The government’s will abolish the 55% death tax on the 6th April 2015 which looks to me very much like ‘family pensions’, will be how we regards pensions in the very near future. This is without doubt a game changer and from where I sit pensions were and still are regarded with a healthy amount of distain to say the least, are now going to become a great deal more attractive to a lot of people, especially those in business that may have the potential to build up large pension funds in their lifetime. And even those that have already build up a large pension portfolio.

In September 2014, George Osborne (Chancellor of the Exchequer) announced plans to abolish the 55% pension’s death tax charge with effect from the 6th April, alongside the pension reforms outlined in the Budget and the Autumn statement.

The new rules will allow you to withdraw money from pension fund at either your marginal tax rate of tax (20%, 40% and 45%), if the original pension holder (you) is over 75 when you die, or no tax charge at all if you are under 75. Now that starts to make pensions look a lot more attractive than the 55% tax charge that it currently in place.

Furthermore, your beneficiaries will be able to access the pension fund at any age and up to lifetime allowance, which is currently £1.25 million.

Many people will wish to take advantage of these new pension changes and rethink how they plan to use their pension funds in the future. Additionally, we expect there to be far more interest from people wishing to put more into their pensions and even re-commence contributing after having stopped, due to the disillusionment with traditional retirement planning.

Understanding the pension changes is certainly going to be very important, especially around tax and inheritance planning.

It is quite possible than pensions will be seen as a better way to pass on assets to the next generation, rather than a house in many circumstances.

‘You may wish to start having a conversation with your adviser ahead of the changes coming on the 6th April. The questions you may want to know the answers to are; How can I start to create a pension that will possibly become “a family pension”? Previously this was never really an option; however it is now a very realistic option for some.

For the first time since pensions were invented, the reforms put in place the possibility to help families plan from one generation to the next. We have had this opportunity to plan in this way before.

We are now moving from an individual product mind-set to a family service mind-set.


What next: If you have not get up to speed on your pension situation in recent years, a good look under the bonnet is a great place to start. Knowing what you have in place already, how much you have invested already, will help you enormously in working out if your pensions may be useful if you are considering ‘a family pension’ in your future plans. Pulling together all up-to-date information is a very useful exercise.


To get the best value for your investments and savings, we recommended that seek professional advice from a qualified financial adviser.


Contact Martin Dodd on 01902 742221 or email him at martin.dodd@miadvice.co.uk if you would like talk about money issues.

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