ALL energy bills to fall | Plan 2 student loans | Retirement tips

This BBC Podcast is supported by ads outside the UK. Du, jag skulle ju köpa några nya palpställd i lagret. Det kanske blev lite mer grejer. De hade ju allt, hade en skribd, jag köpte en sån här, och kontornstolar, och så hade de en sitsnygg typcontainer. Vi har inredning för hela arbetsplatsen. Välkommen till AI-produkten! Nu kan du tanka svanen märkt Prim Redefine HVO100 på utvalda stationer. Läs ner på. Well it's not Yeah. We've done some simple subjects today, haven't we?

Hello, I'm Martin Lewis and this five live. But there's also a lot of people. Biggest shake up to And others too. Focus on your health space. Play the theme tune.

So at the start of the part, we went straight into the big newsy issue of the moment, Plan 2 student loans. Well whenever you talk about student loans, I find myself getting sort of slightly baffled. Right. But then it's always reassuring when I speak some of the smartest people I know amongst my sort of friendship group, school friends, you know, with k with kids that at university age now, they come to me and they just What I can't understand what

So it's not just me. It it just is flipping complicated. It is a Rube Goldberg machine, if you know what one of those is. I don't, but go on, tell us. You i it's the famous sort of invention. You know you see it and then the marble rolls down the steps and it turns the toaster on and the toast flips out and it moves into that's a Rube Goldberg machine.

And that's the problem with student loans. I mean, there are five different plans. Each of them, they have what look like minor differences in terms, but it totally changes the entire structure and the way that they operate. And so there's huge confusion out there. And there's there's the difference between the politics and I'll be honest, it's not been my finest week on that. Pretty disappointed with myself, as you you may know that I I uh

Was hearing a conversation about myself on Good Morning Britain and I interrupted um the leader of okay. It happens forgive yourself, honestly. Everyone's apologised to everyone else. It's all cool. But I regret it. It was unfair to do that even to anyone, even the leader of the opposition. The content I don't regret.

But but I own myself to better standards than that. But I thank you for saying that. And I did I got I went to meet her yesterday and we had a really good chat and and Laura Trott, who's the Secretary of State for Education about student finance too, and I was very pleased I got to apologise in private as well properly. Anyway, what I wanna what I think we should do is is let me let me try and start with the basics. Now th this is about plan two student loans. Right.

Those are the student loans for people from England and Wales who started you so it's where you're from, not where you go to uni. From England and Wales, not where you went to uni is irrelevant, as long as it's sitting in the UK. And started between twenty twelve thirteen academic year and the twenty twenty three academic year.

You're on plan two. Now I'm gonna t there are three main elements that work in combination in any student loan. The repayments, the when it wipes, and the amount that you borrow in interest. Those are the three. So let's go through each one in turn. On Plan Two student loans, you repay nine percent of everything you earn currently above£28,500.

So it is effectively, while you have it, it it's paid through the payroll just like income tax. It's nine percent additional payments. And the most important thing to understand about student finance is what you pay each year. is solely dictated by what you earn on the threshold.

And one of the big contentious things at the moment is while the threshold will go up this year, from next year in the last budget, the Chancellor said it would be frozen. And that works like fiscal drags on tax. If you think about it.

If you're paying the the threshold next year is gonna be just over twenty nine grand. So if you earn thirty grand next year, you're gonna pay a little bit, but then if you your salary goes up to thirty one grand the next year and the repayment threshold's frozen, then you're paying a bigger proportion of your salary.

to pay the student loan back. Does that make sense? It does. I mean what interests me is that I mean in any other financial product you'd look at the small print when you sign up for it. I mean it does it say in that small print Yeah, the terms and conditions of this I know it's not technically a loan, we call it that. It's like more of a tax, isn't it? Which is again this is the duality and complexity that's ridiculous. But does it say there's somewhere look this is

This is what you will pay. This is a threshold. No, and it didn't say that, but it within the contract, look, I try to take um the the the government in twenty fifteen to judicial review over this because they changed the repayment threshold and they reneged in the end and there was a political solution there. Hopefully there'll be one here. And and my legal advice at the time was it it wouldn't work. There was nothing that we could stop that.

That that's not the same as saying individual students can't take a legal case. Th what they were promised is it would go up with average earnings. I mean, that was in the marketing, that was what the government was saying, that's what people got when they signed up to it, and that's why

I've been particularly vexed over the repayment threshold freeze by the current government because I think there's an argument about changing terms for future students. We may all hate what they do, but that's within politicians' whim. But negative retrospective changing contracts. For me is a moral breach of contract and it shouldn't be done, which is why I've been very vocal on that.

uh and and and you know s had said publicly that I don't think that the Chancellor should be doing that and ask them to r you turn on that, which they may well do. But but anyway, let me go back to the mechanics. So you you're with me. What you pay is solely about what you earn above the threshold. Nothing else.

It doesn't matter. It doesn't matter how much your borrowing is for what you repay each year. The next step is when does it wipe? And with plan two loans, it wipes when you've cleared everything you borrowed on the interest or thirty years, whichever comes first. For the majority of people, it's 30 years. So therefore, for the majority of people, you are paying nine percent. additional over the threshold for thirty years. And that is the main dictator of what you pay.

The final thing is the amount you borrow. And the interest that's added on top. And the unique thing about plan two loans for undergraduates is they have the maximum interest rate of inflation, and it's the RPI, not the CPI, which is an issue, inflation plus three percent. So above inflation interest rate. And uh that's something I've always since before twenty twelve I was campaigning at the time that it was it was wrong on principle to do so.

