Closing Remarks and Future Questions

Hi, Peter, Roger with the D with a D . Not sure . I like to touch on those more than just some of the questions sometimes . Hi and welcome to another meaningful manny Q and A with me, Pete Matthew and me Roger Wigs. All right, Roger, how you doing? I do fine. Thanks, Pete. Good. got We've some work being done just outside the studio. So there may be the occasional banging . It's not me and Roger doing anti dum towards it's just work people doing excellent work on the air conditioning system, which will be really good because it's absolutely boring . So hopefully that'll be useful for future episodes. And we are finally getting around to answering questions from this year, Roger. We're in releasing this in Mid June, and we're now answering questions from January. Well, it just shows how people love listening to us , you know ? Yeah, it's strange, isn't it? Yeah, I know I understand it really, but yeah, it shows the level of what people want from us. The fact that we've had this buildup in the background of all these questions . But please do keep them coming in Hello at meaningful money. TV with a subject line podcast question. And we'll put it in and we'll listen to it later in the year and perhaps answer your questions. Yeah, yeah, just obviously if it's time critical, yeah, trying to get it out . Yeah, we put a little note in the podcast questions at the top. Yeah, maybe, then if we spot that, if Nick spots that, then we'll see if we can squeeze it in sooner rather than later . But as always, if we go over any notes or links today, they are at the show notes. Meaning for money. tv slash QA fifty one , right? Oh, and if you're watching this on YouTube, do us a favor, like the video, subscribe to the channel if you're not already and share it with friends and family. Thank you so much. It really helps. Okay, first one from Mark Watch. This one's from Mark With the Sea. Mark with the Sea. Carc? Not Carc? No . Mark says hi both. I have a question relating to discretionary trusts for life insurance policies. I'm from Scotland, aged thirty seven, married with two young children and have a life insurance policy with Vitality, which is currently not in trust. I was considering putting it into a trust for the benefits associated to inheritance tax, but was looking to get your opinion on whether it was necessary or not and what the pros cons are, thanks Mark with a C I was always taught, you know, in financial advisor school that it should be the default that it's in trust. Yes. But it all comes down to why you're taking it out. And the question that jumps out to me initially would be if you're married with two young children, you say it's I have , is it a we have? Because if it's in joint names , ye theah app,roach might be slightly different. Sure, because if it's joint life , first death, so the joint life bit that relates to when it pays out, doesn't it? So if it's for both you and your wife , I'm assuming life actually, you know, could be same sex marriage, but you know, if it's on both lives you and your spouse, then if it's first if it's joint life, first death and obviously you both own it and it pays out when the first of you dies. And because you both own it being only for probate it would pay immediately. It would pay immediately and it was payout to the spouse and it doesn't form part of your estate because it's a joint policy that's paid out. Sure, which is a which is important but if it's in your name then it absolutely ought to be in trust Yeah I would have thought because you can then there is an assumption here that Scot thetish law is the same for trust, but I'm pretty sure it is . Yeah, because then it just avoids the probate process altogether because essentially it's not owned by you anymore. It's owned by the trust. Yeah. And the whole idea of having a life policy it pays , this is a bit of tweet, pays the right amount to the right person at the right time . And if you've got a policy that's not in trust and is a delayed with probate, you're getting the money out for the purpose it was set up for maybe delayed, which activates whole object . It does . And so you don't want it depends on the size of your state, but obviously if it is added to your state, it could potentially be problematic for inheritance tax or it could even put you into the inheritance tax ban depending on how big the policy is. But ultimately it's about speed and as you say Ros getting into the right hands at the right time . You can avoid the need for trusts to a certain degree by using life of another. Do you want to explain that? Yeah, this is where instead of insuring your own life for a benefit of somebody else or your joint lives, you actually take a policy out on someone you have a financial interest it's got to be. So you take the policy on your spouse or partner, whatever it is. And then when they die, you get the money automatically because you're the owner of the policy and not the life insured. Yeah. So that gets around that timing thing . Having said that, it still forms part of your estate because you own the policy on somebody else. So yeah, so if you die together. Yeah , which is obviously unlikely and very unfortunate but could happen. So yeah, these are just things think about. I think I mean given this with vitality, if it's just life assurance, then that's fine. It can go into trust. If there's an element of critical illness attached to