Worried About IHT Changes On Pensions? Here’s What To Do
If you’ve read the news about forthcoming changes to the levels of inheritance tax (IHT) levied on pension funds and pension death benefits, and are concerned about what this means for your financial plans, you are not alone.
Many people are worried about what the
changes to IHT on pensions, which are due to be introduced from April 2027, will mean for them and their families.
At the moment, the government is working on drafting guidance and other support tools for those who will be affected by this change to the way in which IHT affects the wealth held in pensions.
But if you’re worried about what this change might mean for you, what can you do
now?
There are three steps that I believe are likely to help bring you peace of mind:
- Get clear about how much you have in your pension pots.
- Speak to an experienced professional about your inheritance tax planning.
- Talk to your family about your estate plan.
Let’s take each in turn.
- Get clear about how much you have in your pension pots
This is an essential starting point. You can’t possibly work out what your IHT position might be if you don’t know how much you have in your pension pots. So, before you go any further, take the time to find out precisely how much you have and what kind of schemes they are in.
Many of us don’t keep a particularly close eye on our pension savings, so it is worth checking how much you have in your pension scheme – or schemes.
As many of us change workplaces multiple times throughout our careers, it is highly possible that you have multiple pension schemes, even if you are only actively paying into one of them at present.
Find out where they all are, what the value of each pot is and speak to your financial adviser about whether you should merge some or all of these to make your retirement finances easier to manage.
2. Speak to an experienced professional about your inheritance tax planning
This is an essential next step. There is a lot of uncertainty and, indeed, misinformation about what is changing around IHT and pensions. This uncertainty is often what causes the greatest feelings of fear.
When you imagine the worst, it can be easy to avoid addressing the issue. However, I can promise you that talking to an inheritance tax planning professional will help to set your mind at ease.
At the very least, they will be able to help you work out what your IHT position really is – and what it is likely to be in the future.
If you want to discuss your pensions and IHT plans, I’m available for a free
Clarity Call at any time. Use this time to ask your most pressing questions and to get some advice on how to organise your estate plan for the future.
3.
Talk to your family about your estate plan
It’s highly likely that you will name a member (or members) of your family as executors for your will. Therefore it is best to talk to them about your estate plan as a whole and your IHT planning, so that they have an idea of what to expect when you pass away.
One of the concerns about the proposed new IHT rules on pensions is that executors may not know how many pension pots their relative had. This is why it’s so important to not only find out where all your retirement savings are, but to consolidate them.
Create a document listing all of your pension pots, as well as account numbers and passwords to access them online. This will make your executor’s job a great deal easier when the time comes.
To review your existing will or estate plan, get in touch with
Sure Wealth today.
