The Meaningful Money Personal Finance Podcast

Time for another Q&A episode where Roger & Pete answer questions on retirement planning, passing assets to children. SIPP vs ISA and much more!

Shownotes: https://meaningfulmoney.tv/QA47 


01:42  Question 1
Hi Pete, Roger, and Nick,
Thank you for the podcast - I've been listening for a while but fell behind and just binged about 15 Q&A episodes over the last fortnight! There's nothing like listening to the podcast to get me fired up about my finances!
I have a question about the upcoming change to minimum retirement age, and a question about how to use my SIPP versus S&S ISA post-55/57.
I was born in February 1972 and so by my reckoning should be ok to access my SIPP at 55. However, I heard somewhere that access could be removed at the date the law changes, because I wouldn't be 57 by that date.
Can you shed any light please? It doesn't make sense to me to grant access then take it away.
The reason I'm asking is because I'm thinking that in the next year I should favour putting money into my SIPP for the tax relief instead of into my S&S ISA, since I can access it within a short time anyway if I really needed to.
Once I'm 55, does it still make sense to put money in the ISA at all, given the SIPP will continue to have tax relief so long as I'm working?
All the best and looking forward to the videos coming out!
Chris

07:04  Question 2
Hi Pete & Rodger,
My wife & I are both aged 55 & I plan to retire aged 60 possibly a little earlier my wife isn't sure exactly when she will stop at the moment.
I currently have a work place Scottish Widows default pension lifestyle turned off £225,000 I pay in 31%, company pays in 4%, salary sacrifice I then occasionally move funds to my 100% equities SIPP low cost global index fund £442000.
My wife has a small DB pension and 45,000 in a SIPP again all in equities. My plan is to retire at 60ish on the SW pension to bridge the gap to state pension age 67. Leaving the SIPPS invested in equities both in low cost global index funds. Possibly adding some bonds a few years out from state pension age. Currently 20k emergency fund cash isa and my liquid assets whisky collection.
Do you feel I could improve my plan or is it reasonably sound?
Kind regards, Lee.
 
12:48  Question 3
Hi Pete & Roger,
I have a deferred DB pension which in 2018 (when it closed) I was told my annual pension at age 62 would be £18270.
The pension is capped at CPI or 2.5% annually, whichever is lower. As such it is getting deflated by high inflation. As of today it's £21840. (With CPI it would be £23830 or even £26050 with RPI). I have a decent DC scheme to top it up but what can I do mitigate this decline with transfer out values currently quite low?
Thanks for your advice.
Richard
 
18:08 Question 4
Hello Pete and Roger,
Firstly, thank you for your brilliant podcast - it really is absolutely fantastic. Since discovering it early in 2024, I've listened to almost every show! I love the way you both make complicated concepts easy to understand and often have me chuckling along at the same time!
I have a question to you both about inheritance tax and a potential way to reduce, or even eliminate, its effects. I don't believe you have covered this particular strategy, so I'm very interested to hear your thoughts. Here's what I am thinking.
My wife and I are both 43 and have two lovely children aged 7 and 9. We both work full-time in well-paid jobs and save a good amount into our pensions and ISAs, whilst also ensuring we 'live for today' by going on regular holidays and spending as much time as possible with the children (whilst they still like spending time with us!). Our rough combined financial position is as follows:
- £1m in company DC pensions, contributing at a rate of about £85k gross per year
- £350k in stocks & shares ISAs, contributing at a rate of £40k per year
- For each child – £40k in Junior SIPP contributing at a rate of £3600 gross per year, and £10k in Junior ISA with no significant annual contributions
- A house that is worth about £700k with £400k still to pay on the mortgage (remaining term 15 years)
I am aware that it's very early to think about inheritance tax, and I know that rules in the future will very likely change. However, it's very conceivable to me that our children will incur a very significant IHT bill when we both shuffle off (to use Pete's phrase!). My "solution" to this is as follows. When our children reach the age of 18, rather than paying £40k per year in our ISAs, we will pay it directly into their ISAs. We will fund this either through earnings (I still love my job and envisage working well into my 60s), and/or from one or both of our pensions. When we are retired, we plan to take regular payments from our pensions up to point where we would start paying higher rate tax; this will hopefully allow us to live comfortably whilst also contributing to our children's ISAs. Any shortfall will be covered by our own ISAs.
We will give this money to our children on the basis that it is still our money if we ever need it (e.g., care homes, massive holiday, Lamborghinis, etc). In other words, we will tell them that we will continue paying them £20k a year each provided that they do not touch it and have it available for us if we ever need it. With a bit of luck, we will never need it, and both our children will ultimately receive a substantial sum of 'inheritance' without paying any IHT.
I appreciate there are some risks associated with this strategy. The two that I can think of are as follows. Firstly, there's a risk that we fall out with our children and lose control of the money. Secondly, if one our children marries, then divorces, then half of the money we've given them may disappear to someone else. This is definitely a concern. However, provided we are both comfortable with these risks, do you think this is a sensible method of transferring wealth to our children, and can you think of anything other considerations we need to think about? I'm probably missing something really important so it'd be great to hear your thoughts!
Thanks again for your amazing podcast – I really do love tuning in every week!
Thanks, Martin

