What you need to know about pensions with Steve Webb

0:02Georgie Frost: Welcome to This Is Money podcast sponsored by Trading212. I'm Georgie Frost and joining me and Simon Lambert today is Sir Steve Webb, who is celebrating a very special anniversary. Ten years of being a columnist for This Is Money, replying to hundreds of readers with their pension problems and in turn helping many thousands more with their own retirement savings. So we're going to do things a little differently today. In the first half of the show, we grill Steve on all things pensions, from the sustainability of the triple lock to whether those in their 30s and 40s are slightly screwed, and what keeps them awake at night in the world of retirement savings.

0:37Georgie Frost: And in the second half, Simon and I will turn our focus elsewhere. How much can you really save on a new car? Is Barclays' offer to pay you a grand really such a good deal? And a decent problem to have, can you pass on an inheritance that you don't need? don't forget to stay up to date with all the latest breaking money news just go to thisismoney.co.uk or download the app but first 10 years of being a columnist for this is money and that's not his own job he's also a partner at lcp as well by the way but he manages to fit it all in so steve on behalf of all the readers who have definitely learned a thing or two from you thank you thank you georgie it's nice to be with you again always a pleasure to have you on the show steve and is Is there one letter, I just want to ask, one letter, and I'm telling you this is a long time, my memory is not that good, but or an issue that you've covered in that time that will stay with you forever?

1:33Steve Webb: Definitely. I mean, there are lots of individuals it's been possible to help and you have to not lose sight of the individuals in all of this. But occasionally something snowballs and helps vast numbers of people. And I think back to a column in early 2020, an apparently innocent email from a gentleman who said his wife's state pension had seemed a bit low and they phoned up and they got it increased and he didn't think this was right the way it had worked. So we found out a bit. I learned something, I have to say, as I often do in replying to the column and realized a bit more about how the system worked.

2:03Steve Webb: We wrote that and it started an avalanche. People writing in saying, well, I'm a widow and mine is a bit low and I'm over 80 and mine's a bit low. and roll forward four years and the government paid 800 million pounds in pensions arrears to over 100 ,000 people and you know just from that one initial column yeah I can see why that would

2:22Georgie Frost: stay with you forever is that all been sorted out now Steve well yes and no I mean so there was

2:27Steve Webb: there was a bonus win which was that even the government looked at all of this and said my goodness how did this happen we'd better do some proper checks and so for the first time in years They then did some extra checks and found another set of errors for women who've been at home bringing up children, not getting credits. They've already paid out another$100 million on that one. So in a sense, that's ongoing. We're still trying to get that sorted. But there are still aspects of this that are unresolved. I'm still supporting. In fact, the very first person who wrote in, that couple, have never got anything out of all of this.

2:59Steve Webb: Wow. And I'm still supporting them. I've got a case with the ombudsman at the moment. So it's ongoing, let's say.

3:06Georgie Frost: Do us a favour, Steve. does it all work for those of us who are not columnists or newspaper writers um how do you do you have a chat with simon do you get loads of letters like what's the process we get questions

3:21Steve Webb: in every week emailed to pension questions that this is money and uh tanya jeffries my colleague on the team uh sifts them all she anonymizes them all so i never know who it's from so i you know know i'm always judging it on the issue um and then i have a look and i have happily total freedom occasionally uh tanya or simon or so say do you know what i think this would you know this would attract a lot of interest you know if if you're not sure what to do this might be good one but no one's ever said you've got to do this or you can't do that so that's i really appreciate that so i try and pick a topic sometimes a general topic that i think will be of wide interest or that we haven't covered before or something new so like the government changes to winter fuel payments you know there's been all sorts of new rules are still trying to work out how it's all going to work so yeah i do things that are topical and occasionally i'll just pick an individual so a couple this week that i may write about in future weeks you know we've been battling for months to get them sorted you know gentleman over 80 living outside the uk his company pension stopped just couldn't get it started again uh and today you know they've confirmed he's got the back payment the money started again his wife's written me a nice letter and that kind of thing's rewarding as well.

4:28Steve Webb: So we try and mix it up a bit, really.

4:30Georgie Frost: Are there some big themes that keep coming up time and again?

4:35Steve Webb: Yeah, I think the most common theme underlying all of this is a surprisingly boring one, which is just pensions administration, just running these systems efficiently and well. And that was an error in the state pension. You know, calculations are not done. It happens in private pensions. I mean, it's a big row at the moment over civil service pensions, people who want to retire and can't get a retirement quote, or they phone up and they hang on the phone line for two hours and then they get cut off. Just that sort of stuff drives people mad and rightly so. And sometimes I think admin, it's not glamorous, so it doesn't get much attention.

5:08Steve Webb: And people want, you know, governments and companies want to do it on the cheap. And when you do it on the cheap, people suffer.

5:15Georgie Frost: Do you know, I sort of knew that was your answer, Steve, because I was reading the newsletter, the This Is Money newsletter, and it really struck me the way that you write it. So when we think about people getting a war deal when it comes to pensions, it's tempting to think about crooks and scammers, you say. But after 10 years of responding to queries from readers of this money, I've realised that something more mundane lies behind many of the problems that we have resolved. It's the simple matter of pensions administration. Crooks and scammers are a big deal, though. I mean, let's not diminish that.

5:44Georgie Frost: But yeah,

5:44Steve Webb: something so simple can have such a devastating effect. That's right. And I think as pension schemes get bigger and bigger, so the government talks about mega funds. So in future, most of us who work in the private sector will be in one of probably half a dozen, maybe 10. Like Australia. It is. So they call them super funds in Australia, but same idea. And the risk is, if you're one of 7 million people in a pension scheme, how do you ever get anybody's attention? How do you get someone to notice how long you're on a call central dealing with an AI chatbot? So we've got to, in the mass scale of pensions, not lose sight of the individual.

