When will you be able to retire... and will it be with a state pension?

0:03Welcome to This Is Money Podcast, sponsored by Charles Stanley Direct. I'm Georgie Frost and joining me and Simon Lambert today is Helen Crane. And coming up, just how long will we have to wait to get a state pension? As the government launches another review into the age we can get hold of our cash, experts suggest it could go as high as 74. Meanwhile, auto enrolment has been a game changer for getting more of us to save for retirement. But it's not going to be enough. So should the age be lowered to 18? Also today, Labour ignores the double tax hit warning from experts and plows on with plans to include pensions into the inheritance tax net.

0:41But those in the know are using a little known loophole to get round the Chancellor's raid. And Simon's been looking into how to bag the highs and avoid the bus of investing in crypto. 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.

1:02Invest, save, coach or plan. Using technology where it's helpful and people where it matters. Our website and app make trading cost-effective and flexible. But we're more than just an online investment service. We're here for you regardless of your financial needs or if your life takes an unexpected turn. Your finances, your way. Take control today with Charles Stanley Direct. Sign up now. Investment involves risk. But first, there's been plenty of speculation this week about the age at which we can start taking our state pension following a new review. Now, currently it's 66, going up to 67 within the next couple of years.

1:44But the Institute for Fiscal Studies reckons that without reform of the triple lock, it could have to rise to 74 by 2069. So could this really happen? Simon Helen, welcome. Simon, 2069. won't massively affect ours, maybe Helen. What's happening to the state pension age? Yeah, there was a right flurry of maths going on in the office on Tuesday afternoon as we were working on our state pension story and trying to work out what year people born in certain years would be certain ages. At the moment, state pension age is 66. As you said, it's rising from 66 to 67. Now, for people who are aged 48 to 64, the state pension age is currently due to be 67.

2:35If you were born after the 6th of April 1977, okay, so you're 48 or under, and that's all three people doing this podcast at the moment, then your state pension age will be 68. The big concern is that it may go up. The government announced a state pension age review this week. It has to review the state pension age periodically. It's been on the cards for some time. It's a thorny issue because it's been pushed up due to increasing longevity, but the longevity sort of increase has tailed off slightly. So there's now a question of whether we should be continuing to do that. The higher you put it, the bigger the gap you get between people who do physically demanding jobs and jobs that are not so physically demanding, such as sitting in an office trying to work out state pension ages and talking on podcasts.

3:34and also the cost which is now starting to come into play quite substantially and is what led to this warning from the ifs where they didn't say the state pension age is going to go to 74 as you said they said if we don't do something about the triple lock in order to balance the books and the cost of this it might have to go to 74 now in that ifs report it suggested that those people born between 1980 and 1995, so that's 30 to 45 year olds roughly at the moment, the state pension age would have to rise to 69. But for those people who were born after that, so 30 year olds and under, that the state pension age might need to rise up as high as 74.

4:18Now that is a very, very big difference from where the state pension age is right now. There we go again, Helen, stuffing the young people. Yeah, exactly. It's a common theme, isn't it? But of course, as we often say, when we talk about pensions, older people are the ones that are going to vote and young people coming to this is a long, long way down the line. And it's something that politicians just don't ever want to deal with because almost they just keep kicking the can down the road. Clearly something has to happen because 74 is, I mean, that's quite a, I can't imagine a world where most people are staying in work until they're 74.

4:58I mean, as Simon said, you know, people in different occupations, people who are on their feet all day just aren't going to be able to do that. And I think the thing really is as well, it depends on what type of retiree you are, doesn't it? You know, if you're relatively wealthy, or if you've, you know, just saved really hard into a work pension, then you might be able to bridge that gap for a few years, maybe even, you know, 10 years, you can retire in your mid-60s if you've got that decent sort of work or private pension to bridge it. But the people that are going to be probably waiting for longer and having to stay and work probably are these people that are doing these more physical jobs.

5:32So I think something is going to have to give really. So this, I understand, is the third review. And as Simon mentioned there earlier, there's a review into state pension age because we have been living longer. But is this review, Simon, not just about age, because as you said, that seems to have sort of slowed down. Is it about going to be looking into how affordable this is and bringing that element in? Yes, and that's becoming a very important element here. And to an extent, we have become a victim of our own success in terms of improving the state pension. And when you look at the state pension, they like to use something called a replacement rate as to how much of the median income it replaces.