28:19 Question 5
Hello gents,
My question is this : if someone is looking to retire pre-state pension, and bridging that gap, what are the primary options available? 
I've been looking at for example - fixed term annuity if rates are good; bond ladder (feel a bit overwhelmed on this); money market fund; bung it in a cash savings account.
I'm assuming I want minimum volatility - is that the right approach to take?
Richard.
32:18  Question 6
Hi Pete, Roger and Nick
I have become an avid listener in the last three months, having just taken Voluntary Redundancy at age 63. I have benefitted hugely from your expertise and listenable style. Many thanks.
I'm imagining that if you include this question in your podcast you might mention a tax tail wagging the dog. However, I don't want my dog to miss out on performing tax tricks.
My question concerns whether I can take taxable income from my SIPP whilst leaving my tax-free lump sum untouched. I would then like to take the tax free lump sum at a future date to fund a home relocation. Is this possible? 
The background is as follows:
My DB (£40k) pension will kick-in at 65 (18 months to go) when I will also take a lump sum which I will place into my and my wife's ISAs. I have to do this at 65 due to scheme rules. So in the meantime we're living on my £100k redundancy pay which is sizeable enough to also fill our ISA allowances for 25/26 financial year. I will avoid higher rate income tax on this VR payment via a SIPP contribution. This means that our current and future 2 financial years ISA contributions will be full and I will also have a SIPP bumped up to £250k. However, it will also mean most of my VR pay will then be in SIPP and ISAs leaving us short on spendable income next year!
But next financial year, being un-salaried, I will have the opportunity to take £50270 from my SIPP whilst limiting my income tax to 20%. This will then fill next years income gap. (Once I start receiving my DB pension I will find it harder to get the remaining SIPP funds out without paying 40% income tax as the state pension plus DB will then take me over £50270). I don't want the tax-free lump sum next year as I don't have a need for it until age 65 when we plan to relocate and I can't put it in ISAs because I've already filled them.
So can I start taking taxable income but leave the tax-free lump sum in the SIPP where it currently performs the function of an ISA (ie tax-free growth).
Alternatively, am I just being a bit silly and making life overly complicated? Your wise observations will be eagerly received.
I have done my own cash-flow modelling in detail and this is just a simplified summary of the main facts. Once I am in the new routine post-65 then it'll become a lot easier, but these few steps in the dance over the next couple of years require a great deal of thought.
Kind regards, Tom

In this Meaningful Money Q&A episode (QA46), Pete Matthew and Roger Weeks answer six listener questions on the financial decisions many UK households are wrestling with right now. We cover bridging the gap to the State Pension with fixed-term annuities, strategies for staying under £100,000 adjusted net income (and avoiding the 60% tax trap), and how LGPS "CARE" pensions work including whether salary sacrifice can reduce student loan repayments. There's also practical guidance for self-employed listeners facing a tough year and needing to cut costs, plus how to think about funding private school fees without derailing long-term plans. Finally, we discuss how to decide whether to take the maximum tax-free lump sum from a defined benefit pension, including the trade-offs and how to model the impact.

