IHT change tops list of pension investor concerns, study finds

A change to inheritance tax (IHT) treatment of pensions is topping the list of concerns among pension investors ahead of the Chancellor’s Autumn Budget next week.

A study by interactive investor quizzed pension investors about the tax changes that would most concern them if they were implemented, with four in 10 (40%) suggesting that making a pension subject to IHT on death is their biggest worry.

The poll, based on responses from 1,163 investors, revealed the next most worrying potential change would be reducing or limiting the amount of tax-free cash available to people when they access their pension for the first time, which would concern one in four (25%) pension investors.
 
A reduction in the lifetime allowance would cause the most concern for 16% of respondents, while reducing tax relief on pension contributions would trouble 15%. Just 4% said they would be concerned by a reduction in the amount you can contribute.

interactive investor head of pensions and savings, Becky O’Connor, said that the allowances and reliefs that come with pensions make them the “most attractive” way to invest for retirement.

“If the Chancellor feels tempted to tap that vein, he risks people giving up work without enough in their pensions for a decent income because they are worried about being hit with charges, or because pensions begin to lose their attractiveness relative to other ways to invest for the long-term,” O’Connor said.

“The ability to pass on what’s left in a defined contribution pot tax-free is a key benefit of this type of pension and a kind of consolation for the loss of generous old-style defined benefit schemes that offer guaranteed income for life, but in general no ability to pass anything on to relatives.

“Reducing the amount of tax-free cash available would affect everyone with a pension and would therefore be deeply unpopular and the effects widely felt, although could be justified from the point of view of dissuading people from taking out too much, too soon from their pension.”

    Share Story:

Recent Stories


FREE E-NEWS SIGN UP

Subscribe to our newsletter to receive breaking news and other industry announcements by email.

  Please tick here to confirm you are happy to receive third party promotions from carefully selected partners.


Helping the credit challenged get mortgage ready
A rising number of borrowers are finding it harder to access mortgages due to being credit challenged - whether that’s from historic debts, a county court judgment, or having little to no credit history.

In the latest episode of the Mortgage Insider podcast, Phil Spencer is joined by Eloise Hall, Head of National Accounts at Kensington Mortgages, and Alastair Douglas, CEO of TotallyMoney.

Air and the role of later-life lending
Content editor at MoneyAge, Dan McGrath, spoke to the chief executive officer at Air, Will Hale, about the later-life lending industry, the importance of tailored advice and how technology and obligations have shaped the sector.


Inside the world of high net worth lending
The mortgage market continues to evolve, and so too does the answer to the question: what is a high net worth individual in today’s market? In this episode of the Mortgage Insider podcast, host Phil Spencer is joined by Stephen Moroukian, Head of Product and Proposition for Real Estate Financing at Barclays Private Bank, and Islay Robinson, founder and CEO of Enness Global. Together, they explore what brokers really need to know when supporting high net worth individuals.

The future of the bridging industry and the Autumn Budget
MoneyAge content editor, Dan McGrath, is joined by head of marketing at Black & White Bridging, Matt Horton, to discuss the bridging industry, the impact of the Autumn Budget and what the future holds for the sector.