6:20And the UK state pension, when you look at it, compared to other countries, looks very low. But you need to take some of those figures with a pinch of salt, because some other countries bundle in their workplace pension saving into their state pension. So some of them can look a lot more generous than they are. But we have gone from a situation where the UK state pension was considered not very generous at all to a situation where it is considered to be much better. The triple lock has been a major driver of that, which means that state pension goes up by inflation, wage growth, or 2.5%, whichever is the highest of that.

7:03So we've had some big state pension increases in recent years. Some would argue that that's good. And it is good because it has improved the state pension. others would argue that it's improved the state pension enough that we need to move away from the triple lock because it's going to lead to the state pension continuing to rise at an unaffordable rate and that's a very difficult one for politicians to deal with because if you look at the last election there was a race to commit to the triple lock even though people know that we probably need to do something about it there's been suggestions of a double lock for example where you take out one of the elements or you go back to a minimum.

7:39The problem was is that under the previous system, you'd get these headlines of state pension goes up 80p a week and things like that. People were getting absolutely minimal rises. But as Helen said, the cost of this is being lumped onto younger workers because this idea that people pay into a national insurance pot and then that national insurance pot is used to pay their pension is completely wrong. What happens is that people pay national insurance to get qualifying years for the state pension and then the cost of the state pension pretty much comes out of general taxation. And it's the people who are working now who are paying for the people to be in retirement at the moment.

8:13The concern for younger workers is that the state pension may not even be there when they get to a certain age. There's always this talk of means testing the state pension, or that they might not get it for years and years and years. Now, that's a concern for us. But it's even more of a concern for anybody who's listening to this podcast who's under 30. The thing I would say to anybody who's listening to this podcast, it was under 30, is that I do not think the state pension age is going to 74. This is the IFS saying, you need to do something about the cost of the state pension on the triple lock.

8:41Otherwise, in order to balance the books, it would have to be 74. I do not think that this government, certainly a Labour government, is going to put the state pension age to 74. I mean, I'm not saying 100 % it won't happen, but I'm saying 99 % it won't happen, right? Not unless they're planning on bringing in a different state pension age for people who work in the public sector or who were members of trade unions compared to everybody else. But I don't think a conservative government would do that either, because it would be political suicide to raise it by that much. And that is the kind of rise in the state pension age that would potentially deliver, you know, French style protests.

9:17I don't think we set fire to quite as much stuff as the French love to, but there would definitely be widespread protests. And as we talked about, it would lead into that whole thing of like, well, hang on a minute, it's okay for you over there, you're sitting working in an office, but what about me? I'm on my feet being a nurse all day or working in a factory or I'm a builder and that kind of stuff. But what this could lead to is an acceleration in the state pension age. And also there's a kicker here that I think people need to be aware of. And it's certainly something that could catch some people out.

9:51Now, from my perspective, my state pension age is going to be 68. I, at this point in my life, don't want to be working full time until I'm 68. I harbour an ambition to stop working full time before then. I have always looked at it and gone, okay, well, I won't get my state pension until I'm 68. So I need my pension I'm building up through work to cover me until I can get there. At the moment, you can access a pension at the age of 55, your workplace pension, that is soon going to go up to 57. And the age at which you can access it is in theory meant to track at 10 years below the state pension age.

10:30So for example, for me, you, Helen, it could be that it goes up to 58. Now, if they suddenly start accelerating the state pension age, and they stick to this 10 year thing, all of a sudden, you are potentially going to find people who have saved elsewhere into a pension in order to fund a retirement earlier than the state pension age, suddenly seeing the age at which they can access their private pension or their SIP or their workplace pension drifting off into the distance. So I do think that that is something that people need to be aware of. And I wrote a column about this last year, asking, like, should you really, you know, stick as much as possible into your pension and say, well, perhaps if you do harbour ambitions of that retiring early thing, you might want to be lumping some money into an ISA as well, where there's obviously no age restriction on when you can take the money out.