But they have above inflation interest rates added on top of them. And the the the amount that of interest you pay is dictated by you earnings. So th the higher you earn, you get up to the maximum RPI plus three. And that's not gone up with inflation either. So that's not been indexed linked as it should have been.

But the complexity that you therefore have here, Adrian, is there are sort of two cohorts of Plan two loanholders. There's the majority, probably currently at the moment estimated about seventy percent. who simply will not repay in full in the thirty years before it wipes. And therefore for them, and many of them are looking at their loan statements right now on are in panic seeing this huge amount of interest added, but that additional interest in practical terms won't change what they repay.

They'll repay that whether they owe a hundred thousand pounds, a million pounds, or a hundred million pounds. It doesn't matter because what you repay is nine percent of everything you earn above the threshold. Then you have the other cohort. which are those who either are the lowest borrowers initially or in general the highest earning graduates. So it's not the wealth you had before, it's how much you earn as a graduate or a university lever.

And they will clear in full within the thirty years, which means for them the interest rate they pay is real. So that there is this weird difference in student loan. That the interest rate added is not necessarily the interest rate paid. If I reduce this to absurdity to make my point. If you have someone who only earns Gwenty thousand pounds a year, which is below minimum wage, but let's go with it.

Well, they will never earn above the threshold. They will never repay a penny, never mind pay any interest, so the interest rate is irrelevant for them, even though they say it added to their statement. And then on the other hand, you have those people who will repay all the interest because they're going to clear in the 30 year period. And and the the s what what's the opposite of a sweet spot?

Sour spot. The sour spot. Thank you. The sour spot here is those who will repay in in in almost exactly thirty years. They pay more. Because if you earn even more, you'll repay in less than thirty years, so you'll pay less interest. So there's a weird distributional curve that goes on. So so

Have a s do you sort of get what I'm saying? Your repayments each year are dictated by how much you earn and then there's whether you'll clear it or not in the thirty years. If you will clear it in the thirty years, then the interest that's added is the interest you'll pay. If you won't, you will pay less interest or possibly no interest.

compared to the borrowing. And and that's the complexity. Have you got that? Have I managed to explain it well? Okay, so so let me move on to what the policy options are now that are being discussed. And there's various and I'm gonna try and keep this as neutral as I can. You have the repayment threshold. If you increase the repayment threshold, so you say people start paying on higher earnings, then that reduces the amount that people pay and increases people's disposable income.

And that is beneficial to all students because they pay less. Though it does mean fewer people will repay in full, And therefore those who are higher earners may end up paying more interest by if you increase the repayments, if you decrease the repayments by increasing the threshold.

And they will pay more interest because that they're paying less off. But then again, you can always voluntarily overpay. So if you were in that situation and the the repayment thresholds increase, then you would just voluntarily overpay and you could conquer that. The other thing being discussed is reducing the interest.

Now reducing the interest, I think, has a lot of psychological benefits because the interest is absolutely scaring the pants off people when they look at their loan statements, even those who will never pay all that interest. It is a horrendous thing the way that we frame it. But that as a distributional impact, that that benefits primarily the highest earning graduates down to well it's argued down to the median, dad so the middle of middle earning graduates.

Um I haven't seen full numbers on that, but let's just take that at face value. But that doesn't benefit low and l low to mid earning graduates because reducing the interest they would never have paid it anyway. So you have these two Alternate things. You have increasing the repayment threshold, which within the cohort of graduates.

is is more progressive because it starts at the bottom end and moves upwards and you have reducing the interest, which is some would say is more aspirational because it helps those from the top that's that's the argument we've given, it helps those from the top end down. And I've tried to do that with political neutrality, which is not easy on this subject, but hopefully That makes some form of sense. But I go back to a Rube Goldberg machine. You see how complicated this is.

And therefore you have lots of people who are asking for things that w won't necessarily benefit them because and the whole psychological impact of the interest on student loans and the way it's framed and done uh has ought been something I've long talked about and you know and and is is terribly framed. It is it is a is a nice

Now we're gonna move on to energy news. The latest is we had the announcement this week that the energy price cap is going to drop on the 1st of April, but that is not the only story in town. The big twist, as I'm about to explain,

is that all energy bills will be dropping on the first of April. Let's get into it. So what's happening on the first of April is there is an a reduction for the energy price cap, which is of course the do nothing Tariff, if you've not switched or you've come off a fix and you've done nothing, you're on your firm's standard variable tariff, which is about sixty percent of homes in England, Scotland and Wales, you're on the price cap and that means your price is regulated by off gem.

then what's happening is it's gonna come down by six point seven percent on average. In practice, the electricity unit rate is gonna drop eleven percent. The electricity standing charge will go up four and a half percent, gas unit rates will drop 3.2% and the gas standing charge will drop seventeen point one percent.

Now the illustration from Off Gem is somebody on typical use on the price cap would see a reduction of one hundred and seventeen pounds a year, but of course the price cap only lasts three months, it doesn't last a year. So that's an annualised equivalent for a three monthly system.

So prices are going to go down, but importantly, the predictions are after April, we're going to stay at roughly that level for the rest of the year. So it isn't that this is just April, then it's going to shoot back up again. And the reason for that.