it, which there often is , then you probably should consider something called a split trust or a vitality will have their own trust documents specifically for this because if you think that through, if you die, you want the proceeds to go into trust so it's quickly paid out to your spouse for paying off the mortgage or whatever. But if you survive, but you get a critical illness , you don't necessarily want the complication of those benefits going into trust then having to be kind of unwound, really, you want that money in your own hands as quick as possible. So a split trust kind of does that. It pays out death benefits into trust, but critical illness benefits go straight to you. So just be care treatfully around that there if's critically illness benefits. Yeah. And literally go back to why you took the policy out. What's it for ? Is it enjoying lives? That gives a different spin on as well. So it does. Okay, this next one is from David Hipe and Roger. I'm a relative latecomer to the podcast. It's been a year or so now, but your work makes the complications of planning for retirement so much more understandable. So thank you for bringing clarity to a very difficult subject. You're welcome, David. Thank you so much. I have two first world questions if I may . Neither are time critical. It's probably a good thing. I am in a fortunate position. DB pensions will kick in over the next two years. I am sixty three totaling circuits seventy five grand a year. Well well, nice. And with the state pension at sixty seven, it won't be very long if tax thresholds and rates don't change before I'm going to be hitting the sixty percent effective rate in other words, income over one hundred grand. So to delay the inevitable, I'm thinking I will need to contribute to a DC pension , exclamation mark. As I understand it, if I have a DC scheme for three taxiers and presumably contribute to such a scheme each year, say just one hundred pounds , in the year that I hit the hundred pound pound income , I will be able to contribute gross three thousand six hundred pounds times four , less any annual contributions along the way in the first year or with care spreading that amount over two to three years to ease the tax burden. I realize when the money is withdrawn it will still be taxed at my marginal rate, but maybe the sixty percent marginal rate will have been removed by then I can only hope. Is that right ? Have I missed anything or are there any other techniques generally available? It's not right, you have missed some things. We'll get to that in a minute . I am also in a position that when my wife and I both die, unless care home fees are eaten into the estate, there will be inheritance tax to pay as our combined wealth is well over a million and we have already given away what we reasonably can to our children . As I understand it, inheritance tax is payable six months after death, but all being well, probate will be granted well before then so our bank accounts can be used to pay the tax. Our children have financial and health powers of attorney, but they are irrelevant on death, yes they are. Apart from incredibly expensive life insurance or a lifetime gift of cash for this purpose, is there anything we can do to facilitate payment ? The nature of our affairs means there's not much more we can do to mitigate the liability itself, i. e. the vast majority of the value is in the family home. So two questions there. So do you want to take the pensions one first, Roger? Yeah, the pension one actually , David, you don't have to have a DC scheme for three years. The rule is to use carry forward, you've just got to have a pension scheme it where's it's as long as open and you've got a DB scheme. So you haven't got to worry about the three year DC thing. So ignore that. You've already got a pension in place , but you are wrong in saying you could then do four lots of three thousand six hundred . You will have no earnings from what you're telling me in that year. So you can't do the four years. You can't carry forward the three thousand six hundred. You can only pay in what you're to all poweday in. So that year you're limited by three thousand six hundred or two eighty previd tax relief. Yeah , because DB pensions, state pensions, they are not relevant earnings. And so there's no you can't make pensionsion contribut off the back of them. So you are it's as if you had no earnings at all. You do have no earnings as far as the rules are concerned and just like if you were , you know , an eighteen year old with no job or whatever you, could put three thousand six hundred into a pension. You can do that as you propose here, but you cannot carry forward the previous three years. That's just a sort of hard and fast rule. So the maximum you're going to be able to put in is three thousand six hundred a year, David , we reckon. Whether that'll be enough to pull you down below the hundred grand threshold, obviously will depend on how it all adds up at the time. At least you're thinking ahead though, so something , you could consider gift aid. It's probably the only other sort of really powerful option to reduce your adjusted net income . So essentially, you know, you if you pay a thousand quitter charity , that gift gets grossed up . So the charity actually gets one to two fifty, it gets grossed up by twenty percent, essentially . But your adjusted net income is then reduced by that full amount . Yeah. Well, you doubtling