've got control uncertainty, and for most people, they don't have the knowledge to be able to deal with all the complexity of having to now almost have a nest egg, and then cracking eggs to live. You know, we're seeing more people running out of eggs, Chris, they're running out of money before they run out of their own life. And that's a very worrying place. So encouraging that that thought about creating cash flowing assets, not just spending the eggs have a golden goose don't have the Exynos that has the whole idea that anyway, some older people who are drawing the money. We talked about that. So when you're drawing the money, or you're considering it now you don't have this limitations of 4000 pounds. It's a 10,000 pounds allowance. So it does allow you the option to take to take money out and then build it back up again, take money out and build it back up again. So I'm pleased to see that because, as I said, so many people got caught by that particular rule, not realising and I think you mentioned that person that endemic, and with the current economic crisis, people naturally turned to a source of their pension as a way to get some income out and why not? So I think there's a benefit there for older people not to feel like a stakeholder cold without realising. So that's that group of older people. And there are other people who, perhaps, Chris, who have benefited over the years and have already committed significant sums into pensions, where they're affected by the lifetime allowance, they're already exceeding or very close to the lifetime allowance. Then, of course, some of those in bizarrely, Chris met people who over the lifetime allowance. And, you know, I said to them, okay, that's great. Lifetime allowance is just a it's just a tax limit, really how much you can get that tax free without the tax benefits being lost, at least fully lost anyway. And they're switching off the returns on their, their pot, I mean, almost deliberately restricting the growth, because they didn't want to pay a tax bill. And it's kind of a weird thought for me. And you're like, I'm controversial and challenging, and that's my style in nature. But you know, I would say to that, well, okay, let's have an imaginary conversation with you. You wrote a book called escape the rat race that your boss, right, let's pretend you were in a job. And let's put you in the position of you've got a job and you're on 100 grand a year, nice, decent job, you're putting in your pound of flesh, you're getting your 50 quid an hour equivalent, or for your 2000 hours a year. And, you know, somebody's boss knocks on the door. And I'll pretend just for the sake of today being a busker. But it's gonna have a word. You've been doing a good job, I would like to give you 200 grand to do exactly the same job that you're doing now. Would you take the job, Chris? Take that. You take you take the job, right. But there's a by the way, Chris, you're going to pay more tax than you did before. You realise that, don't you? Yeah, oh, no, no, I won't take a job, then. I'd rather I'd rather pay less tax. So to me, the focus is always build as much as you can diversify as much as you can build cash flow as much as you can. And don't worry about allowances. Because you can always with pensions, particularly if you use cells, redirect them to other assets in your life. So in a way, you can grow your pension, but take the money out of it and put it somewhere else in your life. So there's benefit to understanding now assess, can actually help mitigate lifetime allowance, should it ever come back. Because I think there'll be those who are affected, you'd be jumping for joy day one. But they're not knowing whether this is going to come back. So I think definitely getting tuned in to what a SAS can do anyway, because then you can deflect some of that return down other members of your family blind. And this is the last group I think, which is families, you know, those who want to leave a great legacy, it's a fantastic opportunity to see that really significant sums of money can be passed on. And the interesting thing about all pensions is their trust funds. And there's no inheritance tax to play. So if you die leaving a pension, not a final salary pension, right, that's another story. But if you die leaving money in a pot money purchase pensions, or sometimes called DC, or as the opposite of DB defined benefit defined contribution, the terms are interchangeable, but it's money in the pot. And you know that because the pots going off the pots going down and what's going around. But that pot can be passed on completely free of inheritance tax as long as you nominate a beneficiary. Because the Bennett The trust has to nominate a beneficiary. And it's really important to check whether you've nominated a beneficiary for your pension because so many people just haven't done. It's a bit like they've got a life insurance policy, but didn't put it in trust. And then it gets caught. If they die because it's then forms part of probate, you definitely do not want that to happen with your pension. So getting your nominated beneficiary form in sometimes called an expression of wish, which is if I die, I want this money to go to that's essentially all it is same as a life insurance trust us. If I die I want this money to go to. And by creating that it doesn't go through the will. It just goes almost directly to the people that you want it to go to. And there's real value in that and I think as families become more involved in pensions together, and again a nod to SAS because it allows that Family members up to 11 people to join forces together. You can have family members joining from AJ team, which means it's much more than a tool of stewardship, and passing on knowledge. And even involving the young not necessarily dating but you know, every, every kid's different, every young person is different. But you can get them to participate, even virtually, you know, he is, if I gave you 50,000 pounds to invest, you know, what would you do go research that come back. And let's discuss that. And you can do that virtually. So let's pretend you did what would be the return a year later. So there's a way to involve children in pensions, and maybe that wakens up the idea that they should join a scheme of their own as soon as they can. And that kind of drives us full circle to to be all this is about just driving awareness, Chris, that pensions are a great source of tax relief and a great source of being tax free. But wealth is not about that. Wealth is about building education, building stewardship, building assets that cash flow, and if you can do all of those things, and use the maximum light using your maximum miser use which didn't change pathway all this change massively but I still didn't change till 20 grand still nine grand for junior ISIS if you want to put money into your kids names, you know for the pick it up at 18. So some very, very weird things, I think going on in this budget. And let's see what happens to the political outpouring for the changes here and see what actually happens. But we don't have a camera quasi budget where something happens one day and the next day, it's all you know all about face and back to where we were before. But interesting for a podcast, Chris, and I think I might just hold back on re recording everything I've ever done about Benjamin.
Christian Rodwell 41:51
interesting indeed. You make the topic of pensions interesting, Kevin, a House of Wisdom. Love to get you on the BBC. I think
Unknown Speaker 42:02
I don't really want to old geezers, like me with the light shining.
Christian Rodwell 42:06
Oh, that was great. I really enjoyed that. Thank you for sharing. And yeah, just enlightening us a little bit more about some of the the areas that weren't covered, perhaps just in the news. But what does this actually mean? And who does it affect? Yeah.
Unknown Speaker 42:20
And don't forget, if you've got any questions, we're here to help. So you know, we're a caring sharing organisation, and if it's worrying you just get in touch in the usual way. So Chris, enjoy next time. Yeah. And
Christian Rodwell 42:33
thanks to listeners as always, and I guess, Kevin, we'll be back Same time, same place next week.
Unknown Speaker 42:39
We will indeed until then, my friends see ya.
Unknown Speaker 42:45
We hope you enjoy today's episode. Don't forget that we are constantly updating our resources inside a wealth builders membership site to help you create, build and protect your wealth. Head over to wealth builders.co.uk/membership right now for free access. That's wealth builders.co.uk/membership
Transcribed by https://otter.ai