The removal of a “death tax” on pensions savings is a welcome step towards simplifying later-life planning, Adrian Walker, retirement planning specialist for Old Mutual Wealth, has said.
Mr Walker said: “We welcome the amendment confirming the ability to continue passing pension savings through the generations.
“Each new ‘successor’ is likely to require some assistance in making the most tax-efficient use of their funds, perhaps with one eye on being able to pass even more on to their own successor, so the potential for advisers to deliver true inter-generational services will be greater than ever.”
The proposals are put forward in amendments to the Taxation of Pensions Bill which will allow people aged 55 or over to withdraw their pension savings.
It will mean inherited pensions can be passed on through multiple generations and will always be tax-free where the individual dies before reaching age 75 or taxed at the benificiaries marginal rate where the individual dies after the age of 75.
The public bill committee looking into the Taxation of Pensions Bill met for the first time this week to discuss its timetable.
Adviser view
Phil Perry, director of Greater Manchester-based Ark Financial Planning, said: “Anything that’s going to save tax is always going to be a good thing.
“But the average pension pot will be anywhere between £30,000 and £50,000 so I don’t know how much bearing it will have.
“If you are one of the minority with a huge pension pot, that’s clearly going to be an advantage.”