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What is a pension beneficiary?

Daniel Liddicott
Post written: Sept 2026  •  Published: Sept 2026
2 min read

What is a pension beneficiary?

A pension beneficiary is the person, or people, that you name to receive the funds from your pension when you die. You could nominate your spouse, civil partner, children or other family members. You can also name charities should you wish to.

This is done by completing an Expression of Wish form for your pension provider, so that they are aware of your intentions upon your death. You can also use this form to specify the proportions in which you would like your pension funds to be distributed to multiple people.

This may become even more important with the expectation that pension funds will become subject to inheritance tax (IHT) from April 2027 onwards. There is hope that the Autumn Budget, scheduled for 28th October, will give additional clarity on this.

If no beneficiaries are nominated, it would be reasonable to assume that your pension funds would be distributed in accordance with your Will. However, this is not the case!

Most pensions have a trust-based structure, which means that providers do not automatically follow the wishes laid out in your Will. They have discretion as to how the funds are distributed upon your death. Whilst some common sense may apply, naming beneficiaries is the best way to ensure that the people you want to receive your pension funds actually get them.

We have been working to identify any clients whose pensions do not currently have named beneficiaries and will soon be sending out Expression of Wish forms for your signature, but please get in touch if you have any questions or concerns in the meantime.

Even where there is a Will, this is not the way.

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What is a pension beneficiary?2026-09-18T15:11:59+01:00

Can You Delay Dementia?

Dominic Thomas
Post written: Aug 2026  •  Published: Sept 2026
2 min read

Can You Delay Dementia?

Research from studies in the US suggest that people in their 50s making changes to their lifestyle, may increase their chances of being dementia free by 13 years. Is it that simple?

A report in New Scientist (15 August 2026) cites a study in the US by Josef Coresh at New York University. In essence, the study of about 12,000 Americans typically over a 26 year period concluded that chances of getting dementia are much lower for those people who had low blood pressure, do not smoke and do not have diabetes or to put it another way, concluded that people that smoke, have diabetes and high blood pressure are 2.7 times more likely to suffer from dementia.

One of the problems that we all tend to have when it comes to your financial planning is a general inability to grasp the potential health changes we may experience as we age. I may draw up your plan until you are 100, but it is likely that for most of us there will be a serious decline in health at some point. Typically this affects mobility and mental capacity, which impacts a loss of independence and is another good reason for everyone to sort out their own Power of Attorney.

Coresh set up and runs The Optimal Aging Institute, established in 2023, which is designed to connect research from around the world in this field. There are key factors that changes in lifestyle can help improve on the “normal” (typical) experience of decline in older adults. The sooner this is started the better, but actually it seems that fairly dramatic differences can be achieved whenever you begin to live more healthily.

There are some detractors to the research, its US focus (where food is heavily processed with lots of added “sugar”) and a lack of connection with hearing loss and isolation, as pointed out by Richard Siow at Kings College London, who is Director of ARK – Ageing Research at Kings.

Many of you are medics and I am significantly “outside of my lane” but I believe it accurate to say that high blood pressure, smoking and diabetes all damage blood vessels, which when inflamed damage neurons which normally help the brain to function well, particularly for memory and learning.

Whatever the research suggests, this is one area where some changes in our lifestyle, something that is within our control, but not without significant effort (and battle) may provide a considerable advantage in later life. I’m really glad that organisations like Kings and NYU exist to fund research into this. We have an ageing population (globally, not simply here) and need all the assistance we can get to avoid a massive pressure on care in later life (and therefore increased cost) which as many of you will know can be extremely expensive and a topic that recent Governments have continued to ignore.

Whilst many of you will have had experience of dementia with family members, there is a rather good film starring Anthony Hopkins (still working at 8X) called The Father. Here is the trailer.

