1. 1. Helping people making choices "how can we make financial decisions easy?" Henry Tapper First Actuarial 21 May 2015
2. 2. 2 Information is unprocessed knowledge
3. 3. The ladder of abstraction leads nowhere 13 May 2015
4. 4. For example.
5. 5. Agenda The three Es theory The three Es practice Information overload Now, lets start back at the beginning I want to tell you a story about pension freedoms
6. 6. Agenda The three Es theory The three Es practice Information overload Now, lets start back at the beginning I want to tell you a story about pension freedoms
7. 7. 7 Three Es in theory Giving people the confidence to make good financial decisions Engage Educate Empower
8. 8. 8 Engage People engage with people We believe face to face is the best way to engage Educate Empower Three Es in theory Giving people the confidence to make good financial decisions
9. 9. 9 Engage Educate Empower Once people are interested, they are ready to learn Clear, simple explanations Three Es in theory Giving people the confidence to make good financial decisions
10. 10. 10 Engage Educate Empower Once people understand, they are ready to take action Helpful, clear guidance Three Es in theory Giving people the confidence to make good financial decisions
11. 11. Agenda The three Es theory The three Es practice Information overload Now, lets start back at the beginning I want to tell you a story about pension freedoms
12. 12. 12 Educate You will be much better off if you minimise your marginal tax payment in each year that you draw your pension. Three Es in practice Giving people the confidence to make good financial decisions
13. 13. 13 Engage Educate Empower Shall I show you how in words and pictures? I bet you hate paying tax? Did you know it is possible to reduce the tax you pay on your pension? Three Es in practice Giving people the confidence to make good financial decisions
14. 14. 30,000 Salary NI 12% Tax 20% NI 12% Tax 20% Tax at 0% Tax at 0% Salary 30,000 Salary Salary 30,000 Salary Salary Tax 20%Tax at 0% 0 8,060 10,600 42,385 Natl Ins 2% Tax 40% What you take home Salary 30,000 Tax of 3,880 NI of 2,633 Natl Ins 12% Take-home of 23,487 Natl Ins 0% First, how tax works on your salary Income tax Nat Ins
15. 15. 30,000 Pension Tax 20% Tax 20%Tax at 0% Tax at 0% Pension 30,000 Pension 30,000 Pension Tax 20%Tax at 0% 0 8,060 10,600 42,385 Natl Ins 2% Tax 40% What you take home Pension 30,000 Tax of 3,880 Natl Ins 12% Take-home of 26,120 Natl Ins 0% Income tax Nat Ins Now, how tax works on your salarypension
16. 16. 16 Engage Educate Empower So, you have saved incredibly hard and have 200,000 in your defined contribution pot Youve decided not to annuitise Youve even heard you can take it all in one go So shoud you? Three Es in practice Giving people the confidence to make good financial decisions
17. 17. 17 with the tax muppetometer
18. 18. 18 with the tax muppetometer
19. 19. 19 with the tax muppetometer
20. 20. 20 The small print We have used 2015/2016 tax allowances, ignored investment returns and inflation and not tried to predict how HMRC might bend the rules in the future, which they undoubtedly will. Allowing for these might change the numbers a bit, but would also make the model less user friendly although we doubt the underlying messages would change. Namely, spreading your DC pot over a number years will, for most people, mean paying less tax. with the tax muppetometer
21. 21. Agenda The three Es theory The three Es practice Information overload Now, lets start back at the beginning I want to tell you a story about pension freedoms
22. 22. Information = Knowledge
23. 23. Agenda The three Es theory The three Es practice Information overload Now, lets start back at the beginning I want to tell you a story about pension freedoms
24. 24. This is how we make decisions easy
25. 25. 13 May 2015 25 The views expressed in this presentation are those of the presenter. Questions Comments