As I found out earlier this year after my skiing accident, life does have a way of presenting obstacles (and opportunities) when you least expect them. Having the resources and people to draw upon and flexible plans in place doesn’t change the likelihood of these events – they just make us far better prepared to deal with them.

So, in this edition of The Wire, you can read some useful articles about how we can help you to plan for the bad (and good!) things that come your way.

For example, using cashflow modelling to consider what your financial future might look like can help you answer questions such as “can I retire now?”, “will I have enough to sustain my lifestyle?” and “can I make this gift to a family member?”. Read Phil Patient’s informative article on the benefits of this approach.

You can also read Sebastian Gladwish’s article about the growing trend for a family to internally “share” a financial planner and to work together to create a family financial plan that includes multiple generations. It’s a potentially great way to help ensure the smooth transfer of wealth, to manage and meet multi-generational expectations, and to substantially reduce potential tax issues.

Hear from our award-winning later-life lending expert: One area of expertise you might not immediately associate with HFMC is “later-life lending”. Yet, we’re lucky enough to have one of the country’s leading experts right here.

Indeed, the prestigious British Mortgage Awards recently named our specialist, Darren Johncock, as the best later-life lending broker in the UK.

In his article, Darren looks at how we can help individuals and families to tackle IHT planning issues using later life lending (equity release), and examples of where equity release has improved a client’s liquidity position.

And, talking of “liquid”, during periods of economic uncertainty as we’re experiencing now, it can be a temptation to hold more of your assets in cash savings. However, the eroding effect of high inflation can quickly see your cash lose its spending power.

In his carefully presented article, Mark Morris explains why holding more cash than is necessary is likely to be a mistake in the long run, and why even investing at the worst point during the 2008 global financial crisis would still have left most investors better off than cash in the medium term. It’s a fascinating read.

Rishi Sunak in court, and healthy habits

Lastly two other thought-provoking pieces.

Firstly, household names BT and Marks & Spencer are among complainants who have taken former chancellor, Rishi Sunak, to court over what seems like an innocuous change to the way inflation is measured.

While it may appear a trivial issue, experts believe Sunak’s decision could cut lifetime pension benefits by up to 9%, so read about why the court verdict could have a significant impact on your pension income.

Secondly, there’s much we can learn about other countries and cultures when it comes to health and wellbeing. Whether it’s dietary improvements or an imaginative new prescription for Canadian residents, discover seven fantastic health habits to potentially improve your future that you can learn from around the world.

As always, we have tried to ensure that this edition contains something for everyone, and we would love for you to share our articles with those that you think might benefit from reading them.

Finally, I just wanted to thank you again for continuing to work with us – we do not take this for granted. We wish you and your family good health and prosperity – take care out in the sun!

Jeremy

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Now that the Bank of England has raised interest rates six times since December 2021, you may think that, finally, rates on cash savings are starting to improve.

Whilst that is true, there are several reasons why leaving your surplus cash in the bank could be riskier than you think. Here are three of the most important.

1. High inflation can erode its real value

According to the latest Office for National Statistics (ONS) data, the inflation rate in the UK hit a 40-year high of 9.4% in the year to June.

Effectively, goods and services that cost you £1,000 a year ago will cost £1,094 today. You’ve probably already noticed the impact at the pump or your favourite restaurant.

Whilst interest rates on cash savings may be rising, even the best rates currently fail to keep up with the rising cost of living.

According to analysts Moneyfacts, as of 15 August 2022 the best easy access savings account paid 1.67%. Had you invested £100,000 a year ago, at that rate you’d now have £101,670.

Compare this to how the average price of goods and services has risen from £100,000 to £109,400 in the same period. This clearly shows how saving in cash has reduced your spending power and eroded the value of your wealth in real terms.

2. Returns are likely to be inferior to investing

Keeping some wealth in cash is a core part of a financial plan. Whether it’s your emergency fund or you’ve earmarked it for use in the next year or two, there are many sound reasons for holding cash.

However, keeping too much in cash could be a risk if it slows your progress towards your financial goals.

Much of the growth that powers your financial plan comes from higher-risk assets such as equities. So, keeping too much in cash could see you miss out on more positive returns.

The table below compares the returns of investing in the UK stock market (as represented by the FTSE All-Share Index) with dividends reinvested, and the returns on investing in cash deposits with the interest reinvested, between 31 December 1999 and 31 March 2022.

