Britain's Pension System Is In Danger

26:16And the pensions minister, Torsten Bell, is on this mission to end up with fewer, bigger, better run pension schemes. So they're putting the squeeze on the pension schemes. And it starts with the things called master trusts, which are big national schemes where you've got NEST, some people may have heard of. Good example of that, where you've got loads of employers all sharing the same pension scheme together. So Torsten Bell's coming along and he's saying, you big pension schemes, you've got to have at least£25 billion in the pot by 2030. And if you can't get to that level, basically you've got to shut up shop and consolidate your whole pension scheme with someone else's pension scheme.

26:54So he's putting the squeeze on the pensions industry. I think that's probably not a bad thing. I think we could do with fewer pensions. I don't see why we need all these thousands and thousands of pension schemes. In some cases, it's still a bit of a cottage industry. So hopefully that will also then lead to better returns because they'll be better governed. They can make different investment choices. They'll get better economies of scale. The theoretical arguments stack up. The thing that makes me slightly uncomfortable about this is when you read the DWP's analysis this paper on justification for this, and you look at the returns that these pension schemes have delivered in the past, right, there's pretty much zero correlation between size and levels of return, right?

27:41So small schemes sometimes do really well, big schemes sometimes do quite badly. Over what kind of time periods? I can't remember what the, that's a good question, I can't remember what the time period was. But I looked at this chart and thought, well, you'd actually get more correlation if you got a hillbilly to fire buckshot at a road sign. It's It's just like, there's just nothing there at all, right? But I buy the theoretical argument. It kind of makes sense that we need to end up with fewer, bigger, better. I was going to ask the question of why does bigger mean better? And you basically answered it.

28:10One thing that you worry about is if a big fund does badly, the impact of that on the population is much bigger. It's like a reverse diversification point, isn't it? So if Ness screw up or just deliver poor returns. So, and we just have to hope they do a good job. And alongside this consolidation agenda, they're also bringing in this new value for money framework. And to an extent, this kind of stuff exists already. And pension schemes have loads of reporting requirements on them. And they have to produce chair statements every year and details of their investment returns and their charges. And no one ever reads this report, but we have to keep producing them every year.

28:49And there's a new version of this called this value for money framework that will analyse all these pension schemes across the services they provide to their members, the investment returns that they're making, and the challenges that they're levying. And this will help bring more transparency to the schemes and scrutinise them and should also help to, as an early warning mechanism, to identify schemes that you've just described in that scenario who aren't delivering good returns and try and steer them all to delivering optimum returns in the future. There are risks with that. They could end up with a lot of clustering.

29:21They could all just cluster towards mediocre because no one wants to be an outlier. So there are risks. But broadly, I think this is not a bad strategy. Practically, quickly, for this consolidation, for the individual, was this something that they have to do, like they actually actively have to consolidate their pensions or will it be done for them? It'll be done for them. What if you don't want to consolidate? You don't have a choice. Well, if it's them picking up one of your small pots and moving it to another provider, they will try and get in touch with you and say, hey T, just so you know, we're moving this over here, is that okay?

29:53And then you can go, no, I quite like it where it is. That should make more people kind of look at their pensions and be more interested. Yeah, and then also there's the dashboards, which I think will absolutely be a game changer. This is like on the government gateway kind of, is it that kind of vibe where you log on and you can see everything? All the pension schemes across the land are currently uploaded. They're making connections. They're not uploading their data because that sounds scary because someone will just come along and steal it all, right? So they're not doing that, but they're creating this hub whereby anyone will be able to just log into a hub.

30:23It's very simple just to go in and say, hi, this is my name, here are my personal details. Just remind me what pensions I've got out there. And it will hopefully help to solve that problem of people losing track with old pensions over the years, which is a massive problem, tens of billions of pounds that have just gone missing because people forget they've got pension schemes. So this dashboard is a really big part of the equation in making it easier for ordinary people just to get access to, oh, yeah, of course, there was that job I did 20 years ago. I'd forgotten I had that little pot of money there.