me for a minute. No, no, no, I got completely read . So your income is then reduced by the one thousand two hundred fifty. So you give obviously, you don't have the money anymore. You're giving it to charity, right? But it's something else to consider to reduce your adjusted net income. So but a small payment like that if added to the three thousand six hundred by the time you get used if you're saving sixty percent tax it's worth the far end it. It's worth doing. Yeah, yeah. Okay. So this other question about the speed of payout . I mean, there's not what you can do about that. It is what it is . I mean, you know, hopefully probate will be granted well before that. I mean, you and I've both seen probate cases take two years. Yeah. Yeah . And these days actually a lot of the investment companies and banks will allow the probate to be paid from your accounts. The RST. I saw the RST . So yes, it's not, you know, if it's obviously probate isn't granted until IHT is paid. Yeah , but yes, a lot of the banks will allow specific withdrawals. So as long as it's gone through your solicitor or whatever and they can see the proof of that, then they will often be able to pay the IHT for you from their funds whether it's invested funds or whether it's cash . There is a third thing you can do and the executors could actually take a loan out with the promise that they will be repaid from asset sales at some point in the future would be a big loan though. Yeah, it would be a big loan potentially. I mean, I think it sounds David like there would be enough in bank accounts to pay the IOST . That I mean that's like the magic really. The issue we generally have is that if there's only a property , you know and that has to be sold to pay the IST, that's when it can get, you know, interest sort of payments can rack up and stuff. If it takes two years to sell a house, then you're not really paying interest on the IHC for all that time. So yeah, cool. All right, hopefully that answers that next one, Roger. Great question three. This is from Dan. Dan says Hi, Roger and Pete. First of all, thank you for all the content you provide. It has been incredibly useful as I start to really take the idea of early retirement seriously. It's really, really important . I am forty nine looking to retire as early as financially possible as I have medical issues that mean my life expectancy is somewhat curtailed, though I plan on defying the inevitable for as long as possible. Good on you . I have a DC pension which I plan to access as soon as I stop working in hopefully ten years' time. I also have an index link deferred DB pension which provides a fifty percent widow's pension as one of the benefits. I am torn between accessing this six years early with a twenty five percent reduction as I start drawing from my DC pension or delaying so that my wife is better taken care of in later life. Whatever I choose, all the projections seem to stack up that my DC pension should last into my nineties, but I'm acutely aware that I will probably want to go a bit overboard when I first retire and try to maximize travel experiences . My question is, am I missing something in the DB trade off? Assuming I live a while after retiring, accessing the pension early will take a decent amount of time before we're financially worse off than we would have been if we'd waited Circle thirteen years . However, the combined loss of my state pension and the smaller DB income could leave my wife short of funds. I would really appreciate your perspective on this scenario and anything else you think I might want to consider. Many thanks again for all your work and words of wisdom . Dan yeah, it's a difficult situation, Dan, you know? He balance that So DB schemes by definition can ward against longevity because are a rising income . And you know, if you live you until' hundredre a ten and damn, then obviously you're going to completely game that system . So because your income will rise you'll always win. But of course it's less of a benefit if you die early if your life expenses curtailed as you say does it say is there like a sixty what's the fifty fifty percent winners winners pension? Yeah so that's quite a slice off because their costs won't reduce you know household costs won't reduce by half if there's only one of you. I generally when I'm planning I sort of reduce costs by about twenty five percent rather than half. A lot of them still the same, right ? The problem is with these the DB pension is that by taking it early, obviously the trustees of the scheme is saying, well, actually if we've taken it early and that escalates over time , you know, that twenty five percent reduction is really, really important for them. The problem is what you're saying to me and what I'm listening to in the background is actually losing your state pension and then having a far, far smaller DB pension scheme staying back for your wife when you've gone, horrible thing to talk about might be difficult for her. So I think you've got to come back to brass tax and say, okay, what is more important to me and say, Okay , I think is it identifying what your wife will perhaps need ? And it's a horrible thing to talk about . Yeah , yes, yes, it is. You gotta face it though, isn't it? If you draw the DB early, obviously it's a lower amount but But obviously it's the lower out because it's paying out for longer. If you draw the DB early , it's less draw on your DC fund, which