Source: FE fundinfo. Data as at 31 March 2022.

Of course, the value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

However, this shows that even during periods of volatility – such as the dot-com bubble, the global financial crisis, and the Covid-19 outbreak – the returns on equities outpaced that of cash.

Interestingly, had you moved your savings from cash and invested them in equities at precisely the worst time, on the eve of the financial crisis in October 2007, you would still have generated better returns in the long-term.

Whilst you would have suffered an initial 46% loss in the first 17 months (and probably regularly rued your decision to invest!), by January 2013 the value of the investment in UK equities had not only recovered completely but had also overtaken what you would have earned in cash deposits.

And, to the end of March 2022, that same equity investment made at the peak of the market in 2007 would have delivered a gain of 104%; whereas cash in the bank would have provided a cumulative return of just 16%.

3. Protection is limited by the Financial Services Compensation Scheme

A final risk of holding too much wealth in cash is that there is a limit to the amount of protection afforded to your savings by the Financial Services Compensation Scheme (FSCS).

As of August 2022, the FSCS will automatically compensate each eligible individual up to £85,000 if you hold money with a UK-authorised bank, building society or credit union that fails. There are temporary higher limits of protection in specific cases, for example money paid as the result of a property transaction.

So, if you have more than £85,000 with a single institution – and remember that some banking licences include several brands, such as HSBC and First Direct – your savings could be at risk if the organisation fails.

In this instance it can pay to spread your savings across a range of institutions to ensure you maximise your FSCS protection.

Get in touch

If you’d like to have a chat about how to maximise the return from your cash savings, please get in touch. Email or contact us on 020 7400 4700.

Please note

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

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While you may equate this specialism with old folk withdrawing funds to go on a round-the-world cruise, it can actually form a crucial part of a successful estate plan and mitigate potential Inheritance Tax (IHT) issues.

Later-life lending is a growing area of expertise, and we’re fortunate to have one of the UK’s leading experts here at HFMC. Indeed, the prestigious British Mortgage Awards recently named our specialist, Darren Johncock, as the best later-life lending broker in the UK.

Read on to find out how Darren can help you to tackle IHT planning issues, and examples of where equity release has improved a client’s liquid position.

A typical example of repaying mortgage debt from pension assets

When clients approach us, it’s normally because they have a large estate and are concerned about potential IHT issues.

Our first port of call is to work out how affordable it is for clients to make gifts of capital.

The two charts below demonstrate the approach of repaying outstanding debt from existing pension assets.

In the first chart, the black line running along the top of each column is what the expected outgoings for that client are every year. The cashflow software then “fills up” these bars using any incomes it knows about.

It begins with earnings (blue) and rental income (purple/pink) and then uses other assets where this isn’t sufficient. Cash and investments are in pale blue, pensions are in orange or pink, and State Pension income is modelled in dark blue.

The second chart demonstrates that this approach – repaying mortgages from pension funds – means the client is projected to have very little in the way of liquid assets at the end of their life.

This will potentially make it difficult for the client to fund their outgoings, should investment returns on their pensions (depicted by the green bars) not be as anticipated.

Equity release can provide an alternative approach

Instead of repaying a mortgage from pension assets, a client could consider repaying this debt using an equity release mortgage. The chart below shows the difference this approach can make.

This enables the client to maintain all their existing properties (the purple bars on the chart above) and leave a larger estate to their beneficiaries.

The chart below shows how this approach gives the client much more flexibility in how to spend their money over the long term – as demonstrated by the larger green bars.

While this scenario does play more to improving liquidity, there are two key reasons why the estate is so much larger at the end.

Firstly, the increased size of the estate will be largely due to the client maintaining their pension wealth, which, crucially, falls outside their estate for IHT purposes.

Additionally, the estate is larger because the debt that must be repaid at the end of the plan effectively reduces the value of the client’s only IHT chargeable assets – their properties.

GET IN TOUCH

If you’d like to find out how our award-winning later-life lending approach could benefit you and your family, please get in touch.

Darren.Johncock@hfmcwealth.com or contact us on 01932 870 030

Please note

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

Think carefully before securing other debts against your home.

Equity Release will reduce the value of your estate and can affect your eligibility for means-tested benefits.