And this is the big thing that everybody needs to take home because you need to understand what's happened that changed the structure of energy bills. is most of the reduction is because two policy costs have been taken off bills. The eco scheme is ending at the end of March, so therefore that will no longer be paid for on the first of April, and that is on most bills, just not on some smaller firms.

And for three years, seventy-five percent of the cost of the renewable obligation is to be taken off bills and paid by the state. So that's through general taxation or debt, however you politically want to view that. And that is the government's hundred and fifty pound off bills. Now because this is coming off policy cost That is the main driver of what is reducing the price cap.

But it also means all other tariffs, including people on existing fixes, will drop too. And in fact, we're expecting to see somebody on typical use on a fix. or roughly typical use, we'll see a drop of between seven and nine percent on the first of April. So yes, literally, if your tariff is fixed, even though it says it's fixed, on the first of April, the rate you pay for energy will drop. So it's not just the price cap changing, it's all energy bills changing.

I think I I know you've got loads of questions. Hopefully we've got that. Okay. Fungus de Bogieman. Nice name. Nice name. So why do they drop the cap when people turn their heating off and bang it back up with extra when it's time to warm the home again? I mean I I very commonly get that out.

This is a particularly different one. The cap moves. The most volatile element of the cap is wholesale rates that make up forty percent of your bill. And that moves and the cap is an assessment of the three months rate in the run-up to the cap changing.

And they do actually look at it over different rates that are yeah, so it's not really a winter-summer thing, but it has happened that it goes up in the summer, goes down in the summer and comes up in the winter. I think what's important to understand about this is we've changed the underlying benchmark of energy bills. So these policy costs have come off.

And they're not going back on. So the main reason the price cap is dropping this time is because of policy changes, not because of the wholesale rate. If we didn't have the policy changes, then we would be seeing the price cap go up by about one to one and a half percent because of additional network costs that have been added on top and because of what happened with wholesale rates. So I think this particular drop not normal.

is likely to be see, sets a new range of prices and of course the wholesale rates could go up and they could rise again, but I think we're we're likely to see it stay at this level and that should go into the winter and beyond. Government's fixed until December twenty sixth.

Should I leave early and fix again, or stay, or will the savings be passed on to me automatically? On the first of April and firms haven't written to customers yet, I had the boss of Abj Off Gem on my TV show the other day and I put this to him that why hasn't anyone communicated? And he said they were going to be communicating soon. On the first of April, the rates you pay for your existing fix will drop.

It's going to drop by roughly 3.5 pence per kilowatt hour on electricity and 0.33 pence per kilowatt hour on gas. The only exception is if you are on a smaller firm's tariff, a very small firm's tariff that weren't part of the Eco scheme where you won't see such a big drop because you don't get the ECO savings because you weren't paying them anyway. So yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw'n yw.

But what that does mean is if you do a comparison now, because they're all going to be dropping by roughly the same rate, if there is a cheaper fix available now and you don't have early exit penalties, then you might want to switch to it. If there isn't a cheaper fix available now uh and you do have early exit penalties, you won't want to switch to it. So there's no there's no great rationale here. All fixes are gonna come down.

So if you do a comparison now, you it's it's an easy comparison'cause they're all coming down by the same amount. Whichever one's cheaper is the one that's cheaper. And therefore go for that. But you may have early exit penalties to go. If you got a good fix in the first place, you're probably sitting pretty and fine, so there's no need to do anything, because your price is going to come down automatically. Sarah Jane. The electric standing charges are going up, so we're not saving anything.

Well that's not true. Uh I uh they are going up and I have vociferously campaigned about the standing charge for many years. I think it's a moral hazard. I think it disincentivises lower users from cutting their bills. And again, when I spoke to Off Gem about this on Tuesday night, they are doing a pilot scheme. It's not as good as I wanted, but still a pilot scheme for 150,000 customers coming in April, where they're going to be testing lower standing charge tariffs.

While the electricity standing charge is going up by its it's about two and a half pence a day. Right, it's going up two and a half pence a day. The electricity unit rate is coming down by three pence a kilowatt hour, and we use a lot more kilowatt hours than we have days in the year. So overall, unless you are someone who has no gas an only electricity meter, and you use a tiny I mean really tiny amount of electricity

your bill will be dropping in April. And in fact, the people who will see their bills dropping the most are electricity only users who are high users because the biggest change here is the electricity unit rate.

Uh this is on the price cap anyway, is coming down by eleven percent. So I understand your point. I don't like standing charges either, but it is not fair to say that the electricity standing charge is going up, therefore we won't save because the unit rate is coming down so substantially.

When are we likely to see the rate affecting the suppliers' fixes? I looked at Eon again today, says Jay. As my fix ends in April, the fixes on their site haven't changed yet. Why the lag? They won't change. So this this is gonna get really complicated over the next month for people. We have this date, it's like everything is being pulled down on the first of April. Chunk. It's coming down. And that all fixes will we hope it they will all come down by a uniform amount.

So on the 1st of April, the price that you pay if you were to fix from the 1st of April onwards will be based on the new prices. But if you're comparing fixes now, they have to tell you the price that is currently in play. Even though that price should drop on the first of April. And I had confirmation from OffGem, all prices should drop, all the savings should be passed on. And I've been firm by firm and every single firm apart from Tulo Energy who w just seem not to respond.

has replied by saying, Yes, they will pass on the full savings and yes, it will be done on the first of April. So if you're looking at fixes now and you find your cheapest fix today That will just get cheaper on the first of April by the same amount as other fixes. So your cheapest fix today is your cheapest fix today because they're all going to use by a uniform amount, with the exception and the only one who's in the charts at the moment who's really cheap.

