Autumn Budget 2024: Pensions subject to Inheritance Tax from April 2027 – but most still won't pay

mgdavid

CSL0183 said:

What about death in service life assurance benefits? 

Everyone paying into a DC scheme I suspect will have some sort of death in service life assurance policy attached? 

My own pays a 5x multiple of my pensionable salary plus the contents of my pension pot at the time of my death. 

I am 40yrs old and still have a long way to retirement but my current pension pot plus 5 x my salary is worth around £700k today, right now. (£80k pensionable salary x 5 = £400k + £300k in pension pot) 

I appreciate I am a fairly high earner but surely it wouldn’t take much for anyone on a decent salary to breach £325k if death in service benefits are also included in the maths for IHT?

Someone on a more average £40-£50k pa at a reasonably young age would break this £325k no problem with (5x salary) life assurance benefits?

Or am I misunderstanding death benefits?

Logic says the DIS payment must go direct to the beneficiary as the assured is no longer alive when it is paid. Therefore it's not part of the deceased's estate for IHT or anything else. (but I may be wrong - when did logic drive legislation?)

Albermarle

Cus said:

artyboy said:

Yorkie1 said:

Albermarle said:

Otherwise yes the change will change behaviour/decisions. I have just been flicking through a Lamborghini brochure 

One has to ask ... 

What colour?! 

I'd give red a wide berth...

Red for Ferrari, yellow for Lamborghini..I thought this was common knowledge 😁

Just been having a look at Maclaren, they seem to prefer darker colours, although with orange bits.
not sure being able to do 230 mph is really that useful though.
Maybe would be better with a RR.
A 40% discount on it in effect 

LHW99

mgdavid said:

CSL0183 said:

What about death in service life assurance benefits? 

Everyone paying into a DC scheme I suspect will have some sort of death in service life assurance policy attached? 

My own pays a 5x multiple of my pensionable salary plus the contents of my pension pot at the time of my death. 

I am 40yrs old and still have a long way to retirement but my current pension pot plus 5 x my salary is worth around £700k today, right now. (£80k pensionable salary x 5 = £400k + £300k in pension pot) 

I appreciate I am a fairly high earner but surely it wouldn’t take much for anyone on a decent salary to breach £325k if death in service benefits are also included in the maths for IHT?

Someone on a more average £40-£50k pa at a reasonably young age would break this £325k no problem with (5x salary) life assurance benefits?

Or am I misunderstanding death benefits?

Logic says the DIS payment must go direct to the beneficiary as the assured is no longer alive when it is paid. Therefore it's not part of the deceased's estate for IHT or anything else. (but I may be wrong - when did logic drive legislation?)

But then, up till now, DC pension pots have not been part of the deceased's estate (hence no IHT), who also ouldn't be alive when it is made available for whoever is receiving it.

It appears that the Government feels that won't bar taxing DC funds, so presumably DIS payments would have to be specifically exempted under the new legislation proposals..

mitcheg1

CSL0183 said:

What about death in service life assurance benefits? 

Everyone paying into a DC scheme I suspect will have some sort of death in service life assurance policy attached? 

My own pays a 5x multiple of my pensionable salary plus the contents of my pension pot at the time of my death. 

I am 40yrs old and still have a long way to retirement but my current pension pot plus 5 x my salary is worth around £700k today, right now. (£80k pensionable salary x 5 = £400k + £300k in pension pot) 

I appreciate I am a fairly high earner but surely it wouldn’t take much for anyone on a decent salary to breach £325k if death in service benefits are also included in the maths for IHT?

Someone on a more average £40-£50k pa at a reasonably young age would break this £325k no problem with (5x salary) life assurance benefits?

Or am I misunderstanding death benefits?

Life assurance is payable under trust and therefore not subject to tax

Turtle24

The way I see it is most people with DC pots have made sacrifices to build a pot to last their retirement, money they could have enjoyed.
We have no way of knowing how long it will need to last so probably if possible saved more than they will need.
Are friends in DB schemes have not had to save apart from there normal contributions and do not have to worry about how to manage their pots as they age or if it will last, and also still seem to have way more.
The very least we deserve is to be able to pass on what's left.

penners324

LHW99 said:

mgdavid said:

CSL0183 said:

What about death in service life assurance benefits? 