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Without careful cashflow control, many businesses put themselves at risk of failure. Running out of money means they can’t pay suppliers or wages, bringing their viability into question. Indeed, the Guardian recently reported that 2 in 5 of the UK’s small businesses – around 2 million firms – had less than three months’ worth of cash left to support their operations.

If you want to ensure you meet your financial goals, cashflow modelling is also a key component of your financial plan.

It’s a useful way to determine if you are on track to achieve your financial goals and that you’ll have “enough” to support your ambitions – whether that’s to retire early, make a legacy gift to support your family, or start your own business.

Cashflow modelling gives you a visual illustration of what you can expect in the future, empowering you to make key financial decisions that can be genuinely transformative. Here are four ways it positively supports your financial plan.

1. It requires a clear focus on your goals

When it comes to creating a bespoke financial plan, we always begin by focusing on your goals first.

Visualising your dream future – and sharing that vision with us – means that we can create a plan aligned with your goals. Everyone’s goals are different and personal to them. For some it is all about achieving a certain lifestyle, whilst for others it could be about achieving financial security and independence, or maybe starting a philanthropic legacy.

Cashflow planning provides a clear projection of your future wealth and gives you a solid starting point to be able to model scenarios around your plans and aspirations.

If you’re in a comfortable position to meet your goals, the model will show you. Alternatively, if you’re not, we can make adjustments to get you on track. A cashflow plan can also inform discussions such as:

• “Will we have enough money to do what we want?”
• “Will my family be looked after?”
• “What impact will investing my capital in illiquid assets, such as property, have on my retirement?”
• “When can I afford to retire?”
• “What level of spending is sustainable in retirement for me?”

This approach ensures that you are always focused on the “why?” and purpose of money, and that your goals are front and centre of any financial plan.

2. It can help determine exactly how much investment risk you need to take

When a financial planner asks you how much risk you are prepared to take with your investments, it can be tough to answer. In many ways it’s very subjective and does little more than explore your psychological relationship with risk.

So, how do you determine how much risk you’re prepared to take when investing? Can you put a figure on it?

A cashflow plan can bring clarity to this question as it helps to determine the exact return your savings and investments need to generate to meet your goals over a defined period.

If you know what your goals are, inputting information such as your income, assets, and outgoings into a cashflow plan can establish exactly how much you need your wealth to grow over a certain time frame.

It could show you that you are currently being too cautious, and that you’ll either need to save more or increase the investment risk you’re prepared to take to meet your goals.

Conversely, it might reveal that you’re taking more risk than you need to, and that you will have enough to meet your goals without exposing yourself to so much volatility.

3. You can plan more carefully for external risks

However carefully you plan, life has a way of putting unexpected challenges in your path. Without the right planning, these can easily derail your progress and delay the achievement of some of your goals.

Your cashflow plan will identify risks that may include:

• Volatile or falling stock markets
• Impact of ill health
• Loss of employment
• The death of a loved one
• Rises in inflation / living costs
• Changes in taxation or legislation.

We can then model a range of scenarios – for example, simulating a drop in the markets just before you retire, or planning for higher than expected inflation – to ensure that you can still draw the income you need to sustain your lifestyle in retirement.

Your cashflow plan will also show where you need to take additional steps so that, should misfortune strike, you can cushion the impact. An example of this might be putting some protection in place to ensure there’s a capital injection on the event of ill health or premature death.

Planning for these risks does not make them less likely to happen, it just means you will be better prepared should they occur. An analogy often used is that a cashflow plan is the equivalent of a map or sat nav when driving a car on a long journey. Would you attempt to drive from John O’Groats to Land’s End without a route planner? And what would you do if a key road were closed?

4. It encourages a regular review, which can help support your progress towards your goals

Developing a long-term relationship with a financial planner, rather than taking one-off advice, can add significant value.

Indeed, Vanguard estimates that working with a planner can add about 3% a year in net returns over the long term to your portfolio, depending on your specific circumstances.

Additionally, a landmark study by the International Longevity Centre (ILC), published in December 2019, found that receiving professional financial advice between 2001 and 2006 resulted in an average total boost to wealth (in pensions and financial assets) of £47,706 in 2015 terms, when compared to those that didn’t receive advice.

The study found that advised affluent individuals had 17% more in terms of assets than affluent non-advised individuals. Furthermore, those who reported receiving advice at both time points in the analysis had nearly 50% higher average pension wealth than those only advised at the start.

For your cashflow plan to remain effective, you and your planner need to update it regularly to take account of changing events.

