Professional Pensions advises pension professionals to keep their eyes skinned for signs of how their wealthy clients and indeed themselves, will find their pension pot taxed when they die.
A third of those responding to a leading pension lawyer’s questions, expressed confusion about what is going to happen to their and their client’s pots.
Unity of inanity
The same news appears in Pension Age!
“With potential administrative complexity adding to the unease, all eyes will be on the process which the government ultimately lands on for accounting for and paying any IHT due on pensions benefits.”
The pension press like the pension lawyers like the consultants and other experts are agog by the thought that the small proportion of the population who pay inheritance tax might pay more and some who don’t will, because they don’t spend their pension before they or the person getting a spouse pension die.
I have a very simple solution to this problem that will make it one that people choose rather than have inflicted upon them.
I suggest that DC pensions, that are liable to IHT, offer a default pension option that provides good value (by being invested) and security (by being well managed with the PPF behind if not).
It has become unfashionable of late to offer people pensions rather than freedom from pensions but if my experience is anything to go by, the freedom experience is not what I signed up when I made my first pension contribution when 21 in 1983. Back then I made earnest intent to have a pension when I got to state pension (then 65) which was 2/3 of my salary (that being the target back in those days).
I think I will make it. My “65” has turned to “67” and I’ll have to do it on career average rather than final salary but I think I will get to a pension paid to me that allows me to have the last 30 years of my life (my target for retirement) securely sorted.
I will not expect to leave any of this pension to my estate but I do expect my partner to get half of it so that she can have the benefit of me to pay a portion of her bills. I think she has the same idea. We will leave money to our families and to organisations we see fit. If we are fortunate enough to leave an inheritance tax bill, we will ensure we make this an easy burden.
In short, I am not confused by pensions and IHT at all.
My advice to all the pension people confused by the Sacker questions is to ensure that you, your clients and the wider public get paid pensions and not pots, pensions do not cause any IHT problems.