Everyone paying into a DC scheme I suspect will have some sort of death in service life assurance policy attached? 

My own pays a 5x multiple of my pensionable salary plus the contents of my pension pot at the time of my death. 

I am 40yrs old and still have a long way to retirement but my current pension pot plus 5 x my salary is worth around £700k today, right now. (£80k pensionable salary x 5 = £400k + £300k in pension pot) 

I appreciate I am a fairly high earner but surely it wouldn’t take much for anyone on a decent salary to breach £325k if death in service benefits are also included in the maths for IHT?

Someone on a more average £40-£50k pa at a reasonably young age would break this £325k no problem with (5x salary) life assurance benefits?

Or am I misunderstanding death benefits?

Logic says the DIS payment must go direct to the beneficiary as the assured is no longer alive when it is paid. Therefore it's not part of the deceased's estate for IHT or anything else. (but I may be wrong - when did logic drive legislation?)

But then, up till now, DC pension pots have not been part of the deceased's estate (hence no IHT), who also ouldn't be alive when it is made available for whoever is receiving it.

It appears that the Government feels that won't bar taxing DC funds, so presumably DIS payments would have to be specifically exempted under the new legislation proposals..

DIS payments aren't linked to pensions though. It's an insurance product

SnowMan

Pretty decent video by James Shack on the IHT changes, 'Are Pensions worth it anymore?'

https://www.youtube.com/watch?v=9YIw_WDNbzQ

Marcon

Turtle24 said:

The way I see it is most people with DC pots have made sacrifices to build a pot to last their retirement, money they could have enjoyed.
We have no way of knowing how long it will need to last so probably if possible saved more than they will need.
Are friends in DB schemes have not had to save apart from there normal contributions and do not have to worry about how to manage their pots as they age or if it will last, and also still seem to have way more.
The very least we deserve is to be able to pass on what's left.

Why should pensions be any different from any other savings product, particularly given all the tax advantages you've already had?

LHW99

penners324 said:

LHW99 said:

mgdavid said:

CSL0183 said:

What about death in service life assurance benefits? 

Everyone paying into a DC scheme I suspect will have some sort of death in service life assurance policy attached? 

My own pays a 5x multiple of my pensionable salary plus the contents of my pension pot at the time of my death. 

I am 40yrs old and still have a long way to retirement but my current pension pot plus 5 x my salary is worth around £700k today, right now. (£80k pensionable salary x 5 = £400k + £300k in pension pot) 

I appreciate I am a fairly high earner but surely it wouldn’t take much for anyone on a decent salary to breach £325k if death in service benefits are also included in the maths for IHT?

Someone on a more average £40-£50k pa at a reasonably young age would break this £325k no problem with (5x salary) life assurance benefits?

Or am I misunderstanding death benefits?

Logic says the DIS payment must go direct to the beneficiary as the assured is no longer alive when it is paid. Therefore it's not part of the deceased's estate for IHT or anything else. (but I may be wrong - when did logic drive legislation?)

But then, up till now, DC pension pots have not been part of the deceased's estate (hence no IHT), who also ouldn't be alive when it is made available for whoever is receiving it.

It appears that the Government feels that won't bar taxing DC funds, so presumably DIS payments would have to be specifically exempted under the new legislation proposals..

DIS payments aren't linked to pensions though. It's an insurance product

But the consultation proposals

https://www.gov.uk/government/consultations/inheritance-tax-on-pensions-liability-reporting-and-payment/technical-consultation-inheritance-tax-on-pensions-liability-reporting-and-payment

say:

kimwp

Marcon said:

Turtle24 said:

The way I see it is most people with DC pots have made sacrifices to build a pot to last their retirement, money they could have enjoyed.
We have no way of knowing how long it will need to last so probably if possible saved more than they will need.
Are friends in DB schemes have not had to save apart from there normal contributions and do not have to worry about how to manage their pots as they age or if it will last, and also still seem to have way more.
The very least we deserve is to be able to pass on what's left.

Why should pensions be any different from any other savings product, particularly given all the tax advantages you've already had?

There is a tax advantage, but that comes with the disadvantage of the money being locked away until a time period that has a significant uncertainty around how much of it you will live for/be able to enjoy. I personally think increased tax is the only way we are going to improve the country, but it is annoying that individuals have to self-insure and therefore gamble and/or overstock for a retirement that they might not live through.