Helping people making choices – "how

can we make financial decisions easy?"

Henry Tapper

First Actuarial

21 May 2015

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The ladder of abstraction leads nowhere

21 May 2015

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Cyan

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Light blue

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For example….

Colour palette for PowerPoint

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Dark blue

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Light grey

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Pea green

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Forest green

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Cyan

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Light blue

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Agenda

• The three “E”s – theory

• The three “E”s – practice

• Information overload

• Now, let’s start back at the beginning

– I want to tell you a story about pension freedoms

Colour palette for PowerPoint

presentations

Dark blue

R17 G52 B88

Gold

R217 G171 B22

Mid blue

R64 G150 B184

Secondary colour palette

Primary colour palette

Light grey

R63 G69 B72

Pea green

R121 G163 B42

Forest green

R0 G132 B82

Bottle green

R17 G179 B162

Cyan

R0 G156 B200

Light blue

R124 G179 B225

Violet

R128 G118 B207

Purple

R143 G70 B147

Fuscia

R233 G69 B140

Red

R200 G30 B69

Orange

R238 G116 29

Dark grey

R63 G69 B72

Agenda

• The three “E”s – theory

• The three “E”s – practice

• Information overload

• Now, let’s start back at the beginning

– I want to tell you a story about pension freedoms

Colour palette for PowerPoint

presentations

Dark blue

R17 G52 B88

Gold

R217 G171 B22

Mid blue

R64 G150 B184

Secondary colour palette

Primary colour palette

Light grey

R63 G69 B72

Pea green

R121 G163 B42

Forest green

R0 G132 B82

Bottle green

R17 G179 B162

Cyan

R0 G156 B200

Light blue

R124 G179 B225

Violet

R128 G118 B207

Purple

R143 G70 B147

Fuscia

R233 G69 B140

Red

R200 G30 B69

Orange

R238 G116 29

Dark grey

R63 G69 B72

6

Three “E”s in theory “Giving people the confidence to make

good financial decisions”

Engage Educate Empower

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Light grey

R63 G69 B72

Pea green

R121 G163 B42

Forest green

R0 G132 B82

Bottle green

R17 G179 B162

Cyan

R0 G156 B200

Light blue

R124 G179 B225

Violet

R128 G118 B207

Purple

R143 G70 B147

Fuscia

R233 G69 B140

Red

R200 G30 B69

Orange

R238 G116 29

Dark grey

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7

Engage

– People engage with people

– We believe face to face is the best way to engage

Educate Empower

Three “E”s in theory “Giving people the confidence to make

good financial decisions”

Colour palette for PowerPoint

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Dark blue

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Gold

R217 G171 B22

Mid blue

R64 G150 B184

Secondary colour palette

Primary colour palette

Light grey

R63 G69 B72

Pea green

R121 G163 B42

Forest green

R0 G132 B82

Bottle green

R17 G179 B162

Cyan

R0 G156 B200

Light blue

R124 G179 B225

Violet

R128 G118 B207

Purple

R143 G70 B147

Fuscia

R233 G69 B140

Red

R200 G30 B69

Orange

R238 G116 29

Dark grey

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8

Engage Educate Empower

– Once people are interested, they are ready to learn

– Clear, simple explanations

Three “E”s in theory “Giving people the confidence to make

good financial decisions”

Colour palette for PowerPoint

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Dark blue

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Gold

R217 G171 B22

Mid blue

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Secondary colour palette

Primary colour palette

Light grey

R63 G69 B72

Pea green

R121 G163 B42

Forest green

R0 G132 B82

Bottle green

R17 G179 B162

Cyan

R0 G156 B200

Light blue

R124 G179 B225

Violet

R128 G118 B207

Purple

R143 G70 B147

Fuscia

R233 G69 B140

Red

R200 G30 B69

Orange

R238 G116 29

Dark grey

R63 G69 B72

9

Engage Educate Empower

– Once people understand, they are ready to take action

– Helpful, clear guidance

Three “E”s in theory “Giving people the confidence to make

good financial decisions”

Colour palette for PowerPoint

presentations

Dark blue

R17 G52 B88

Gold

R217 G171 B22

Mid blue

R64 G150 B184

Secondary colour palette

Primary colour palette

Light grey

R63 G69 B72

Pea green

R121 G163 B42

Forest green

R0 G132 B82

Bottle green

R17 G179 B162

Cyan

R0 G156 B200

Light blue

R124 G179 B225

Violet

R128 G118 B207

Purple

R143 G70 B147

Fuscia

R233 G69 B140

Red

R200 G30 B69

Orange

R238 G116 29

Dark grey

R63 G69 B72

Agenda

• The three “E”s – theory

• The three “E”s – practice

• Information overload

• Now, let’s start back at the beginning

– I want to tell you a story about pension freedoms

Colour palette for PowerPoint

presentations

Dark blue

R17 G52 B88

Gold

R217 G171 B22

Mid blue

R64 G150 B184

Secondary colour palette

Primary colour palette

Light grey

R63 G69 B72

Pea green

R121 G163 B42

Forest green

R0 G132 B82

Bottle green

R17 G179 B162

Cyan

R0 G156 B200

Light blue

R124 G179 B225

Violet

R128 G118 B207

Purple

R143 G70 B147

Fuscia

R233 G69 B140

Red

R200 G30 B69

Orange

R238 G116 29

Dark grey

R63 G69 B72

11

Educate

“You will be much better off if you minimise your

marginal tax payment in each year that you draw

your pension.”