The Father (2021), Directed by Florian Zeller, Starring Anthony Hopkins, Olivia Colman, Olivia Williams, Mark Gattis and Rufus Sewell. Produced by Film4

References:

Josef Coresh PHD: https://med.nyu.edu/faculty/josef-coresh

The Optimal Aging Institute: https://med.nyu.edu/departments-institutes/optimal-aging/   

Richard Siow at Kings: https://www.kcl.ac.uk/people/richard-siow

ARK: https://www.kcl.ac.uk/research/ageing-research-at-kings-ark

What we do: https://www.solomonsifa.co.uk/what-we-do/

The Father (2021). https://www.imdb.com/title/tt10272386/?ref_=nm_flmg_job_1_accord_2_cdt_t_14

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Can You Delay Dementia?2026-09-10T13:43:35+01:00

Who is on your list?

Dominic Thomas
Post written: Aug 2026  •  Published: Aug 2026
3 min read

Who is on your list?

I recently went to see a new(ish) musical of the Japanese manga story “Death Note” at the Barbican, Directed by Stephen Whitson. It’s an imaginative story and a decent new musical, with a high level of energy and a fairly incredible set and large ensemble cast.

The story was originally written by Tsugumi Obha and drawn for the anime manga series by Takeshi Obata. The premise is perhaps one of the oldest struggles that we mortals wrestle with – is there any justice? Since the dawn of time, life has been “unfair” and “unjust”. Myth, religion and story all tend to wrestle with and explain this very fundamental cry of woe in a world that frequently feels unfair. Even Jesus observes in the sermon on the mount:

“He causes his sun to rise on the evil and the good, and sends rain on the righteous and the unrighteous” (Matthew 5:45)

I’m not too familiar with Japanese myths or the faiths of Shinto, Buddhism or the general cultural mix, though I do find it intriguing. So quite how old the notion of other worldly gods and demons goes back is somewhat illusive. Obha introduces us to several “death demons” or Shinigami. They carry a book, into which they mercilessly play with humanity, the random writing of a name results in that persons death. Somewhat bored with his existence, one Shinigami called Ryuk, deliberately drops his book before a student with a clear sense of right and wrong called Light, who quickly learns that he can serve justice far faster than his father Soichiro, who is head of Japan’s National Police Agency. His “success” and liberal use leads to inevitable questions about the validity of his own version of “justice”.

It’s an enjoyable musical, with some good songs (music by Frank Wildhorn). I suspect that most of the audience quickly wonder whose name they might write down in the book, to be very candid, my list is very long and easy to produce, an evident flaw in my own character, which is probably the point.

We all want the world to be considerably better and much fairer, each day we are confronted with challenges to our sense of fairness, often in the small details, but invariably in big “news” stories of the day. However much you try, its inescapable, much like death. World culture is full of figures representing death, some are rather more palatable than others. Hades to Azreal. I was quite fond of “Death” in the Sandman, another “graphic novel”. Death was warm, welcoming, caring, compassionate and rather beautiful (played by Kirby Howell-Baptiste in the 2022 television series “The Sandman”).

Anyway, justice, as we know is often in short supply, illusive. As consumers we have the opportunity to exercise a moderate amount of consumer power against companies whose actions and behaviours we oppose. At a political level, we get to vote, as consumers we get to spend (or withhold spending) and perhaps vote at AGMs as many protestors attempt to do. Often the challenge feels enormous, perhaps overwhelming, but we are reminded from history that even small acts of resistance can bring about significant change.

Sadly I do not possess the ability to grant extended life and cure life threatening or life taking conditions. None of us escape death, as ever we are reminded and called to live well, on our own terms and to live justly, fairly – whatever that may mean for you. Your financial plan is best when designed around your values, so be aware that we expect this to be an ongoing discussion between us, without judgement about your views on life and death and the meaning ascribed to them. We can also discuss how your views on social issues like climate, sustainability, governance etc can be applied to your investments. Nothing will be “perfect” because you and I are not, neither is the world.

Here is the trailer for Death Note the Musical showing at The Barbican until 12 September 2026. I think it fair to say, audiences would typically be younger than “normal” which is a good thing to encourage people into theatres.

I’m sorry, but I simply cannot resist sharing this rather beautiful clip from the Netflix series “The Sandman”. Here are Kirby Howell-Baptiste (Death) and Tom Sturridge (Dream).