11:22I'm not as convinced as you, Simon, that it won't go up to 74. Just for the statistics of how many of us are living longer, new technologies will enable us to work longer. And I think we're going to have to. But what it does highlight, Helen, is taking your own initiative, especially if you're self-employed. But when did you start paying into your pension? Helen, when did you start? Do you remember? I do. And I'm actually a bad example. So I started work just before auto-enrolment came in in 2012. So my first job, I wasn't auto-enrolled into pension and I decided not to enrol myself into it consciously because I was quite poorly paid.

12:08first job living in London, my budget was so squeezed that I didn't want to put in whatever it would have been, you know, probably less than 100 quid a month on my salary, not a lot at all, but just decided I couldn't afford it. But then luckily, in a way, I moved jobs a couple of years later. And when I started that job, auto enrolment was in place. And I allow myself to be put into the workplace pension there. To be honest, if auto enrolment hadn't been in place, would I have just left myself opted out again honestly quite possibly you know also made a huge change in the amount of people that that do pay into their pensions I think it went from something like 50 % to 80 % of people who who can be in a workplace pension are so in in my case I feel lucky that that happened to me uh now because I think as a lazy sort of 24 25 year old would I I've been like, oh, you know, I'll have a bit more beer money for a couple of years.

13:04I absolutely, to be honest. I definitely would. Same. I'm a bad example. But what the suggestion is, and why we're talking about this is because the boss of pension firm legal in general says that under current auto enrolment rules, which as you say, it's been a game changer, you have to be 22 and earning over£10 ,000. And those rules came in, started to come in in 2012. we know all of the evidence shows it is not enough so boss of legal and general saying well don't start 22 start at 18 now helen you've written about this for your column this week what do you make of antonio simo's comments well i don't think a lot of young people are going to be very happy to hear this um if not only because it's easy to say that when you're the boss of a pension company who a earned 10.6 million pounds last year so he's probably putting a fair whack into his pension um but also you know he's got a clear vested interest in people paying into their pensions for longer however he does have a good point as you say if the retirement age is eventually going to go up to perhaps not 74 but but certainly later you know people are simply going to have to save more into their private pensions.

14:23But that's obviously much easier said than done, you know, saving at 18. First of all, a lot of young people are still in university at 18 or still in sort of training or, you know, maybe a part time job or a low paid job. Where is that money going to come from? First of all, you know, even if you are working full time, your budget is so stretched, you know, you might want to buy a house, even if you're renting a house, your rent will be so expensive you know if you're in your first job not earning a huge amount what you know where on earth is that extra money for your pension gonna gonna come from in your budget so I think you know it's not nice to hear here's another thing that you should be doing with your money when you really kind of don't have enough of it as it stands but I think the this point that you need to make is to sort of enroll into the auto enrollment scheme you're supposed to pay in 4 % of your earnings every month.

15:15Your work then pays in 5 % and the government gives you 1 % in tax relief. So if you're able to do that at any age, absolutely great. That's really sort of making the most of your pension savings. However, if you are in a position where you're finding it tricky to put money into a pension, you can't afford to put in that full amount, you don't have to. So you can put in less. Your contributions to your company might stop. So if you aren't struggling, it's not a good idea to do this. But if you're in a situation where you can put in even £50 a month into your work pension, it does still really have benefits.

15:51So we worked it out, and£50 a month from the age of 22 to 67 could still get you a£172 ,000 pension pot at the age of 67. That's based on your pension investments going up by 6 % a year. So that is much better than nothing. I think the message is, you know, obviously, it's tough for young people. But if you can even put aside a really small amount, just start and, you know, obviously hope most people in that situation would get a pay rise in a few years, they'd be able to up that sum, they'd be able to go back into the auto enrolment scheme, get their company to match it and their pot would really snowball.

16:34But yeah, it's really difficult to hear. And I understand that. But if you can even put in a tiny amount, it's so much better than nothing. Simon, why was it that the 22 limit was brought in? Because you would have thought people between 18 and 22, I understand the 10 ,000, but why would you have an age limit if you've got a financial limit, as it were? Because there's a lot of trade people that start at 16. It'd be good for them to start. Imagine what a foundation they could build if they could say for those sort of six years between 16 and 22 or wherever. Yeah, it's one of those things. And there's also some income limits as well.