I this is logical, I think leaves more of that intact , which gives greater flexibility later. So we would assume there's more fund left if you die early Dan, then you know, your wife , presumably your pension fund goes to her. You know, you have done an expression of wish, haven't you? Right. And so she would have, yes, she'd have she would lose your state pension, she would lose half of the DB pension . Hopefully she's got her own full state pension , if not, if there's anything you can do to make up past years, that's worth considering as well . But then she's got flexibility from what would be a larger DC pot than if you spent all the DC or more of the DC earlier deferring the DV . It's I think if I was planning for you would be modelling it. Yes. So you'd actually put some numbers on it. I think that's the only way it probably won't be a lot in it though. There probably isn't much in it. I think it does come down to you're really saying to us actually you're going to be spending more in your early years of retirement for obvious reasons because you may not have a longer years of retirement. So actually the DC does give you more flexibility to draw down upon that to pay for those experiences. It's a real balance. There's no rights and wrongs here. That's the difficulty with it. I can sort of feel the you mentioned it, Rose, it's sort of brass tax. It said, you know, could leave my wife short of funds . I imagine if you had to choose , you would want her looked after . If it was a purely binary decision, which it isn't, it'd be like, you know, live really well in early retirement or make sure my wife is okay. I'm sure like most people you would say, I'd rather make sure she was looked after . And so I think you could probably put some numbers on it by saying what is what level of guaranteed income would make your wife financially secure ? You know, not necessarily living well , but living comfortably, right? Not six holidays a year, not changing the car every other year, but what level of guaranteed income would be enough for her to live well, worry free . And I would be basing the rest of my planning around that, I think . Yeah. And the widow's pension is only really valuable to this one specific scenario of you dying when you do You're trying to build your flexibility by spending now but also making sure your wife's taken care of. So yeah, I think a bit of planning would go a long way here really. Yeah, I'm going to put a little plugin for Minfo Academy here because that gives you access to the financial planning tool that I use every day with clients. It enables you to model scenarios and do so intelligently with tax and inflation and growth rates and all that sort of stuff taken into account. So like any projection, it's not accurate, right? But it is it will help you kind of visualize and consider these options. And it remember also that you could do kind of like a partial bridging thing. It doesn't have to be, you know, we stop Wednesday ideal ten years time is it? ten years time flee, right? Not to say like fifty nine , you start drawing your DB pension then, you could draw DC from fifty nine to sixty two and just defer your DB three years instead of, you know, the full sort of six years until it pays out or whatever. So there's going to be a lot of gran ularity here and I think either working with a very good financial planner would help you kind of navigate this stuff or you could do it yourself with a bit of help from meaningful academy. So meaningful academy. com slash retirement planning. Use a coupon code podcast if you decide it's for you. was a little bit hesitant to pitch, but this is the sort of thing that that is made for. Yeah. Yeah. Creating the scenarios and seeing which you like best. And one last little comment you're hoping to outdo this for as long as you can, which fingers cross all takes place. It's worth checking whether your DB scheme actually offers enhanced terms if you have good channel. I hellalth. They may or may not have. And it depends on your diagnosis and stuff like that, I guess. But if your diagnosis is quite serious and it does sound like it, then perhaps you do DBS scheme and see if they have any enhanced terms for you. Yeah, could p possiblyay out earlier with not much of a reduction. No, no, no, whatever it's definitely worth asking. Okay , so what follows started out as the longest question we've ever received. It was over a thousand words. So Joe , thank you, not thank you for that . But I mean normally that would be enough to just not have it included, but it actually raises a point that I don't think anybody's raised yet. And I'm cutting most of it out, don't worry, I'm cutting quite a bit of it out . So here's a question from Joe. Hi Pete and Roger. My partner works for Royal Mail . She is under the new starters contract and started in twenty twenty two at which, point the pension scheme was a typical defined contribution scheme with very generous contribution levels from the employer of ten percent with a six percent contribution from the employee . This was easy to make assumptions on for compound calculations to plan for our very far away retirement as we are both currently twenty seven years of age. Important point I think. Now this brings me to today's pension scheme, which is known as collective defined contribution . I'm struggling to find any information on this type of scheme as it seems to be the first of its kind