Budget 2024: PwC comments on impact on pensions industry

Commenting on the impact on the pensions industry, Gareth Henty, said:

“Making Defined Contribution pensions pots liable to inheritance tax will have significant implications for pensioners and their financial planning. If pensioners are unable to pass on their DC savings to loved ones without incurring inheritance tax, this is likely to accelerate the withdrawal of savings early, potentially leaving pensioners with a much smaller - or even empty - DC pot later in life when they most need it. Alternatively we may see an increase in pensioners now looking to secure a guaranteed income via an annuity. All of these behavioural changes are likely to mean the actual additional inheritance collected by the Treasury will diminish significantly. Individuals will now be disincentivised to pass private sector pension wealth down the generations.

“The increase in employer national insurance will now make salary sacrifice schemes all the more attractive to employers and workers although the operation of these schemes is complicated by the announced increase in the National Minimum Wage. Careful planning by employers will be needed.

“The Government confirmed plans to capitalise the National Wealth Fund however we await guidance on how pension assets may be used for investment in productive finance and growth opportunities, particularly in the UK’s growing science and technology sectors, many of whom are sponsored and invested in by venture capital and private equity.”