Shownotes: https://meaningfulmoney.tv/QA46 

02:18  Question 1
Hi Pete & Roger,
I am a long-time fan of your podcasts, and I often sneak off during the day for some peaceful R&R and listen to your latest release or even go back on old shows.
My wife and I are in the fortunate position that we have both retired but still have a number of years before the state pension will commence (6 years / 2 years).
Our long-term plan was to build up our private pensions so that we would have a comfortable retirement but also be able to leave our two children a reasonable inheritance which has meant we have been reluctant to dip into our DC pensions too early.
With the proposed changes to IHT bringing in the unused pension pots on 2nd death into the estate and on current projection we have in excess of £1m in DC pensions which unfortunately are heavily weighted in my favour to 80/20 and we both have a DB scheme each (circa 5K) which have been activated.
My questions relate to fixed term annuity.
To bridge the gap between retirement and receiving the state pension for my wife circa 6 years, I was considering looking at one of these to cover sufficient income to take her up to the personal tax allowance limit bearing in mind the annual DB income.
My dilemma is where or how best to fund this.
Can we or do we use our personal savings?
Do we use my wife's DC pension in part?
Can I use my own DC pension, but any withdrawal would be subject to 20% tax rate so not a preference even if allowed?
As part of my look into these fixed term annuities, there also seems to be an option to have guaranteed cash return at the end of term. 
Is there any sense in considering this as it would require a bigger investment or withdrawal? 
Would this cash also be tax free or would it be income and added to your existing income stream?
It would seem to me that if I wanted to reduce the pension pot differential but ensuring the tax payable was only 20%, then I could either max my withdrawal requirement annually or consider the annuity route but this could be complicated with my state pension commencing 2027?
Should I be hung up on the pension pot differential values between us and does the IHT rule of the couple's tax-free limit being £650,000 nil rate ignore where the money originates. 
This pension pot differential must be quite common, do you have any other comment or suggestions that would be helpful.
I, like many of your listeners enjoy your banter and how you impart knowledge to the wider audience for their better good – a big thank you for this.
Best Regards
Brett.
Meaningful Academy Retirement Planning

11:04  Question 2
Hi Pete & Roger, I'm a big fan of the podcast — thanks for all the clear and practical advice you share each week.
My base salary is about £76k, but with shift allowance and a car allowance my total package is closer to £90k. On top of that, I can earn overtime (which is unpredictable) and I also get a discretionary bonus of up to 20% of base salary.
The challenge is that we don't find out the actual bonus figure until the end of March, but if we want to waive it into pension we have to decide in advance — so it's guesswork. Without any planning, the bonus can push my adjusted net income over £100k, which means I start to lose my personal allowance and fall into the so‑called "60% tax trap" between £100k and £125k.
At the moment, I already have several salary sacrifices in place: – Pension, Holiday purchase, Share Incentive Plan (SIP).
I'm now considering adding an electric vehicle through salary sacrifice, which would reduce my taxable pay by about £10.5k a year. That would keep my adjusted net income below £100k, but it obviously reduces my monthly take‑home.
I'm 29, so I don't mind putting a bit extra into my pension for the long term, but I don't want to over‑commit too early and lose too much cash flow now. In the next year or so, my wife and I are also planning to have children — which adds another layer, because if my income goes over £100k we'd also lose access to childcare perks.
I know there are worse problems to have, but I'd really like to maximise my take‑home pay without losing benefits and while staying as tax‑efficient as possible. So my question is: how should someone in my position — with variable overtime, an uncertain bonus, existing salary sacrifices, and family planning on the horizon — think about the £100k threshold, the 60% tax trap, and the personal allowance taper? And more broadly, how should PAYE employees balance lower monthly net pay against the tax efficiency, taper protection, and childcare benefit eligibility that salary sacrifice schemes can provide?
Many thanks. Lewis.

19:48  Question 3
Hi Pete and Rog
I'm 28 and my fiancé is 26 so we're at the early stages of building our empire. The knowledge and insight I've picked up from listening to you over the past 12 months has been a massive help, so thank you!
My financial situation is fairly run of the mill: a  Salary Sacrifice DB pension with a 6% employer match, early days Stocks & Shares ISA, emergency fund etc.
However my Fiancé works for our local council and has a DC pension titled "CARE". From what I can understand, this means every year she works, she builds up an amount, that yearly amount tracks inflation up to retirement, then at retirement all those revalued yearly amounts are added together to give her a guaranteed annual income for life.
To my question! Firstly, is my understanding correct, or is there anything I'm missing? And secondly, is there a way of playing with her percentage pension contribution to lower the amount of student loan she has to pay back?
Bonus question: I've just finished Q&A Ep31 and caught wind Pete had a beer - what's your tipple of choice?
Always thankful for each episode and video you provide!
Thanks, Tom
 