It is Fuse Energy because it's one of those smaller providers that does not have the eco scheme. So while it will drop on the first of April, its rates won't drop by as much as the other fixes. I say it's a bit complicated. I hope that makes sense.

Steve wants to know if we're ever going back to pre war gas and electric prices. What I mean, I it which war are we talking about there? I assume major Ukraine war. We're definitely never going back to pre World War two. I'm not sure we're going back to pre Ukraine either. Look, w just before the crisis, I think the price cap was about twelve seventy, it's now in the sixteen hundred.

I I'm not sure we will ever get back. I mean, partly because the change of the way that we distribute and generate energy. So there are there are two things that go on there. First of all, the move to renewables and and more wind generation.

means that you have to have transmission and distribution costs. Instead of having lots of central power stations, we have lots of small generation hubs. And connecting those up costs money. And that's gone on to the network costs that we pay and that has increased price. And secondly, the shift of use, primarily because of electric cars. to having to have a lot more electricity also means that uh there are lots of cost changes going in the underlying infrastructure.

So even that alone, I think, means we probably wouldn't go back to where we were. And not unless there are you know, maybe in ten, fifteen years' time with huge dividends if the promised renewable dividend comes off. But I'll leave other people to discuss that. In the short term though. I think in the first from the first of April, it wouldn't surprise me, and I'll do it on typical use figures, even though it's meaningless, but it just gives you a scale.

If the cheapest fixes were coming in at around 1,350 quid a year. And then if we go back to what the price cap was, so I'm not comparing light with light, because fixes before the war were much cheaper. The price cap before the Ukraine war were maxed out at about twelve seventy. So I think we're getting closer. I think from the first of April we will get closer to you being able to get a tariff that's not that much more expensive than it was pre Ukraine. But we're never gonna go back, I don't.

Certainly certainly not in the in the the imminent future. Unless there's some massive I c I can't predict that. Gary says can you explain if or how the hundred and fifty pound savings is going to be applied to people on a tracker tariff, or does this mean we will be better off switching to a fixed tariff?

Okay. So I need to be slightly careful here because There is the general term a tracker tariff, which is a tariff that tracks the price cap or is a price cap tariff, and then there is the specific tariff, the octopus tracker. If I answer for the first one, if you are on a price cap or a tracked tariff, then you will see your rates drop on the first of April. They'll be applied automatically.

If you are on the octopus tracker tariff, that is a time of use tariff where the amount you pay changes every day based on underlying wholesale rates at that time. Uh and it can work very well for some people, but you've got to be aware of the volatility. And there's also the agile tariff where the price moves every half hour. And you can uh go online and you can see it. So you need to be really able to to distribute your usage correctly for that.

The octopus tracker tariff They will pass on all the policy cuts. But of course it will be far more difficult to see. And I asked uh again, I asked off Gen Boss about this the other day because it's something that concerns me, and they will be monitoring that everything is will be passed off.

But you won't be able to work out, you know, how much it is because it's a day changing rate. It just means the rate will be lower than it would be everything else being equal, but you no won't know what the rate would be otherwise. But

No, in itself, that is not a reason for you to shift. If you're on the tracker tariff and it's right for you, then that can be cheaper than the cheap fixes. If you're on a standard variable tariff, Then that's the price cap and the price cap is a pants cap and if you can fix and those on prepayment can't, um or can't get cheap fixes anyway, then I would get yourself off. The price cap and onto a fixed deal and go via a comparison site to find your cheapest.

It was promised in the budget that average bills would come down by £150, when in reality bills are coming down an average of £117. Are those sums right? Uh yes, but sit back, everyone. We this is another complicated one. So the the promise in the budget. was that bills would come down on average a hundred and fifty pounds, but they did say everything else remaining equal. And I remember talking to Ed Miliband about that and he was very clear it was everything else remaining equal.

But that number was quite interesting because it was always thought that the reduction on the price cap would be£133. So why the£150 to£133 first? I mean it might have been£134,£135, but it was in the 130s. And the reason for that difference was Average users on the price cap use less energy than average users not on the price cap.

So the overall average saving for everybody, because this applies to all bills, is 150, but the average saving for those on the price cap was going to be in the 130s because they look they use less. With me so far. Yeah. Right. Then the announcement of the price cap coming down in April of one hundred and seventeen pounds is due to the everything else remaining equal.

The price cap moves every three months and there are lots of factors in there, wholesale rates and network costs, which I've already talked about ad nauseum. And those have gone up. So as I said earlier. If the policy costs had not come off bills, we would have seen the price gap go up in April as opposed to down six point seven percent. It would have probably gone up by about one one point six percent.

So for those on the price cap, the tip the the saving on a typical bill isn't in the one thirties, it's one one seven. Interestingly, if you're on a fix because your rate is fixed and therefore the only thing affecting its price during the fix will be the policy cut.

you are likely to see the full policy cuts passed on. Because you're that's why I said earlier that'll be a seven to nine percent saving and that's where the hundred and fifty pounds comes from. So it's very complicated, but it does actually take me to a really important point. Just moving it on a second. The current differential between the cheapest fixes and the price cap is about 14%.

So if you would do a cup to go a c you're on the price cap, you do a comparison, it depends on usage and reason, but let's just go average. You would save about 14%, maybe 200, 250 quid on a typical bill by getting on a fix now. then in April your fixed rate will drop. And it will likely drop by more than the price cap is dropping. So currently the differential is 14%. Probably from April, the differential between the cheapest fix if you were getting it now and the price cap might be 15% or 16%.