Whether that’s a change in your circumstances or a period of high inflation, as we are seeing now, reviewing and altering your plan can help you to stay on track to meet your goals.

To continue the travel analogy, imagine if a pilot was flying you on your holiday from London to Hawaii. They were two degrees off track at the start and never course corrected until they thought they were due to land.

At the beginning it may seem to make little difference but, if not corrected soon, then the likelihood would be that you missed landing in Hawaii altogether. Regular reviews and small course corrections are vital to staying on track.

Cashflow modelling encourages this collaborative and long-term relationship, which offers both financial and emotional benefits.

Get in touch

If you’d like to find out how cashflow modelling can help you to create a bespoke financial plan that works for you, or you’d like to review your current plan in the light of current events, please get in touch.

Email or contact us on 020 7400 4700.

Please note

Investments carry risk. The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

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Research from Klarna earlier this year revealed that a third of UK adults feel too uncomfortable to talk about money with their peers. The study also revealed that one-fifth have never discussed personal finances with friends or family, with 1 in 3 feeling too awkward to raise the subject.

One increasingly popular way to break this taboo is to include your family in your financial planning process.

Read on to find out why working together as a family – and sharing a financial planner – can be so beneficial.

£5.5 trillion set to pass through generations in the next 25 years

In the coming decades, a staggering amount of wealth is set to pass between generations.

According to a report by M&G Wealth, wealth passed to younger generations is projected to double over the next 20 years – and could reach as much as £5.5 trillion by 2047.

Whilst you would undoubtedly want to see all the fruits of your life’s work pass down to your children and grandchildren, without careful planning much of this wealth could end up in the hands of HMRC in the form of Inheritance Tax (IHT).

Indeed, official government figures show that estates paid a record £6.1 billion in IHT in the 2021/22 tax year – up £729 million (14%) on the previous year.

If you’re used to keeping your finances separate and have not yet considered working with other generations of your family to formulate an intergenerational financial plan, your loved ones could face significant IHT issues on your death.

One way to mitigate this issue is to work on your financial plan alongside your family.

1 in 3 advised families now share the same financial planner

Increasing numbers of people, including many HFMC clients, are now planning as a family.

Indeed, the M&G Wealth report found that 1 in 3 advised families now share the same financial planner, with around 3 in 5 of those sharing the same adviser as their parents.

Of course, sharing a financial planner doesn’t have to mean sharing every detail of your financial plan. It can simply mean working in tandem with other generations to create a plan that more accurately reflects your priorities and the situation of others.

It’s also a step that can provide peace of mind. You have the reassurance that the people close to you are receiving expert financial advice that can help them reach their goals and achieve long-term financial security.

Interestingly, research shows that all generations are comfortable with sharing an adviser with a family member:

• 37% said they “would feel relaxed as their family already trusted them”
• 34% “liked that all the family’s finances would be in one place, so everyone could review them together”
• 28% went further still, saying they would feel “relieved they’re sharing the same adviser”.

Intergenerational wealth planning can be complex, and the different generations are likely to have many different concerns. However, using the same financial planner can help you understand what your family is worried about and the steps that they can take to improve their financial security.

Using the same financial planner can benefit your family in numerous ways

The M&G Wealth research reveals that there are many valuable benefits of planning as a family.

Source: M&G Wealth

Let’s consider these one at a time.

Saving money on tax

Anyone with an estate worth more than £325,000 – or £500,000 if you intend to leave your home to a child or grandchild – is likely to face an IHT liability on death.

No one wants to lose 40% of their estate to tax, so estate planning should be a core part of your financial plan. Working with your parents or children can ease the transfer of wealth and help you to make the most of gifting and trusts.

Everyone in the family is treated fairly

Openness and honesty can ensure that all your beneficiaries know where they stand. Working together as a family can demonstrate you’re being fair to all parties, reducing possible squabbles and disagreements.

Helping younger family members

Leaving a legacy on death can boost the financial security of the younger generation. However, increasing life expectancies can mean your children could be in their 60s or 70s by the time they inherit.

It may be more useful to consider gifting to your child or grandchild at a time in their life where the gift would have more impact – for example, to help them buy a home.

We can use sophisticated cashflow modelling to establish what level of gift you can provide to a family member without damaging your own standard of living or future plans.