6:19Steve Webb: That's the key.

6:20Georgie Frost: absolutely right there have been so many changes though haven't there steve to pensions over the last decade or so i'm thinking auto enrollment the decline of the gold-plated pensions triple lock of course and now pensions being included or will be included in the inheritance tax net very different landscape now how do you assess it i suppose some very good moves some Um, that's so.

6:45Steve Webb: Yeah, I mean, the good stuff, it's easy to just kind of bank and move on. But I do think, I mean, I'm slightly biased, but the new state pension, although not everybody loves it, has done one big thing, which is it's treated men and women equally for the first time ever.

6:59Georgie Frost: Just explain what is the new compared to the old and why?

7:02Steve Webb: Yeah, so the old state pension, so for people who retired before 2016 were on that old system. And it was designed after the Second World War. and it was designed in a world where men went out to work women looked after the home and the family and in retirement a woman was deemed not really to need a state pension because she had a husband and so the whole system was designed around men getting the main or most of the pension and then a woman got a bit more if her husband died that kind of idea but women were second-class citizens basically and you know i was minister from 2010 to 2015 and we just looked at that system and said how can we have something designed in the 1940s going into the 2010s it just didn't make sense so we restructured the whole thing we didn't spend more money we spent about the same but said let's try and remove this discrimination and by about now a man or a woman retiring today within a few pounds will get the same on average state pension and the news is not perfect and the controversy is in it but it's it means that women who often do badly on private pensions at least the bit that the state does excuse me is a good thing so so you know i think that's positive you mentioned automatic enrollment that's another 10 million people at least starting on the pensions journey so yeah positive stuff but you're right constant change doesn't help state pension ages going up have been difficult for people tax changes speculation about more tax changes so you know what we want is stability and the government's just set up a pension commission to try and map out the 2030s and that's the prize if they can give us a long-term plan and stick to it then we're in with a chance.

8:36Steve Webb: But the annual tinkering just undermines confidence, I think.

8:39Simon Lambert: And the tinkering doesn't stop, does it? Because there's a very big change coming up with pulling pensions into the inheritance tax net based off the suggestion that some wealthy people were using them to avoid inheritance tax, although it's quite a lot more nuanced than some of those claims make out. What do you make of that decision to pull pensions into inheritance tax? Are we not just penalising people who were doing exactly what they're meant to do in the private sector, which is start saving early and build up a pot that's going to be large enough to provide a comfortable retirement.

9:15Steve Webb: I can see why the government did it. I mean, apart from that, that broke. There is an argument that says if I've saved in a stocks and shares ISA, for example, that was counted for inheritance tax. If I'd saved in exactly the same way, but it was just called a pension, it didn't count. And financial advisors, let's be frank, would say to people, take the money out of your ISA first, leave it in your pension because you'll pay less inheritance tax. So there were some people who were using it as an inheritance tax, not as a savings vehicle. But I guess one of my big worries about this new system is the impact on the poor souls who have to deal with people's estates.

9:49Steve Webb: And for me, that's the worst aspect of all of this. It's that once someone's died, it's miserable enough as it is. You have to deal with what they call sad men, you know, all the hassle, all the paperwork and so on. Now we're going to lump pensions in that. You've got to find the pensions. you've got to contact the company you've got to get information back you've got to put it in a calculator you've got to go back to the pension people you've got to make sure the IHT is paid and if you haven't done that in six months there's a charge or a fine or a penalty that's what really gets me about all of this um and I think you know that I have to change it it'll come in next year it will be awful for people and there'll be a clamor to change it but I wish they'd change it

10:24Georgie Frost: before or on and after Simon what's your view on on this I think it's the wrong move and I the

10:31Simon Lambert: The reason why I think it's the wrong move is for a number of reasons. Firstly, what Steve just said about executors having to deal with this is going to be an absolute nightmare for people. Secondly, I think the government is making the mistake of putting two things together that are not the same. Most people's pensions are what they're going to need to rely on in retirement. and unless you are lucky enough to be in the public sector now it's on you to build up your pension pot and we underestimate how big a pension pot you need to have a comfortable or even a moderate retirement the pension pot that you need for a comfortable retirement is basically a million pounds now that is the combined tax-free inheritance tax allowance for a couple now most people will then use those pension pots to live on some wealthy people have been using them in order to dodge inheritance tax but only that's only beneficial to them if they die before the age of 75 because if they die after the age of 75 it's taxed as income on the person who takes the money out of the pot so whilst the inheritance tax isn't there at the moment there is still tax there the income tax element and if you take any meaningful sum of money out of that pension pot as the beneficiary of it you're going to end up paying higher rate tax because you're going to go into the 40 tax band so a lot of that money that would be passed on for people who die after the age of 75 which most people die after the age of 75 right so if you die before the age of 75 you're dying early most of that money will probably be taxed at 40 anyway and then i also think it's it's one of those policies where it's painted as taxing one generation but actually it's taxing another generation and and penalizes another generation so it's painted as a raid on wealthy boomers passing on money right now for a start the wealthy boomers who are passing on money if they do this by definition they are dead right so you're not actually taxing them you're taxing the people who benefit from the money but you know that's the whole inheritance tax thing or whatever but more to the point that generation is far more likely to at least have some element of um final salary or defined benefit pension scheme right it's the younger generations of private sector workers who are entirely dependent on defined contribution pots and are going to need to build up that big pot and what we're creating is a system whereby if those people are unlucky enough to die early whilst there's still a lot of money unspent in their pension pots they will be penalized and they will be penalized for having done what they were meant to do which is save a big enough pension pot in order to fund their retirement you know and if they don't die early and they live until a very old age and they run down their pension pot then that's great they win because they live to the very old age and they win because they get to spend their pension pot and they win because they get to not pay inheritance tax but it's penalizing the younger generation of savers it's penalizing the people in their 20s their 30s their 40s not the older generation uh who are already retired and that's why i have a problem with it and i think it's i think it's a real muddle and i also think the other issue is that the government is willfully ignoring the fact that there is going to be an element of double taxation on those people who do die after the age of 75 and have unspentment pots because there's going to be inheritance tax on those pots and then there's also going to be income tax charged on people taking the money out and that's going to lead to you know near 70 tax rates on some of that money