17:15Like it's only income between certain levels that goes in, which seems a bit strange when you look at it, to be honest. But I think that some of it also was for to make it easier. Okay, so they thought for a start, you don't want to encourage people to opt out. Maybe if you start doing it with people who are younger, you're going to get a higher level of opting out and then either they stay in the same job and they don't opt in in the future or they get into the habit of opting out so you don't want to get into the habit of opting out then also you've got that element where it becomes more of a difficult situation for companies to deal with because if you've got you know lots of young people do multiple low-paid jobs right so So most of the jobs I've done in my life were before the age of 23.

18:07You know, I'm unusual in that obviously I've worked for the same company for nearly 20 years, right? And I had one journalism job before that. But before the age of 23, I had loads of jobs, you know, ranging from numerous pubs I worked in, working, you know, in France overseas, working as a snowboard instructor, working in supermarkets, working in BHS, which was the most mind-nobbingly boring job I've ever had in my life, working in a River Island warehouse picking stuff, you know, all those kinds of things. If you think about like all of those like tiny little pots, tiny little pots and the difficulty for companies of building that up, then it starts to become quite difficult.

18:47And I think statistically speaking, you know, younger people are more likely to have those little jobs and where it wouldn't really make a difference. I do think that they do need to look at the framework of this and think about shifting it. I think that we need to come up with something for self-employed people, which is the other part of the pensions review that the government launched this week as well, is looking at some of this other stuff as to, you know, what else can we do to improve on the situation? And I would say that it really matters the earlier you start. There is a neat trick where if you save for 40 years instead of 30 years, you double your money.

19:24You don't put twice as much in, but the power of compounding that snowball effect that Helen just referred to you know the ball rolling down the hill picking up a little bit more snow every time getting bigger and bigger and bigger really pays off and this 30 to 40 year kicker is a big one so if you can start doing it in your early 20s then it absolutely makes sense and I remember a conversation I had with my little sister when she started work and she was auto enrolled and it showed her how much she was going to be going into a pension she said i can't afford that it was something you know it's like 100 pounds a month or whatever she said i can't i can't afford 100 pounds 150 pounds a month i can't afford 150 pounds a month and i was like yeah but that's you're not putting all that in i said you're only putting this much in your company is matching it and putting that much in and you're also going to get tax relief on what you put in so to go back to the 50 pound amount that helen used as an example and 50 pounds a month i reckon most people could do 50 pounds a month if i said to you you give me £50 and I'll give you£112.50, you would consider that to be an exceptionally good deal.

20:27And that is the deal that most people will get for putting£50 into their pension, because a lot of companies will match what they put in. So you put in£50, your company matches it with another£50, and you get£12.50 worth of basic rate tax relief on the£50 you put in. So that's£62.50 plus£50, £112.50 for£50 in. That's a great deal. Do it. One day in the future, you'll thank yourself for doing it. The problem is, Simon, and we know we have a problem with this, and I can't remember the behavioural economics term for it, but if you offer someone£50 now or£100 in two years, they tend to take the£50 now.

21:03It's very hard for people to see the benefit when it's so far in the future as to the loss that they feel they're taking now. So that£50 feels enormous even if you say, don't worry, in 40 years' time, this will be worth way more. Oh, no, but the beauty of it is that they could see it the next month. They could look up their pension statement and they could see that£150.50 has gone in. That's what we need to be getting to people. That's what we need to be getting through to people. But no, they can't have it. They've got to wait for ages. That's it for part one.

21:42I'm joined now by Lisa Kaplan of Charles Stanley Direct for our weekly Investing Explained feature Lisa, we've got a question here, topical, as pensions are in the news I want to start saving an extra£200 a month for retirement What is the easiest way to do this? Right, it's a good question Saving for retirement says pension If you want to choose your own investments, and Simon and I, I think your listeners often do, as a SIP is a good way to go. Charles Stanley offers SIPs via our online platform. Other providers are available. You simply go online, open a SIP, choose the investment. We'll get the tax-free cash for you for the basic rate, do a tax return if you're a high-rate taxpayer.

