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?

Well, it looks as if one exemption which has been used for inheritance planning is going to be toast. And that's fine because things change.

I can see why it’s been targeted that’s for sure.

I suppose I’ve seen so many changes to pensions over the years that you do get a bit of fatigue wondering what they’ll change next.

That is what I meant 🙄

Used to be a minority of people who used them that way, though. Also remember that there used to be a requirement to annuitise at 75 (pre A Day) and when alternatively secured pension was brought in IHT was originally payable on that, to discourage people from using their pension as a means to avoid IHT.

This is what I'm wondering. I'm guessing those who have large amounts they wanted to pass on will just find other ways to avoid the tax

I'm guessing those who have large amounts they wanted to pass on will just find other ways to avoid the tax

Seriously rich people always have, and especially since the introduction and lowering of the lifetime allowance. Trust funds etc are probably not realistic options for people with pots which really are primarily to provide a pension but which might have had a significant residual amount if they don’t live long.

Not including any residual pension pot in IHT was always an anomaly, so it's a fair change. There's probably some people regretting putting money into a pension fund that they can't now get out and gift to their kids I suppose.

There's probably some people regretting putting money into a pension fund that they can't now get out and gift to their kids I suppose.

I'm not sure they're necessarily worse off. They will have to pay income tax to get the money out of the pension and give it to the children as a seven-year PET, but (if they're wealthy) that's only likely to be the income tax they didn't pay on the way in, so largely neutral.

Yes, this really isn't the big deal some people are claiming.

Pensions aren't being taxed more than other assets, or treated particulaely unfavourably. They are just removing the incentive to keep more in your pension pot than you need in order to avoid IHT.

It's not what you said though! 🤣

I am more worried that I won't have enough money to afford a retirement than I am about passing money on from my pension after I die. Of course it should be part of the pot for inheritance tax, never understood why it wasn't.

Ha ha me too! By concidence I have a call with a financial advisor this afternoon about pensions (arranged long before the budget).

My main question is am I saving enough for a half decent standard of living in retirement, not how can I pass the lot on and not pay IHT!