And then the predictions are, and this is where it gets to crystal ball gazing, that from July onwards, when the price cap changes again, it's gonna the price cap will stay at roughly the same level, whereas your fix is fixed. So it won't change. That's why I'm saying get off the price cap if you can. And there are many other options than fixing, but fixing is a simple option because that differential is so cheap. And as a totally different aside,

Some very nice news. One of my good friends, Jason's wonderful daughter, who's worked so hard at medical school. I just got a WhatsApp through. Can I just say congratulations now, Dr. Emma Frank? Of course. Congratulations from all of us. Uh what about we get a quarter on? Would you like to hear from Jim in Kingslyn? I would. Absolutely. Bring him on. Jim, how are you doing? What have you got for Martin?

Hello. Yeah, I'd just like to know I've got a electric gas bill or electric gas. I need to change it next month. Yeah. And uh So you're f you're are you on are you on a fix, sorry. Are you on a fix its ending? Is that is that why? Yeah. Okay, cool. That's ending next month. My direct debit was two hundred pounds a month.

And they've just told m or on what they've on the email they sent me they just put my dire direct debit up to three hundred and seventy five pounds a month. So I just wondered what deals there are, what w what I need to do. Okay. So Sorry to get confusing here for a second. It's important to understand that your direct debit and the amount that you pay are separate. So the direct debit can often go up because it's based on them estimating what you will use.

But what you actually will pay in the long run, that affects your cash flow, is based on the rate. So we we can't really compare on direct debit. But clearly you're coming off a cheap fix, I presume, and you're gonna move to the the price cap and the price cap is more expensive than your cheap fix, so you would pay more, so things would go up. Is there anything I need to know about your usage? Do you have an electric vehicle? Do you have storage heaters? Do you have anything like that?

No storage heaters, gas heating. Um I have an electric car. We need to charge at night. Do you drive a lot? Not a lot. Are you worth three thousand miles a year or a ten thousand miles a year? Or a twenty thousand? About fifteen thousand miles a year. So you're charging every night. Yeah, charging most knights.

You will you will almost certainly be better on an E V tariff. The the big question is, how much of your energy other energy usage could you safely shift to nighttime? So let's say we're talking between twelve and five in the morning. A reasonable amount. We set the washing machine dishwasher often to come on in between midnight and five. Okay.'Cause we're currently on a forget the name of the tariff, but uh electric vehicle tariff. Which firm is it? British Gas. Okay.

You you want to go back onto an EV tariff. The one that has the cheapest rates at night is just from a list in front of me. It's not a complete list, I need to be honest, is So Energy and Eon Next, other six and a half pence at night. Octopus intelligent octopus is seven pence. But then you've also got slightly higher rates during the day. There's Fuse Smart EV is pretty good. It has th the cheap rate isn't as cheap, but the rates during the day are higher. So it it it is a depender.

But you absolutely want to get yourself onto a cheap EV tariff. You're using a lot of energy there and shift as much as you use as you can. Just a safety note, don't turn the tumble dryer on when you're asleep. It's not safe. But everything else you you know you can put on when you're asleep as long as you check the safety of the appliances. And that will generally in if you're um fifteen thousand miles a year at the top of my head and I'm not doing a calculation on it, that will generally

outperform going on to a cheap fix for you is what you should be moving on. There is there is also the option of the octopus agile tariff. Where there the rate moves every half hour and you get a you get an indication

each day of where the rates are gonna be. And some days it's more expensive than the cheap uh E V charging and some days, you know, when we get into summer you may well be paid overnight for charging your vehicle. They will actually pay you for doing it. But that's a lot higher risk and you have to be comfortable with that. So I'd be thinking I'd be having a look at

Options like Eon Next or Sew Energy and have a look at Fuse Two because of its daytime rate as well. And then you just do the numbers. I you really need to understand how much of your energy you're using between twelve and five in the morning. And it's about the proportions. I I don't know how good you are with the spreadsheet. That's the way I do this. But we don't have comparison sites that are good enough on E V tariffs yet. Uh that's going to come in the next year, I'd think.

Okay, thank you. Does that help? Yep, that's brilliant. Thank you very much. All right, thank you so much. Sorry I can't be more exact, but it just depends on the usage distribution. One last question, Michael. Thanks, uh thanks Jim. Michael's on a fix rate now on Eon, fix for fifteen months. Would you recommend waiting till April the first and look for a different fix now?

I just think if you're on a fix and it's a good fix, th my honest answer is your fix rate is gonna get cheaper on the first of April. The price cap has nothing to do with a fix. Someone asked me the other day, I don't understand why the price cap's g the the The driver of the cut in the price cap is the same as the driver of the cut-in fixes, but the two are not the same thing. So they're both coming down because of the underlying policy cost.

But the price cap moves does not affect the prices of fixes. The price cap moves on a time lag, fixes move based on current prices. They're just totally different. So the price cap coming down is not a reason that you should be changing your tariff.

Fix rates are coming down, but if the fix that you're on is a good fix, then your rate's going to come down anyway, too. So well done, stick with it. Um and if it's not a good fix, byddwch chi'n gweithio'r pethau'r pethau'r pethau'r pethau'r pethau'r pethau'r pethau'r pethau'r What's happening on the first April i is the same for almost all firms, therefore it doesn't really matter in a relative sense for the choice that you're making.