14:22Georgie Frost: and i just think that's wrong so a fair few bits to iron out just a shout out for those of us unmarried without children 325 000 not a million um the problem steve oftentimes people don't spend enough in retirement. They're so frightened of their pot running out, aren't they, that they sort of hold on to it. But we have the reverse problem that people are desperate not to give anything to the government. So they're like, right, I'm just going to spend all my money and then run out.

14:49Steve Webb: Well, I think we will see a big behavioural response to this measure. We're already seeing, you talk to financial advisors and people are queuing up to work out how to avoid the impact of the change that happens next April. And I suppose, again, another of my concerns about all of this is that there's a bit of a saying that inheritance tax is a tax paid by people who don't have advisors you know because on the whole good planning for most people can get them out of it and what it tends to be the people right at the top who don't pay and then the next people down who pay who didn't have advice and that will happen with this as well there are lots of things people can do so people are looking at things like gifting out of surplus income so you take your pension pot you buy an annuity that you don't really need that gives you spare money you give that to the kids and as long as it's spare money it's immediately exempt from inheritance tax don't have to live seven years it's just a gift from spare income so things like that people will do they'll find ways around it you know there's lots of trusts being set up offshore bonds you know the works really so again is it fair a system where actually the well the very wealthiest just find a way around it and it won't be those who pay the tax i want to ask you we are having to

15:58Georgie Frost: make more choices with our money. As I said, the gold-plated pensions are, alas, for money, no more. These are big, big choices, big choices about which to invest our money, how to spend it, etc. And the reality is, whether we can afford it or not, most of us don't get financial advice. I think it's something like 9 % have got financial advice. Are we anywhere close to being ready? And what needs to happen to make sure that we are ready to make such enormous decisions over our futures?

16:28Steve Webb: That's a big question. As you say, if I think about my parents' generation, they knew the age at which they'd get a state pension because that hadn't changed. They knew. So my mum and dad both got small private sector DB pensions that lasted as long as they did. They had to make essentially no choice. And they both retired, I'm pretty sure, at state pension age. It was all done for them. This generation, personally, I think you shouldn't expect people to have to do much of this for themselves. I think in building up a pot, what they call accumulation, you've got very clever people doing it for you.

17:02Steve Webb: And as long as they're doing a good job, you shouldn't have to muck about with it. Fine, if you want to, if you want to do something different, fine. But what they call defaults, the things that happen if you don't make a choice, we need those to be good and appropriate for people. So that helps people get a pretty decent pot. But then all the stuff about retirement, when you take it, Do you take different parts? Do you combine them all in one place? People need a lot of help with that. I've got a controversial suggestion, Georgie, if I may.

17:28Georgie Frost: Yeah, go for it.

17:29Steve Webb: Do you think about mortgage advice? I'm going to say free. You can't see on the podcast the air quotes on free. So I've taken mortgage advice a couple of times, and I've perceived it as free. Somebody's paying the advisor's wages. I know that. It's somewhere in the system. I'm probably paying somewhere. But to me, it was free. So I freely, gladly took mortgage advice, got some good advice and got on with my life. Pensions, that's banned. You can't have free pensions advice because they banned it 15 years ago because they were worried advisors were steering people towards whatever gave them the biggest commission.

18:02Steve Webb: I wonder if we could bring back free pension advice where we're transparent that the advisor is paid by somebody, paid by the pensions industry. but somehow you know we can see what they're doing we can see if they've steered us towards the thing they get the most commission from whatever but we've we've basically killed financial advice for the mass market and so many people could really do with it now SAI and nudges and all that stuff will get us some of the way I wonder if we could bring back

18:28Georgie Frost: free pensions advice is there not some sort of pension advisory service already where we can get

18:34Steve Webb: some sort of free information information yes guidance yes advice no so there's a thing called pension wise which the government set up after the pension freedoms came in so it was like i'm over 55 i can touch my pop right you know what what's draw down what's flexi access draw down what's an annuity all that stuff so you can phone them up they're not going to try and sell you anything it's impartial great but at the end of the call you say to them so what do you think i should do and they say sorry you know not my job that's the problem you know you can explain the rules but how people judge you know in their unique individual circumstances what's right for

19:08Georgie Frost: them that's what's missing what do you reckon of that idea simon free pension advice i i think it's