22:27Still technical, but that's how it works. If you're not that fast about choosing your own investments. You can do it via payroll if you're employed. And that's certainly very simple. The money is simply taken out of your pay packet before tax and you get all the tax relief in one. And if somebody wanted to go down the route of opening a SIP with yourselves, for example, but they don't want to be choosing shares or funds themselves, is there something there that can help them out as well? There are a couple of things on our website. We have Charles Stanley manage funds and you choose one of them and we'll manage the money on your behalf.

23:07And we also have a preferred funds list, which is really, if you know what sector you're interested in, our research team has a list of funds that they rate, that they think are good. It's not a kickback or anything. These are just what the research team think are good and what our investment managers invest in as well. Great. Lisa, thank you very much. My pleasure. Welcome back. The government is ploughing ahead with bringing pensions into the inheritance tax net from April 2027. So bereaved families rather than pension firms that will be responsible for working out and paying the tax, disregarding experts' warnings about the double tax hit on inherited pensions, which they described as punitive.

23:49Now, Simon, we knew that pensions, this was announced in the spring statement, I believe it was. So why are we discussing it now? And what is double taxation all about? There was a report this week on the consultation that they've done, which had a lot of replies from people in the pension industry. And there are two main criticisms of this. Firstly, that it's going to be an administrative nightmare for families, because they're going to have to pull together all the different pension pots that people have, and they're not going to be able to complete probate and get access to people's estates until that's done.

24:22This was going to be pushed onto pension companies and investment companies, which some of which are really quite efficient some of which are notoriously slow and difficult to deal with now in some scenarios that would mean that they were waiting a very long time to get money that they actually need to live on and might be having inheritance tax bills being demanded of them before they can do that in other cases it might just mean that they're waiting forever to get out the money and they're they're going at the pace of the slowest donkey and some of these donkeys can really be quite slow. The government has listened to this and gone, okay, fine, well, we won't get the pension companies to do it.

24:59We'll get people to do it instead. So the administrative nightmare has been moved from the pension companies to the people instead. Now, there are many people within the industry who are saying, okay, mildly better, but you only sort of listened to what we were saying. You didn't listen to the bit we were saying about this is going to be administrative nightmare. And this is a problem of pulling pensions into the inheritance tax net. The other problem is to do with this double taxation. Now, the reason the government says that it is pulling pensions into the inheritance tax net is so that people stop using them as a vehicle to avoid inheritance tax.

25:36I would argue that this is a somewhat flawed case for doing it. Firstly, whilst there has been lots of talk about using pensions and keeping pension pots intact for the inheritance tax benefits. It is only a benefit if somebody dies under the age of 75, which is not normally considered a benefit. And in fact, actually, most people don't die before the age of 75. So in that scenario, no inheritance tax, 40%, and no income tax on withdrawals. If you die after the age of 75, there is no inheritance tax, but your beneficiaries are charged income tax on withdrawals. Now, as the withdrawals from that pension are added to their normal taxable income, most of those people, if they take any form of meaningful sum out of that pension and already have an income elsewhere, will end up paying 40 % tax on the money they're taking out of that pension because it's going to bump them up into the 40 % tax band.

26:39So it's not true that these pensions were completely free of tax at all. Also, I would argue that there is only a very small number of people. It's a niche sport, a very small number of people doing this, a very small number of wealthy people. It might be something that was talked about a lot by financial advisors and wealth managers. I've seen no figures, no evidence of how many people were actually doing this. And I really don't think that it is that large a number. I think this is basically a tax grab. And what it's done is it's going to put pensions into the inheritance tax net. So inheritance tax, everybody has a nil rate band of£325 ,000.

27:18If you own your own home and pass it to a direct descendant, you could add another£175 ,000 onto that, giving a maximum tax free allowance for an individual of£500 ,000. pounds. If you are a married couple, you can double that, but not everybody is part of a married couple. So let's talk about the 325 and a 175. If you have been saving for your retirement to the degree that you need to in order to pay for your retirement, as we were just talking about, you're going to need a very large pension pot because even if you wanted the cost of a comfortable retirement, you know,£40 ,000 a year, for example, you will need a million pound pension pot.