30:53So I think that's really, really good news. We spoke to Andrew Lee, who's an Australian politician, so they're obviously 20 years ahead of us in terms of auto-enrolment. He said people got really interested in the schemes when the money got bigger, and he was like, it was kind of like a time thing. So the one I'd heard from Australia is roughly when it gets the value of the sort of money you'd spend to buy a car. Yeah. It's kind of roughly when people go, oh, hello. Yeah. I'm getting interested now. Yeah, I mean, I don't want to put extra work on employers. I think they have a lot to contend with, but it'd be really good if the balance was printed on the payslip.

31:24So you could, I don't know, maybe it is or when I was, it wasn't. But you would just see this money leave for pension, and then it would feel like it went somewhere else. And it would almost feel like a tax. I could see I wasn't like that. I was heavily engaged. But my work colleagues were like, oh, that much has gone out for the pension. Whereas if you could see that transition from, we took this amount, now it's worth this amount, plus you got the tax relief, so actually you got a boost. They might see that journey and go, oh, well, this is actually a cool thing. And I think a big point, again, the Australians nailed this, is ownership and making people feel like this is your money rather than this is a tax.

32:00And we've talked before about how I would like to turn the system on its head and just say, look, once you've got a pension, you can carry that pension with you from... Pot for life. Pot for life, right. So you take it with every job you go to. You just go to your new employer and say, hi, this is my pension pot. And the employer goes, okay, fine. I'll put my money into your pension pot then, rather than the current system where every time you change jobs, the employer says, this is my pension. And if you want my money, you've got to join this new pension scheme, which to me is just a crazy system.

32:26So that question of ownership, I absolutely agree with you. But I think the dashboards will help in fostering that sense of ownership and giving people a really easy access point. The other thing I think is worth just highlighting is where the link-ups through open banking and the big high street banks and some of the smaller fintech banks as well, the online banks, are now making connections with pension providers. So you connect open banking with the dashboards. So it's not that far in the future where you open your banking app and there'll be a tab there that says, oh, Damien, do you want me to take you to your pensions?

33:05And it's all there on the same app. in your hand right in front of you on your phone, which, let's be honest, we look at more often than we do our payslips. Yeah, it'd be amazing. And then if you had like, these are how many NI contributions you've made so far towards your state pension or whatever, if you could have all of that in one, you just, it's like osmosis, isn't it? Slowly, the bits are getting connected together. Yeah. So it's coming. You know, and I think we shouldn't underestimate how important that is. So just making it easy for people, right? Right, that's just sort of, as a business model, you'll never go too far wrong if you can just make it easy for people.

33:38Well, that's what the success of auto-enrolment was. It made it hard to opt out, easy to be in. And it was the nudge that way. And a good nudge, you know, you're talking about getting communities invested that are outside of it. You'll do that by showing them the balances on their schemes and showing them how they're growing and showing them that they'll get some free money from it. And then people will be around the dinner table going, look at my pension, you know. And the crazy bit of that is, you know, I've talked earlier on about the billions of pounds the government gives in tax relief. No one sees that.

34:08I mean, you know, you guys have got accountants, you run businesses, right? So maybe you do see that because, you know, you have to think about this in terms of doing your accounts every year. Most people doing a job, looking at their pay slip, no one's going to buy it. Look, by the way, you know, your government just put 50 quid in your pension for you. That kind of doesn't happen at the moment. And I feel like as an incentive to save, for most people, the tax relief the government gives is largely wasted. I would argue the main benefit of putting money into a pension is not the returns you generate from investment.

34:41It is the tax relief, like the 40 % guaranteed return for a high rate taxpayer. I just slightly disagree with you there. For most people, it's the employer contribution. Okay, yeah, this is, yeah, yeah. But the combination of that free money from the government and the free money from your employer, it's the best return you'll ever get. Absolutely, you double your money on day one. It's like you're not going to get that anywhere else. Yeah, I was thinking as a limited company director, so I don't get it. But yeah, no, you are right. I'm just talking to your audience here. Just show me up. Do you want to fight?

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36:19Okay, thank you on the consolidation points. I think that's really clear. I want to talk about mandation now. So let's start again. What is the mandation piece? So do you know what? I actually brought somebody along today. So basically the mandation piece is the government saying, you, the pensions industry, with all that money that we directed to you, the hundreds of billions of pounds, trillions of pounds you're looking after, you're not putting enough of that into the UK economy. And we need more economic growth. We need a stimulated economy. We've got startup businesses that need financial capital to help them grow.

