Was Labour’s Budget a damp squib for those of us in the pensions industry?

Not if you read the detail behind the headlines. Subject to consultation schemes will inherit a significant job from April 2027 – to collate information from beneficiaries on death to assess, report and pay inheritance tax.

We can’t see any industry positives in the proposed implementation of the approach, but here are some potential pitfalls:

• Pensions will be the first asset used against the tax-free inheritance allowance. This should help reduce the burden, but it relies on those managing estates knowing what to do and who to contact. Increased engagement with pensions through dashboards may help from an information availability viewpoint.

• The system will rely on beneficiaries disclosing accurate information about assets. Without that accurate information, errors in reporting and calculation will happen.

• Who bears the risk of errors? The scheme administrator or estate? There are no obvious mitigations for potential penalties/interest.

• Added complexity will bring unwelcome upward pressure on fees. For example, master trusts maintain standard approaches to help keep costs down and make arrangements attractive.

• Added complexity could limit services offered by providers. Could death benefits become too difficult to administer or come with too much risk?

While consultations imply openness to change, the fact there’s so much detail already, it feels like a done deal – and that won’t help anyone.

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