IHT raid on pensions a 'disaster' for families

RACHEL Reeves' decision to impose inheritance tax on unused defined contribution pensions is barrelling towards families, and most still have no idea what's coming.

- By Harvey Jones

From April 2027, bereaved relatives will be forced to navigate one of the most complex tax traps ever devised, and pension experts warn that the Chancellor is sleepwalking the country into disaster.

Former pensions minister Ros Altmann has spent months trying to raise the alarm. She said the plans will not only add a fresh 40% tax charge to pension pots left untouched at death, but also tear up the current system and replace it with a bureaucratic nightmare.

As she bluntly puts it, the Government's proposals "could kill off modern pensions" by making them so complicated and risky that millions will be deterred from saving.

Ordinary families will be hit hardest. A wealthy pension saver can afford specialist advice and complex will planning. The average worker, often with several small pension pots and limited support, cannot.

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Under the new rules, relatives will be responsible for finding every pension the deceased ever had, identifying the correct beneficiaries, calculating the inheritance tax (IHT) due and paying it within six months. Altmann said this is simply impossible.