36:54And at the moment, it's the Canadian pension funds that are coming along and doing that. And the big final salary pension schemes, of which there are still quite a lot, though many of them are now closed to new members, right? They're not investing in the UK stock market anymore. They're investing in government debt and less exciting stuff like that that doesn't directly stimulate the growth of businesses and the economy. So Torsten Bell, the pensions ministry, has come along and said, do you know what I'm going to do? I'm going to put a reserve power in the legislation that gives me or any pensions minister in the future the ability to come along and force you pension schemes to invest your money where I think is appropriate.

37:34I mean, really, we're talking about infrastructure and private markets and small business growth. Where I think appropriate is very loose. Right. In my bank account. So just two thoughts around those, two reasons why this makes me really uncomfortable. I just wanted to quote this from our friend Adam Smith. So this dates from 1776, right? And he said, The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with the most unnecessary attention, but assume an authority which could safely be trusted to no council and senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.

38:16In other words... I don't speak like that anymore. I know, right? Drop the mic on that one. So what our Scottish friend is saying is, the last person you want to trust with directing you how to invest your money is the person who thinks it's appropriate for him to tell you how to invest your money, which is a slightly circular argument. But I don't disagree with him about that. And my other point on this is, you know, Torsten Bell will say, look, I used to run the Resolution Foundation. I'm the good guy here. I'm bringing this legislation in just to help the UK economy. but I want you to think of the worst politician in the country right the person you really whenever they come on tv the politician you really dislike the most who think absolute nutter you know particularly if they're a front bench politician who might one day be in power and imagine that person having control over your pension fund and that person in the future having this legislative power to say no I want the money invested here that really makes me uncomfortable yeah um and the short-termism, the lack of knowledge as well around investment.

39:19These are not professionals. They're just career politicians. Torsten's probably a little bit more credible, but even the Resolution Foundation, he wanted to cap ices and rinse those, and I thought that was a disaster. So I have a lot of sympathy with his argument that we should use that investment capital that is available to stimulate the economy. Agreed, right? Don't force pension schemes to it. Never force people how to invest their own money. To me, that is like a red line. It's a hill I'm willing to die on, right? What the government needs to do is to create the pathways, create the incentives, create the connections.

39:51Make it a no-brainer. Make it a no-brainer. Get the pension scheme trustees going, do you know what? That's a really good investment. We should put some of our members' money in there. Don't force us to do it. I'm going to, like devil's advocate, slight pushback. So the Australian super fund is at 23 % of assets are held in the Australian market. That has been declining recently. They've got more global. They're talking about 5 % here. Are we like quibbling around a small amount? For now, yes. I think we're just crossing a rubicon and even conceding the principle of allowing politicians the capacity to mandate where we invest our private savings.

40:33To me, that's just a really dangerous road to even start going down. And just again, as an illustration of that. If you look at the asset returns over the last 10 years, maybe it's a self-fulfilling prophecy. And maybe Torsten would argue, well, if we'd invested the money in the UK economy, the UK economy would have done better. But if you look at what the UK economy has done over the last 10 years, you'd have been a lot better investing your money in the US, right? So a politician coming along and saying, this is where you should invest your money. I'm going to go and get my investment advisor to tell me how to do that, I think.

41:06Thanks very much. And my worry is that once you've given them the power, it's like Chekhov's gun. If there's a gun on the wall in the play, it will get fired, right? So for me, once they've created the mandation power, they just won't be able to resist using it. Because it's just such a big pot of money that they can dip into that's outside of debt and taxation. And they're saying to the end of the pensions industry, look, it's fine. We won't force you as long as you do what we want. That's a bit of mafia, isn't it? It's crazy. It's like, oh, yeah, we want you to sign up to this voluntarily, but we put a backdoor there that says if you don't do it, we'll force you.