24:23 Question 4
Hi Pete and Rog
Long time Facebook group, podcast and you tube fan, asking a question that I haven't heard answered yet.
I am self employed, and have been for 12 years now. 2025 has been an unexpectedly difficult one in my industry with corporate customers cancelling projects and budget cuts, and individual clients feeling uncertainty.
How can I make hard decisions about cutting back on my business and personal expenses, whilst also staying as positive as possible about the future?
My turnover is down about 30%, with a knock on effect on my income. I've stopped investing in my pension as the business isn't making enough profit to do so, and am now looking at cutting back on business expenses like the subcontractors I book to work with me and marketing (which I've held off doing hoping income will recover).
Meanwhile I took on many personal expenses that feel very hard to cancel like private health cover for my family, income protection insurance, gym membership, kids sports clubs and their  orthodontist treatments - all totalling £6-800 pounds per month. I'm not sure where to start!
Thanks for considering my question.
Best Wishes, Lara
 
31:40 Question 5
Dear Pete and Roger,
Loving your podcast. I can honestly say listening to it has transformed my relationship with money and investing. My husband used to do all the money management alone and seems thrilled I've finally shown an interest...
Short version:
- She 39, he 44
- Her - late starter due to Uni and maternity - now profits of £60pa self emp
- He has £50k pa accrued in DB scheme plus AVCs - maxing contributions
- He sacrifices to stay below £100k
- ISAs - they don't say how much
As the children are approaching secondary age and with some SEND issues in the mix we are looking at all the options including fee-paying independent schools. Luckily with the age gaps we have we will only be paying for two kids at any one time and grandparents are stepping in for eldest. This is costly, but I think doable for us as we're quite frugal people anyway. I'm now working out how best to fund this. If we reduce our pension contributions we will lose huge amounts to tax and student loan deductions (in my case) - 62%/47% (him) and 51% (me) will be deducted and we'll lose the childcare funding for our toddler which will be a massive blow.
Would it be mad/bad to release some equity from the house, enjoy this money now and pay this off with a pension lump sum when we can access it?
I feel that it would be absolutely mad to retire with far more than we need, whilst our children missed out but also mad to miss out on the tax relief.
I'm really interested in your thoughts and if there are other ideas? We have just a few years to prepare and ideally I'd like some flex or contingency in any plan. Could an offset mortgage be useful here? I could go full time but I don't want to miss out on raising the kids so this would be the last resort. It just feels like a cash flow issue that needs some planning for. HELP!
Thank you for reading, fingers crossed I've got all the vernacular right and haven't caused any confusion.
Take care and best wishes, Annie
 
36:58  Question 6
Hi Nick…Roger…and the other guy! 
I'm an avid new listener having read and loved Pete's retirement book and binged on your podcasts. I'm loving what you do and how you do it, and have recommended you widely. 
My question relates to how I judge the amount of tax free lump sum to take from a DB scheme. It feels wrong to convert inflation-protected DB pension into a lump sum, but I'm thinking of taking the maximum and wonder if I'm being foolish.
I could take my £40k DB in 18 months or could reduce this to £26k for £190k lump sum with a commutation factor of 14.
The spouses pension is maintained at 50% of the unreduced pension (ie £20k) even if I take a lump sum. Nice!
My wife will also have a £6k DB at same retirement date. We will both receive max state pensions 2 years later. We also have SIPPS and some ISAs and I am confident that these non-DB funds will see us through to state pension age with good margin.
My budget shows we will need up to £60k PA spend for very comfortable retirement. £40k PA to cover basics. If I didn't take a lump sum then we have £40k (DB) + £6k (wife DB) + £24k (SP) = £70k income. This works.
But as I say, I actually think I should take a max £190k lump sum…
This would mean £26k (DB) + £6k (wife DB) + £24k (SP) = £56k total index linked, which works out at £49k after tax.  The additional £11k PA will be easy to provide from the  invested lump sum.
But the real reason to take the max lump sum is to manage the risk of me being first death. If/when that happens then my wife has £20k (spouse DB)+ £6k (her DB) + £12k (SP) = £38k index-linked income, or £33k after tax. I think she'll need to find £15-£20k PA from the invested lump sum to stay comfortable. This feels more borderline, especially as she has little natural affinity for investing and may be better buying an annuity. 
It seems to me that I would be wise to take the full lump sum to best provide for my wife should I die first (statistically the most likely). This matters a lot to me.
Is this reasonable thinking? Or is there a way of judging an in-between lump sum?
With kind regards, Tim