The Sandman (2022-2025), Created by David Goyer, Neil Gaiman and Allan Heinberg. Starring Tom Sturrige. Produced by Netflix

Your values for your financial plan. It’s your life.

References:

Death Note The Musical: https://deathnotethemusical.com/

Tickets at the Barbican: https://www.barbican.org.uk/whats-on/2026/event/death-note-the-musical

The Sandman: https://www.imdb.com/title/tt1751634/

What we do: https://www.solomonsifa.co.uk/what-we-do/

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Who is on your list?2026-08-21T15:16:34+01:00

What’s the Label?

Dominic Thomas
Nov 2025  •  2 min read

What’s the Label?

I don’t know when it occurred, but at some point several decades ago a clothes label on the outside of a garment would be removed, all labels were on the inside. Marketing geniuses decided that branding would propel the fortunes of a company and nowadays a label or logo is often not simply proudly displayed, but often seems to be the design itself. We attach ideas, values and narratives to a brand. It’s not a particularly new concept – for example religious iconography has been used for centuries (is there a more recognisable icon than a crucifix?).

Labels are also helpful in guiding us to better decisions about our purchases, ‘healthy food’ and so on. We know that these are often problematic and can be rather too subjective.

The financial world has tended to use labels to describe funds – a risk score, or whether it’s ‘green’ or ‘ethical’. The regulator has been attempting to address the often problematic use of terms like these to avoid misleading investors into believing and assuming things about a fund. “Greenwashing” is a term used to reduce the problem into one word. Progress is being made, (with Sustainability Disclosure Requirements – SDR) but the truth is that any label is reductionist.

This problem is obviously not unique to the investment world. Recently the ASA banned the farming “Red Tractor” campaign which, argued the clean rivers charity Rivers Action, implies environmental standards that are not actually observed, citing the pollution of rivers by a number of “Red Tractor” farms. Red Tractor countered that they never implied environmental care, but animal welfare … which I personally think is a stretch; they admitted to not even checking environmental standards for the farms. Supermarkets and no doubt consumers will now be confused by yet another problematic label.

Labels are by nature simply too reductionist, think of the term ‘doctor’ and how broad that can be – or indeed ‘financial adviser’. These days I see all sorts of unqualified people on social media talking about financial strategies, tax, pensions and so on and barely any are responsible or regulated for their advice (financial journalists aren’t either).

The problem of course is the deliberate play on assumptions that we make. We as consumers are left to fend for ourselves when faced with the rebuttal “we never said that” (but it was seemingly implied).

So, be warned – even without the deepfake artificial intelligence now here, we are often deliberately mislead into parting with our money based on our assumptions.

Reference:

What’s the Label?2025-11-14T16:34:08+00:00

Would you be hit by a Wealth Tax?

Dominic Thomas
July 2025  •  4 min read

Would you be hit by a Wealth Tax?

We live in a world that is lurching towards fascism, which is largely due to the failure of centrist Governments to address the inequalities in our society. Whilst evidently aware that the UK overspends and hasn’t enough income each year to continue to provide the services that we expect, sadly this Government, much like those before it, is adamantly refusing to tax the very wealthy (those with more than £10m of assets). Instead, they are taking a wrecking ball to the working and middle classes and small businesses with tax upon tax.

Plans to raise even more from inheritance tax (IHT)

We know that inheritance tax is unpopular and probably not because of the amount it raises (which is a fraction of taxes, accurately less than 1% of the total £857,821m) but rather more to do with the approach that Government simply taxes you again, taking bites out of the same money. Your savings have already suffered income tax, capital gains tax and possibly stamp duty and VAT, yet also finally succumb to inheritance tax.