41:43It is like, yeah, a shakedown in that sense. And from my perspective, if we're talking about infrastructure in the UK, the UK seems devastatingly inadequate at building large-scale infrastructure projects. I don't want to give 5 % of my pension to spend 110 million quid on planning for a bridge. You know, you need to go sort that right out. And I think what they should do first is deliver, then ask. Go, look, we've delivered this amazing world-class bit of infrastructure. Now, do you want to be part of that? Do you want to sign up to this kind of fund that puts 5 % into UK? There could be kind of like an opt-in.

42:20It absolutely feels like they're trying to put the cart before the horse. And to you say, to your point, if they did the hard yards about reforming the planning system, then the pension schemes might be a bit more inclined to say, do you know what can i invest here now because it's going to be quick and easy to build something that will generate a revenue for us so yeah well i mean hs2 thames valley bridge crossing these i can put just so many schemes are just a waste of money basically and you're basically saying we're going to ask you to spend even more money on those kinds of schemes i don't know i don't know yeah i mean i i am dead against it but i know that people are for it um and i kind of want to understand that side of it so is it just that chicken and egg if we will jump start the economy is that the argument i i think you know there's there's more profound structural challenges such as the planning system that are going to hold us back and unless we fix those you know we're just going to throw money at good money yeah yeah yeah and it'll be like oh well we've it's like if someone tells you you've got to eat a certain thing every day even if you don't want it you've just got to go buy that thing it's it's a miserable life okay so we're going to sit with torsten tomorrow and talk to him about that how would you what would you ask him you know on on the mandation point is there anything why i guess my question to him would be and there's a lot of good stuff in the pensions bill so like and he's a bright guy and i enjoyed reading his book and he's quite funny there's there's a lot of it i disagreed with but you know i respect him as a politician.

43:45But on the mandation thing, I'd be like, how else could you have done this so that we could have achieved the goal voluntarily, right? What could you have done to create an interface between the capital on the one hand and startup businesses on the other hand? What could you have done perhaps to have incentivized UK pension schemes with some tax break for small businesses, right, to say, okay, startup businesses, which is what we want, that's what it's all about. It's all about getting growth, you know, or infrastructure products, projects. We will offer tax breaks to those to incentivize those pension schemes to bring their investment capital.

44:25So you could create a relationship between the savers over here, members of the pension scheme, and the businesses starting up over here. Why haven't you looked at that as a solution rather than just saying, I'm going to get my stick out and wave it over your heads? I hope you wrote that down, Ruth. will be strangely enough that question might pop up tomorrow um okay let's talk about state pension because from the briefing you've got some radical views out there and i think everyone's gonna be like oh we agree everything and then you're gonna hit us with some state pension stuff yeah yeah yeah so can we talk i think everybody knows like the broadly i i assume that the state pension current system is is considered unsustainable because of the triple lock and just to remind everyone this just guarantees that long term the amount of state pension that people get will increase above the rate of inflation and wages because of the 2.5%.

45:11So that's not a good thing really for a system where we have an ageing population, declining birth rate, and the workers already probably are quite squeezed in terms of taxation. They're getting a bit bowed down with the weight they're carrying on their shoulders with all these increasing numbers of pensioners they've got to carry around. Yeah, but we face this issue politically of the largest voting base is the retirees or the pensioners. So if you take that away from them, They understandably get very upset and they probably vote out whatever government's in power at the time, right? So it's become an albatross around the neck of British politics and no one knows how to move on from here, which is why I think, you know, we talked about the Pensions Commission earlier on.

45:50I think depoliticising it would be a helpful way to go. But one way or another, we have to move on from here. And then where I'd kind of look to move to is I've spoken to so many people in their 20s and 30s who are just, well, obviously the state pension isn't going to be there for me. I had no confidence in it, no trust in it. So the difficult bit is they're paying for the pensioners of today, right? So this is not a good recipe for social cohesion. If you're saying to a bunch of people, you have to pay for the old people, but when you get there, you might not get it, right? They also got the houses as well.

46:22This is getting a bit awkward at this point. So the state pension currently costs around 5 % of gross domestic product as a national output, right? So, which is currently around 130 billion pounds a year, give or take, right? If you fast forward to 2070, even if we change nothing about how the state pension is defined and structured, the cost of the state pension will have gone up to about 7.5 % of GDP. So in today's money, that would be the equivalent of increasing the cost of the state pension by around 75 billion pounds, right? Why will it go up? Because of the ageing population. More people taking it.