19:15Simon Lambert: a very interesting subject and a thorny issue and there is definitely a scenario as steve outlines that way less people are getting any form of financial advice now due to the way that the payments system is structured it creates a more honest system advisors aren't getting rewarded for selling products in the way that they used to and there's been an awful lot of mis-selling in the financial advice industry over the years but it does also create a situation where people are being asked to pay thousands of pounds up front something they're like why don't have the money now what you should be thinking about in that instance is probably the value of that advice is going to massively outweigh the cost over your retirement and you know you should do it but that's the theory of what you should be doing in practice what's actually happening is people aren't doing it so i do think that there is a scenario where where something has to something has to change steve we we touched on the kind of the the younger generations the people saving for their pensions um now if you look at the retirement living standards put out by pensions uk that benchmark the figures of how much you need for a moderate retirement at the moment they say a couple would need 43 ,900 pounds right and obviously that's for a couple retiring now if you're in your 30s and you're not retiring for another 30 years you need to factor in what inflation is going to do to that and I did the maths while you and George were just speaking even if inflation is only two percent which is the Bank of England's target and that's a big if there isn't it um especially in light of recent things that we've gone on that sum in 30 years time is going to be 79 ,950 pounds so that's basically 80 grand so a couple would need an income of 80 grand a year you're gonna need a really big pension pot between you to to do that are people in their 30s and 40s gonna have enough money for retirement in your view

21:17Steve Webb: short answer is lots of them aren't unless we do something i mean it's probably worse for single people because the benchmarks for single people are even scarier funnily enough relative to you know the state pension is a smaller percentage of the figures for single people but i guess that's why this pension commission is so important because the first pensions commission laid the groundwork for automatic enrollment for 10 million people starting on the pension savings journey which was great but then it stopped and essentially we got to eight percent contributions in 2018 ish 2018-19 will have wasted a decade you know nothing's going to happen in this parliament we know that already so we've lost a decade whereas in australia they've been going from three percent to six to nine to twelve it's taken them 30 years to do it but they've got to 12 now we're still kind of dithering around so to answer your question unless i think unless the mandatory minimum contributions go up gradually but significantly an awful lot of people will have some pretty unpalatable choices and basically it's go on working past the point where you want

22:16Georgie Frost: to or retire poor there isn't really a third option oh sobering steve um let's talk on a lighter note let's talk about the state pension uh the triple lock um easy easy time steve and i must feel like every time we ever you're on the show i ask you the same old things so so sorry but you know it is a really important question and i think it's going you said earlier the government's broke like is it time we we really had some tough conversations about how sustainable it is

22:44Steve Webb: yeah i think i think all political parties would now like to stop it so as i often say when we started it in around 2010 2011 it was trying to undo 30 years of damage to the state pension so for the previous 30 years the state pension had been eroded year after year after year it was falling relatively average wage so the triple up was a mechanism to to right a wrong in my view and it's been running for 15 years so 15 years to fix the 30 year hurt maybe that's not unreasonable but But once we got the state pension to a decent sort of level, maybe a third of the average wage, and we're not far short of that now, maybe you then lock it.

23:21Steve Webb: So you say, right, we've used the triple lock. It's done its job. We've got to a third of the average wage. The pension will now always be a third of the average wage. So that's a kind of earnings link. I think that's probably where we need to get to. It's just everyone's waiting for somebody else to ditch it. And that's how it's managed to survive this long, I think.

23:37Georgie Frost: I mean you said every politician probably or every political party would want to get rid of it but Steve we forget because you're such a nice guy that you were once a politician too so you know about the machinations behind the scenes there's going to be a really tough call politically

23:56Steve Webb: it is yeah and the government has to make it first because everyone can wait for the government so the government will be thinking how do we get ourselves off the hook on this and one way of doing it would be to say look, the Labour manifesto said triple lock for the rest of this parliament, so we're going to honour that. And actually, we're going to run it on for a few more years until we hit this third of the average wage or whatever benchmark, and then we'll lock it. So I, the Chancellor, not only have I kept my promise on the triple lock, I'm actually going to extend it for a few more years and then lock in that good state pension.

24:27Steve Webb: They'll still have national newspaper headlines slagging them off for scrapping the triple lock, but that's probably the least worst way of switching it off,

24:34Georgie Frost: i think byman as a publisher of a major financial newspaper section what what headline would you

24:43Simon Lambert: write well obviously any government that removes the triple lock is going to end up being criticized and it's going to end up upsetting a lot of pensioners because there's a lot of pensioners out there and there's a lot of people about to claim the state pension demographically they they wield a lot of power but i think what everybody recognizes and what we're increasingly starting to see highlighted is that young people are getting a pretty raw deal and have had a pretty raw deal over the last 10 years 20 years um youth unemployment is a major issue now young people are going into an uncertain jobs market there's a big concern over student debt for example you know the cost of living all those kinds of things first-time buyers rental levels and stuff so is it fair that they are funding a generous policy for the older generation that has more money now that's not to say that everybody in the older generation has more money and the great thing about being a young person who's working is you know what you could just go out and do some more work to earn some more money and that's not an option that lots of 75 year olds for example have but i do think as steve said that it is time to to call time on this and politicians need to be brave enough to do it and the one thing that's really interesting that popped up this week is that the one political party that has sort of slightly stuck its head above the parapet on this is reform now i'm no great fan of reform and nigel farage as many listeners will know and i get criticized for that by some of our listeners in the comments on the podcast we do read them i do see them so you know but it is not a political podcast okay i'm i'm i'm an equal opportunities criticizer of political parties they're all a bunch of mugs as far as i'm concerned and I'd really like to see somebody come in and do a better job.

26:43Simon Lambert: OK, and I don't care which party they're from. But Nigel Farage has said that the Triple Lock is up for debate, open for debate, he said. After Robert Jenner had supported it, but Nigel Farage said it's open for debate. Now, reform, they could blow this wide open if they come out and say, do you know what, unfortunately, we can't afford it anymore. And we're going to have to stop it. Because then all of a sudden you've opened up the debate and it becomes acceptable for the Labour Party or the Tories or the Lib Dems to go, yeah, do you know what? Actually, we probably do need to have a proper conversation about this and we might need to stop this.

27:20Simon Lambert: So who knows? Maybe.