27:56Instantly, you have an inheritance tax liability, regardless of whether you own your own home, have any other assets, etc. So it's going to pull a lot more people into inheritance tax. The double tax thing comes from the fact that unless the government changes things, from 2027, if someone dies after the age of 75 and has an unused pension pot, it will face inheritance tax of 40 % if they're over the threshold. Plus, their beneficiaries will still have to pay income tax when they take the money out. So if you go on the 40-40 basis, right, 40 % inheritance tax, 40 % income tax, it delivers a 64 % tax rate.

28:35If people go up to the 45p tax because they take a large amount out, it goes up to 67%. There's some edge cases where it could go over 70%. Clearly, I think this is something that needs to be dealt with and is wrong. The consultation said, didn't say anything about fixing this. And people in the, you know, the The pensions industry, people in the know, experts said, you need to listen to this. You need to do something about it. It's not right. Now, there's still time for the government to do something about this. And I think that they should do. Now, I don't think they should be putting pensions into the inheritance tax net anyway, because a pension is a pension and it's not there for inheritance.

29:10OK, I don't think the case stacks up that lots of people, enough people were doing this in order to pull it in. And it's going to push so many people into the inheritance tax net just because they're building up the pension pots they need to live on and to survive in retirement. Now, that's fine. If you die at the age of 95 and you've run your pension pot down to zero, well, then you don't have an inheritance tax liability. You've used your pension as it is. If you die early, all of a sudden, huge amount of tax on the pension pot. You're literally penalising the people who've lost out by dying early.

29:40Now, obviously, they'll be dead, right? So they're not going to be in a great position to be that angry about it. They do get very angry about it whilst they're still alive, but they're not going to be in a great position to be angry about it. But it's, you know, on the families, it's like, oh, right, you know, your mother or your father's died early. Oh, and here's a tax bill for a few hundred thousand pounds. To me, I just think it's wrong, right? What we're trying to do is grab little bits of money here and there because someone made a promise not to put up the main taxes, okay? But if you are going to do this, if you are going to do this, you shouldn't be double taxing people.

30:14They need to get rid of the double taxation bit. what is a bit of a contradiction about this is that probably these rules won't be the same in 60 years time when or 50 years time when the people who are starting work now are retiring but if they are it seems that you know these young people who are doing what they're told you know starting saving their pension at 18 also enrolling at 22 like putting as much they can to their pension because they're hearing you know you might not be able to get your state pension until 74 these are the people that are going to be most punished by this aren't they because they're the ones who are going to have the biggest pensions.

30:48And, you know, is it right that someone who's done that ends up handing their family? No, they won't be punished. They won't be punished. It's like an insurance policy, isn't it? They'll have the security of knowing that they've got a big wadger cash in retirement. And if they're unfortunate to die, well, they're unfortunate to die. I don't have kids. So I'm like, oh, it doesn't matter. Take my money. You're like, it's fine. It's all going to Bazzi Dog's home.

31:19I don't know. I mean, it's just people are doing what they're supposed to do. And it seems that you're right, they're not being directly punished for it. But I mean, no one wants to hand their kids. People just don't like the idea of it, do they? They don't like the idea that they've worked hard to do this. And the government's going to take a chunk of cash that would previously have gone to gone to their kids, I think is, is the idea of it, isn't it? It's, it's not something that people like to think about. I do jest as someone who's absolutely spanked a lot of money just out of pure panic over the last decade into my pension.

31:51When I could have put it somewhere else, it does make you wonder, doesn't it, if inheritance is part of your planning for your future? What I think is wrong here, and I think what Helen said, is that this is portrayed as a policy that is going to be taxing wealthy boomers. It's not. It's a policy that's taxing young people. It's basically taking a scenario where up until, you know, 2027, people have had one set of rules and benefited from one set of rules. And it's saying, right, we're going to bring in some new rules. And that's going to hit the younger people who were saving for retirement, doing what they've told to save for retirement, because they're going to get inferior pensions anyway, because this older generation had defined benefit pensions, defined benefit pensions that had kickers on them, that paid out amounts to their spouses and so on.