47:05More old people, right? So if we do nothing else, the cost of the state pension is going to go up by tens of billions of pounds a year. And we're going to have a smaller population base paying for it. This is not sustainable. At the same time, we need defence spending, NHS spending. Because the ageing population isn't just state pension, it's the pressure on the NHS, right? Absolutely, yeah. So it's like a two-factor cost. Yeah, you're going beyond my pay grade here, but absolutely, yes, definitely the NHS is a major part of that equation as well. Social care too, which sucks up vast amounts of your council tax and local authorities spend most of their money covering social care and special educational needs for kids.

47:44It's a whole separate story. So I think an interesting road to go down would be to say, OK, first of all, we need to fix the private savings. So there's a kind of cascade here. In order to fix the private savings, we need to get more money going in. It's really difficult to get individuals to agree to pay more money in. So what I'd do is I'd go to the employers and say, could you put more money into private savings, please? And to help offset that, I'd give you some tax breaks. I'd rewire the capital gains tax system, for example, to allow you more expenses in terms of your investment back into the business.

48:18So I'm going to try and do something that, A, helps businesses grow, maybe reverse that national insurance increase. Cut the employer's NI or something. Yeah, yeah, yeah. But then the trade-off is I'm going to ask you, the employer, to put more money into your employees' pensions. So where I'd like us to get to is everybody within reason is saving at least a decent amount for retirement. Now, if we bummed – stay with me here. If we bummed the state pension age to 75 – I know. I won't know. Get out of here. Who invited this guy? Right. We put the state pension age at 75, and all of a sudden, the state pension that you're currently getting of around£12 ,500 a year could become somewhere near to£20 ,000 a year because it's paid much later.

49:05And then everybody says, yeah, but I'm not going to work until I'm 75. I just definitely cannot do that. And that's fine. Okay. So first of all, we wouldn't get there until about 2070. So we're talking about 50 or so years in the future. So we're only talking about the kind of... I'm just working out. I'll be 76. So we gradually increased the state pension age between now and 2070-ish, right? So by the time we get there, the state pension age has crept up to 75. And alongside that, everybody's saving enough in private pensions. And here's the fun bit, right? They turn around and say, well, look, I want to retire now.

49:39I'm 65. And that's great because what you can do with your private savings is you've only got to draw on them for 10 years. You can take 20 grand a year out of your private savings in today's money, which with decent contribution rates, most people could build up enough money to do. You get your private savings for the first 10 years of your retirement. That carries you through to age 75. And if you're still alive at 75, the state pension kicks in at a level that is now sufficient to keep you in a reasonable standard of living for the rest of your life. So you kind of solve two problems there, because on the one hand, you've made the state pension sustainable.

50:15And on the other hand, you've also solved that really thorny problem of how do I make my private savings last for the rest of my life when I don't know what investment returns I'm going to get and I don't know how long I'm going to live for? Well, if we reframe the question of, well, it's only going to last you for 10 years. So your£200 ,000 pot of money that you've built up, you can just run it down to zero over the next 10 years and then you'll get your state pension from 75 and that will be at a decent level and that will sustain you for the rest of your life. It becomes almost like a care pension.

50:44It's like for people, it's later life care, right? It just kicks in at that point. So, I mean, that's quite spicy, I recognise. But I think we need to think kind of radically if we're going to move on from where we are today, which is a system that has just managed decline. Spicy is the word. So 14 % of people don't reach current state pension age. Current, they die beforehand. Just tough titties to them lot, is it? Which is what happens today, right? If we raise it, there's going to be even more people. Yeah, you've got to go to like what? Do you know the average age of life expectancy in the UK?

51:19For men, 78.8. According to ChatGPT, 78.8 years. Is that cohort or period life expectancy? Oh. I don't know how to say that. So that's like a multi-play thing. Is that the European or African swallow? Yeah, yeah, yeah. African. Is African swallowed? Anyway, yeah. But also, it's very location-dependent, right? I mean, the disparities. Blackpool is 74. Yeah, right. So just down the road from where I live, you go into the nice bits of Lake District, it's probably like 90 or something. Well, Chelsea is like 80s, right? So this feels like it's the wealthy that would get the state pension. It's what happens today, right?