27:22Georgie Frost: Who knows indeed? Oh, I mean, from the triple lock to Steve, whenever I talk to young people about the state pension, they just go, prer, the one exists when I'm older. Will it? Will it be means tested or some such thing?

27:33Steve Webb: Yeah, I mean, I think I'm quite optimistic about this. I mean, I can see why people would say it. So, for example, in Australia, the state pension is already means tested. If you've got a big superannuation pot pension, you don't get a state pension at all. So it could happen. In the UK, we've seen winter fuel payments taken away from better off pensioners. So, again, there's a precedent there. But there's a world of difference between taking away a winter fuel payment of up to£300 a year and taking away a state pension of£12 ,500. I mean, it's just, you know. And for me, the biggest reason I think it won't happen, means testing, is how do you get from here to there?

28:09Georgie Frost: What would have to happen?

28:10Steve Webb: So a minister has to stand up, maybe put it in a manifesto, although they'd be terrified to say, vote for us and we'll means test the state pension. They might just do it. Exactly.

28:17Georgie Frost: Great.

28:18Steve Webb: Yeah, might just do it after an election. But a minister stands up and says, OK, we want to save some money. So the state pension won't be paid to people with income above such and such. So do they do it immediately? Well, they can't, can they? They can't say to people, as Simon just said, who've already retired, who can't really go back to work, we're taking it away from you. So right, everybody currently on the state pension probably protected. What about people a year away, two years away, three years away, who, frankly, may have retired, got all their plans worked out, drawing a company pension, whatever.

28:46Steve Webb: Can you take it away from them? Probably not. But as soon as you say, well, we'll do this in five years' time, say a minimum of five years, that's a parliament. That's a whole parliament. so you get no savings in the net before the next election no money to spend on the nhs or tax cuts or anything and all the political grief and politicians don't like no money and all the grief they want all the money and none of the grief so i just don't see how you get from here

29:12Simon Lambert: to there not exclusive to politicians either well no i think there's also there's also another issue as well which is that how do you define the means testing what do you do to do the means testing Steve said that you know people with an income above a certain level that is by far and away the most obvious way to do the means testing however there is a crucial point in which we have created a retirement system a pension system where people's income in retirement is increasingly flexible they can decide how much money they take out of their pension and if you needed to have an income below x in order to get your state pension well you just take less money out of your pension in retirement.

29:54Simon Lambert: You just draw less money from it and you would keep your income below that level. The only people who couldn't do that would be people with defined benefit pensions, most of whom will in the future be public sector workers. And can you see a government going to war with all of the public sector workers on pensions? I mean, maybe the Tories or Reform might, but the Labour Party certainly aren't going to.

30:19Georgie Frost: Yep, quite. Just before we move on, Steve, you mentioned there about gender a little bit earlier. The WASPy campaign, I feel like that's been going on and on and it's not quite over yet, even still now. Was it a fair decision?

30:32Steve Webb: I would have liked the government to have accepted what the ombudsman said. So, I mean, there's thousands of hours of history towards this, but basically what the parliamentary ombudsman said is, look, governments can decide what the pension age is. Parliament can just decide that. That's not what this is about. It's about having realised that some women didn't know about the changes. Did they act efficiently, effectively? And what the ombudsman said is, do you know what? They didn't. They knew years ahead that lots of women didn't know they should have taken effective action. They didn't. You can't come up with an individual compensation scheme for 10 million women.

31:06Steve Webb: So here's a sort of token flat rate amount per woman. And that's what the ombudsman recommended. And I just think if you have a parliamentary ombudsman who scrutinises government, is independent, set up by Parliament. That's why it's called the Parliamentary Ombudsman. Parliament set it up to scrutinise government. And if they independently recommend compensation, then I think it should be paid. Now, maybe not the full whack, because like Equitable Life, they recommended 5 billion of compensation. In the end, 1.5 billion was paid because that's what the government felt they could afford. So maybe not the huge bill that it might cost.

31:38Steve Webb: But I think the principle of an independent ombudsman making recommendations, once we say government departments can just ignore it we risk destroying that and that for me is the

31:48Georgie Frost: most important thing all right then steve what keeps you awake at night when you think about

31:54Steve Webb: pensions and retirement trying to work out when i'm going to retire but maybe a few more columns

31:59Georgie Frost: yet before i do absolutely that's what we want to hear steve you're not allowed to retire yeah i

32:03Steve Webb: mean it is funny is that thing we've already talked about which is that whole group of people who are simply not saving enough and maybe don't even realize they're not saving enough you know a whole generation who, you know, they didn't get the gold-plated pensions of yesteryear. They're not building up enough to replace them. We're wasting time. You know, I said we've wasted a decade and we really have. And unless we get a move on, you know, that whole, you know, the state pension will get people to the starting gate, but people want more than that. And we're letting them down if we don't get a move on.

32:33Steve Webb: So that's my biggest concern, really.

32:35Georgie Frost: Robert, we can't end on a negative there, Steve. If you could give a pep talk to someone worried about their financial future now, what would you say? Some tips, some advice to how to, you know, get yourself on a good path to retirement, because it's always a lot of gloom and doom. And if you open up the pages of the newspaper online, it's a bit like we are all stuffed, aren't we? So a bit of positivity from you, Steve.

33:00Steve Webb: Yeah, I think the way to take control is to know where you stand. You can't make a plan if you don't know where you're starting from. So, you know, get a state pension forecast, work out what you're going to get, get together all those pension letters you've never opened and please don't bin them. I mean, if you don't open them, stick them in a pile on the corner and occasionally have a look at them. Find out what you're going to get. You know, next year, I think the pensions dashboard will go live. People will see in one place all their pensions and that will help. And then you'll be able to see what you've got, what you can expect and have a look at that.