in the UK and seems to have been used for a while in the Netherlands. Now the wording of the scheme seems to be worded as if it's a defined benefit scheme with a lump sum being paid at retire ment age and a guaranteed income for life amount being paid each month. However, it has the caveat that the payout per month may decrease if investments don't perform as expected for better or for worse . So this is not a guaranteed amount at all in reality . The issue I have with this is that with a standard DC scheme like my own, if I was to die either before or during retirement, the remaining money in the pot would be inherited by my surviving spouse or if she was to pass away before I do, it would go to the next nominated beneficiary. With the collective DC scheme, it's worried that if my partner was to die before she claimed it, then I would receive the income for life proportion at a reduced rate of fifty percent, lose out on the lump sum entirely, or if she was to pass away after claiming it, then she would clearly receive the lump sum and I would remain to collect the fifty percent income for life as long as I remain alive. This seems to be very unfav orable for anyone receiving the benefit on this scheme on the whole . I've done some comparisons as the new collective DC plan was sold as far and away a better option than the old DC plan, but I can't find a way for it to make sense. Joel then adds like about five hundred words of calculations, which I'm going to skip . It's hard to see how this new scheme is better in any way compared to the old scheme, even if the contributions from the employer look more gener ous on paper . Well, that's because contributions for D any kind of DB scheme is largely irrelevant. Oh exactly. Yeah Is there something I am completely missing or misunderstanding with this new type of pension scheme? I haven't seen much content online about it at all and would love for this to be featured in a podcast episode or a video or even just for a chat on this matter as I feel very underwater with it . I can't seem to find a good way to factor this pension into our plans as we do plan to retire before the age of sixty seven. That's just based on the CD scheme payout. So that's what I'm working with. There is an option to opt out of the CDC plan and join a regular Nest DC plan instead. This has only got four percent employee contributions on top of the five percent employee given a yearly contribution of X so that doesn't seem like a good option realistically. I suppose my main gripe would be how much you would lose out on if the wor st was to happen , as traditionally this would remain as a pot for the next of kin to inherit. However, if my partner and I both passed away at age seventy, I certainly hope not, and didn't have kids under the age of eighteen, the entire amount of money would be lost. This is the part I'm struggling to wrestle with and the nest pot even looks appealing with this in mind. I know the future is uncertain and we could live to a hundred, but the chances are relatively low. I think at twenty seven the chances are relatively low toll doar Apologies, this got a bit long and ranty . I would appreciate any feedback. Keep up the amazing work. Are you you're forgiven . And I've learned loads from your content over the years. I can feel the frustration here here. Yeah , we were tempted initially to say Joe, like you're twenty seven man, what are you worried about? But that would be too dismissive. I understand, you know, you want to plan, you want to think ahead, and that is very much to your credit. So we're not going to dismiss that, but there is a kind of rider that some of these comparisons, man. I mean, you did calculation, which I skipped , which ended up with a sort of what the pot might be in a DC pension , you know, when you're sixty five or whatever , but there was no inflation adjustment as far as I could see in your calculation. So that would be a huge factor. This is a weird scheme, it's a first of its kind. It is yeah, and we've had to dig into this because it's like one of these old schemes where you had a guaranteed of income with a DC well no a decier flexible income with a guaranteed underpin , which seems to be, which is what we never really came across those either back in the day . But I think there is something in your question, Joe, that I want to just latch on to and say if the worst was to happen, traditionally this would remain as a pot for my next of kin to inherit. This is a very new thing . But back in the day, I'm saying that again now most people had a DB pot and when you died, it went as a spouse's pension to your next of kin and then it died with your if you both went, unfortunately that's the way it happened . So this the current way of looking at pension pots is not the traditional way, it's the new way . And I think we've got to detach ourselves from that and say what exactly is this ? It's like a DB scheme Because effectively you get a guarantee of an income based upon this year's earnings or your wife's . But it has this underpin that says if the scheme does well, you get more. Unfortunately, it's also got the down ward side . But you've also got a cross subsidy because you've got other people in the scheme that may not make retirement. So their funds, like in an old traditional DB scheme would be left in the pot to make sure the pot does its job for you. So I'm thinking in some ways it's difficult to compare because