51:57And we pay, currently you've got to pay 35 years worth of national insurance to qualify for state pension. Well, if you do a full working life, you'll have paid somewhere near as a 50 years worth of national insurance. You don't get any extra money for those extra years of national insurance you pay. The government just banks it. I mean, there are a lot of inconsistencies in the system. But the whole point of the state pension was to provide an old age security blanket for the people who have outlived their resources. Right. And and somewhere over the last 50 years, it's morphed into something where we've come to regard it as a right.

52:30that, you know, that's... I think we need to get somewhere back to the fundamental founding principles of the state pension, which is this is a collective insurance scheme to provide for people who don't have adequate resources to provide for themselves in their later old age. Okay. It's a bit mad. So how are you going to sell that to me and basically say you've still got to pay the same rate of NRI, you've still got to fund everybody now and through their retirements, but you're not going to get it to a 75. Where's my carrot? So the carrots are twofold. One is we will make sure you get to build up a decent private pension saving.

53:05I know it's different if you could... By paying for it myself through. You are the employer, right? That's not a carrot. Right. So look, we've said all along, there's no easy answers here. We've got to go somewhere with this. But it's always that it's the young 'uns. That's what I mean. This is a way you get to retire, right? This is a way you get a private pension pot of your own and you get a state pension that is sustainable in the long term. If we don't do this, you might not get either of those things. Could you cut tax on me today? You know, if we're saying that, or is it just that we've got to maintain the arrangement for the current?

53:39I have no answer to that question. So when you start getting down into the weeds of, okay, do we change the capital gains tax rate? Do we change the national insurance rate? Do we change the income tax rate? I mean, here's another spicy one for you. I'd get rid of most pensions tax relief, right? I'd flip it on its head and I'd say, because it costs tens of billions of pounds a year that I don't think is actually being that effective either in boosting people's private savings or in incentivising them to save for themselves. I'd have some fairly modest upfront saving like the first£1 ,000 you put in, you get£500 from the government or something like that.

54:13And thereafter, it's coming out of taxed income, but it grows tax-free and when you get to the other end, you get to take it all out tax-free in contrast to the current system where the money you draw out of your pension is all taxable. So you would flip it to almost like an ISA? Correct. Right, right. Yeah, as someone who loves that slapping money in from a limited company, I think the people who are engaged in their pensions really do realise the value of that tax relief. And I recognise in all I'm talking about here, both with the state pension and with the tax relief stuff, there is a whole load of work you'd have to do to work out how you can make it all effective.

54:50I think you'd have to leave the country after you bought all this in, to be honest with you. This is back to where we started from, which is, you know, the easiest solution is just to do nothing and kick the can down the road and let the next lot deal with it in five years' time because I'll be out of power by the time the chickens come home to roost. When they, you say they ratchet up the age of retired state pension to 75, would that be like a year every year, every few years it will go up one year? Why don't they just do it right now, 75, and we all bear the brunt together? Yeah. Like the people who retired.

55:27They've got no time to build up the assets is the problem. And you've got to give people time to plan. So, I mean, the general rule of thumb, it's not a hard and fast law, but the general rule of thumb is you give people at least 10 years notice of their state pension age change. So it's currently 66, it's about to go to 67. So you wouldn't introduce any changes for anyone older the age of 57, right? So that's why you have to kind of feed it in over a long period of time. And I think that's entirely reasonable. They should stop the link between private and state then if they're doing that because, you know, I think this kind of – it's informal, but they drag up, don't they?

56:04And I think if you're going to move me to 75, do not say that I can't access my private until I'm 65. I'll leave work when I want and I'll deal with that. It does feel very on the young, that. So what about triple lock? What happens today with the triple lock in your dystopian worldview? It's got to go. And I would look at something like, let's set the state pension at a percentage of average earnings. 33 % is the IFS's recommendation. And then we just track it. Then when inflation spikes, we protect them. And if the economy booms and everyone's wages are going up, you know, then the pensioners benefit too.