33:30Steve Webb: And if that's not what you want, then, you know, often at work, there'll be a pension department or you can get an advisor through work or you know if you work for a bigger company and start thinking what what you could do often your company will do more if you if you do yeah making the most of what you've got all that kind of stuff you know i mean you know look at this is money every week and make the most of the money you've got you know there are things you can do to take control but if you if you bury your head in the sand if you think oh it's all too terrifying i'm not going to look till i'm 60 it's kind of left it a bit late really so you know find out where you stand nice nice tip there uh before i

34:04Georgie Frost: let you go Steve Simon final word 10 years blow some well-deserved wind well I mean the first

34:10Simon Lambert: thing I would say is that over the last 10 years Steve has been working tirelessly to write his columns for us and the amount of work that goes on behind the scenes to do that is immense and he deserves a huge amount of credit for that right because he's genuinely doing something that is really really helping people out and putting a lot of work into it and also delivering great stories you know people love these steve's columns they love to read them our readers absolutely love the columns every monday people come in to read steve's columns and that's great it's a column about pensions and retirement and we've got it's it's appointments of you you know that's absolutely brilliant but also it's it's sort of the level of financial education over that period of time because as humans we learn through stories that's really that's the way that we learn through through you know centuries millennia however long we've i don't know how long we've been around long time right you know and people reading those columns are learning something and the amount of financial education that's gone on over those 10 years through Steve's columns is absolutely immense.

35:26Simon Lambert: And so I take my hat off to him for doing them. And I'm also very, very grateful because lots of people love reading them.

35:37Georgie Frost: Obviously, it wouldn't be so long. So Steve, here's to the next 10 years. I hope you'll be back on the show.

35:42Steve Webb: You know what we said about retiring. That's very kind, Simon. And I appreciate the opportunity. It's very rewarding. I appreciate all the work that your colleague, Tanya Jeffries, does as well because she's a key part of the whole process. A pleasure. Nice to see you both. Thank you.

35:56Georgie Frost: Right, let's crack on. A screeching handbrake turn there from pensions to cars now, Simon. Let's be honest, few of us really enjoy haggling, let alone with a car salesman. But what if you knew exactly how much they're willing to come down on the price of a new car before even stepping foot into the showroom? Oh, this is money can help. Firstly, before we get into the details of this one, Simon, it wouldn't cross my mind to haggle on a new car. Would it not? Is this a normal, is it? No, do you? I mean, I've never bought a new car, so...

36:26Simon Lambert: Oh, you absolutely must haggle on a car. Cars are like a classic haggling. Second hand, yeah. No, no, no, no, no. I mean, you've got what's known as the list price, right? Which is what the manufacturer says the car will sell at. But then more complicatedly, you've got the on-the-road price, which is the cost of getting that car on the road, right? So that's the one that you treat it as, because that includes the tax and stuff like that for the first year and things. um but this these prices are entirely negotiable and there's a number of layers of an onion going on here where you can get some money off and and you know different elements where you can go okay here there there so don't pay this price okay so my fault there but like i said i've never bought

37:13Georgie Frost: a new car so it didn't doesn't strike me but even with a second-hand car even with anything the idea of haggling is just a bit oh so how much money can you genuinely save i mean obviously depends where you're haggling but is there sort of like a ballpark figure you can get well i mean let's look at britain's top selling car okay the ford puma you could get a 10 discount on this so the

37:43Simon Lambert: average retail price is 30 878 the achievable price according to our experts at insider car deals is 27 000 pounds 305 so that's a 3573 pound saving kia sportage 11.7 discount nissan cash guy you could get 19 of a cash guy so many cash guys are sold but you could pay nearly 20 percent less than the list price on one of these and then you know lots of other cars that we feature in the article vote a golf vw golf who doesn't love a golf jeremy clarkson basically says the answer is buy a golf pretty much whatever question here is about what car you should get the answer is just buy a golf right yeah 19.3 discount you could get off that average retail price 35 492 according to insider car deals 27 000 pounds 410 you could save 8 800 pounds right and we've got a discounted example here of a 1.5 tsi 150 r line obviously you know exactly what that is georgie oh yeah i've got one a 23.8 discount on that car so it's not rubbish cars is it um no no it's good

38:59Georgie Frost: cars these are cars people want to buy so um how can you get the discounts then on on cars right