In this episode of the MeaningfulMoney Q&A, Pete and Roger answer six listener questions covering a wide range of personal finance topics. We tackle a tricky inheritance tax situation involving a property bought in children's names, look at pension and ISA options for a daughter likely to spend her career working outside the UK, and offer some perspective on balancing financial sensibility with life's genuine passions. We also cover whether a minimal LISA contribution strategy actually works, how to manage the transition from 100% equities to a retirement asset allocation in the years before you stop work, and what income protection options exist for a young professional wanting to guard against long-term illness or injury.

Shownotes: https://meaningfulmoney.tv/QA45 
02:20  Question 1
Hello Peter and Roger (without a D)
I am so pleased I discovered your podcast a few months ago, since then your words of wisdom accompany me on my daily dog walks and I have become the annoying older colleague in the office telling the younger colleagues about the power of compounding and contributing to the pension scheme.
I have a rather unusual query I would really appreciate your view on and maybe the potential pitfalls we are experiencing would be of interest to other listeners as I have read lots of questions on-line about potential benefits of putting property in children's names.
My parents retired to Spain 25 years ago, they cash-purchased a UK flat for when they come back 10 years ago. In a bid to avoid inheritance tax they bought this in mine and 3 siblings names (all in our late 40/early 50s). They did not seek professional  advice, just assuming it was the right thing to do, which could be the morale of the story.
Sadly my Dad recently died and as executor of his will I have been looking into the UK assets. I realise now that this cunning plan does not work, as they regularly stay in the flat without paying rent. Therefore, it is classed as gift with reserved benefits and still included in the estate. However this is not an issue as they are well below the IHT threshold.
The question I have relates to the future financial position that I think they have inadvertently created. My mum wants to sell up in Spain buy a house in the UK and then either rent the flat for some more income or potential sell it. But how does this work if the property is in our names? Can she legitimately take rent (with our permission) without it having income tax implications on us (I am higher rate so do not want this!). If she wants to sell it I assume it will be sales to us siblings so we will pay capital gains (but what rate? we are a mix of tax brackets and one of my sisters doesn't own another house.) She says she might be best just transferring into her name, but I don't think it will be that easy and we will still be liable for capital gains as it will effectively be a sale to her. Is there something we have missed here and is it something we should be concerned about? Or is it OK to leave as is and let her keep to draw down income. Could it be the right thing to do and having the property in our names be simpler to resolve when she dies?
I am hoping your soothing Yorkshire/Cornish tones can reassure me all will be OK.
Vicky a faithful listener.
 
11:24  Question 2
Hi Pete and Rog
I only discovered the podcast fairly recently, but have been following your web-based lessons on Meaningful Money for a while (and have read the books). I am really loving the podcast - so many back episodes to listen to! Super-informative, and your dulcet tones are also very soothing!
My question is to do with advice for an adult child who is likely to spend her career working outside the UK.
My husband and I are both late 50s and technically have reached FIRE (years of finance-nerdery despite relatively low incomes) but I am still doing consultancy because I quite enjoy it.
Our older three children are all getting established in their careers, and I've brainwashed/ educated them in the ways of financial sensibleness, so they're all set up with emergency funds/S&S ISAs/employer pensions/SIPPS. Our youngest daughter is studying at university in Poland (the kids and I all have dual Polish/UK citizenship, as my mum was Polish). This means my daughter can work anywhere in the EU, and although she will always have strong ties to the UK, it's looking as if she is more likely to work outside the UK once she graduates in summer 2026.
This opens up a whole new world of options in terms of setting her on a path to financial security, and there's quite a lot of conflicting information  - I would really appreciate some input on what are likely to be the best options for someone in this situation.
At the moment she's 'ordinarily resident' in the UK, on the electoral roll etc., but doesn't have any UK income. Can she make pension contributions in the UK even if she's working elsewhere? I assume she still has an ISA allowance if she's a UK citizen working abroad, but a LISA would make less sense if she's not likely to buy a UK property? I am self-employed via a limited company and she has occasionally done bits of tech support for me, so she could register as self-employed in the UK and bill me for that - would that count as UK employment? My accountant is super-scrupulous, so I'm not interested in anything that might be sailing even vaguely close to the wind in HMRC terms.
I would appreciate any thoughts on this perhaps slightly non-standard situation, although I assume there must be quite a few other people out there with dual UK/EU citizenship who might be facing similar questions?
Many thanks, Felicia