56:46Yeah. What about an average of the three? So then they could stand there and go, we're keeping the triple lock, but we're going to average the three. I talked about the albatross and we've just got to get rid of it, right? This is just, I mean, it made sense at the time, back in 2010 when it was introduced. Nick Clegg and that coalition government. It was the coalition government. It was Steve Webb, who was the pensions minister at the time, the Liberal Democrat pensions minister in the coalition government. And then pretty much as soon as they introduced it, the Conservatives went, And of course, we introduced the triple lock, aren't we lovely people?

57:16And they've kind of tried to own it ever since, but it was originally a Liberal Democrat policy. It made sense at the time for increasing the state pension progressively. If you'd gone to the Treasury and said, can we bump up the state pension by£1 ,500 in one go? The Treasury would have said, definitely not. And Steve's talked about this, how they went in with this triple lock idea, and they were absolutely amazed when the Treasury signed off on it. It's like, have you not thought about this? But they agreed to it. And so it's got the state pension up to a more generous level. It's got to stop, though.

57:47It's got to stop. They were like some of the poorest cohort, weren't they, the pensioners before it. So we need to give a bit of a nod to that. And there are plenty of pensioners that are still in poverty. Absolutely. So to say, oh, it's too generous, it falls on. You know, it can seem a bit out of touch. You know, you basically, they're not all sat there with massive DB schemes and huge homes and like, you know. Okay, well, thank you. I mean, certainly radical, like the 75. Do you have any other wild changes or ideas? So, I mean, I would love to see all of that. You know, we've talked about public sector pensions.

58:24We've talked about tax relief. We've talked about the state pension. I think this goes way beyond the Pensions Commission's remit. But to me, these are really fundamental, profound problems. You know, it's back to what we talked about with the planning regulations. Unless we get this stuff out on the table and say, okay, what does good look like here? What are we trying to achieve here? How do we come up with a system that is fair and adequate and sustainable for the generations to come? You know, we're never going to solve this problem. And so I think you need a pensions commission to have those tough questions.

58:55And I've thrown out some slightly spicy ideas about where we could go with all of this. But that's the kind of thinking that we need. You know, why are we spending£50 billion a year on public sector pensions? Why are we spending£70 billion a year on pension tax relief? Why have we got the state pension structured in the way that we have? You know, why do we still persist with the triple log? Well, we know that for political reasons. Okay, fine. Let's put all of this out on the table and see how we can rearrange the pieces into a more equitable system. Can we talk about the next budget, the upcoming budget?

59:27I want you to, we know you make world-class predictions on where things are going so can you can you predict what changes we might see there I know you've made some changes to your pension setup as out of concern of what might be coming is that right yeah so I mean but I'm in a particular situation uh because of my age um and because I'm only working part-time and because of the amount I've been lucky enough to be able to save up in my pension so I can't build up any more tax-free cash in my pension I've maxed out on that right? And then I look at Torsten Bell and the IFS and others saying, do you know what we should do?

1:00:02We should cap the amount of tax-free cash people could take. We should significantly reduce it. And I'm going, well, hang on, if you do that in a couple of months' time, that would cost me tens of thousands of pounds in extra tax when I come to draw that money out of my pension. And given that I'm only working part-time now, so I'm not using up my ISA allowances every year, my wife isn't, you know, because we don't have the kind of surplus income we used to have, right? So why would I not take my tax-free cash out of my pension now, stick it in the bank, and then recycle it back into ISIS over the next few years?

1:00:34So that's what I've done, because I'm genuinely concerned, because of the fiscal position, because of the ideological inclinations of this government, because of what they've said before, because this is where the money is, you know, to me, it was a no-brainer to take my tax-free lump sum out of my pension now to then reinvest it into ISAs over the next few years. This might all go spectacularly wrong if instead of reducing the tax-free lump sum in the budget, he instead stands up, she instead stands up and says, do you know what I'm going to do? I'm going to cap the amount you can put into your ISAs.

1:01:07And then I'll be stuck with this big bag of money and no way of putting it into my ISA. And that would be quite funny. But I'll cross that bridge when I come to it. You just get an air GIA. You've still got the money out tax free, which is the main thing. So there's that. I think, I mean, maybe they will, something else has been looked at more than once in the past is abolishing employers' NI relief on pension contributions, which wouldn't hurt, you know, it's a bit like when they dialled up the employer NI last year. They could argue it's not costing you as a worker. It's just the employers who have to pay more national insurance on your pension contributions.