39:08Simon Lambert: so not rubbish but where is this information come from okay this has come from pat hoy okay who is the founder of a website called insider car deals now pat hoy has got years a decade in fact of experience working in the motor trade he has got access to information from manufacturers showroom networks on the current prices and what they can get them down to plus and this is a really important bit pat has a team of mystery shoppers who are out there testing this stuff out and seeing what they can get off cars up and down the country every day okay pat then takes all that information synthesizes it and pulls together details on the best prices that you could get on a new car and if you are going to go out and buy a new car and bear in mind the figures that we've talked about here we're talking about the like the price of the car right the actual you know price tag on this is what this car will cost you most people don't buy cars like that anymore they buy them on pcp finance deals right and actually you can get a better deal by taking the finance than you can by buying the car outright which often surprises a lot of people lots of people think if they go into the dealership and say i could pay you cash deal or be right right well i'm going to give you my special discount that's enough that case they actually they want you to take out the finance agreement if you take out the finance agreement they can probably offer you a better price so what quite a few savvy people who don't want the finance agreement do is they go in they buy the car on the finance agreement and then they pay off the finance agreement early on so i think you basically you've got about three months and then you can pay off the finance agreement so go in take out the finance buy the car get the best price they possibly can and then three months time pay off finance no penalties or anything like that and then they own the car outright most people though just keep paying the finance deal um but if you are gonna buy a new car right then i would strongly recommend that you go to pat's website to insider car deals where he offers a number of services right and you will you will have to pay for some of these services okay and no we don't like paying for things nowadays on the internet where we think everything should be free but you will have to pay but what you will get is a personal deal sheet based on the car that you want to buy that will explain to you the exact discount that you could probably get and what you should be targeting and how to do it and it's gonna the discount that you're gonna get on that car is gonna massively outweigh the price that you pay for that service you know from pat's website so if you were going to buy a new car then i would say do this it makes perfect sense but anyway pat's given us this information for a story that we've done this week and we're running a series of stories based on the stuff that you know that the pats told us and it's absolutely fascinating you know how you can do this even on some of the best-selling cars but you have to keep going that's the other thing don't when you go in there go ah well what's the best price you can offer me and then the salesman or saleswoman goes well it's x it's the absolute best i can do and you're robbing my children of shoes here don't listen to that don't listen to that nonsense they are giving you the best they are giving you the best deal you need to push them you need to go back and push them and it's when they think that you are you're really going to buy the car right then when they're like okay this person might actually buy the car but i'm gonna but you say to them i would but like it's above my budget and i'm looking at some other cars and you know you get that you know It was when they think they can reel you in that they'll then give you the best price.

42:47Simon Lambert: You don't accept the first one they offer. Keep going back to them. Do that and you will get the best price.

42:53Georgie Frost: Right. Now, for the latest nice problem to have reader question time. I've, not me, reader. I've recently received just under£20 ,000 from my late mother's will. That's not the nice problem, by the way. Obviously, it's sad that you get an inheritance always. But just to say, they don't need it. because they pass some to their children and grandchildren, already using the annual£3 ,000 inheritance tax allowance to do this. But they would like to give them more. As they don't need the money to live on, can I treat this as a gift from surplus income? If that is the case, do I have to give all the money because to me, in order to comply with the, quote, pattern of giving I have established, where I gift all of my surplus income each year?

43:41Georgie Frost: Right, there's a lot in this, Simon. Firstly, the small gifts is involved here. The gift from surplus income. Tie it all together. And what do we have? So, the small gifts allowance.

43:56Simon Lambert: Yes, right. So, every year you can give away up to£3 ,000 as an individual free of inheritance tax. And any money that you give above that becomes potentially liable for inheritance tax.

44:08Georgie Frost: So easy£3 ,000, you can divvy that up between two people, or you'd have to just give it to one person alone.

44:14Simon Lambert: Oh, yeah, you can divvy that up. Divvy it up, right, yeah.

44:17Georgie Frost: If they're getting married, you can also give them some money too.

44:20Simon Lambert: Yeah, right. So if they're getting married, you can give them£5 ,000. There's a special allowance for that. And you can give people individual gifts of up to£250 to as many recipients as you want. See our previous question from someone who asked whether he could give£100 ,000 away in£250 chunks. to which the answer is no but look these gift limits are massively outdated they haven't been they haven't been raised since the 1980s and something that people will notice is that life has got more expensive since the 1980s this thing called inflation has happened and this illustrates why in harrison's tax just needs a complete overhaul but the governments have just been sticking their head in the sand and turning it into a cash cow for years and it is it's a hideous tax it's hated by like most people it's the most hated tax hardly anybody pays it if you've got the most hated tax but hardly anybody pays it other than like rich people you just need to take a long hard look at it because it's it's counterproductive but anyway the point is these are the rules right yeah okay give away up three thousand pounds per year you can give away more than that but then it becomes potentially uh liable for inheritance tax unless you live for another seven years now there is a loophole which is you can give away money out of surplus income and that doesn't fall within this seven-year rule and it doesn't fall within the normal allowances but this has to be surplus income so income that you don't need to maintain your standard of living and it also has to be income right and this is important for the answer to this question and it also has to be a pattern of regular giving now the pattern of regular giving is a really gray and nebulous area right so it could be you gave one gift per year or it could be you gave one gift per month or it could be every three months could be every six months there needs to be a pattern so you need to establish that pattern and what you need to do is you need to establish that pattern and then you need to write it down and say what you're doing because at some point potentially your executor is going to need that information and the reason why they're going to need that information is because you will be dead and therefore they will not be able to ask you the question of what you were doing because you are dead uh and and this creates a major issue as steve was talking about in the first half of the show for executors so you know if you're going to do something like this or you have a family member who's doing something like this do everyone a favor write it down write a letter don't have to send the letter to anyone but just write something down that says this is what i'm doing here's where you can see what i'm doing and a crucial bit for this question is this isn't income this is capital this is not income if someone leaves you money it's not income it's capital if you take money out of your isa it's not income it's capital if you withdraw money regularly out of your pension however that is considered income right but you can't just take it out your savings can't take it out your house can't take it from inheritance and so on so in this instance unfortunately this is not a way to get around it there is however something that you can do if you are left money as an inheritance in someone's will and you don't need the money and you would rather pass it on to the younger generation and this is something that not a lot of people know about but this is an issue that does affect lots of people because inheritance is actually tend to come to people when they are much older than we think people are i think the average age of inheriting is in the 60s by which point most people are in the financial position where they don't really need that money but their children on the other hand are in a situation where they might be needing house deposits you know yeah money to help pay for their kids and their lives and all those other things they're very expensive and you can do something called a deed of variation which means you can redirect all or part of an inheritance to somebody else this is a legal document you need to speak to a solicitor about this but it is relatively simple to do and by doing this the gift is treated as if it came from the person's estate rather than from yourself and then goes to the other person so the classic example of this is exactly this kind of thing right grandparent dies leaves their money to their own child their own child who is a parent of adult children themselves goes would you know what i don't need this money and in fact i'm going to have an inheritance liability myself yeah so it's better if i actually if this money went to my children my adult children instead you can do a deed of variation which effectively means that the money didn't come to you and it goes to them.