19:06  Question 3
Dear Pete and Roger.
I listen to your podcast all the time and it keeps me right. It has really helped me navigate my financial literacy or lack thereof. I am now in a situation where I have much better understanding of what I need to be doing with my money, and have made sense of all financial decisions such as paying into my workplace pension, owning my own home, and I have a recently paid job and some side projects which earn me a little.
My question is, I think, a search for a validation of my life choices! Basically, despite having a good job and owning my own home outright, I am still struggling to budget every month. This is because I have made a terrible financial decision of owning two horses. These horses are my pride and joy, but the financial strain of it does make me feel guilty in terms of the distribution of spending between me and my husband. I spent about 600 a month on the horses, give or take a bit each month.
Do you have any words of wisdom about how to balance being sensible with money Vs 'investing' in my life passions? I don't think I'll ever give up the horses, so it's more about whether I continue to stress about it or not.
Many thanks for your wisdom as always
Josie
 
25:20 Question 4
Thank you for all the great content!
I have a LISA question for the podcast in relation to my 25 year old son? He currently lives with me in SW London and is saving to buy his own place. I love having him stay and I am in no rush for him to move out.
He/we decided not to go with a LISA because he is likely to buy a property in or around London and we are concerned about the £450K cap which I believe has remained fixed since 2017. He is very motivated, ambitious and hard working and has already had several promotions with an opportunity to work in the US next year. He has already saved £50K for a deposit and I intend helping him too. He is not in a rush to buy as it feels like the property market is no longer running away from him. 
He told me he thinks it makes more sense to enter the property market on the second rung of the ladder rather than the first as it costs so much to move with stamp duty, fees etc. So perhaps a 2 bed in a nice(ish) area rather than a starter home (and renting the second bedroom to a friend). I think I agree with him, especially if he ends up working in the US for an unknown period of time.  A 2 bed in a nice(ish) area where he actually wants to live would cost more than the £450K cap which is why we are reluctant to use the LISA for saving for his first home (I understand it can also be a pension investment but he is already contributing to his workplace pension).
However, I have in my head a bug that says he can put minimal contributions into a LISA each year (say £5) which he could top up retrospectively if he changes his mind and does find somewhere to buy for under £450K. Am I correct?
Your thoughts would be much appreciated.
Michelle

29:04 Question 5
Hi Pete and Roger
Thanks so much for all the work you do, I've only found the podcast recently but already enjoying learning more and thinking about things differently.
My question relates to saving for retirement and specifically the period leading up to retiring.  Nearly all of our (mine and my husband's) pensions are in SIPPs where we have been happy to be 100% equity, in global index funds. We are now maybe 7-10 years from the point where we could retire, and I've been able to research withdrawal strategies to the point where I'm confident managing that when we get there.  We have determined our target asset allocation split between equities / bond funds / individual gilts and money market funds for the start point of retirement.
I haven't been able to find much information about the period of transition from 100% equity to the asset allocation we want in place for the start of retirement.  Obviously it's a balance between reducing exposure to volatility as we approach retirement and accepting a drag on the portfolio caused by the increasing allocation to cash and bonds and my instinctive (but not evidence-based!) approach would be to gradually move from one to the other over a number of years.
So my question is this - is there a better approach than just a straightline shift from one to the other?  How far out from retirement is it appropriate to start making the transition?  The best advice I can find online is just to pick whatever makes you feel comfortable and do that but surely there must be some more robust guidance out there?  I appreciate it might not be a one size fits all answer but would appreciate your thoughts on how to approach this.
The one piece of advice I do seem to have found is that however we decide to do it, to stick to a predetermined schedule to avoid temptation to try to time the market - does that sound sensible or have I missed the mark on that?
Thanks so much for any help you can give.
Fran
 