1:01:41They might do that. They might look at the tax relief. What would that do to salary sacrifice? Oh, yeah, that's a couple of salary sacrifice. So there's not as good a benefit because... Because you're going to have to pay, you know, because it would then be tax neutral whether you put the money into the pension or not. You're going to pay the NI on it either way. I think they should go the other way and make salary sacrifice more widely available, more popular, because that is a way to get more into the pensions. Yeah, but they haven't got any money. You're talking about giving away more taxpayers' money to the population.

1:02:12That's their problem. And, you know, as has been widely reported, they've got a bit of a hole in their budget at the moment. And so they need to look for the money. And there's a lot of money in pensions. So I'd actually be quite surprised if they don't do something on the pensions. But what do I know? Anything else that you think might happen? I think housing, again, is a no-brainer. I mean, the two big pools of private capital in this country are pensions and houses, right? and it's daft that housing council tax hasn't been revalued since what 1991 yeah that's bonkers right so um i mean theoretically if they just revalued council tax all that money would go to local authorities rather than central government and i think it's central government where rachel reeves needs the money but maybe they would make some tweak to the rules in the process maybe you'd get some kind of land tax you know properties worth over 10 million or something like that you can bring it in at a very high level it wouldn't be i wouldn't be at all surprised to see something like that coming in because it's houses and pensions where the money is that's where the only really the two places they can go in terms of capital for for revenue raising the council taxing should be progressive though but it won't be they should redistribute and make it cheaper for people with lower repriced houses but what they'll just whack on extra bands won't they well i hope not do you think they'll change the council tax i don't know i mean i guess politically it's difficult and that's why successive governments haven't done it it's a genuine wealth tax if you structure it properly and like everyone's screaming for a wealth tax and that right there I'm not a lot of people are I mean you know it's immigration or it's wealth taxes are like the kind of dominant things right what I mean is it's a genuine wealth tax that's hard to avoid because you can't take the house with you so it's a no brainer from that point of view I just fear that it wouldn't reclassify the lower bands so your house in Bradford stays at the level it is which is probably too high and then you just get a Mayfair place with like a big band.

1:04:12So it'd be really interesting I mean I hope they would do it you know and then maybe you introduce an element of land tax as well so those property developers that are sitting on land banks you know they might be incentivized to develop them because it's going to cost them more money if they don't. Apply it to the duchy as well yeah they've got a lot of land yeah yeah they might make them pay. So because I mean yeah And we touched briefly on the housing problems. You're not going to solve that without building more houses. Thank you so much. You're a legend. You're the best at this, I think. We love having you on.

1:04:43I'm going to eat a biscuit now because I've been eyeing them up the whole time. Yeah, no, honestly, I'm starving. Smash some chocolate chip biscuits. Thank you both very much. It's always a pleasure. Ah, no, it's so good. Do you know what the most common email I get is? Where should I put my money? What should I invest in? Basically, what I get is, I love all your content. I know it's amazing. I don't want advice but and then they basically ask for what they want me to do is just to look at their portfolio and go yeah that's okay or you're doing the right thing I can't do that because it would be construed as advice or guidance and I don't think it's right for me to do that but I appreciate that there's lots of people out there that really just want a sense check just want some reassurance exactly they just want someone to look over it and go yeah you're doing the right thing and I don't think no matter how many times they watch a video that says exactly what they're doing is probably the right thing.

1:05:35It's not good enough. So we do offer a service where we give you the ability to speak to a qualified financial advisor and get some guidance. Just get that sense check and have a look over your portfolio or whatever other questions you have about your personal finances and just say, yes, that's right. Or no, you really got the wrong idea there, mate. You should start again. You've got Mr. Personal Finance 2.0 basically just helping you, holding your hand, giving you some reassurance. I mean, if people email me saying, do you want to hold my hand, they'll get a reply then. I'm quick on those ones, mate.

1:06:08That's how you want to say. You're like, send a picture. Yeah, yeah. The link is below in the description. My hand is also there as well. Shut the hands off me.

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