There is ongoing confusion around IHT proposals for pensions, according to specialist law firm Sacker & Partners.
In a survey of trustees and sponsoring employers Sackers found mixed views on a range of government proposals for DC schemes.
When asked what changes they’d like to see in 2025 almost a third (32 per cent) of respondents said they were hoping for improved retirement support and the same proportion want to see an increase in AE contributions.
However only 4 per cent said they felt clear about the scope of the Government’s proposals to apply IHT to certain wealth passed on through pension schemes. Of the remaining 96 per cent, most respondents have concerns ‘to some extent’ as to what the ‘life products’ exclusion will capture, as well as which benefits fall within scope.
Sackers said the two biggest concerns relate to increased administrative complexity, with the changes affecting day-to-day operations and increasing the risk of errors (cited by 36 per cent of respondents) and potential delays in paying out death benefits (mentioned by around 20 per cent).
Sackers partner Helen Ball says: “There will therefore be lots of interest in the output of the Government’s recent consultation process.”
She adds: “Lack of clarity around the precise extent of the IHT proposals is clearly causing ongoing concern. Realistically, it may be some time before a clearer picture emerges, as the government takes time to digest the consultation responses. With potential administrative complexity adding to the unease, all eyes will be on the process which the Government ultimately lands on for accounting for and paying any IHT due on pensions benefits.”
In relation to the changes trustees would like to see for pensions, Ball adds: “ We may see retirement support duties arrive via the Pension Schemes Bill later this year, but there remains considerable uncertainty about the timetable for auto-enrolment changes.”
She adds: “There were mixed views about the Government’s approach to setting DC priorities – although 62 per cent of respondents said the priorities ‘are clear, although there is a lot happening all at once”’ another 31 per cent found the direction unclear and remain uncertain about what might be coming next.
“With so much still to be decided and so many developments on the DC horizon, trustees and employers should monitor legal developments closely over the next few months, and check they have the resources to manage what may be coming down the track.”
