This week we’re going to be talking about how pensions really work. I occurred to me while looking back over the first 100 sessions of this show that while I have covered off pensions before, I have not dealt with how the money gets in and out of a pension, and how it behaves while it is in there. So stay tuned for some hardcore pensions info which hopefully won’t make you snooze because I’m joined this week by my best mate in the world…

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Introduction

Back in sessions 13 and 14 I covered off quite a bit of theory about pensions. Where I stopped short was dealing with what happens to the money going in and coming out of a pension. This latter point – getting money out – has changed significantly over the last year and by the time this session goes live, the new rules will be in force.

I’m joined by my business partner Roger Weeks who also happens to be my best mate in the world. He’s our resident pensions genius which means he has very few friends, but also that he’s best placed to help us understand how pensions really work in the new world.

Here are the questions I asked Roger:

• Are pensions as complex as the industry has made them seem?
• How does it work when money goes in?
  • If I'm an emloyee – how does it work?
  • What if I'm self-employed?
  • Can you quickly explain salary-sacrifice and what the benefits are?
  • What exactly IS tax relief and how does it get added to my pension?
• OK, so once the money is in the pension – how does it grow? (With silver bells and cockle shells, and pretty maids all in a row)
• So pretty much everything has changed when we get to the other end and it is time to take money out of a pension. What are the main options open to me now?
  • Lump Sum
    • UFPLS
    • Full vesting
    • Phased retirement
  • Annuity purchase for some or all
  • Drawdown
  • Ad-hoc withdrawals
• How does the tax work?
  • PCLS and…
  • …marginal income tax rate – explain
• What happens when I die?
  • Pre age 75
  • Post age 75
  • Interim rules next year

Roger can be contacted via the Jacksons Wealth website or on Twitter at @rogeraweeks

Summary

I hope that was helpful. I went easy on Roger this time, but I usually tease him fairly mercilessly. We are thinking about starting up another podcast where he and I talk about real client case studies. That project is not off the ground yet – you’ll be the first to know – but I enjoyed chatting to Roger and no doubt you’ll be hearing from him again.

Reviews

No reviews this week, as recording in rapid succession after last week…

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Next Session Announcement

Next time we'll be starting a mini-series here on MeaningfulMoney. By far the most popular sessions over the last two and a half years have been the ones about investing, so I figured it’s time to give you more of want you want! I’m not sure how long the series will be – maybe 4 or 5 weeks, but it’ll be a fairly comprehensive guide to how investing works.

If you have a question on this subject, or any other financial query that you want answering here on the show, then the best way to do that is to leave me a voicemail at meaningfulmoney.tv/askpete