The Chancellor’s plans to include private pensions within the estate, making them subject to inheritance tax, has been poorly received among Brits, with 47% expressing a negative view of this announcement.
According to new research by PensionBee, only one-in-five respondents feel positive about this upcoming change, set to take effect in 2027. As a result, nearly a third (29%) of respondents now say they’ll explore alternative methods to pass on wealth, having previously viewed their pensions as a tax-efficient way to leave money for their loved ones.
Plans to increase employer National Insurance contributions from 13.8% to 15% are also divisive among Brits and have served to increase uncertainty and confusion with two-thirds (65%) of savers either unsure about how this would affect them, or concerned that it could reduce future wage increases or pension contributions from their employer. Meanwhile, over a quarter (28%) felt the change would not impact their pay.
Despite these policy changes, most (44%) respondents feel their confidence has been unaffected by the Budget, but a significant proportion (29%) now feel less assured than before.
Becky O’Connor, Director of Public Affairs at PensionBee, commented: “Following a slight boost in pension confidence after Labour’s victory in the recent General Election, it’s clear this optimism is waning.
The Chancellor’s decision to bring private pensions into the inheritance tax fold has been met with opposition from savers, many of whom viewed this as an important feature of pension saving.
While it’s worth noting that an unused Defined Contribution pension can still be left to a spouse and not be subject to inheritance tax, this policy shift will be a significant disappointment for those relying on pensions to pass on wealth to their children or grandchildren.
This change is likely to prompt wealthier savers to consider how they manage their pension in retirement, and may mean they explore alternative investment options, which could lead to broader shifts in spending and investment behaviour among retirees.”
Table 1: Following the Chancellor’s budget announcement, how has your confidence in managing your personal finances changed?
Source: PensionBee, November 2024. Responses from a nationally representative sample of 1,000 UK adults. Numbers have been rounded.
Table 2: How do you feel about the upcoming change to inheritance tax on private pensions?
Source: PensionBee, November 2024. Responses from a nationally representative sample of 1,000 UK adults. Numbers have been rounded.
Table 3: Does this change to inheritance tax affect your estate planning, such as passing on wealth?
Source: PensionBee, November 2024. Responses from a nationally representative sample of 1,000 UK adults. Numbers have been rounded.
Table 4: How do you think an increase in National Insurance for employers might affect your personal finances or business?
Source: PensionBee, November 2024. Responses from a nationally representative sample of 1,000 UK adults. Numbers have been rounded.