49:08Simon Lambert: Now, what's interesting is it can be executed within two years of death and with agreement from all affected beneficiaries. So it doesn't have to be immediate. So if you are in this situation or your family's in this situation, then speak to a solicitor.

49:23Georgie Frost: I'm just thinking with this particular case, you said it doesn't have to be immediate, but it seems like they've already received the money. So I assume if that's the case, that ship has sailed for this particular person. But if you haven't taken possession of the money, is that sort of what I'm hearing?

49:37Simon Lambert: well in the answer that we have from andrew smith who's an independent financial advisor at flying colors he has highlighted this potential use of the deed of variation being another alternative solution in answer to this question so it does sound as if even if the it appears the ship has sailed that it may not have sailed if it sets sail less than two years ago got it got it

50:00Georgie Frost: all right just get some proper advice on that one then all right finally barclays will pay you up to a massive£1 ,000 to open a Premier account and switch your cash ISA. Simon, that is a lot of money, isn't it?

50:15Simon Lambert: Do you get to be true? It is a lot of money, isn't it? It's a lot of money. I mean, these cashback deals are coming thick and fast at the moment. And a lot of them come from banks trying to get you to join, right, on one hand. And on the other hand, investment platforms trying to get you to sign up um the barclays one here is trying to get people to open barclays's premier account right and you have to do that through the current account switching service and you can get a 400 pound cash sweetener if you do that there's a catch you must pay a pre-tax annual income of 75 000 pounds into the account or have at least 100 000 pounds in savings or investments with barclays or a mix of both in order to be eligible for barclays premier account now in return for that you'll get free apple tv plus don't know what the difference is between apple tv and apple tv plus but you're getting the one that says tv plus on it cash back on spending uh and enhance rates on your savings um and you don't pay a monthly fee for this premier account this is one of those premium accounts that you don't pay a monthly fee for um but you can't hold a current account with barclays um as of the 17th of february 2026 um and you need to open your barclays account in the barclays app and the offer ends on 30th april now you then have to complete a full switch in the app including at least two active direct debits and you must pay at least four thousand pounds into the new premier current account within 30 days of opening it if you clear all of these hoops you will get 400 pounds so how do you get the other 600 pounds what you need to do there is move a cash isoport that is worth 100 000 pounds or more right and have the barclays premier bank account so it's quite a big hurdle here yeah yeah i mean you lost me at the other hundred thousand yeah right so so anyway if you've got a lot of money

52:25Georgie Frost: you can get a lot of money right in that true in life yeah if you have a premier account a year and

52:32Simon Lambert: it has to be a fixed rate isa it's not just their standard isa if you have a premier account then barclays rates you get a slightly better rate so it's one year fixed rate flexible isa offers a rate of 3.8 percent if you've got a premier account it'll pay you 3.85 percent now that's not the best on the market for a one-year fixed rate isa but if you get 600 pounds cash back or moving 100 000 pounds that's the equivalent of a 0.6 percent boost on your rate over the year which takes your 3.85 percent up above the best one-year fixed rate isas on the market so you're actually winning however if you don't have a premier account you only get 200 pounds for transferring in your isa which is only a 0.2 percent boost you get a lower rate in the cash isa and you don't beat the best rate on the open market and also as i said these are only fixed rate isas so what you could do instead if you just want an easy access isa is just choose one of the best easy access isas and the best one on the market in my view is the one that has the least hoops to jump through to get it it's totally flexible you can take your money out when you want to it's a proper cash isa and it comes from trading 212 and it pays 4.4 on an easy access cash isa which is a great deal actually i should say that if you want to look up the best cash isa rates then you need to go to thisismoney.co.uk forward slash save where you will find our savings tables and we highlight all of the best deals and just to say simon apple tv apparently

53:58Georgie Frost: is a physical hardware device while apple tv plus is the service similar to netflix so don't get

54:07Simon Lambert: them confused right so i'm the start of the week 7.3 percent that is how much booksy 100 is up this year already 7.3 percent 7.3 percent that is that a seriously impressive performance for the uk stock market that is you would be happy with a 7.3 percent return in most years that's a good investment return um and it's only the 20th of february obviously there are many months You're young. Anything could possibly happen. But often a good start to the year indicates a good year for investors. But what is going on here is that the UK stock market is suddenly looking a lot more attractive to investors around the world.

54:50Simon Lambert: Some of that money is starting to shift from big US tech into other markets. And the UK stock market, people are sitting up and paying attention to it. And we've been waiting for this to happen for a really, really, really long time. it started to happen last year and it looks like the effect is continuing this year so good news

55:11Georgie Frost: thank you very much simon you can keep up to date with the latest breaking money news just go to thisismoney.co.uk or download the app and if you have any comments or questions for the team or anything you would like them to look into simon you can email us podcast at thisismoney.co.uk

55:26Simon Lambert: send us your questions if you've got a question send us a question we will answer it on the podcast you can come to thisismoney.co.uk forward slash podcast to find all podcasts past and join in the debate and read your comments come and tell us about what you think on the things that we've been talking about this week

55:43Georgie Frost: and if you have any questions for Steve as well he mentioned the email address right at the top of the show if anyone's forgotten it it is

55:51Simon Lambert: pensionquestions at thisismoney.co.uk

55:53Georgie Frost: that's what it says on the tin and if you like our podcast why not rate us

55:56Simon Lambert: wherever you found us

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