you're doing apples and pears, but I think you're getting the best of both worlds really. Yeah, I'd agree with that. We had one comment actually that gave us some stick for saying that, you know, pensions are not inheritance tax vehicles. But I absolutely stand by that. You know, it's really only been since twenty fifteen that the people really started to think about leaving their pension fund because they were just massively taxed beforehand and in some cases obviously back in the day most people I said it. Yeah . Most people bought annuity . Yeah. So pensions, freedoms, flexibilities, it's really only the relatively recent past where leaving a pot for your beneficiaries has even been a thing. So it is important not to project that on what in this case is a hybrid DB and DC but still has many of the benefits of a DB . Yes. You know, it's its whole purpose is to provide an increasing income. Yes, there's a little bit of risk that income might not increase or it might even fall a little bit. So it isn't fully guaranteed , but it's about the income. It's not about an inheritable part. No, no, I don't know what it's for. No. And what you're missing out on as well, I think, Joe, possibly is, that your wife will get an eighth of this year's earnings put aside for the future. Well, that itself will escalate . Notwithstanding the investment in the background. So that will escalate in retire ment before retirement and then in retirement. So you're getting an escalation factor built in already before you get there. So it's not just the fund that's going up, it's the income that's going up in the background. Yeah, that's an important point. It's easy to get hung up on contribution rates , which mean two completely different things when it comes to DB and DC . Obviously with DC is very straightforward, that money goes into your pot and it's invested and it grows. With DB it's just about keeping the scheme alive, making sure it's funded enough to provide the benefits with this new CDC god yeah another pension hacker we got to get our heads around you know it's doing a bit of both. I just don't think you can compare contribution levels. And I don't think you can compare well with a DC I'd have a pot of this versus what it might work out under the new CDC scheme. I think it is, as Robert said, Apples and pears . I don't know whether it's even possible to say which is better than the other. I think they're just weirdly different. And I think because you're so far away from retirement, it's difficult to say that's better than that one. There's there's no perfect solution to this one because it depends on earnings between now and then. So if you take that to the net degree and say, okay if your wife then gets lots of pay rises and actually her pension plan will grow far quicker than had she be paying into a DC scheme. Yeah Yeah, true . I mean , I would absolutely not switch out of that into nest . No, I mean Nest is a suboptimal scheme at the best of times. You know, there's initial charges on old contributions . Some of the investments are, you know, fairly ordinary. You need to look for the best one. There's very lim ited investment choice. You can't do partial transfers away. The Nest scheme is a sort of Tesco Value sort of box standard kind of scheme really . And the CDC definitely is not that . So I would urge you, I think, Joe, just not to get hung up on what could have been the case, like comparing it to the old scheme. She can't have the old scheme anymore. So you have to just kind of accept that. Nest is definitely an inferior scheme to the CDC. Yeah. And the other thing I'm thinking is well, at age twenty seven, you will amass other assets during your lifetime. You'll end up with ICES stuff. At the moment you're doing mortgages and pensions and that's understandable, but you will amass other assets and they will provide the flexibility and the ongoing money that your wife could possibly have should you go early? Okay, so hopefully Joe, I mean answer, Joe, it is to your credit that you're thinking about this sort of stuff just don't overthink this kind of stuff, I guess I would say. Yeah. Okay, question five. Question five. This is from Lawrence. Says Hi Peter and Roger with a D. With a D. Not sure . I like Central Those more than I can't some of the questions sometimes . Like many people these days, I spent part of my career working overseas. I'm now fifty two and have been thinking about how best to deal with personal pensions I accrued whilst working abroad. In my case in Japan and the United States , both broadly equivalent to the four hundred and one K type schemes. Whilst working overseas, I didn't accrue sufficient qualifying years to receive any state pension benefits. But I did build up some company personal pension entitlements. The amounts are relatively small, less than a hundred thousand pounds in total , which makes me question whether it's worth the time and cost of seeking formal financial advice. My UK based pensions and ISIS are relatively straightforward and well organized, but these overseas pots feel more cumbersome by comparison. I imagine there must be many people in a similar position holding small overseas pension pots and unsure what the most sensible approach is. From an administrative perspective, it feels as though the simplest option may be to access these pensions as soon as I reach the relevant retirement ages rather than continue to manage them long