We're gonna leave energy there for the moment, but there's a few more tips later in the pod, especially if you are a low user, you have solar panels, or you're on a smart prepayment meter. So listen out for those nearer. Should we move on? We've done some simple subjects today, haven't we? Student finance and the interaction of underlying energy bills when we're having an unprecedented move. This is fun.

Sound like an idiot and then we finish. That's that's what happens every week, but I I enjoy it. I just like being uh part of it. So tell us about the Tellers. The Tellers was simple.

What had no one warned you about when you retired that you would now like to warn other people about? So what I was trying to get at from this. is, you know, if you're retired What is your top tip that you would tell other people that you wish someone had told you? And we have had some beautiful answers. We have, we really have. Um is is it Gidi or G D? One thing nobody really prepares Gide. Yes, it could be.

N one thing nobody really prepares you for is how quiet life can feel after you retire. The freedom is great at first, but the sudden loss of routine Workplace social interaction and sense of daily purpose can hit harder than expected. I'd warn people to start building hobbies, community connections, or meaning more meaningful projects before retirement so the transition doesn't feel like falling off a cliff into endless free time. That's really, really interesting.

And and Graham says, life span and health span are different things. Quite right. This is what my wife specialises in, so I hear a lot about it in my house. Enjoy your health span while you can and maintain your muscle mass. You want to be able to lift cabin bags into the overhead racket eighty and not be out of breath walking up a flight of steps. So it's it's both Cardio ist wichtig.

squats and being able to get up out of a chair are really important as you like. I think flexibility, that's when I feel I'm s quite strong and do weight but me too. I mean I don't bend over and pick something off the floor from one week to the next if I'm going to go. I've got a daughter to do it for me as well now, you know, and it's too easy I've got you know

Can you beg I d I don't want to do it. And I I I do loads of exercise. I exercise every day and I think that's one of the reasons I have the tight muscles on the back of it. But I you're right. And just to do the lifespan versus health span. Cause this is interesting because it's the whole, do you really want to live to 150? Actually, what we want that's lifespan. Health span is about Living as long as you can when you have your health to be able to be

Mae'n gweithio yn fysicol ac yn gweithio, ac yn gweithio, ac mae'n gweithio'n gweithio, ac mae'n gweithio'n gweithio, ac mae'n gweithio'n gweithio, ac mae'n gweithio'n gweithio'n gweithio, ac mae'n gweithio'n gweithio, ac mae'n gweithio'n gweithio, ac mae'n gweithio'n gweithio, ac mae'n gweithio'n gweithio, ac mae'n gweithio'n gweithio, ac mae'n gweithio'n gweithio, ac mae'n gweithio'n gweithio, ac mae'n gweithio'n gweithio, ac mae'n gweithio'n gwe

It it's all this big divide is coming up of maximizing our health spans, being healthy as long as possible is arguably more important than maximizing our lifespans. Nobody really warns you how much identity is tied to work. The money side gets discussed. The lifestyle change doesn't. Structure matters just as much in retirement as it does while earning Routine, purpose and social connection. Without those, even a healthy pension pot can fear them.

Yeah. Well funny enough, one of the other h health span things as we're talking about it is social interaction. You know, they say the main things are exercise, sleep, eat well and and social interaction. Those are the things that keep you going as you get older. Uh Ashley, n uh retired but still young. I got great advice from someone. Having a paid off home made retirement possible if I still had to pay my mortgage and

I wouldn't be able to do it. If you can, good luck to you. You get just getting rid of that big bill, getting rid of the pelican would be very useful. Otto says maintain a sense of purpose, whether by volunteering, doing casual work, having hobbies Said the first summer is joyous, but the first winter without purpose can be very depressing. Uh interesting, Pete follows that up.

Don't retire in January. It's a harder way to start retirement than waiting until the summer months when you can get out. That's very interesting, isn't it? Yeah. You wouldn't think of that, but ac you can absolutely see why that works. Well done, Pete. I mean it depends what kind of sort of type you are. You know, I'm hopeless with time on my hands. I'm hopeless. And I d I I suspect you're the same, aren't you?

I I don't know, I don't get it. Um But yeah, absolutely. I uh there are times when I think, I'd just like to stop and then I'll think, what would I do if I did? You know, what would what would fill me, what would give me the purpose to do? And I think that is one of those things about retirement. But I still go with Pete's view that if I had nothing to do, I would prefer to have nothing to do when it's twenty one degrees outside than when it's zero degrees and raining and dark.

So I think it I think ev even with that sentiment, Adrian, Pete's right. I'm I'm I'm Team Pete. Uh should I do Jim? Yeah, Jim's good one this. Come on. Be ready for your working friends and relatives to obsess over the question, What do you do all day? To which you can answer whatever I want, whatever I want. This afternoon, for example, I shall be watching the cricket. And yes

all afternoon. Why? Because I want to and I can. I feel like we need some like big round of applause of Asian for Jim on the back.

Absolutely. Have we got time for more? Go on, yeah, I was do one or two and then a wealth manager. You do a couple, I'll prep mastermind. Okay. Matt's uh a wealth manager. He says those that take out a level annuity should look at the past few years of inflation. As a warning to very much consider inflation linking. Many are not informed of this and choose the higher starting number.

You'll have to stop your prep for a minute and just decode that for us, Martin. All right, so uh annuities you is a payment each year for the rest of your life until you die.

