The best financial plan isn’t the cleverest one. It’s the one with someone checking the dates.
This week we got a new Prime Minister. Within hours of Andy Burnham walking into Downing Street, the predictions started. What he’ll do to pensions. What he’ll do to inheritance tax. What he’ll do to the money in your ISA.
I don’t know what he’ll do. Neither, and I say this with some confidence after 30 years in this business, does the person telling you about it at a barbecue. But the flurry of predictions is a good excuse to share something this job has taught me: every piece of financial information comes with a date on it. The expensive mistakes I see almost all come from ignoring that date – acting on information before it’s true, or clinging to it after it’s stopped being true.
Acting too early
Cast your mind back to the run-up to last autumn’s Budget. The rumour mill was certain the Chancellor would cut the tax-free cash you can take from your pension. People panicked. Some took their full 25% out early, just in case – money they didn’t need yet, pulled out of a tax-sheltered pension and parked in a bank account.
The cut never came. And you can’t simply put that money back. Pension recycling rules can trigger a tax charge if you try. So people who acted on a prediction ended up worse off than people who did nothing. Not because they were foolish. Because they treated a maybe as a certainty – information acted on before its date, on rules that never arrived.
Holding on too long
The opposite mistake is slower, and it catches more careful people, because it happens to information that really was true.
Take the cash ISA. For as long as most of us can remember, putting your full allowance into cash savings was the careful choice nobody questioned. From April 2027, if you’re under 65, only £12,000 of your £20,000 allowance can go into cash. The default our parents taught us now comes with an age limit and a cap.
Or take the pension you were told never to touch. For a decade, the standard wisdom was to spend your other savings first and leave the pension alone, because it passed to your family free of inheritance tax. From April 2027, unused pension funds count as part of your estate. For some families the old approach became the expensive one. Same pension, same family, opposite answer.
Both were true. Both expired. The people who get caught out won’t be the ones who followed that wisdom at the time – they’ll be the ones still following it five years after the rules moved on.
Someone has to watch the date
So the useful question to ask of anything you hear about money – from a paper, a portal, or the barbecue – is not “is this true?” It’s “is this still true, and who’s checking?”
That, in the end, is what ongoing advice is for. In a quiet year, when your life is steady and the rules sit still, a review can feel like paying someone to tell you everything’s fine. Then a Budget flips the logic on your pension, or a redundancy arrives, or a new government starts thinking out loud about tax – and the person who already knows your situation is the difference between adjusting calmly and scrambling.
You don’t buy the steady hand for the calm years. You buy it for the year the weather turns. And when did things last stand still for long?
There will be a Budget this autumn, and between now and then you’ll read a hundred confident predictions. Most will be wrong, and even the true ones aren’t true yet. Plan on the rules as they are. Then make sure somebody is still watching when they change – because they will.
The best financial plan isn’t the cleverest one. It’s the one with someone checking the dates.
Daren Wallbank, Chartered Financial Planner, Ginkgo Financial
Inheritance Tax planning is not regulated by the Financial Conduct Authority
