What does this mean for people and pensions?

[imastrangerheremyself]

If pensions are to be taxed as part of inheritance how will this affect the way people view them?
Will it be - there's no point in putting more away now so let's enjoy our money now? This is something that will in two years time drastically reduce the wealth of everyone who has a pension and home.
Will people downsize their homes to ridiculous levels to try to reduce their level?
What about people who live in the SE where a 3 bed house may well be 1/2 a million compared to areas where it is half of this? Surely that is an unfair start line too?

It’s currently pretty insane to be relying on the state pension anyway - given all the changes in the law to mandate saving for one this is very strong push for individual provision.

In addition to your time and attention, of course the other thing you can give them which should be of lasting benefit is a good education.
I wonder if some of the money which might otherwise have been put in/left in pensions will end up being spent on school fees, or paying for uni costs?

I intend to spend my pension on me. I have worked for years and when I retire at Christmas, I intend having the best retirement possible until I shuffle off to the tar pit. My DC should not expect an inheritance as I intend to leave this earth with the same assets I came with - nothing.

Because pension schemes are just trusts with extra knobs and whistles on them so evolved with similar treatment on the distribution of funds on death. At the time they were set up they were all defined benefit pensions so the payment of death benefits was more of a side issue.

It's affecting my thoughts about my pension. Prior to the budget, I was focused on maxing my contributions but am now thinking of gifting more to the DC and have today set them up with SIPPs.

My DH and I are spending our pensions on ourselves, that’s what it’s for.

"...a house valued at £500k or more"

You are mistaken, it is very unusual indeed. According to the Land Registry the average house price in the UK is £292,000.

That is the average. So around half of houses will be less than that.

Agree completely. It encourages spending on private schools, uni and any other assistance your kids might need early on in life.

And same again for grandkids

Today

Everyone needs the NHS and kids need a functioning education system. And if we hide all our money our kids will work to pay for it.

Bringing them up with "pay no tax" as a main motivation, everyone for themselves, leasing to private USA style healthcare and a breakdown of having any connection or responsibility towards the society you will live in, will create a truly dreadful existence.

Really? I find that hard to believe . Many people I know have a house and a pension which will be affected by this. I can't believe I'm in a 1.5%

It's the old N/S divide.
Where I live you would struggle to find a house on the market for £500k.

Most people won't have a pension pot by the time they die though, they'll have spent it and/or bought an annuity.

In London the average is over £500k. In the south east it looks to be around £375k. I can’t see standard deviations but the fact it’s an average means that half of the houses are over that level. Not “very unusual indeed”

Pensions are already taxed and have been so for years

Sensible people will have a pension pot by the time they die!

@Poffy yes I'm in the SE and our 3 bed would sell for about 500. My sister elsewhere has a 4 bed that cost her 230 recently.

Of course pensions are taxed. I do so every month but it is the remainder that could pass free of IT prior to this. Yes beneficiaries would pay tax according to their tax rate as they withdraw. Now they are going to tax it before that stage.

I use my private pensions to partly live on now. I have savings, but if I need them to pay for help/care, then that’s what it will be.

I helped my ACs out, years ago, I can’t live worrying about their :”inheritance” now.

See I think this is totally reasonable. Inheriting anything used not apply to the vast majority. And we are all living longer. Adult children should be making their own way - relying on inheritances is no way to plan a future.

Oh interesting- just read pensions were only excluded in 2010 under Osborne

It's tougher nowadays though - I plan on helping my DC out as much as possible

Im sure there will be tax efficient ways to try to circumvent this. Eg trust funds, offshore etc. I guess all the tax people are busy now and at least there are two years to plan.

Most ordinary peple will be spending anything they saved in their pension during their retirement. That is what pensions are for, not hoarding tax free money for your children.