Undertaking this process multi-generationally can therefore benefit both you (you can reduce an IHT liability through gifting) and your child/grandchild (they receive the gift at a time that is useful to them).

Ensuring the family is aware of each other’s financial situation

Without a conversation about intergenerational wealth transfer, your beneficiaries may make assumptions about the likely level of inheritance.

If these prove to be wrong, it can generate discontent and resentment. So, creating a financial plan as a family ensures everyone knows where they stand, and that you manage expectations when it comes to the transfer of wealth.

Supporting a parent/grandparent

Financial planning as a family doesn’t just involve working with younger generations.

If your parents or grandparents have never sought advice from a financial planner, they could have significant tax issues they have never considered. Encouraging them to work with your planner could ensure more of their wealth is passed to their loved ones, rather than lost in IHT.

Get in touch

Creating a family financial plan offers many benefits, from managing expectations to ensuring the seamless transfer of wealth.

To find out how we can help you and your family, please email or contact us on 020 7400 4700.

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Whilst we might think these foreign practices to be unusual, have you ever stopped to consider whether they might benefit you?

Here are seven habits from other countries and cultures that you might want to embrace in order to live a healthier and happier life.

1. Canadian National Park passes

In January 2022, doctors in Canada were given a new kind of medicine they could prescribe to their patients: annual passes to nearby national parks.

The initiative is designed to encourage people to spend more time in nature, whether that be through hiking or simply taking the opportunity to sit outside.

Studies have shown that spending time outside can have incredible health benefits, such as relieving anxiety, increasing self-esteem, and lowering stress.

Experts recommended investing two hours a week into nature, so taking a leaf out of Canada’s book and adding a 20-minute walk into your daily routine or planning a picnic is an easy way to improve your mental and physical health.

2. Sweden “fika” breaks

Fika is a Swedish tradition that involves taking time out of your day to sit down and enjoy a cup of coffee and a cake. At many companies, fika is not just encouraged – it is mandatory.

The short breaks allow employees to spend time catching up with each other and boosting team morale. Additionally, breaks from work are beneficial to employees’ mental health, as well as increasing productivity, making Sweden the 11th most productive country in the world.

Try splitting your day up with a fifteen-minute fika. Give yourself time to enjoy a drink and a sweet treat, as well as chat to your family, friends, or colleagues before continuing with your day, and watch how much your productivity improves.

3. Singapore cleanliness

The Keep Singapore Clean campaign has been running for over 50 years and proved its effectiveness in 2021 when it was voted the greenest and cleanest city in the world.

Their strict standards – including a ban on importing chewing gum or fines for forgetting to flush a public toilet – have led to their average life expectancy rising from 66 to 83, the third highest in the world.

Keeping your home and other places you frequent clean is an excellent way to improve your morale, as well as reducing the chance of getting unwanted infestations. Simply emptying your bins as soon as they are full or wiping down surfaces with disinfectant can also lessen your chances of falling ill from contagious diseases.

4. Thai massages

Thai massages – known as “Nuad bo-rarn” in Thai, which roughly translates as “ancient healing way” – have been around for thousands of years. The practice is closely related to Buddhism, and involves aspects of yoga, Ayurveda, and Chinese medicine.

These massages offer a range of health benefits, such as an increased range of motion, reduced back pain and headache intensity, as well as lowering stress. Research has shown that it can even be used to aid stroke patients, as it reduces their pain level and improves their ability to recover certain functions.

Flying to Thailand for a massage may seem excessive, but luckily there are plenty of places that offer the practice of Thai massages in the UK that you can visit.

5. Japan’s portion control

There is a common saying in Japan – “hara hachi bu” – which translates to “eat until you are 80% full”. Instead of stuffing yourself with food, this encourages people to stop eating before it becomes uncomfortable, giving your body enough nutrition to do its job without overdoing it.

This mindful method of eating reduces calorie intake and so reduces the levels of obesity in Japan, and leads to many benefits, such as delaying the appearance of aging and increased life expectancy.

Next time you sit down to eat a meal, keep this saying in mind. Checking in with your levels of hunger and asking yourself whether you are still enjoying the meal will help you to adapt your portions to the perfect size for you.

6. Turkish baths

Turkish baths – also known as “hammam” – go far beyond just cleaning yourself. It is a form of hot steam hydrotherapy and is associated with a myriad of physical and emotional health benefits, including reducing stress, improving blood circulation, and removing toxins from the pores in your skin.