Three “E”s in practice “Giving people the confidence to make

good financial decisions”

Colour palette for PowerPoint

presentations

Dark blue

R17 G52 B88

Gold

R217 G171 B22

Mid blue

R64 G150 B184

Secondary colour palette

Primary colour palette

Light grey

R63 G69 B72

Pea green

R121 G163 B42

Forest green

R0 G132 B82

Bottle green

R17 G179 B162

Cyan

R0 G156 B200

Light blue

R124 G179 B225

Violet

R128 G118 B207

Purple

R143 G70 B147

Fuscia

R233 G69 B140

Red

R200 G30 B69

Orange

R238 G116 29

Dark grey

R63 G69 B72

12

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 “E”s in practice “Giving people the confidence to make

good financial decisions”

Colour palette for PowerPoint

presentations

Dark blue

R17 G52 B88

Gold

R217 G171 B22

Mid blue

R64 G150 B184

Secondary colour palette

Primary colour palette

Light grey

R63 G69 B72

Pea green

R121 G163 B42

Forest green

R0 G132 B82

Bottle green

R17 G179 B162

Cyan

R0 G156 B200

Light blue

R124 G179 B225

Violet

R128 G118 B207

Purple

R143 G70 B147

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Red

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Orange

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£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

Nat’l Ins 2%

Tax 40%

What you

take home

Salary

£30,000

Tax of

£3,880

NI of

£2,633

Nat’l Ins 12%

Take-home of £23,487

Nat’l Ins 0%

First, how tax works on your salary…

Income tax

Nat Ins

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Forest green

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R17 G179 B162

Cyan

R0 G156 B200

Light blue

R124 G179 B225

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R128 G118 B207

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Red

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Orange

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£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

Nat’l Ins 2%

Tax 40%

What you

take home

Pension

£30,000

Tax of

£3,880

Nat’l Ins 12%

Take-home of £26,120

Nat’l Ins 0%

Income tax

Nat Ins

Now, how tax works on your salary… pension…

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15

Engage Educate Empower

• So, you have saved incredibly hard and have

£200,000 in your defined contribution pot

• You’ve decided not to annuitize

• You’ve even heard you can take it all in one go…

• So should you…?

Three “E”s in practice “Giving people the confidence to make

good financial decisions”

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Forest green

R0 G132 B82

Bottle green

R17 G179 B162

Cyan

R0 G156 B200

Light blue

R124 G179 B225

Violet

R128 G118 B207

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16

with the tax muppetometer

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R17 G179 B162

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Light blue

R124 G179 B225

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Red

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Orange

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17

with the tax muppetometer

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R17 G179 B162

Cyan

R0 G156 B200

Light blue

R124 G179 B225

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Red

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18

with the tax muppetometer

Colour palette for PowerPoint

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Dark blue

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Gold

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Mid blue

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Light grey

R63 G69 B72

Pea green

R121 G163 B42

Forest green

R0 G132 B82

Bottle green

R17 G179 B162

Cyan

R0 G156 B200

Light blue

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19

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

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R121 G163 B42

Forest green

R0 G132 B82

Bottle green

R17 G179 B162

Cyan

R0 G156 B200

Light blue

R124 G179 B225

Violet

R128 G118 B207

Purple

R143 G70 B147

Fuscia

R233 G69 B140

Red

R200 G30 B69

Orange

R238 G116 29

Dark grey

R63 G69 B72

Agenda

• The three “E”s – theory

• The three “E”s – practice

• Information overload

• Now, let’s start back at the beginning

– I want to tell you a story about pension freedoms

Colour palette for PowerPoint

presentations

Dark blue

R17 G52 B88

Gold

R217 G171 B22

Mid blue

R64 G150 B184

Secondary colour palette

Primary colour palette

Light grey

R63 G69 B72

Pea green

R121 G163 B42

Forest green

R0 G132 B82

Bottle green

R17 G179 B162

Cyan

R0 G156 B200

Light blue

R124 G179 B225

Violet

R128 G118 B207

Purple

R143 G70 B147

Fuscia

R233 G69 B140

Red

R200 G30 B69

Orange

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Information = Knowledge ≠

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R121 G163 B42

Forest green

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R17 G179 B162

Cyan

R0 G156 B200

Light blue

R124 G179 B225

Violet

R128 G118 B207

Purple

R143 G70 B147

Fuscia

R233 G69 B140

Red

R200 G30 B69

Orange

R238 G116 29

Dark grey

R63 G69 B72

Agenda

• The three “E”s – theory

• The three “E”s – practice

• Information overload

• Now, let’s start back at the beginning

– I want to tell you a story about pension freedoms

Colour palette for PowerPoint

presentations

Dark blue

R17 G52 B88

Gold

R217 G171 B22

Mid blue

R64 G150 B184

Secondary colour palette

Primary colour palette

Light grey

R63 G69 B72

Pea green

R121 G163 B42

Forest green

R0 G132 B82

Bottle green

R17 G179 B162

Cyan

R0 G156 B200

Light blue

R124 G179 B225

Violet

R128 G118 B207

Purple

R143 G70 B147

Fuscia

R233 G69 B140

Red

R200 G30 B69

Orange

R238 G116 29

Dark grey

R63 G69 B72

This is how we make decisions easy

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Light grey

R63 G69 B72

Pea green

R121 G163 B42

Forest green

R0 G132 B82

Bottle green

R17 G179 B162

Cyan

R0 G156 B200

Light blue

R124 G179 B225

Violet

R128 G118 B207

Purple

R143 G70 B147

Fuscia

R233 G69 B140

Red

R200 G30 B69

Orange

R238 G116 29

Dark grey

R63 G69 B72

13 May 2015 24

The views expressed in this presentation are those of the

presenter.

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