The Fake Exodus

The failure of the current Chancellor, who in fairness is just as ineffective as all her predecessors over the last 40 years or so, is unable to appreciate the biases that she has – an inability to believe that taxing a few people more will not cause them to leave the UK with a proper wealth tax. Pandering to right wing reports of an “exodus” of millionaires from the UK, which is an utterly inflated and bogus interpretation of the available data, we, like the Chancellor and most politicians, are being fed the lie that we must allow the very rich to pay minimal taxes or risk their departure and then share the burden between those who remain here. In fact, our tax system is deliberately structured this way. The firm touting the narrative, seized upon by billionaire media moguls, is Henley and Partners – a company that basically specialises in servicing the ultra-rich. Its equivalent is a gun manufacturer distorting violent crime data resulting in fear and widespread gun ownership (ker-ching!) and … more violent crime.

Reality Check – Millionaires care about a thriving society too

The reality is that only 0.2% (zero point two percent) of millionaires migrate. This rate has barely altered. The Tax Justice Network and Patriotic Millionaires UK have both attempted to address this grossly deliberately misleading narrative, providing data and facts, but UK and global media outlets are rarely concerned with anything other than sensationalism and stoking division. It wouldn’t be a surprise if you had never heard of either organisation. It might surprise you to learn that 80% of UK millionaires support a 2% wealth tax. These are people who have at least £4m of net assets, which does include some of our clients.

Chancellor Rachel Reeves, like those before her, has fallen for it and is pressing ahead with frozen allowances, increases to NI and tax rises for inheritance taxes in particular, impacting anyone with an investment-based pension fund (you) or a farmer (we have a few farmer clients but not many). Whilst Henley and Partners have backtracked on their false and inflammatory statements about an “exodus”, the media has not caught up and neither has Reeves.

As a result, the gradual reduction of the welfare state, the sense of distaste that most of us have for our ever-rising bills and taxes, the billionaires and ultra rich continue to build wealth and remain largely outside of scope. The constant failure of the UK Government and in particular Kier Starmer, leaves the door open for an irate electorate to vote for change, sadly the party that garners attention (thanks to a more than willing media) is that of Reform and the duplicitous Nigel Farage, who is a Trump mimic and fans the flames of fascism. For some people he is a protest vote; but the evidence suggests that he is not merely a protest. His rhetoric (backed by very wealthy individuals like Elon Musk and businesses) calls for dismantling the welfare state (including the NHS) and taking an authoritarian approach – threatening our democracy. On the rare occasions that he and his supporters admit that Brexit has failed, he states this is due to Government not going far enough (by which he means far right enough). Whilst the focus may initially be on “illegal immigrants”  and abandoning plans to save our only planet, his “policies” or words will inevitably fail to address any real problems; his argument will always be that centrists (the vast majority of the electorate) didn’t allow him to go far enough, and so we are, in my view, at a crossroads. He also advocates “relaxing” gun laws and defended fascists (laughably calling them “concerned families”) attempting to burn down a hotel which may have housed asylum seekers. You know your history.

When new information comes to light, I am forced to rethink and change my mind – how about you? My role as your adviser is not to tell you how to vote, but to advise you about your wealth and how this aligns with your lifestyle and the general sense of wellbeing when contextualised within our society.  Successive Governments have all largely failed most of us except the very wealthy which doesn’t include you (or me) despite our combined efforts to save, invest, grow, innovate, employ, repay debt and minimise taxes.

Instead, an employed person earning say £120,000 will have tax rates of 62% whereas I can assure you that someone with sufficient capital will be able to generate the same level of income with tax rates no higher than 28%. Taxing income and taxing wealth are not even vaguely comparable. You will note that in the diagram about tax receipts, most of those taxes are paid by working people under State Pension age.

I’m actually of no particular political persuasion, I attempt to vote for who I believe will serve our country and planet best, not necessarily my own interests. The choices today are highly influenced by media bias and false representation. Somehow, we have to pick our way through the noise and vote for decent people who hold everyone’s interests; not simply those who have a particular distorted view of monoculture, a faux respect for the protection of women and children (look at what they vote to cut) and conveniently forget our history whilst at the same time portraying a distorted view of the past. It is time for hope, not hate.