term. That said, I'd welcome any general thoughts or guidance on typical approaches people take in this situation and in the obvious pitfalls to be aware of. Many thanks, Lawrence. General thoughts and guidance is what you're going to get as an area of race. Nobody's coming your way now. No just, I think usually in this case, and obviously don't do anything quickly. Make sure you understand exactly what the tax situation, what the sort of admin situation is , if you leave them where they are, that's sort of almost like the default choice, right? Leave them where they are and take them as you suggest you're probably going to do. Take the benefits when they come at the time when they're due. So you know I mean to sort of think about early access, transferring or any of that stuff. That's kind of your starting point, I think I suppose the difficulty with overseas pensions is that the complications are disproportionate as the amount of money you get invested. So you can have currency exposure which wouldn't necessarily normally have over here . So fluctuations in the Japanese and the American currencies compared compared to sterling . Local tax rules , how they work over there. No idea. I've got a clue . And then the reporting requirements in the UK when you patriate the money from your pension here. Yeah, when it gets paid into your bank account have to put that tax return. You have to make sure you put it in the right box, I suppose . You can occasionally transfer overseas pensions into UK plans, but they've got to be qualifying and yeah, you're right to sort of highlight whether the costs or benefits will stack up because that's deeply specialist work. I can't imagine any UK pension provider would accept a transfer room without advice. No . And obviously it would be specialist device so it wouldn't necessarily be cheap. But if it saves you making a bunch of mistakes, it probably would pay for itself . But recommendation in a minute. I'm kind of think that what Lawrence has suggested is probably the best thing to do. Yeah, in my head, yeah, keep it simple for yourself, just leave them sit there. They'll do what they do. If they're like four hundred one k they're invested in the background anyway. Yeah. So if you if you bring the money on shore here , if you manage to get that done through with the advice or whatever, it's like it then needs to be invested . So there's no harm in perhaps leaving it somewhere else invested, I don't know. Yeah , I don't know. I mean, this is way outside our field, Lawrence, but fortunately, I know a man who can help. At least I know a man whose company can help. So he's been on podcast a couple of times over the years a good friend of mine called Phil Billingham and he is mostly retired now like a lot of us, I think he's still keeping his hand in . But his firm is called Perceptive Planning. We'll put a link in the show notes to him, but just search perceptive planning and you'll find him just tell him I sent you. All right, but I've never met anyone more competent when it comes to cross border stuff. He's lived I think on five different continents and there's this is at his company's specialism is managing this kind of cross border stuff. So definitely check them out perceptive planning. UK . All right . And lastly from that's confusing, this is from Pete. Oh no. Oh no, no, no, it isn't. It's from Steven Tabarum. That was weird. Just read my own name. Sorry about that . So Stephen, thank you. fifty eight now. Oh , this was via a YouTube comment. That's why there's no preamble. It's like, all right, Stephen, maybe say some nice things before you ask a question. I was surprised you used the question because he didn't say anything nice. No, no, no, exactly. I suppose Nick just didn't kick it out. It's mandatory. You have to say nice things before we ask pressure. fifty eight now and both thinking of retire at sixty one with no mortgage and kids self sufficient . At age six onety, we will have around three hundred thousand in savings including stocks and shares ISA, cash ISIS, premium bonds and bank accounts. And between us we will have around four hundred fifty thousand in pensions at age sixty seven and the wife will get a seven thousand pounds a year NHSDB pension . Our idea is to live off the cash first from age sixty one to age sixty seven to let the pension pop grow to its absolute max and then draw down the twenty five percent tax free to add to the state pension at age sixty seven , then live off the rest at about four percent a year . Okay but others say to take the tax free twenty five percent before sixty seven because if I do it at sixty seven it will add to the state pension, taking you over the personal allowance. You won't, but yeah, we'll come back. We want to let the pot grow more for actual retirement age of sixty seven onwards and leave more for the kids' inheritance long term if we don't use ALO, so we're unsure what to do. For clarity, it is our intention to lump some money into our pensions and ISIS in April. Okay , it's like a mon monthth ag agoo with some of our available cash you may also lump some into my stocks and chairs ISA to leave it growing for say between eight to fifteen years. Any advice welcome? No advice, Stephen, just some thoughts . But I mean that others say to take the tax free twenty five percent before sixty seven because if I do it at sixty seven it will add to the state pension taking you over the postalance. Won't