Yet again, however, I don’t believe this will be the case. Such a move wouldn’t necessarily gain much for the government apart from ill will. The reason I say this is that those who have large funds to pass down the generations are, in all honesty, likely to live beyond age 75, at which point the funds then become taxable in the hands of the beneficiary.
Those with smaller funds are more likely to need to access their pensions, and so will be paying tax on them on their lifetime with little or nothing remaining to leave behind – even if they do die before the age of 75. Taking all this into account, not that much tax is really being lost. The biggest issue is not accessing funds at all, and those funds then remaining for many years beyond the original member’s death, but there isn’t much that can be done about this.
Abolition of PCLS
It wouldn’t be a Budget without the mention of the abolition of the pension commencement lump sum (PCLS). This rumour has come out every year for as long as I can remember and 2018 won’t be any different. Once again, I don’t believe that it will happen, but as usual there will be people who access their PCLS ahead of the Budget date just in case changes are made.
I used to believe that even if this did happen there would be some sort of protection in place for those that had already accrued an entitlement, but I am not as confident about this any more. That said, a change here looks unlikely, because the PCLS is one of the driving forces for savings, and although the government wants more tax revenue it also still wants people to save for retirement.
I believe this will be another quiet Budget for pensions – I hope so, at least. There are too many other things going on at the moment and there have been too many recent dramatic changes to warrant any more.
The government needs to focus on encouraging more pension saving and making either big changes or small tweaks that mean even more trust is lost will not help. Many of these changes would technically only impact the wealthy and those with larger pension funds, but a change is a change and still sends the same message. We want long-term pension planning, which can only be achieved with long-term consistent legislation we can work with.
I will be sat watching the Budget nervously, as I suspect many other people will too. Fingers crossed policymakers are too busy with Brexit to tamper with pensions this time around.