32:38I think it increases intergenerational unfairness rather than reducing it. I would actually argue, and I've argued this for a long time, that we should just reduce the rate of inheritance tax from 40 % to 20%. And then it would become a much smaller concern for people because 20 % sounds a lot fairer than 40 % and also takes a lot less money out of people. I mean, we had a statistic this week that a tenth of families that end up paying inheritance tax are getting bills of more than£500 ,000. That is a lot of money to be handed over to the government in one whack. Meanwhile, Helen, the number of families using a little-known loophole to beat Rachel Rees' inheritance tax rate has nearly tripled.

33:22That's actually according to new data from HMRC. So the amount of money transferred under this loophole increased from 52 million in 2022-23 to a staggering 144 million in the last tax year. But what is it, Helen? Tell us. Yeah, so this is transferring money via gifts out of surplus income. And this is something that people have been using ever since we've heard about pensions perhaps being brought into inheritance tax to essentially get around that. As you said, the amount of money transferred under this has gone up from 52 million in 2022-23 to 144 million in 2022-24, so a huge rise. And the way this all works is basically you can hand money to, normally it's from a sort of parent to a child without having to pay any inheritance tax, provided that you can prove that the gifts are from surplus income.

34:16So this means, according to HMRC, that giving away this money doesn't affect your quality of life and that it comes from income rather than savings. So if you can say, you know, I've got this money floating around in my current account. I don't need it to live. You can pass it to someone without having to pay inheritance tax. So it's something that not necessarily a huge amount of people have the luxury to do. But the kind of people who do have these quite large pension pots are kind of looking at that as a way to kind of get around the rules and be able to pass money on without that tax. Obviously, now rumours are sort of abounding that the government will look to target this unsurprisingly now that people have identified this this leap hole.

35:01So it's something that could perhaps come up in the autumn budget to cut that off, unfortunately. But for the love of God, please don't make financial decisions based on speculation ahead of what could maybe happen in the budget, Simon. Indeed. The key thing with this is there has to be a regular pattern of gifting. The regular pattern of gifting is a quite nebulous concept. So, for example, there is a question as to whether, you know, you could make annual gifts. And if you made enough of them, that would be a regular pattern of gifting. Obviously, as Helen said earlier, it's notoriously difficult to predict when you're going to die.

35:36So if you were to make annual gifts and then die and you've only made one annual gift, how do you prove that you would have continued to do it in the future? Good record keeping is absolutely essential on this. And you could use it, for example, to pay 50 pounds a month into a pension for your child or your grandchild. and that would count as a regular pattern of gifting, be free of inheritance tax and be possibly a great idea. And there we go. We've come full circle. Right, we're going to leave inheritance. We're going to leave pensions to one side because Simon, the FTSE 100 passed the 9 ,000 mark.

36:09Could we reach 10 ,000? And also you've been finding out more about investing in crypto this week with a certain Glenn Goodman. But before we get there, FTSE 100, 10 ,000, Simon. Indeed. Yeah, I said to our business editor, Mike, this morning, I was like, I think we should do a could the FTSE reach 10 ,000 story. He looked at me and rolled his eyes. I was like, no, no, no, seriously, because we've been talking about will it reach 9 ,000? And it finally did 9 ,000 this week after flirting with it all last week. And then all of a sudden, I'm like, let's do it. Will it hit 10 ,000 story? He said, I'll have a look through my inbox for speculative FTSE nonsense.

36:44I said, to make that the headline of the story, speculative FTSE nonsense. But hey, look, we're only 10 % off. We could do another 10%. I mean, might fall by 10 % as well. What's going on is there's a bit of exuberance going on in the stock market at the moment. It's going on across the Atlantic as well in the US, where people seem to have forgotten all of the worries they had earlier in the year and are now dancing around celebrating Donald Trump as president. We're just counting the days until he does something. There's this taco trade that everybody's talking about. Trump always chickens out.

37:16There is going to come a point when he doesn't chicken out. and the more that people keep saying that he always chickens out the more likelihood there is that he will go i'm not chickening out this time um just to teach you all a lesson um and that's just the kind of thing that he might do or he might just do something crazy we're not out of the woods on the tariffs yet i think there is a bit of irrational exuberance going on in the market uh it's not quite melt up territory where stuff just goes straight up in the air but i do think there is some irrational exuberance the footsie's slightly different you've got money flowing into UK stocks because they're seen as undervalued and people are paying a little bit of attention to the US and going yeah this may be a little bit too much you know exuberance here but also earlier in the year concerns over you know how much more can these big tech companies keep delivering how much more can the US keep delivering concerns about Trump allocating a little bit more money elsewhere and the UK is benefiting from that and 9 ,000 is just a number, it's an aggregate number on the index, you know, you add all the 100 companies together, the index doesn't care about numbers.