Would you be hit by a Wealth Tax?2025-08-13T10:19:38+01:00

TTAFC Allowances

Daniel Liddicott
March 2025  •  3 min read

TTAFC Allowances

Following the well-publicised removal of the Lifetime Allowance (LTA) for pensions from the beginning of the 24/25 (6th April 2024), two new allowances related to pensions were created in its place. Trust the Government to remove one allowance, only to introduce two more!

Before we get ahead of ourselves – a brief reminder. The LTA for pensions was the amount that an individual could save into pensions, and subsequently take from pensions, before being hit with an additional tax bill. Potentially up to 55%! The last LTA figure before it was abolished was £1,073,100. This remains an important figure, even with the removal of the LTA.

The maximum tax-free lump sum that could be taken from pensions (those without any protected tax-free cash entitlement) was £268,275. This is 25% of the old LTA figure.

Now, rather than allowing tax-free lump sums from pensions that are greater than this figure, the Government has brought in the Lump Sum Allowance (LSA). This allowance is also £268,275, effectively maintaining the same maximum tax-free lump sum amount as if the LTA was never abolished.

The second new allowance is called the Lump Sum & Death Benefit Allowance (LSDBA). This allowance essentially mirrors the last figure for the LTA (£1,073,100) and limits the amount that can be paid out to beneficiaries as a lump sum on death of the pension holder. Any amount greater than the remaining LSDBA is potentially liable to income tax. Any tax-free cash taken from pensions during life will gradually reduce this death benefit allowance over time.

Claiming what you are entitled to

As a result of the rule changes over the years, you may be entitled to greater LSA and LSDBA amounts than HMRC currently have on record for you. This will likely be the case if you took tax-free lump sums from your pensions at times when the LTA figure was different from £1,073,100. It has changed 10 times since its introduction in the 2006/2007 tax year.

HMRC calculate your remaining LSA and LSDBA allowances using £1,073,100 as the starting figure as this was the last LTA amount. However, their calculation will be incorrect if you took tax-free cash in any of the years shown above in which the LTA was not £1,073,100.

If you think that you might be one of those people, please let us know. We are working through our records to determine and get in touch with those of you who may need to apply for a certificate to reinstate the tax-free cash allowances that you are entitled to. These are called Transitional Tax-Free Amount Certificates (TTAFC). Apologies for all the acronyms throughout this piece!

Whilst the LTA has officially been abolished, it still casts a relatively large shadow over the pension planning landscape.

TTAFC Allowances2025-03-28T14:53:23+00:00

PENSION DEADLINE – YOUR STATE PENSION

Dominic Thomas
March 2025  •  3 min read

PENSION DEADLINE – YOUR STATE PENSION

I’ve had a few enquiries from people who have seen something in the news but aren’t clear about what it is. There is a sense of urgency and the information seems to be coming from reliable sites, so what is it?

‘BOOST’ YOUR PENSION

The tax year ends on 5th April 2025 a few weeks away now. This is a deadline for people who wish to make up (backfill if you will) missing or incomplete years of national insurance contributions. The timeframe is closing, it’s a use it or lose it situation.

Why would you?

Firstly, this only applies to people under State Pension Age (SPA). To get a full State Pension, you need 35 years of National Insurance contributions, which for the record, technically can begin when you are 16 until you are 67 or older. So most people will have a ‘working career’ of 51 years to build 35.

If you have had breaks in your employment (maternity, child care, working abroad, redundancy, sickness) then you will likely find that you don’t have a full record. So on the assumption (red flag) that you work and pay NI until your State Pension Age, then you can estimate how many years you will have.

If you build more than 35 years, you do not get a bigger pension.

Time is Running Out

Until 5th April 2025 you can buy the missing years (for a price) all the way back to 2006. Once the new tax year starts, you will only be able to make up incomplete years in the last six tax years.

You are smart enough to know that ‘the system’ is under some strain, so getting the data and paying for the missed years is going to be arduous.

So the first thing to do is check your NI record. You get a list of every tax year since you were 16 (fairly enlightening as an experience). If you spot missing years, perhaps there has been an error? If not, then estimate how many more full tax years you are likely to work for yourself or someone else until State Pension age.