35:26  Question 6
Hey Pete & Roger,
Thank you for the great podcast!
I have a question about income protection insurance. I'm quite young (25 - probably among your youngest listeners!), no dependents, renting with my partner, and am fortunate enough to have a well paid job and a promising future career.
I recognise that my biggest asset is my future earning potential and would like to protect that in case of the worst. I have a 6 month emergency fund, healthy amounts (for my age) invested across ISAs and pensions, and my work offers 50% loss of income protection for accident or illness for 3 years, which is all great.
My question is - to what extent should I think about trying to protect against the tail risk of not being able to work for >3 years, possibly till pension age? This is of course quite unlikely, but would be very detrimental if it were to occur - the exact sort of place where insurance would make sense. However I can't seem to find any insurance policies with such a long deferral period and I can't "double up" by having a shorter referral period. So, do such products exist, and if not are there any alternatives other than just accepting that risk and re-evaluating if and when my circumstances change? Is this even a reasonable risk to be thinking about, or is it overkill? Is there anything I should think about that I may be missing?
Many thanks, Sarah
*Affiliate - https://meaningfulmoney.tv/lifesearch

From April 2027, many unused pension funds are set to be brought into the IHT net, changing how pensions work for legacy planning. Pete and Roger explain what's changing, what still remains exempt, where "double tax" can arise, and the practical steps to consider now — without rushing into knee-jerk decisions.


01:55 KNOW - Pensions no longer outside of estate
09:49 KNOW - Some important exemptions still remain
10:32 KNOW - In some cases there could be TWO taxes
14:15 KNOW - The administration will also change
16:58 KNOW Summary
17:15 DO - Rethink the old "leave the pension last" strategy
22:40 DO - Review who your beneficiaries actually are
24:56 DO - Consider using surplus pension income while you're alive
26:35 DO - Don't rush into drastic decisions
30:39 Podcast Review
 
Shownotes: https://meaningfulmoney.tv/session616

In this Meaningful Money Q&A episode, Pete Matthew and Roger Weeks answer six listener questions on UK personal finance, pensions and investing. We cover inheritance tax (IHT) and who actually pays it, a defined benefit pension "state pension deduction" before State Pension age, and whether salary sacrifice affects higher-rate tax relief. We also discuss whether global tracker funds are too concentrated in the US, how offshore investment bonds compare to a general investment account (GIA), and how IHT taper relief works for gifts and the nil-rate band.

Shownotes: https://meaningfulmoney.tv/QA44 


03:40  Question 1
Hi Pete and Roger,
I have been really enjoying your podcast and have learned so much about finance, tax and investments that I did not know before. I enjoyed your episode on inheritance tax.
I have a question regarding inheritance tax and what happens if beneficiaries are unable to afford to pay it. My parents are wealthy with three properties (mortgages all paid off) and a large private pension, my parents also had a limited company which they used to maximise their earnings by minimising tax. However, me and my brother are average in the financial sense, where we have "normal salaried jobs", as my father would say. We earn far less than him and hence have much less assets. I own a house but have most of the mortgage left to pay because I only bought it last year. I am also single and live alone on my single income. My brother rents a flat and spends most of what he earns and has no concept of saving/future plans or investments, he does not even have a pension.
I am under the assumption that the IHT has to paid first before the inherence is released, rather than IHT simply being deducted from the actual inherence itself before distribution?
When I look at the total of my parents assets, me and my brother have no where near enough money to be able to pay it, due to the large gap in wealth between us and my parents. I tried to discuss this with them a few times but was fobbed off. They don't have any plan in place, all they have is life insurance to cover each other should one party die, and a simple one page will including just each other and us, no extended family. My brother and mum have no clue about money, and my dad who is in charge of the finances has multiple health problems of late. I am anxious of the day when I will be asked to pay tons of IHT which I might not be able to able to afford, especially because I am single and have my own bills and mortgage, I can't afford another loan.
Is there a way to get around this or reduce the burden? If I cannot afford to pay the tax, can I simple "run away" from the situation and decline being a beneficiary, hence shoving the responsibility of IHT onto other family members? I don't really understand the process of probate, and whether my parents life insurance would pay it, but it seems to be that it pays out to the spouse should the other die, so I assume this would be added to the total assets and hence increase the tax burden should the other die?
My parents don't seem to be bothered and are reluctant to discuss this so I am unsure what to do. How do "average/mediocre" kids like me and my brother usually deal with the tax from being born into a wealthy family?
Sorry if this is a silly question, but I would appreciate any words of financial wisdom.
Many thanks, Lava