38:21I mean, in theory, the number doesn't matter. And whether you breach the number or not doesn't matter, because actually, it's the performance of all the individual shares. But once you get through that 9 ,000 mark, it does add a bit to sentiment, it adds a bit to confidence. And so you've seen some good buying pressure after that, Whether we're going to get to 10 ,000, I don't know. I mean, we will do one day, hopefully. And hopefully it won't take as long as it's taken for us to see this index actually climb up to decent numbers over the last 20 years or so when the FTSE has been something of a laggard.

38:56Talking of speculation, Bitcoin. You've been speaking on your investing show to crypto expert Glenn Goodman. What were you chatting about, Simon? Well, Bitcoin in general and buy and hold. That's the mantra, the sensible mantra that investors get told. And they also get told it's time in the market, not timing the market and not to try and trade the market. Now Glenn has an interesting view when it comes to Bitcoin where he says actually that's not what you should be doing. He says buying and holding Bitcoin is not the right move. And this is due to the insane volatility and peak to trough falls that Bitcoin has.

39:37And his argument that most people just can't hack it. They will not manage to buy Bitcoin and sit on the Bitcoin and allow it to just go up. because there's going to come a point where it falls 50 % or 80 % even. There have been numerous times in Bitcoin's short life where we have seen 50 % falls. There have also been numerous times where we have seen 80 % falls. It is exactly the kind of thing where people manage to sell out at the wrong time, buy in at the wrong time. What Glenn advocates, and this is not surprising because Glenn is the author of a book called the crypto trader is he advocates, yeah, you laugh.

40:21He advocates a trading approach, but not a nipping in and out on a daily basis. He says that's where you're also equally likely to trip up. What he advocates is a long-term trading approach where you try to get in close to the bottom, but once things have already started to pick up and you try to get out close to the top once things have already started to decline. And he says you do run the risk, obviously, due to the volatility of being caught out and getting a false signal. But if you follow the system that he's got, then you can get in closer to the bottom and you can get out closer to the top.

41:00And he says what that means is that you're not sitting there checking on your account and watching it tumble by loads or shoot up by loads and then therefore being likely to make the wrong decisions. And just to give an illustration of the timeframes he's talking about here, he's talking about maybe, you know, a year or two year timeframes of holding Bitcoin. I.e. he's not, as I said, not talking about a daily basis, not talking about a weekly basis or even a monthly basis. But again, this is something that is notoriously difficult to do. All right, Simon, your stat of the week. My stat of the week is£278 ,848.

41:44No, that is not the average house price. That is what somebody paid for a Ford Escort. A 1976 Ford Escort. Although it is not any old Ford Escort. It is a Mark II RS 1800, one of only 109 limited edition road-going models built by Ford at its advanced vehicle operations pilot plant at Averley Essex, each one finished in diamond white paint. Georgie, I can already see you picturing exactly the car I'm talking about in your mind. But anyway, this is a record. It was in the same family for 50 years and it sold for£280 ,000. pounds i mean you said you could drive it would you drive a car when you'd spend that sort of money on it or they just polish it and look at it lots of people who buy a car like that they won't drive it lots of them would be super low mileage and they just never get driven but some of them will be driven and there are cars that are worth more money than that old classic cars that are worth more money than that that people take racing and i absolutely take my hat off to those people fab that's it for this week you can keep up to date with all the latest breaking money news just go to thisismoney.co.uk or you can download the app and if you have any comments or questions for the team or anything you'd like them to look into if you'd like to look at this investing show simon you can email us at podcast at thisismoney.co.uk you can come to thisismoney.co.uk for such podcast find all podcasts past and if you want to watch that investing show episode go to thisismoney.co.uk forward slash investing show and if you like our podcast why not rate us wherever of you found us helps other people find us too.

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