WARNING: Estimating Your Lifetime

You have to give this some thought, a State Pension pays out for your lifetime, so if you die before getting one, well, that’s lost. As a warning, from both experience and research, most people underestimate how long they will live, so beware of that. You may also have a condition that shortens your life expectancy. So to pretend that this is an easy calculation is misleading.

The State Pension is very good value, it provides a guaranteed income for life, it is taxable but for most will fall within the current personal allowance for 0% tax.

Check your NI record, get a State Pension forecast – but remember that they assume you work until your State Pension age. Whilst you are there check the date of when that is for you. You can find the links in our resources section or start by clicking here.

Link to your NI records: https://www.gov.uk/check-national-insurance-record

PENSION DEADLINE – YOUR STATE PENSION2025-03-07T16:05:43+00:00

Will Reeves Slash Cash ISAs?

Dominic Thomas
Feb 2025  •  2 min read

Will Reeves Slash Cash ISAs?

Hopefully you will know that I am a fan of having cash, we all need it for ‘liquidity’. In plain English – that means having money easily available without needing to sell anything. This is usually best for your emergency fund. This is a number (sum) that helps you to sleep well at night and quite frankly depends on your life stage. A measure of 3, 6 or 12 months of normal spending is helpful plus planned spending projects (not normal spending) over the next three years.

Keeping more than this in cash will likely erode the value of your spending power. You are likely to be going backwards. You might say “backwards, but at least with certainty – compared to investments” well, that is true in the short term but in the long term, whilst nothing is certain, we have yet to see a period when cash beats shares over 10 years or longer.

So, the news that the Chancellor (Rachel Reeves) is contemplating either scrapping or reducing the Cash ISA allowance from £20,000 to £4,000 may be a surprise for some of you. It’s because in theory holding cash doesn’t really serve anyone very well, least of all the economy, but investing in businesses … well that helps create wealth. That’s why she is considering it.

It would seem that this will only start from the new tax year (if at all) and nobody is expecting her to tell us that you can only hold £4,000 in total in Cash ISAs – which would be highly unlikely. Whilst you may find this an unwelcome change, it’s worth remembering that Cash ISAs always had a lower allowance until the 2015/16 tax year when the allowance became £15,240.

As we are still in the 2024/25 tax year data isn’t up to date, honestly in this digital age, I don’t understand why HMRC are so behind. Anyway, interest rates obviously improved over the last couple of years and more people used Cash ISAs, 63% of contributions to ISAs in 2021/22 were into Cash ISAs. People forget the impact of inflation which is still not within range, and Cash ISAs continue to provide a negative return. Quilter did some research and found that £10,000 into a Cash ISA in December 2012 would now be worth £11,955 but when adjusted for inflation that’s really £7,918. In contrast, the same amount invested into a global shares index fund would be worth £33,526 (£22,221 after inflation).

You may have seen my inflation diagram about a first-class stamp, something we can all relate to and perhaps why there are fewer Christmas and Birthday cards being sent.

  • 1985: 17p
  • 1995: 25p
  • 2005: 30p
  • 2015: 63p
  • 2025: £1.65

Your money has to keep pace with inflation.  10 years races by, but holding your hard-earned money in cash that provides a negative return is only good for short-term projects and emergency funds.

The current ISA allowance for 2024/25 is £20,000.  The Junior ISA allowance (for those under 18) is £9,000.

Will Reeves Slash Cash ISAs?2025-02-27T11:05:24+00:00

Smaller pension, larger lump sum

Dominic Thomas
Feb 2025  •  3 min read

To take a smaller pension and a larger lump sum

Most old-style pensions (Final Salary or Defined Benefits) tend to offer the ability to take a tax-free lump sum in exchange for a reduced pension income. Everyone is different, and advice should always be tailored to your personal circumstances and requirements. However, here I simply wish to outline the issues for consideration.