If you would like to try this miraculous experience yourself, there are several Turkish hammams dotted around the UK that you can visit. In fact, Harrogate is home to one of the best-preserved Victorian Turkish baths in the world, and it is still functional today.

7. India’s “sitting on the floor”

Sitting on the floor to eat meals is a common practice in India, and an excellent way to aid your digestive system.

Bending forwards and backwards to pick up more food gently massages your pancreas, which stimulates digestion, and it also encourages you to be more mindful of what you are eating, as all your focus is on the meal.

Although it may seem like a strange custom to practice in the UK, do not be afraid to ignore your dining table for an evening and try it for yourself!

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One lesser-known move was Sunak’s proposal to change the definition of the key UK inflation measures, the Retail Prices Index (RPI). The proposal, after a request from the UK Statistics Authority, centres around the government’s plans to align RPI with the Consumer Price Index including owner occupiers’ housing costs (CPIH) no earlier than February 2030.

It may seem like an innocuous change, but the potential impact on pensions has resulted in industry titans BT, Ford UK, and Marks & Spencer beginning a judicial review against Sunak through the Royal Courts of Justice.

The review is looking at whether the UK Statistics Authority (UKSA) and the Chancellor have the power to change RPI in this way and whether they properly applied their powers.

RPI normally results in a higher figure than CPIH

Owing to the different calculation methods, RPI is expected to result in higher inflation figures than CPIH.

For example, in July 2022 the Office for National Statistics reported that the RPI stood at 11.8% while the CPIH stood at 8.2%.

Industry experts have previously warned that the reforms could cost savers and investors up to £122 billion and impact up to 10 million members of defined benefit (DB) schemes, whilst also leaving pension schemes around £80 billion worse off.

Now, Sunak has put the wheels in motion to reform the RPI calculation, moving to the CPIH measure from 2030. On the surface of things, modifying the way the RPI is calculated may seem like a positive move, as the current method for calculating the RPI has been widely criticised in the past.

However, the change arguably worsens the funding positions of many well-run pension schemes and resulted in lower incomes for those on RPI-linked pensions. So, BT, Ford UK, and Marks & Spencer are taking legal action in an attempt to reverse the decision.

Many pension schemes would benefit from a reversal of the decision – as they would expect their inflation-linked gilt holdings to appreciate whilst their CPI-linked pensions would be unaffected. This could meaningfully improve funding positions.

A shift in the RPI could also cut thousands off the final salary pension value for future retirees as many pension schemes where RPI is used to calculate any increase in your benefits each year.

According to a Money Marketing report, affected pensions could have their growth cut by between 4% and 9% over the course of their lifetime. What’s more, the report claims women will be worse off on average, as women’s life expectancies are higher than men’s overall.

Concerningly, this move is set to affect thousands of pensioners up and down the country. The complainants say that “this affects approximately 82,000 members of the [BT] scheme alone and the decision will wipe £2.8 billion from the aggregate present value of their pensions”.

So, if the legal action taken against Sunak is unsuccessful, your final salary pension value could rise more slowly from 2030. This change may result in an overall reduction in income compared with your pension growing in line with the current RPI measurement.

2 key examples of how your pension could grow if the decision is reversed

As of August 2022, it is yet unclear whether Sunak’s move to change the way the RPI is calculated will go ahead, though industry commentators expect the government to be successful in their defence.

If the government is unsuccessful in implementing the change, your pension could benefit from further growth in the coming years.

Professional Pensions provides two examples of how a pension holder’s investments could yield better returns if the RPI measurement remains the same:

• A 65-year-old retiring today with an annual RPI-linked pension of £5,000 will ultimately gain around £15,000 over their lifetime.
• A 55-year-old retiring in 10 years’ time with an annual RPI-linked pension of £5,000 would gain approximately £32,000 over their lifetime.

So, if you have significant pension wealth and already have plans in place to fund your retirement, a reversal of Sunak’s RPI shift could be hugely beneficial for you.

However, if Sunak’s decision to reform the RPI is enshrined into law, it could significantly affect your future pension income.

Working with us can help review your pension wealth and prepare for any ramifications of the change to the RPI measurement.

Get in touch

We can help provide you with the peace of mind that, no matter what happens in 2030, your wealth can sustain the lifestyle you deserve.

To find out how we can help you and your family, please email or contact us on 020 7400 4700.

Please note

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.

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