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65% unaware of pensions death tax reforms

Advisers urged to reduce IHT bills through pensions.

Nearly two-thirds of people approaching retirement are not aware of the recent changes to the pensions death tax, new research suggests.

A YouGov survey of 497 people aged between 55 and 64, commissioned by Old Mutual Wealth, found only 35 per cent knew about the Government’s death benefit reforms.

In September 2014, Chancellor George Osborne announced that untouched pension savings and pensions in drawdown would be taxed at beneficiaries’ marginal rate, rather than at 55 per cent, if the individual dies after age 75. Joint life and value protected annuities also benefit from the changes.

Where the person dies before age 75, pensions can be passed on tax-free.

Old Mutual Wealth financial planning expert Rachael Griffin says: “People should be starting to look at their pension as a cornerstone of their estate planning, helping them to pass on their wealth tax efficiently to future generations.

“The new pension reforms mean pensions have the IHT benefits of a trust but without the restrictions or complications. With over £3.3bn being paid in IHT in 2013 there is significant potential here for advisers to now help reduce the IHT bill for clients.”


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