As an example, John is due to receive a pension of £23,195pa from his old employer. Alternatively, he could take a reduced pension of £17,583pa with a one-time tax-free lump sum of £117,224. That’s a difference of £5,612pa to his pension income (but with £117,224 ‘in the bank’).

If he were to die, the widows pension remains at 50% of the original pension (not always the case, but often) which is £11,597.50pa for the remainder of his spouse’s life.

Pension income is subject to income tax. In this case, his other pensions including the State pension (£11,500pa) would mean that he pays basic rate tax on total pension income (20%). In reality then, his gross income of £23,195 is really £18,556pa.

At face value, the tax-free lump sum is equivalent to 20.8 years’ worth of the lost income (£5,612pa). However, this is taxed income and really the net amount (after tax) lost is £4,489.60 which would be roughly 26 years of income in exchange for the tax-free lump sum of £117,224.

The same rate of inflation applies to whatever level of income is taken, but of course over time this will gradually compound.

If he were to die after five years of retirement, the pension would reduce by 50% whether he has taken the lump sum or not. However, if he hasn’t spent or used it, then the lump sum would have remained in his estate, and if invested, it should have grown. In the worst case scenario, if he and his spouse had both died shortly into retirement, there would be no ongoing income, but had he taken the lump sum (and not spent it) at least that would be left within his estate.

Naturally more income tax will be paid on the higher income and if he has a full State pension it would take around 10 years before he becomes a 40% taxpayer or 16 years if he takes the reduced income. We can obviously calculate the tax in more detail, but this is meant to be a simplified example.

Whilst it might be obvious, if the client has other taxable income, then taking the lump sum makes even more sense due to the reducing amount of net income received after basic rate, higher rate and potentially additional rate tax.

If you want to talk this through so that you get a better understanding of how this relates to your personal situation, please get in touch.

Smaller pension, larger lump sum2025-02-14T15:54:58+00:00

Pensions and Inheritance Tax

Dominic Thomas
Jan 2025  •  2 min read

Pensions and Inheritance Tax

In the first Labour Budget of the current Government, Rachel Reeves announced that from 6th April 2027, pension funds (investment-based pension funds) would form part of an estate for inheritance tax assessment. This made a number of folk choke on their gin and tonic as they considered their estate in light of this pension reform.

Despite only being elected on 4th July 2024; now barely six months on and only about three months since her Budget on 30th October, the Government has been facing growing criticism for lack of economic growth since they took office. To be candid, I’m not sure who is so vexed about this; as any reasonable person would appreciate that the impact of a new Government and policy decisions generally take a while to have any impact on economic growth. So this has probably rather more to do with sentiment than fact (all political bias aside).

Anyway, some of the biggest companies have collaborated to tell the Chancellor that her plans to include pensions within inheritance tax assessments are “bonkers” (my word not theirs!). This includes AJ Bell, Quilter, Hargreaves Lansdown and Interactive Investor, who between them manage £430bn of pensions across around 3.4m people.

I’m not sure how much attention will be given to their pleading, however meritorious, as there is a rather obvious conflict of interest (if the funds are not taxed, then investment firms continue to manage the higher amount).

It would certainly seem that the UK needs some serious spending on its infrastructure, healthcare, education and welfare – so the money has to come from somewhere, but so far the billionaires seem to have been able to reside in their silos like Bond villains and declare that they will move outside the UK should they be required to pay any more tax – perhaps Mars.

There is obviously some unfairness about the Government proposals. It punishes those who saved and didn’t spend it all. There is ample opportunity for not simply one tax (IHT), but the likelihood of further double taxation. One might add that this doesn’t help the younger generations to finally buy a property either. Frankly the complexity of tax rules and pensions will make any adviser (let alone Executor of an estate) squirm with uncertainty when totting up all the assets and calculating the liability (failure for doing this accurately can result in a custodial sentence).

In short, a week is a long time in politics, the few months since the Budget already feel like a lifetime and there may well be a lot of changes before April 2027. So before you panic and blow your retirement planning into some irrevocable strategy, please do consider that change is possible and may be probable.

Pensions and Inheritance Tax2025-02-17T17:01:29+00:00

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