Many people are aware that having a decent cash reserve is important during the best of times, let alone during periods of financial volatility. According to some research, about 25m people in the UK (i.e. nearly 50% of the population) live each month “paycheque to paycheque”, leaving them very vulnerable to a sudden outlay of money. An unexpected boiler replacement, for instance, could plunge a household to thousands of pounds of debt without a sufficient “cash cushion”.
Did you know that after World War II, the UK government raised inheritance tax (IHT) by 80% and then went as high as 85% in 1969? These figures are much higher than the 40% levied in 2020 on the value of an estate exceeding £325,000. Yet questions have been raised in the press about whether IHT may be in the Chancellor’s sights as we approach the autumn budget.
There is good news and bad news. For the good news, you may be encouraged to hear that since 2017, the average pension pot has grown significantly in size. In 2020, employees in large firms in the UK have an average of £120,000 in their pension pots – up 35% from 2017. Yet the bad news is that there is still a large gender gap here.