it tax free? It's tax free. It's not income. It's capital. Listen to it, Stephen. Yeah. That's the thing that screamed out at me when I first read the question. Yeah . The other thing that jumps out at me, Stephen, is you say at age sixty one , you will have thirty thousand pounds of savings and then you're going to draw from your savings to get you through to retirement and then access your pension, which is laudable . The problem is that you will have a personal allowance between those years when you've got no income . So you could draw from your pension tax free. So the tax free lump sum comes over and you can take some tax free income. It's taxable income, but within your threshold allowance , that could be tax free. So you don't need to spend all of your cash. No You need a withdrawal strategy. Definitely. You're fifty eight now, so you know you're three years hence, you're thinking about it at the right time . We have a kind of order of operations. This is how we would sort of think about it at Jackson. So firstly, know all your sources of income now. So it's not withdrawals. This is source of income. So the wives Joanne would clip me around the back of my head if I called her the wife. So your wife's not listening, Steven. The wife's seven grand a year NHSDB pension , you need to know whether you're both on for the full state pension. Once you've identified your pensions, that's your sources of income, that's step one. Step two is to really understand what your outgoings are, right? And not just what they are, but what you would like them to be to enjoy retirement to the full . Step three is to assess sustainability. So will the money last? Are you going to run out? The fact that you're talking in terms of four percent rules and stuff like that suggests that you're already thinking about this, which is good . With those three things known, you can then start to kind of determine what your drawdown plan will be. And there's always re aason why I have a job, right? It's about sort of balancing different optimizations . And which ones we go for depend very much on the client, right? It's about what they want, not what we want. So optimizing for income and tax, both now and deep into the future of your retirement, optimizing for legacy planning. You talk about that, leaving more for the kids, right? Optimizing for diversification of pots. That's really important where you're drawing money from. So if you've just got a big pension pot and not a lot in savings, we'd be looking to address that if we could. But there's no way you can balance all three of those. You're going to have to prioritize to a greater or lesser extent, right? But that's kind of step four , determine your drawdown plan. And once that's decided, you invest accordingly. Now I'm really annoyed because James Shaq did a video on this before I got ch aance to . He's a lot more consistent than me, that's why . But essentially, he codified those things. This is what we do every day, but he's done a really good video on it. Like all James Shack videos, there's loads of detail and some great examples in it. We'll put a link in the show notes, but I'm going to be doing one soon. But I think it is a balancing up of what I see all the time with people is look after your needs first . Yeah, what you leave to the children is a bonus for them . It's all down to how much you and your wife need to spend. As Pete said, you know, look at what you're spending now, but actually what would I like to spend on what would I like to do in retirement? Yeah. Get those things in place first. You know, chances are you may be living in the property that children have, you may not need any pension bond. I'm going through this exact thing at the minute . I'm now looking where do I draw my income from because my Jackson's money stops last payment the last payment's going to come to me. And it's like, okay, I've got some ISIS and I've got some pensions. Where do I draw it from? So the children know that if they get anything, that's a bonus for them. But we're trying to work out this. So I'm doing exactly the same thing for you that you're doing at the minute is like, okay, I will have a period of when I've got no income. So I need to probably draw some from my pensions within my personal allowance. Otherwise you lose it. Yeah. Why would you not take that? It's tax free income. And if you think that my pension and your pension and your IS and my IS are invested, whether you take the take the capital withdrawal for your income replacement comes from the invested ISO or the invested pension, it doesn't make too much difference. It's the taxation side of this. Definitely . If you need help with any of that, by the way, I know a really good financial Don the road. Exactly. Yeah, yeah. Okay, good up. I mean there's some really good questions this week actually and some challenging ones . So I hope those answers were helpful , but please do keep them coming in at hello meaningful money. tv with a subdoing podcast question and if they're urgent mark, them urgent or his time critical I think it's pulled out. Yeah, we'll do our best to get to them. But that's it for this week. Hope you enjoyed it. Thank you, Mr. Roger Weeks, you speak? Yeah, and oh I nearly did things out of order there. Forgive me, I nearly messed with the producer Kate's head notes and links at the show notes meaningformed. QA fifty one. We hope you enjoyed it. We'll see you next time.