And it's one of the things people used to effectively be forced to do with their pensions before we had the so called pension freedom, which means you can effectively use your pension like a bank account. But an annuity is still a great concept. The reason it became so unpopular is the rates were poor. And what he's saying is Don't get a flat annuity. So let's make it very simple. If you pay for an annuity and it pays you five thousand pounds a year for the rest of your life.

Well, that five thousand pounds if you live thirty years will be worth a lot less in thirty years than it is now. So get pay for an annuity which goes up and is linked to inflation. So you'll get the equivalent of five thousand pounds in future money every year for the rest of your life. Clearly the rate you get at the start would be lower, but it would go up.

And if you are getting an it look, the the biggest piece of advice I can give anybody on retirement in terms of the finances is do not do anything with your pension until you have made a pension wise appointment. That's a totally free guidance system offered. It's non profit, it's comes paid for by a levy on the financial services industry.

And there are so many things you can get wrong with taking money out of your pension or using your pension money, including not getting an index linked annuity, including just getting an annuity with your pension provider.

The the hour appointment you get with these people to give you b specific bespoke guidance is the most important thing that you can possibly do. And and if you're lucky enough to be wealthy, then go and pay for independent financial advice too. But the guidance is free to everyone. Karen's got a good one. Try to live on your projected pension for three months before retiring. You get a feel for it if it's doable and you save money too. You need more than you think for days and meals out.

Exercise and eat healthy now, your body will thank you later. Retirement is not good in in poor health. I mean it's a good point. You've got more time on your hands, you probably you know, we'll probably end up spending more money. Yeah, you will. I mean, w li life doesn't work the way we around we think it. We work for what, about forty, forty five years of our eighty ish year life?

And the rest of it we're we're having to pay for the other years. You might think, well, hold on, no, I didn't for the early years. But of course, we have a cross-generational subsidy that your parents paid for you while you were a child and you will pay for your children, so that sort of evens out. And then of course you've got to pay for your retirement. So yeah, I mean it is hefty. It is hefty. But sp something else that's hefty in a very bad segment is this.

Welcome to my Money Mastermind, Adrian. The score stands at you've got 16 right and 33 wrong in this three-option multiple choice quiz, which means I'm afraid you're doing NB. No better than random chance. Okay. Sorry. Now as you'll know, listeners, our Adrian likes simple rules. Yeah. Offside, too complicated. VAR, suspicious. Inheritance tax, just don't go there.

It's our favourite b Well Adrian, I'm so sorry, inheritance tax is exactly where I'm going and I want you to understand how it works. So here is your question. But I need to tell you before I get into the question something very exciting today. When you give me your final answer, you have to say locked in.

And then we have a tension bed that we're going to be doing for the first time before I reveal what the answer is. Isn't that exciting? I say locked in. Okay, you say yeah, when I I will say to you, are you locked in? And you will say, Yes, I'm locked in. Or no exactly not.

So anyway, a single man has a house worth a hundred thousand pounds and other assets worth three hundred and fifty thousand pounds. Write both those down, hundred thousand, three hundred and fifty thousand. He is leaving the house to his children. Will his estate have to pay any inheritance tax? Which of these best describes the situation? So you got it? House is a hundred grand, other assets three fifty.

A, yes he will, because the total inheritance tax limit is three hundred and twenty five thousand pounds. B, no, because he's leaving his house. He gets an extra£175,000, so the total limit is£500,000. Or C, there is no inheritance tax on the house, but there is some on the rest as the limit on non-house assets is£325,000. Well the answer is I don't know because I don't know the nuances of inheritance tax.

There's some implication that the I mean what this boils down to, isn't it, is the i is property. Is there a special Is there a any any is it treated differently to any other asset? Yeah. And I don't see why it wouldn't be Well I can see why it would be'cause it's important to put it. But I d I d I I think

No. I think it's A. It's A. So your answer is yes, because the total limit is three hundred and twenty-five thousand pounds, he will have to pay inheritance tax because he's leaving a total of four hundred and fifty thousand pounds. Rydw i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd i'n mynd. Oh yeah, so locked in. Locked in, Simon, but we'll go for it. You're now locked in, Adrian. I'm locked in. So let's start with the basic facts.

Standard inheritance tax allowance for a single non married person is thousand pounds. That bed's too short. We'll work on this and make it get better. On air. On air rehearsals, this is the way forward. Anyway. But there is another allowance. Which is if you are leaving your main property to your direct descendants, so that's children or grandchildren, including stepchildren, foster children, adopted children, or the same as grandchildren.

Your mate, you get an extra one hundred and seventy-five thousand pounds allowance. So the answer we'll have the uh uh here. I don't know why they take so long. They should have it ready'cause it's the same every week. Well I know and when I censor it I do I do bold the correct answer so they they know that you've chosen the wrong one. I d uh but they'll be Well they do, do they? Well they could flipping tell me. No. Um So then the question is is it B?

He's got this three hundred twenty five thousand and a hundred and seventy five thousand, so that's a total five hundred thousand pounds and that covers it, or is it C? No, it doesn't work'cause not all was on the house. Well the correct answer is C. His assets are three hundred and fifty thousand pounds.

And his property is a hundred grand. The property allowance can only be used on the property. It's not like you get a bigger 175,000 pounds added on top. That can only be used on the property. So his Hundred thousand pound house uses up the hundred and seventy five thousand pounds, but there's no extra, there's no change from that. And the rest of his assets are three hundred and fifty thousand.