13:08  Question 2
Hi Pete and Roger,
I hope this message finds you well. As an avid listener of your podcast for the past couple of years, I want to express my gratitude for the way you break down financial and pension topics that can often seem overwhelming. Your insights have been invaluable to me.
I wanted to share a personal experience and seek your views on it. After dedicating 42 years working at M&S, I am now approaching 60 and preparing to take my pension later this year. While I am proud of my long service, I've encountered an unexpected surprise in my pension arrangement.
I have a Defined Benefit (DB) pension valued at around £9,000. Per year. However, upon receiving my pension quotation, I discovered that the scheme is structured to pay me this amount only until I reach 65 years of age, after which it reduces by approximately £2,200, a 24% reduction. This reduction is based on the assumption that the State Pension will compensate for the difference. However, with the State Pension age being pushed back, I will experience a reduction in my income before the State Pension begins when I turn 67.
This situation feels particularly unfair, especially given that at M&S, there are a significant number of women who are lower-paid workers. The unfairness is further accentuated by the fact that the reduction is a fixed sum, irrespective of one's earnings. This fixed sum reduction impacts lower-paid and part-time workers disproportionately.
I would greatly appreciate any insights or advice you might have on how to navigate this issue. Thank you once again for the fantastic work you do. Your podcast has been a tremendous help in making sense of pensions and finances.
Best regards, Joan
 
20:06  Question 3
Hi Pete and Roger,
Discovered the podcast and book a few months ago while trying to get more organised with life admin and planning for the future. Enjoying working through the back catalogue of the past seasons on the podcast and that's been very helpful - thank you.
I do have a question about salary sacrifice/exchange in a workplace pension around tax brackets. As I got a promotion at work a few years ago I ended up moving into the higher 40% tax bracket so I adjusted my pension contributions - my workplace offers salary exchange for pension contributions - to bring my adjusted salary to below £50k and stay within the 20% income tax bracket and also saving on National Insurance contributions and tax relief. However, last year, another promotion led to another increase in salary and several things going on such as buying a house meant that I hadn't adjusted the pension contributions enough and my adjusted salary was above £50k and a portion of that was taxed at the 40% rate.
Question I have is can I claim back the tax at the 40% rate from HMRC or does the salary exchange mean that I have already had the maximum tax relief applied?
Thanks and keep up the good work, Simon

23:42 Question 4
Hi Pete and Rog,
Only just discovered the pod and loving it!
You advocate global trackers and I can see why, as they are cheap and simple and have the appearance of diversifying risk. But do you not worry about putting 60-70% of your money in one market (the US), which is what a global tracker does? I understand that you're letting the market determine how your capital is allocated, but what is 'the market' when so many other people are also just investing in global trackers? It seems to me there is not enough price discovery and trackers may be chasing a bubble. Would love to get your views.
Cheers guys. Will
https://www.timeline.co/resources/indexing-the-paradox-of-concentration-of-return 
Adviser 3.0 Podcast episode on YouTube: https://www.youtube.com/watch?v=A-Y4jVxDLL4 

30:09 Question 5
Dear Roger and Pete
Huge fan of the show!
I had a question about offshore investment bonds. I'm an additional rate taxpayer and after contributing to pension and ISA, am then looking at what could come next. I've seen offshore investment bonds as an option, however I'm struggling to see how they would deliver a better outcome (assuming the same underlying investments) than simply using a GIA, and selling down the investments once I stop work.
Thanks again, Matt
Investment Bonds: https://www.youtube.com/watch?v=_q5HBoXmekI 

35:28  Question 6
Hi Pete, Roger and Team,
Firstly, thanks to you all for the amazing podcast, I have been listening for years and it has given me the confidence to manage my finances. I spread the word to all who will listen!
My question is regarding tapering with relation to gifts and IHT. The scenario is this, a person is gifted a fairly substantial sum (say £100k) but less than the £325k personal allowance. The person who gifted the sum then dies at 6 years post gift. The persons estate is say £750k.
In this case does tapering occur? Even though the gift is less than the £325k the whole estate is well over the personal allowance. Would IHT be paid on the sum over £325 with tapering on the gift? For example £325k IHT free due personal allowance, £100k at 6% taper relief with the remainder at normal IHT rates?
Hopefully that's a short enough question!
Many thanks, Alastair