So that is bigger than the three hundred and twenty five thousand pound non property limit, and therefore he would pay inheritance tax on the twenty five thousand pounds. So it makes no difference whether the house is worth one hundred thousand or one hundred and seventy five thousand.

Well no, if the house is a hundred it would still it would still be inheritance tax free. The the m let's be honest, the more likely scenario Is that his assets are w his house is worth three hundred and fifty thousand and his other assets are a hundred thousand, in which case there would be no inheritance tax.

Because the 175,000 would come off the 350,000. That would leave another 175,000, and he had another hundred grand worth of assets. And that would be covered. So that's 275,000. And that's covered by the 325,000 normal limit. So the issue here was because his house was worth less than the£175,000 allowance, he couldn't use the rest of that allowance for his other stuff.

It is very worth me mentioning the biggest gain on inheritance taxes for those people who are married or in civil partnerships. If you're just cohabiting, you do not get this. It's that you can leave everything to your spouse inheritance tax free. So e even if you're, you know, Bruce Wayne and leaving a hundred billion pounds, there is no inheritance tax to pay on anything you leave to your spouse.

And your spouse gets your unused allowance. So if we take that net allowance of 500,000 pounds that a single person can give, if they left everything to their spouse, Therefore their allowance is unused, their spouse can then leave in combined their their main property and assets a million pounds to their kid. Because they have their spouse's unused allowance too. And therefore, being married, it's one of the big boons of marriage financially, is the inheritance tax change.

Okay, we've just finished the main pod and there are a couple more things I want to add on energy. The first is for those people who are either lower users or on smart prepay. That is a tariff that you should be having a look at. It's been around for a while, but they've changed the terms and improved it this week, so that's quite useful. It's the EDF Simply Tracker Tariff.

Now what it does effectively it's a price cap tariff, but with a hundred quid off standing charges. Until this week it was fifty quid off. That's right, it's improved. With a hundred quid off standing charges. So effectively you pay The price cap unit rates, but your standing charges over one year and it lasts for one year, are a hundred quid cheaper.

Now there are also via various sites you can actually get cash back on top of this too, which will make it even cheaper. But I'm just gonna do the maths based on the hundred quid lower standing charges for the moment. Effectively what it works out is if you are a lower user using less than around eighty pounds a month of energy, gas and electricity combined.

This is worth doing compared to the cheapest fixes. It's always worth doing compared to the standard price cap because it's a hundred quid cheaper and it's the price cap. But compared to the cheapest fixes, this is worth doing if you use less than about eighty quid a month. Or Alternatively.

If you're on smart prepay, you can get this tariff. And as the cheapest smart prepay fix currently is only 0.8% cheaper than the price cap, whereas the non-smart prepay fixes, i.e., for those on direct debit, are 14% cheaper. You see there's a big difference.

Then this is this is a real winner tariff for most because it'll save you about a hundred quid a year. It's a bit of a no-brainer if you're on smart prepay. So it it is worth having a look at that EDF Simply Tracker tariff for low users or those on smart prepay. I'm afraid for those of you who are on non smart prepayment meters, i. e. old school key or card meters.

There's just simply no tariffs available that you can switch to that are any use as far as I'm aware at the moment. And and they are very rare. Uh so that is one of the reasons if you can you would be better to switch to smart prepay where there's a little bit more competition. And it also means that if you have problems and you're unable to pay, you can get more help from your energy firm. So I think

There's lots of debates over smart meters. I tend to be a fan, but not a huge fan, but I'm because too many of them are broken. But I'm more of a fan on smart prepay because I think it makes such a big difference there. Final couple of points. If you have solar panels at home. and you export over around twenty percent of your energy back to the grid.

Then it is worth you looking for the cheapest energy tariff that is linked to the solar export guarantee. So basically, the solar export guarantee is the amount that you'll pay for generating energy to the grid. And if you put less than twenty percent back to the grid, just go for the cheapest normal energy tariff. But if it's more than twenty percent, because you get better solar export guarantee rate If

your energy tariff and your solar export guarantee are from the same firm, then it's often worth picking based on the solar export guarantee rate if it that's over twenty percent of what you generate. Hopefully that made sense. And my final note of course of two is

I mean the other thing you can do on energy is try and reduce your usage. But you know that, so I'm not gonna go that in detail and we've done that on the show many times before. If you are struggling to pay your energy bills, it's always worth talking to your energy firm

They can have hardship and debt grants from suppliers. If you're vulnerable, make sure you're on the priority services register for vulnerable customers. That's useful too. And uh there are charities out there like National Energy Action that can help. But I think that's probably enough talking from me. I'll probably shut up.

That's it for this week. We tend to put out a new episode every Thursday, like this one, and on Mondays, which is the Question Time Podcast, where you can ask me absolutely anything and everything, open brackets within reason closed brackets. If you've enjoyed today's show, please tell your friends you've been listening to the Martin Lewis podcast and why not subscribe? Then your pockets will be pleased with you. And if you haven't enjoyed it, well you've listened this long, I'm sorry.

Martin Lewis is the founder of MoneysavingExpert.com. But of course, other consumer and price comparison websites are available. You can get in touch with Martin's podcast production team by emailing martinlewispodcast at bbc.co.uk. The offers and rates mentioned in the podcast are correct at the time of recording. However, if you are listening on demand, it's worth double checking as details can date. Remember to subscribe on BBC Sounds and leave us a review however you listen.

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